INFORMATION TECHNOLOGY IN BANKING SECTOR

In today’s banking word there is increasing demand and importance for Information Technology (IT) due to many features, which ultimately helps banks to reduce its heavy costs for providing maximum number of transactions and services to customer for maximum time. To survive in healthy banking competition, no one can bring their bank upward without having IT in their system. IT is necessity of any bank to serve their customers & to reduce unwanted cost. Many programmers are available to provide customer satisfaction. It not only provides quick and fast service but also reduce transaction cost and large paper work.

In the sixties and seventies the banking industry was fiercely competitive as ever was losing the battle of providing good customer services due to impossibly heavy workloads. All major banks already had branches in most major locations and they simply had to recruit more and more staff to cope with the increasing number of customers. The accepted wisdom was that cost was the main basis for competition and so the banks were making strenuous efforts to reduce operational costs, kicking off the process by computerizing customer accounts. ATMs made it easy to deposit and withdraw money, check balances, request statements etc. and coupled with the added advantage of round the clock availability, they not only reduced staff workloads but save customers a new experience of hassle-free banking.

The banking sector has come a long way since then. Now almost all banks are using services from IT to reduce it’s cost It is now one of the largest users of information technology. Some of the areas where banks typically use IT to reduce cost of operations & heavy workload are mentioned below:

1) Back office computerization: Nowadays, almost all Indian and international banks run on fully integrated and online systems where all back office operations like accounts posting, reconciliation, clearing house operations, etc., are completely automated.

2) Front office computerization: All banks provide facilities like instant account statement, making fixed deposits, electronic funds transfer, direct debit facility, etc. to their customers.

3) Automatic Teller Machines (ATMs): These computerised machines enable customers to do their regular bank transactions (like depositing and withdrawing money, ascertaining current account balance, etc.) without visiting a bank branch. ATMs considerably reduce costs for banks (employee cost, space cost, etc.) and provide better level of service to customers (by enabling 24 hour banking access at numerous locations).

4) Net Banking: Most banks like HSBC, Standard Chartered, HDFC, ICICI etc., have extremely user friendly websites where the typical banking transaction (like cash delivery, generating account statements, requests for cheque books and drafts etc.) can be carried out online without visiting the bank. This innovative use of IT has meant that effectively, customers have no need to personally visit the bank for routine banking transactions, which reduce time consumption, inconvenience for customers as well as reduce employee welfare cost in bank.