Explain the significance of new technology in the structure of Indian Banking

Explain the significance of new technology in the structure of Indian Banking

ROLE OF INFORMATION TECHNOLOGY IN INDIAN BANKING

*INTRODUCTION

~ The arrival of new banks post reform period brought about drastic changes in the style of banking operations in India.

~ Growing competition and increasing customer expectation induced the use of technology in banking.

~ Latest technologies are adapted by banks to remain in the highly competitive market.

*SIGNIFICANCE:

~ Information technology improved the structure of Indian Banking.

~ Computerization enables employees to have ready information and to provide better quality services to its customers.

~ Technology also helps to reduce operation costs, offer customised products and manage risks more efficiently.

~ Indian banks now use electronic and telecommunication networks to provide value added products and services.

~ The following are the important technologies used by the banks for efficient functioning:

1)Virtual banking:

~ Services are rendered through extensive use of IT.

~ Customers need not have direct physical recourse to the bank.

2)ATMs:

~ Automated Teller Machines (ATMs) provide round the clock banking services to customers at their convenient places without visiting the bank premises.

~ This enables banks to transact more business in a cost-effective manner.

~ ATMs provide services such as withdrawal of cash, deposit of cash / cheque / draft, updated balance of customer, transferring funds from one account to another, mini a/c statement, etc.

3)Debit Card:

~ It is a pre-paid card with a fixed stored value that allows anytime anywhere' access to the customers a /c

~ It can be used at all outlets that accept such payments.

~ The amount of the transaction (that cannot exceed the cash balance in the bank ) is directly debited to the customer's bank account.

4)Credit card:

~ It is a convenient medium of exchange.

~ It facilitates the customer to enjoy purchase of goods and services without cash payment.

~ The amount is later paid to the bank at regular intervals (generally, monthly)

5)Point of sale:

~ Point of sale terminal is a machine that facilitates online transactions.

~ It provides for electronic transfer of funds.

~ It can support both, debit and credit cards.

6) Door Step Banking:

~ Banking products and services are made available at residence or work place of customers.

7) Internet banking:

~ It is also called online banking and is made possible due to e-commerce.

~ It makes available various services to customers like opening accounts, paying bills, knowing account balance, forwarding loan application, transferring funds, etc

Mobile banking:

~ It is an extension of internet banking.

~ A customer can have access to his account on mobile phone by way of SMS.

9) Telebanking:

~ Banking services are rendered to customers through telephone.

~ It is a 24th hr banking facility based on voice-processing facility.

10) Phonebanking:

~ A customer can talk to a phonebanking officer for transacting non-cash relating banking business.

11) Electronic Fund transfer:

~ It is an easy and speedy mechanism for transferring funds.

~ Funds can be instantly transferred from one bank a /c to another of same / different customer, from one branch to another of same / different bank all over the world.

~ The beneficiary receives money on the same / next day.

12) Electronic Clearing Service:

~ Both debit and credit clearing services can be affected without paperwork.

~ ECC includes salary, pension, interest, dividend, refunds, etc.

~ ECC includes payment of utility bills, insurance premium, repayment of loans, etc.

13) Real Time Gross Settlement:

~ It enhances efficiency of cheque clearing system.

~ It is an electronic settlement of interbank and customer based transactions.

~ It is a single all-India system and the settlement is effected in Mumbai.

~ The settlement is done in near real time (maximum 2-4 hours).

~ Funds settled can be used immediately.

*CONCLUSION:

~ Thus, the banking sector is adapting to rapid innovations to achieve efficiency in providing better services to its customers.

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