subject: Explain the significance of new technology in the structure of Indian Banking [print this page] 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.
