Banking is the backbone of the economy for any country,including India. The banking industry of India is prolife rating along with increased customers base due to the improved and innovative IT support which have made the operations faster. Do you remember the banking process before information technology was induced in it? Well, that is history now. Probably the process which takes just a click to get complete now used to take months after months to reach the final step.
Thus, there is no doubt that IT security has brought the revolution in thebanking sector of India. In today’s era, we can’t think our banking system without IT. Taken from enhancing the efficiency of the banking system to lowering the response time, the information technology is playing the role of the new catalyst for the improved economy for a decade.
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The Transformation of Indian Banking System with the IT Support:
If we talk about banking today, it reminds us of a sophisticated communication process with secure and reliable advantages. But this is not how it looked 10 years back or so. After the Information technology felt upon the finance sector, the banking has gone through a complete transformation. And the best part of the change is that it has been done at a little cost. The entry of the IT support in the banking sector can be traced in the 1990s. One of the primary purpose behind reforming the banking sector if India with the help of information technology was to encourage self-sufficiency, competency, flexibility in the banking system and also to enhance the standard of Indian banking in the international market. With the latest technology, the banking sector has now emerged the opportunities and has also increased the revenues in the last few years with various banking services under one roof. Thus, it would not be wrong if the new banking sector is redefined as the financial supermarket to its customers.
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Some of the IT devices used in the Banking Sector:
The banking sector is going through a rapid transformation to meet the competition and challenges of the time. Needless to say, the IT security is the new differentiator in the performance of the banks. With the latest devices, technology has provided a new framework for the banking sector to cut the cost of global fund transfer.
Here are some of the information technology devices used in the banking sector:
- Electronic Payment and Settlement System: This is the most common media for clearing interbank cheques. Initially, the clearing process used to be done through cash and this device is the replacement of the money.
- MICR Technology: This device has helped the banks to overcome the limitations of clearing cheques within the working hours. The tool helps in the quick credit of money in the customers’ accounts.
- CTS: This device is to eliminate the need for truncation of the physical instrument to the drawee branch by the drawer for the payments of cheques. The device has also reduced the cost of transit and the delays in the processing as well.
- EFT: Through the electronic fund transfer mechanism works for nation wide retail fund transfer between networked branches of banks in a secured way.
- ATM: This is probably the most revolutionary aspect of the new banking system after the information technology came upon. The plastic card and the magnetic strip together carry all the information of the customer and it has ensured the concept of Any Time Money.
- Phone Banking: The customers can access their accounts for non-cash related requirements through an automated voice recorder.
- Internet Banking: The internet banking helped the customers to do the transactions through the bank website with the help of an active internet connection. The customers can access to all the bank products from anywhere.
The positive impacts of IT Support on the Banking Sector:
- The biggest revolution of digitalization came after the information technology began in the banking system.
- The banking process has become more reliable and faster. The information technology even has made the retrieval and maintenance of documents much more comfortable and quicker than it was before.
- The information technology has improved the core banking system, and all the branches of a bank now are interconnected and can access to some common centralized data.
- The MICR cheque processing system has reduced the down time of cheque clearance, and now the customers can expect a faster clearance of their cheques and credit of funds to their accounts.
- The Unstructured Supplementary Service Data was launched so that the customers can access their account with the help of internet connectivity and without going to the bank.
- The internet banking service is offered by every bank to its customers. The customers can have complete access of their account can also make the transactions online with the help of internet connection without going to the physical bank.
- There is more transparency in every transaction done.
- There is better risk management of banking frauds through the use of passwords and two-way authentication during the online transactions.
- The information technology has also increased the competition between various banks, and which has led to better customer service.
- With the introduction of mobile banking, customers can have access totheir account at any time from anywhere.
- The facilities like automatic chequebook printing, cash deposit machines, cheque deposit machines etc. all the banks are now able to provide better and faster services to their customers.
The negative impacts of IT Support on the Banking Sector:
- The loss of jobs is the major drawback of the IT support-induced banking system. The automation has replacedthe number of openings in every bank
- The threat of cyber-attack is a significant loop hole in the information technology-driven banking system. Millions of data can be at risk and can be lost in just one blink if the security is managed correctly.
Information technology has two sides which impact the banking sector differently. The risks are high in both the ways but with IT security, the scopes of minimizing the threats are more than without it. In the current scenario, information technology has become the backbone of the banking sector.