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Role Of IT In Banking IT Essay

In the five decades since independence, banking in India has developed through four specific stages. During Fourth stage, also known as as Reform Stage, Referrals of the Narasimham Committee (1991) paved just how for the reform phase in the banking. Important initiatives in regards to to the reform of the bank operating system were used this phase. Important among these have been introduction of new accounting and prudential norms relating to income reputation, provisioning and capital adequacy, deregulation of rates of interest & easing of norms for entry in the field of banking.

Entry of new bankers led to a paradigm shift in the means of banking in India. The growing competition, growing objectives led to increased awareness between banking companies on the role and importance of technology in banking. The introduction of international and private finance institutions using their superior state-of-the-art technology-based services pushed Indian Bankers also to check out suit by going in for the latest technology in order to meet the risk of competition and keep their customer bottom part.

Indian bank industry, today is in the midst of an IT revolution. A combo of regulatory and competitive reasons, have led to increasing importance of total bank automation in the Indian Bank Industry.

ROLE OF TECHNOLOGY

Information Technology has quite simply been used under two different strategies in Banking. Some may be Communication and Connection and other is Business Process Reengineering. Information technology enables advanced product development, better market infrastructure, implementation of reliable techniques for control of risks and helps the financial intermediaries to attain geographically distant and diversified marketplaces.

In view of this, technology has transformed the curves of three major functions performed by banks, i. e. , usage of liquidity, change of investments and monitoring of hazards. Further, Information technology and the communication networking systems have an essential bearing on the efficiency of money, capital and foreign exchange markets.

Internet has significantly influenced delivery programs of the banks. Internet has emerged as an important medium for delivery of banking products & services. Complete recommendations of RBI for Internet Banking has prepared the required ground for progress of Internet Banking in India.

The Information Technology Act, 2000 has given legal identification to creation, trans-mission and retention of an electronic (or magnetic) data to be cured as valid proof in a courtroom of rules, except in those areas, which continue to be governed by the procedures of the Negotiable Devices Take action, 1881.

As mentioned in RBI's Total annual Monetary and Credit Policy 2002-2003: "To experience the full great things about such electronic concept transfers, it is necessary that banking companies bestow sufficient attention on the computerization and networking of the branches situated at commercially important centres over a time-bound basis. Intra-city and intra-bank networking would assist in in handling the "last mile" problem which would in turn result in quick and productive funds transfers in the united states".

TECHNOLOGY PRODUCTS INSIDE A BANKING SECTOR:

Net Banking

Credit Card Online

Instant Alerts

Mobile Banking

e-Monies Electronic Account Transfer

Online Payment of Excise & Service Tax

Phone Banking

Bill Payment

Shopping

Ticket Booking

Railway Ticket Scheduling through SMS

Prepaid Mobile Recharge

Smart Money Order

Card to Credit card Funds Transfer

Funds Transfer (eCheques)

Anywhere Banking

Internet Banking

Mobile Banking

Bank @ Home "Express Delivery"

USE OF Technology in Lenders to:

Have your paycheck deposited straight into your standard bank or credit union bank checking account.

Withdraw money from your bank checking account from an ATM machine with an individual identification quantity (PIN), at your convenience, day or evening.

Instruct your lender or credit union to automatically pay certain monthly bills from your accounts, such as your auto loan or your mortgage repayment.

Have the lender or credit union copy funds each month from your bank checking account to your shared fund consideration.

Have your federal government interpersonal security benefits check or your tax refund deposited straight into your bank checking account.

Buy groceries, gas and other purchases at the point-of-sale, utilizing a check card alternatively than cash, credit or an individual check.

Use a good cards with a prepaid amount of money inserted in it for use instead of cash at a pay cellphone, expressway road toll, or on university campuses at the library's photocopy machine or bookstores.

Use your personal computer and personal money software to coordinate your total personal financial management process, integrating data and activities related to your earnings, spending, saving, investing, recordkeeping, bill-paying and fees, along with basic financial evaluation and decision making.

TECHNOLOGY IS USED THROUGH:

INTERNET BANKING:

Internet Banking enables you to handle many bank transactions via your personal computer. For example, you may use your personal computer to view your account balance, request transfers between accounts, and pay bills electronically.

Internet banking system and method in which a personal computer is connected by the network service provider directly to a bunch computer system of the bank such that customer service demands can be processed automatically without dependence on intervention by customer support representatives. The machine is with the capacity of distinguishing between those customer service requests which are capable of automated fulfillment and those requests which require handling by a customer service representative. The machine is included with the coordinator computer system of the bank so that the remote bank customer can gain access to other programmed services of the lender. The technique of the technology includes the steps of inputting a customer banking submission from among a menu of bank demands at a remote control staff computer; transmitting the banking requests to a host computer over the network; getting the get at the coordinator computer; identifying the sort of customer banking need received; automated logging of the service request, assessing the received submission to a stored stand of get types, each of the request types having an feature to indicate if the question type is capable of being satisfied by a customer service rep or by an robotic system; and, depending upon the attribute, directing the question either to a queue for handling by a customer service representative or to a queue for processing by an automated system.

AUTOMATED TELLER MACHINES (ATM):

An unattended electronic machine in a general public place, connected to a data system and related equipment and triggered by a standard bank customer to obtain cash withdrawals and other banking services. Also known as automated teller machine, cash machine; Also known as money machine.

An programmed teller machine or automatic teller machine (ATM) is an electronic digital computerized telecommunications device which allows a financial institution's customers to straight use a secure method of communication to gain access to their loan provider accounts, order or make cash withdrawals (or payday loans using a mastercard) and check their bill balances with no need for a individuals lender teller (or cashier in the UK). Many ATMs also allow people to deposit cash or cheques, copy money between their standard bank accounts, top up their mobile cell phones' pre-paid accounts or even buy postage stamps.

On most modern ATMs, the client identifies him or herself by placing a plastic card with a magnetic stripe or a plastic smartcard with a chip, which has his or her account number. The customer then verifies their individuality by joining a passcode, also known as a PIN (Personal Id Number) of four or more digits. Upon successful accessibility of the PIN, the client may execute a transaction.

If the number is entered improperly many times in a row (usually three tries per cards insertion), some ATMs will look at retain the greeting card as a security precaution to prevent an unauthorised consumer from exploring the PIN by guesswork. Captured credit cards are often ruined if the ATM owner is not the credit card issuing bank or investment company, as non-customer's identities can't be reliably verified.

The Indian market today has approximately more than 17, 000 ATM's.

TELE BANKING:

Undertaking a host of banking related services including financial orders from the capability of customers chosen place anywhere across the GLOBE and any moment of night out and night has been permitted by launching on-line Telebanking services. By dialing the given Telebanking amount by having a landline or a mobile from everywhere, the customer can gain access to his consideration and by following the user-friendly menu, entire banking can be carried out through Interactive Voice Response (IVR) system. With sufficient amounts of hunting lines offered, customer call will scarcely fail. The system is bi-lingual and has following facilities offered

Automatic balance voice out for the default accounts.

Balance inquiry and purchase inquiry in all

Inquiry of most term deposit account

Statement of accounts by Fax, e-mail or typical mail.

Cheque e book request

Stop payment which is on-line and instantaneous

Transfer of funds with CBS which is automated and instantaneous

Utility Monthly bill Payments

Renewal of term deposit which is automated and instantaneous

Voice out of last five transactions.

SMART CARD:

A smart card usually consists of an embedded 8-little bit microprocessor (a kind of computer chip). The microprocessor is under a contact pad on one aspect of the card. Think about the microprocessor as changing the most common magnetic stripe present on a credit card or debit cards.

The microprocessor on the smart cards is there for security. The sponsor computer and card reader actually "talk" to the microprocessor. The microprocessor enforces access to the info on the credit card.

The chips in these credit cards are capable of many varieties of transactions. For instance, a person will make purchases using their company credit accounts, debit consideration or from a stored accounts value that's reload able. The enhanced memory and processing capacity of the smart cards is many times that of traditional magnetic-stripe cards and can allow for several different applications about the same card. Additionally, it may hold recognition information, this means forget about shuffling through credit cards in the finances to get the right one -- the Smart Card will be the only one needed.

Smart cards can even be used with a good card reader connection to an individual computer to authenticate a end user.

Smart cards are much more popular in Europe than in the U. S. In Europe medical insurance and banking industries use smart cards thoroughly. Every German citizen has a good card for health insurance. Despite the fact that smart credit cards have been around in their modern form for at least ten years, they are just starting to take off in the U. S.

DEBIT Credit card:

Debit credit cards are also called check cards. Debit cards look like credit cards or ATM (computerized teller machine) credit cards, but operate like cash or an individual check. Debit credit cards are different from bank cards. While a credit card is ways to "pay later, " a debit greeting card is ways to "pay now. " By using a debit card, your cash is quickly deducted from your checking or savings account.

Debit cards are accepted at many locations, including food markets, retail stores, gas stations, and restaurants. You should use your card everywhere merchants screen your card's brand or logo. They offer an alternative to transporting a checkbook or cash.

E-CHEQUE:

An e-Cheque is the electric version or representation of paper cheque.

The Information and Legal Construction on the E-Cheque is equivalent to that of the newspaper cheque's.

It can now be used instead of paper cheques to do any and all remote transactions.

An E-cheque work the same manner a cheque does indeed, the cheque article writer "writes" the e-Cheque using among the many types of electronic devices and "gives" the e-Cheque to the payee electronically. The payee "deposits" the Electronic digital Cheque receives credit, and the payee's loan company "clears" the e-Cheque to the paying loan provider. The paying loan provider validates the e-Cheque and then "charges" the check writer's account for the check

ADVANTAGES OF TECHNOLOGY

From both customer and banking perspectives it shows that the web is a convenience tool available whenever and wherever customers require it. It is also found that the Internet has improved the factors operating quality like responsiveness, communication and access. It is figured the Internet has an important and positive influence on customer perceived bank services and the service quality has been advanced since the Internet has been used in bank sector.

It's generally secure. But make sure that the website you're using has a valid security certificate. This lets you understand that the website is protected from cyber-thieves seeking to steal your individual and financial information.

It provides twenty-four-hour access. When the neighborhood loan company closes, you can still access your consideration and make trades online. It's a very convenient choice for the ones that can't get to the bank during normal time for their work schedule, health or any other reason.

It we can access our bill from virtually everywhere. If we're on the business trip or vacationing abroad, we can still keep a watchful on our money and financial orders - no matter our location.

Conducting business online is generally faster than heading to the lender. Long teller lines can be time-consuming, especially over a Pay Day. But online, there are no lines to cope with. You can access your profile instantly with your leisure.

Many features and services are typically available online. For example, with simply a few clicks you can apply for loans, check the improvement of your investment funds, review interest rates and gather other important information that may be disseminate over a number of different brochures in the neighborhood bank.

Technology has exposed new markets, new products, new services and efficient delivery programs for the banking industry. Online gadgets banking, mobile banking and internet banking are only a few good examples.

Information Technology has also provided banking industry with the wherewithal to deal with the challenges the new current economic climate poses. It has been the cornerstone of recent financial sector reforms aimed at increasing the speed and trustworthiness of financial procedures and of initiatives to fortify the bank sector.

The IT trend has arranged the stage for unprecedented upsurge in financial activity across the globe. The improvement of technology and the introduction of worldwide systems have significantly reduced the cost and time of global money transfer.

It is it which enables banking companies in appointment such high prospects of the customers who are more strenuous and are also more techno-savvy in comparison to their counterparts of the yester years. They demand instant, anytime and anywhere banking facilities.

IT has been providing solutions to banks to manage their accounting and back again office requirements. This has, however, now given way to large level consumption in services targeted at the client of the lenders.

IT also helps the benefits of new delivery channels--in the proper execution of Automated Teller Machines, World wide web Banking, Mobile Bank and the like.

Use of de-mat bill and online trading enables a person to trade shares any time. The show trading companies and AMC's can provide advanced and faster service with help of technology.

There are many useful features and services available online besides for the usual transactions. For instance, you can apply for credit cards, manage investment funds, and pay bills through your online account portal. You can even perform more mundane responsibilities such as placing your order new checks, asking for additional first deposit slips, or confirming a lost or taken debit credit card.

Certainly the above mentioned advantages if technology have improved the grade of service in a bank and financial sector.

For Banking companies:

Price- Over time a bank or investment company can save on money by not spending money on tellers or for taking care of branches. Plus, it's cheaper to make orders online by using technology.

Customer Bottom part- The technology allows banks to reach a whole new market- and a well off one too, because there are no geographic restrictions by using Internet. The Internet also offers a level taking part in field for small finance institutions who want to increase their customer bottom.

Efficiency- Banks may become more efficient than they already are by providing Access to the internet for their customers. By using technology the banking institutions almost become paper less system.

Customer Service and Satisfaction- Bank on the web not only permit the customer to truly have a full range of services open to them but it addittionally allows them some services not offered by any of the branches. The person doesn't have to visit a branch where that service may or may not be offer. An individual can print out of information, varieties, and applications via the Internet and be able to search for information efficiently rather than waiting in line and asking a teller. With an increase of better and faster options a loan provider will surly be able to create better customer relations and satisfaction.

Image- A loan provider seems more advanced to a customer if they offer Internet access, e-banking, telebanking. A person might not exactly want to use these but having the service available gives a person the feeling that their bank or investment company is on the cutting image.

For Customers:

Bill Pay: Bill Pay is a service offered through Internet banking, e-banking which allows the customer to create bill payments to just about anybody. Customer can choose the person or company whom he wishes to make a payment and Bill Pay will withdraw the money from his accounts and send the payee a newspaper check or an electronic payment

Other Important Facilities: E- banking gives customer the control over nearly every part of handling his bank accounts. Aside from the Customers can, Trade Securities, Check CURRENCY MARKETS Information, Check Money Rates, Check Balances, See which inspections are cleared, Transfer Money, View Deal History and steer clear of going to an actual bank. The very best benefit is the fact that Internet bank is free. At many lenders the customer does not have to keep a required minimum balance. The second big benefit is better interest rates for the customer.

Benefits of technology platform

Banks adopting technologies see a number of other benefits, including:

 

Increased employee satisfaction Technology empowers bank or investment company employees to better provide customers. With quick and complete access to customer data, they spend less time looking for information and more time cross-selling and keeping customers.

 

Lower total cost of ownership Banking solutions built on the technology platform can be deployed faster than those predicated on fighting infrastructures-and its solutions can cost a lower amount to manage as time passes. Training and other costs can be minimized if employees already know how to use required technology.

 

Greater return on investment The use of technology helps banking companies get more value out of legacy systems.

 

Reduced businesses risk

CONCERNS WITH E-BANKING

As with any new technology new problems are experienced.

Customer support - banking companies must create a whole new customer relationships section to help customers. Banking institutions have to be sure that the clients obtain assistance quickly if they need help. Any major problems or disastrous can eliminate the banks reputation quickly an easily. By exhibiting the customer that the Internet is reliable it is possible to get the client to trust online bank more and more.

Laws - While Internet bank doesn't have national or talk about boundaries, regulations will. Companies will have to make sure they have software set up software market, making a monopoly.

Security: customer always issues about their coverage and security or exactness. There's always a question if something took place.

Other challenges: insufficient knowledge from customers end, take a seat changes by the bankers, etc

INFORMATION TECHNOLOGY: A GLOBAL PERSPECTIVE

The introduction of Internet has initiated an electric revolution in the global bank sector. The energetic and flexible characteristics of this communication route as well as its ubiquitous reach has helped in leveraging a variety of bank activities. New bank intermediaries offering entirely new types of banking services have surfaced consequently of innovative e-business models. The Internet has emerged as one of the major distribution programs of banking products and services, for the finance institutions in US and in the Europe.

Initially, banks advertised their core capacities i. e. , products, services and advice through Internet. Then, they inserted the e-commerce market as providers/marketers of their own products and services. More recently, due to advances in Internet security and the introduction of relevant protocols, bankers have discovered they can play their key role as financial intermediates and facilitators of complete commercial deals via electronic networks especially through the Internet. Some lenders have chosen a path of establishing a direct web presence while some have chosen either being an owner of financial services centric electronic digital marketplace or being participants of the non-financial services centric electronic marketplace.

The style towards electronic digital delivery of banking products and services is happening partly therefore of consumer demand and partly as a result of increasing competitive environment in the global banking industry. The Internet has modified the customer's behaviors who are demanding more custom-made products/services at a lower price. Furthermore, new competition from real online bankers has position the success of even set up brick and mortar banks under great pressure. However, very few banks have been successful in growing effective approaches for fully exploiting the opportunities provided by the Internet. For traditional banking institutions to establish what niche markets to serve and decide what products/services to provide there's a need for a specific and concise Internet business strategy.

Banking transactions had already started occurring through the Internet way back in 1995. The Benefits of technology guaranteed an ideal platform for commercial exchange, helping banks to achieve new degrees of efficiency in financial trades by conditioning customer marriage, promoting price breakthrough and spend aggregation and increasing the reach. Electric finance offered substantial opportunities for bankers to extend their clientele and rationalize their business as the customers received value by means of savings with time and money.

Global E-banking industry is covered by the next four sections:

E-banking Circumstance: It talks about the actual express, prospects, and issues related to E-banking in Asia with a give attention to India, US and Europe. It also deals with the impact of E-banking on the bank industry composition.

E-banking Strategies: It reveals the key strategies that bankers must put into action to derive maximum value through the online channel. It also brings guidance for those lenders, which are planning to build internet sites.

E-banking Trades: It discusses how Internet has radically changed banking transactions. The section focuses on cross border orders, B2B transactions, digital bill payment and presentment and mobile repayments. Regardless of all the hype, E-banking is a non-starter in a number of countries.

E-banking Tendencies: It discusses the innovation of new solutions in banks.

E-BANKING Situation:

The bank industry is expected to be considered a leading player in E-business. While the finance institutions in developed countries are working mostly via Internet as non-branch lenders, banking companies in the expanding countries make an online search as an information delivery tool to improve relationship with customers.

In early 2001, about 60 percent of E-business in UK was focused in the financial services sector, and with the expected 10-collapse increase of the British E-business market by 2005, the talk about of the financial services will further increase. Around one fifth of Carry out and Swedish lender customers are bank online, while in US, relating to UNCTAD, online banking keeps growing at an annual rate of 60 percent and the amount of online accounts has roughly reached 15 million by 2006.

In Asia, the major factor restricting development of E-banking is security, regardless of several countries being well linked via Internet. Usage of high-quality E-banking products is an concern as well. Most the banking institutions in Asia are just offering basic services weighed against those of developed countries. Still, E-banking seems to have another in Asia. It is considered that E-banking will be successful if the essential features, especially charge payment, are treated well. Bill repayment was typically the most popular feature, cited by 40 percent of respondents of the study. However, providing this service would be difficult for bankers in Asia because it requires a higher level of security and includes arranging orders with a number of players.

In 2001, over 50 percent of the lenders in america were offering E-banking services. However, large banks appeared to have a definite gain over small bankers in the number of services they offered. Some banking institutions in US were concentrating on their Internet strategies towards business customers. Aside from affecting the way customers received banking services; E-banking was likely to influence the bank industry structure. The economics of E-banking was expected to favor large bankers because of economies of range and opportunity, and the capability to advertise heavily. Moreover, E-banking offered access and extension opportunities that small bankers traditionally lacked.

In Europe, the Internet is accelerating the reconfiguration of the bank industry into three separate businesses: production, circulation and advice. This reconfiguration is being further driven by the Technology, due to the blended impact of:

The introduction of new plus more concentrated business models

New technological capacities that reduces the bank relationship and transaction costs.

High degree of uncertainty over the impact that new entrants will have on current business models.

Though E-banking in European countries is still in the evolutionary stage, it's very clear that it's having a significant effect on traditional banking activities. Unlike in the US, though large bankers in the European countries have a competitive advantage because of their ability to invest heavily in new systems, they remain not prepared to embrace E-banking. Hence, medium-sized finance institutions and start-ups have an important role to learn on the E-banking entry if they can take concrete procedures quickly and effectively.

ROLE OF RBI IN COMPUTERIZATION OF Banking companies IN INDIA

Computerization became popular in the european countries right from the Sixties. Main Casings were extensively used both by the Public Corporations and Major Private Organizations. In the Seventies Mini Computer became popular and Personal Computers in early Eighties, accompanied by introduction of several software products in higher level dialect and simultaneous improvement in marketing technology. This empowered the use of personal computers extensively in offices & commercial organisations for digesting different types of data.

However in India structured Trade Unions were against launch of computers in public areas Offices. Computerization was restricted to major scientific research organizations and Technical Institutes and security organizations. Indian Railways first accepted computerization for functional efficiency.

The Electronics Firm of India Ltd. was create in 1967 with the objective of research & development in the fields of Electronic Communication, Control, instrumentation, automation and IT. CMC Ltd (Computer Maintenance Corporation of India Ltd. ) was founded in 1976 to provide for maintenance operations of Main Body Computers installed in a number of organizations in India, to provide the distance, when IBM remaining India, because of the directive of the then Central Government.

In the Private Sector the first major business was TCS (Tata Consultancy Services) which started out working from 1968. In the year 1980 a few batch-mates of IIT Delhi pioneered the effort to start a major education centre in India to impart trained in Information Technology and their efforts resulted in the establishing of NIIT in 1981. Aptech Computer Education was established in 1986 following the test of NIIT.

Before large range computerization, computer education became popular in India and desired by excellent students, when several Engineering Colleges and Techie Institutes adding Post Graduate Degree classes in Computer Anatomist. The booming hardware and software industry in the Western enticed Indian students and most of them migrated for better opportunities to the U. S. A. and settled there. We have today the paradox of India being one of the major capabilities possessing diverse skills in fields of software development, but at exactly the same time, we are still a decade back again to the using computerized service thoroughly in the united states and taking the center to the realms of the common man.

Rapid development of business and industry brought manual operations of data, a saturation point. This acted as a overload on the growing banking operations. Government had banks generally speaking found the "house-keeping" unmanageable. Several heads of accounts in particular inter-bank clearing and inter-branch reconciliation of accounts proceeded to go totally uncontrollable.

Low productivity forced cost of income high and employees recognized that unless they arranged for computerization further improvement in their income structure had not been possible.

In the year 1993, the Employees' Unions of Banking institutions signed an arrangement with Loan company Managements under the auspices of Indian Lenders' Association (IBA). This arrangement was a major period of time through in the intro of computerized applications and development of communication networks in Bankers.

The first initiatives in the region of loan provider computerization, however, stemmed out of the landmark record of the two committees headed by the previous Governor of the Reserve Bank or investment company of India and presently Governor of Andhra Pradesh, His Excellency, Dr. C. Rangarajan. Both reports had highly advised computerization of banking businesses at various levels and suggested appropriate architecture.

In the 'seventies, there is a four-fold increase in the amount of branches, five-fold increase in innovations and a six-fold increase in debris'. Mechanization was viewed as the best solution to the "problems natural in the manual system of functions, their adverse effect on customer services and the grave problems to banking institutions in the framework of increasing occurrence of frauds.

The to begin these Committees, viz. the Committee on the Mechanization of the Bank Industry (1984) was create for the first time to suggest a model for mechanization of lender branches, regional / controlling offices and Head Office necessitated by the explosive growth in the geographical spread of banking pursuing nationalization of finance institutions in 1969.

In the first phase of computerization spanning the five years finishing 1989, bankers in India got installed 4776 ALPMs at the branch level, 233 mini computers at the Regional/Controlling office levels and trained over 2000 developers/systems personnel and over 12000 Data Entry Terminal Operators. The Reserve Lender too got embarked after an ambitious program to bring about state-of-the-art technology in the clearing process and had released MICR clearing at 4 centres and computerized clearing arrangement at 9 centres.

Against this backdrop, the Committee on Computerisation in Banking institutions was create once again under Dr. Rangarajan's Chairmanship to draft a perspective plan for computerisation in lenders. In its statement posted in 1989, the Committee acknowledged the gains of the initial efforts and desired to move away from the stand-alone dedicated systems to an on-line transaction processing environment in branch banking. It suggested that the thrust of standard bank computerisation for the following 5 years ought to be to completely computerise the procedures at both front and rear offices of large branches then numbering around 2500.

RECOMMENDATIONS OF COMMITTEE ON TECHNOLOGY UPGRADATION

The Reserve Bank stayed involved in shaping the technology eye-sight of the banking system. Following the recommendations of the Committee on Financial Sector Reforms, (which is popularly known as the second Narasimham committee), a Committee on Technology Upgradation was set up by the RBI for the Bank Sector in 1994. This committee has representation from finance institutions, Government, technical companies and the RBI. Among other activities, this committee looked into issues relating to

Encryption of People Switching Cell phone Network (PSTN) lines

Admission of electronic digital documents as evidence

Record keeping

Modalities for a dish based mostly WAN for finance institutions and finance institutions with the required security systems by finance institutions and other financial institutions, to ultimately develop a sound and an efficient payments system

Methods by which technological upgradation in bankers and finance institutions could be effected and in the context review the feasibility of establishment of requirements, designing obligations system backbone and specifications associated with security levels, communications and smart credit cards.

The Committee realised the immediate need for training, research and development activities in the Banking Technology area. Banks and Financial Institutions started establishing Technology centered training centres and schools. However, a need was noticed for an apex level Institute that could be a Think-tank and Brain Trust for Banking Technology.

The committee recommended a variety of payment applications which is often executed with appropriate technology upgradation and development of a trusted communication network. The committee also suggested setting up of your Information Technology Institute for the purpose of Research and Development as well as Consultancy in the application of technology to the Banking and Financial sector of the country. As recommended by the Committee, IDRBT was founded by RBI in 1996 as an autonomous centre for Development and Research in Bank Technology at Hyderabad.

LOOKING FORWARD

An old Chinese language saying moves: If you don't know where you are going - you won't ever make it happen. Globally, the financial sector is metamorphosing under the impact of competitive, regulatory and scientific forces. The banking sector happens to be in a change period with re-alignment, mergers and entrance of new players from different industry is becoming common. Many countries including India are de-regulating their bank sector and government policies no more form an entrance barrier to banks competitors. ICICI Standard bank, IDBI Loan provider, HDFC Lender and lately Kotak Mahindra Bank are prime types of these.

Technology has leveled the performing field: the bargaining power of consumers is increasing, switching costs have become lower and consumer loyalties are harder to retain. Main aim of the bank sector including every Bank is principally to make profit, which is ploughed back again to increase business and reach, and pay dividends or share revenue to the stakeholders. This is perfectly accurate, yet generic goal. More over the product (schemes) differentiation is very difficult for bankers as the majority of the products sold are constrained by legal or industry laws. Now, if you already are considering Technology as a tool in Banking you may probably set some of these goals:

Selling financial loans and services

Cutting functional costs

Branding & Market recognition

Keeping profitable customers

Every day increasing numbers of people are turning to the Technology because of their personal banking. It is a safe, convenient way to shop for financial services, maintain loan company accounts and do business 24 hours a day. All of us has always relished a special romance with their neighborhood bank. Why are so many people out of the blue choosing their computers as the new way to view and deal with their money? Quite simple - since it is a very important option to acquire. Bank customers can save time by banking online. You don't have to stand in a single more line to perform the standard transactions when they could be done quickly from the desktop PC anytime, day or nights. But despite having more complicated transactions or investment decisions, people like having immediate control over their budget themselves. They think it is convenient to access all of their financial information in a single place. Simplicity is one of the most important factors. Navigation through online bank should be simple and intuitive. Finance institutions need to appeal to customers who might not be technologically advanced, and really should not require an anatomist degree to get started or use the service. Customers also choose banking institutions whose online services are reliable. Most Finance institutions now offers a thorough range of financial loans and services, including a free of charge checking account and internet charge paying services. Furthermore, an array of checking accounts is available in which you might also request a free of charge check cards. Hence most Banking institutions of pursuing Electronic Banking or Internet Banking FREE have following services:

Get your balance details, Obtain your last 3 transaction details, Question a cheque e book, Stop a cheque payment, Enquire cheque position, Request a merchant account statement, Get Set Deposit details, Charge repayment details for electricity, mobile phone and mobile phone services, Convenience of preparing an operative accounts, Designate a particular account associated with your customer id as the operative consideration. CUSTOMER SUPPORT available 24 hours per day, 7 days a week E-banking Benefits

Benefits for the bank should always echo benefits for the customer of banking services.

Review of literature

1. Offline and online bank - where to draw the series when building rely upon e-banking?

Kenneth B. Yap, David H. Wong, Claire Loh, Randall Bak. The International Journal of Loan company Marketing. Bradford: 2010. Vol. 28, Iss. 1; pg. 27

The purpose of this paper is to examine the role of situation normality cues (online capabilities of the e-banking site) and structural guarantee cues (size and reputation of the lender, and quality of traditional service at the branch) in a consumer's analysis of the standing of e-banking and following adoption behaviour. Data were gathered from a study and a usable test of 202 was obtained. Hierarchical moderated regression research was used to check the model. Traditional service quality develops customer rely upon the e-banking service. The scale and trustworthiness of the lender were found to provide structural confidence to the client however, not in the absence of traditional service quality. Web site features that provide customers confidence are significant situation normality cues. Lender managers have to appreciate that good service at the branch is a required condition for the promotion of e-banking. They can not rely on bank or investment company size and reputation to "sell" e-banking. This is the first analysis that examines how traditional service quality and a bank's size and reputation affects trust in e-banking.

2. E-Banking makes financial transactions easer

The Financial Daily. Karachi: Apr 27, 2010. Vol. 3, Iss. 262

Muhammad Kamran Shahzad, Deputy Governor Talk about Standard bank (SBP), in his address said that the bank sector is now more innovative by using the technology and banking companies are providing a variety of products and services to the customer and by e-Banking these products and services can be found across the country.

3. Innovations in Indian Bank Sector

The caselet gives an overview of the innovative services proposed by the banking companies in India to remain ahead of the competition. Most of these banks took the help of proprietary operations and technology to release innovative products to woo customers and distinguish themselves from the competition. Banks also started out utilizing their ATMs as a way of differentiating their services, making them more accessible and appealing to consumers. They added invoice payment and credit card repayment options at the ATMs. In addition, the lenders used service workers as a means of differentiation.

4. Innovations in the Bank Industry in India

In the 1990s, the bank sector in India saw greater emphasis being placed on technology and advancement. Banks began to make use of technology to provide better quality of services at better speed.

Internet bank and mobile bank managed to get convenient for customers to do their banking from geographically diverse places. Banking companies also sharpened their concentrate on rural markets and introduced a variety of services geared to the special needs of the rural customers.

Banking activities also transcended their traditional opportunity and new concepts like personal bank, retailing and banc confidence were launched.

The sector was also moving rapidly towards universal bank and electronic deals, which were likely to change the way bank would be identified in the future.

5. Sense Safe Online -- To keep consumers' trust and keep them banking online, try tokens and smart cards, experts say.

Michael Performer, InformationWeek. Loan company Systems & Technology. New York: Mar 2007. Vol. 44, Iss. 3; pg. 19

Banks and other finance institutions should adopt more powerful authentication steps, such as security tokens and smart credit cards, if indeed they want to increase client satisfaction with Internet banking, according to a -panel of industry analysts. The panel - which was comprised of security advisers from Yankee Group, TowerGroup and Gartner - was made available recently over a media call organized by RSA, the Bedford, Mass. -based security division of EMC.

DISADVANTAGES OF TECHNOLOGY

Yes, online banking is normally secure, but it really isn't always secure. Identification theft is running rampant, and banking companies are in no way immune. As soon as your details is compromised, it can take weeks or even years to improve the damage, not forgetting possibly costing you thousands of dollars, as well. This generally does not happen in case of traditional method of banking.

Some online banking institutions are more steady than others. Not absolutely all online setups are an extension of the brick-and-mortar standard bank. Some operate completely in cyberspace, without the good thing about a branch that it is possible to visit if need be. With no way to bodily browse the operation, you must be sure to thoroughly do your homework about the bank's record before giving them all of your money.

Before utilizing a banking site that you are not familiar with, check to be sure that their deposits are FDIC-insured. If not, you could possibly lose all of your deposits if the bank will go under, or its major shareholders decide to take an extended getaway in Switzerland.

Customer service can be below the quality that you're used to. Some people you need to comfort in being able to talk to another individual face-to-face if they experience a difficulty. Although most major finance institutions employ a dedicated customer service department designed for online users, going through the dreaded mobile phone menu can still be quite irritating to many. Again, some are noticeably better (or worse) than others.

Not all online orders are immediate. Online banking is subject to the same business-day parameters as traditional banking. Therefore, printing away and keeping receipts is still very important, even when banking online.

If your bank manages only online or simply doesn't have a branch office in your local area, you won't have the ability to reach a consultant personally for discussion of bank account issues. Normally this is not a problem, but sometimes customer support by phone or email can be spotty and could end up being more of a hassle if you have a significant issue that's not easily fixed. Some banking companies are better than others in this section, so you should do some research if this can be an important account for you.

Using online banking effectively requires some basic computer literacy and knowledge of navigating the Internet. While this isn't a problem for individuals like me, those who are suffering from technophobia or are simply just inexperienced using this type of genre may not be comfortable with this concept. There are also a significant number of folks who are dubious of anything having to do with the Internet because it is outside of their safe place. Others are simply too stubborn to acquire the relevant knowledge and skills.

CONCLUSION

Technology has been one of the most crucial factors for the introduction of mankind. Information and communication technology is the major advancement in neuro-scientific technology which is used for access, process, storage space and dissemination of information electronically. Bank industry is fast growing with the use of technology in the from of ATMs, on-line bank, Telephone banking, Mobile banking etc. , credit card is one of the bank products that cater to the needs of retail segment has seen its number grow in geometric progression lately. This growth has been strongly supported by the introduction of in neuro-scientific technology, without which this may not have been possible of course it'll change our lifestyle in coming years.

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