Computerized banking system is a proven, secure, modular, on-line, real-time, flexible, scalable, multi-currency. It is user friendly, easy to manage, and easy to operate information system, based on fully integrated and co-operative components.

1. L/O/G/O
Computerized Banking
SystemFHA. Shibly
Lecturer in IT
South Eastern University of Sri Lanka

2. Computerized Banking
System
• Computerized banking system is a proven,
secure, modular, on-line, real-time,
flexible, scalable, multi-currency. It is user
friendly, easy to manage, and easy to
operate information system, based on fully
integrated and co-operative components.

3. Advantages Computerized banking
system
• Convenience:
• Ubiquity:
• Transaction speed: banking initiates speedy
transactions and they are very cost effective and is
generally quicker than the transactions conducted
at the ATM’s or at the bank
• Efficiency: Feel free to access, manage and
control all bank accounts, including Individual
Retirement Accounts, CDs, even securities, from
one secure site.
• Effectiveness: Manage your money, investment,
bank accounts without even going to the bank.

4. • Data Entry: - Processing presumes data entry. A
bank customer operates an ATM facility to make a
withdrawal. The actions taken by the customer
constitute data which is processed after validation
by the computerized personal banking system.
• Data Validation: - It ensures the accuracy and
reliability of input data by comparing the same with
some predefined standards or known data. This
validation is made by the ‘Error Detection’ and
‘Error Correction’ procedures. The control
mechanism, wherein actual input data is
compared with predetermined norm is meant to
detect errors while error correction procedures
make suggestions for entering correct data input.
What inside????????

5. • Processing and Revalidation: - The processing of data occurs
almost instantaneously in case of Online Transaction
Processing (OLTP) provided a valid data has been fed to the
system. This is called check input validity. Revalidation occurs
to ensure that the transaction in terms of delivery of money by
ATM has been duly completed. This is called check output
validity.
• Storage: - Processed actions, as described above, result into
financial transaction data i.e. withdrawal of money by a
particular customer, are stored in transaction database of
computerized personal banking system. This makes it
absolutely clear that only valid transactions are stored in the
database.
• Information: - The stored data is processed making use of the
Query facility to produce desired information.
• Reporting: - Reports can be prepared on the basis of the
required information content according to the decision
usefulness of the report.

6. Limitations of computerized
banking system
• Cost of Installation
• Cost of Training
• Self Decision Making
• Maintenance
• Dangers for Health

7. Need and requirements of
computerized banking system
• Numerous Transactions
• Instant Reporting
• Reduction in paper work
• Flexible reporting
• Banking
• On-line facility
• Scalability
• Accuracy
• Security

8. Basic requirements of the
computerized Banking system
• Banking framework: - It is the application
environment of the computerized Banking system.
A healthy Banking framework in terms of Banking
principles, coding and grouping structure is a pre-
condition for any computerized Banking system.
• Operating procedure: - A well-conceived and
designed operating procedure blended with
suitable operating environment of the enterprise is
necessary to work with the computerized Banking
system.

9. between manual Banking and computerized
Banking
Point of Difference Manual Banking Computerized Banking
Recording Recording of banking
financial transactions is
through books of original
entry.
Banking Data content of
these transactions is stored
in well designed data base.
Classification Banking Transactions
recorded in the books of
original entry are further
classified by posting them
into ledger accounts This
result in transaction data
duplicity.
No such Banking data
duplications is made In order
to produce ledger accounts
the stored transaction data is
processed to appear as
classified so that same is
presented in the form of
bank report.
Summarizing Transactions are summarized
to produce trial balance by
ascertaining the balances of
various accounts.
The generation of ledger
accounts is not necessary
condition for trial balance.
Adjusting entries Adjusting entries are made
to adhere to the principle of
matching
There is nothing like making
adjusting entries for errors
and rectifications.
Banking report & Banking
statements
The preparation of Banking
statements assumes the
availability of trial balance.
The preparation of Banking
statements is independent of
producing the trial balance.

10. Unique IT Services in Islamic
Finance and Key Players
• In the last 25 year, Islamic banking practice has
progressed tremendously. The past two and a half
decades, serious research done, has established that
Islamic banking is a viable and efficient way of
financial intermediation.
• Several Islamic banks have been established during
this period under mixed, social and economic settings.
Recently, many conventional banks, including some
major multinational Western banks, have also started
using Islamic banking techniques.
• All this is encouraging. Banks moving into Islamic
banking require compliance with Sharia’a principles.
This compliance has significant effect on bank
products, processes and technology systems.

11. • As a result a healthy sub-sector of information
technology (IT) services being catered to the
Islamic Finance institutions is emerging.
• The technology implications vary considerably
depending on delivery structure, such as through
standalone Islamic operation or ‘Islamic windows’
and type of Islamic products offered.
• This impacts both banks and core system
providers, with market likely to present diverse
opportunities for different vendor types.

12. Unique Islamic Finance related
attributes of IT services
• The complexity of Islamic banking as
compared to conventional banking is that
products must comply not only with the
secular laws of a country but also to the
interpretations of the holy Qur'an by
Islamic scholars. A central tenet of
Sharia'a is prohibition of Riba (interest).

13. Islamic banking systems today are still falling short of
customer expectations because of the following
reasons:
• Islamic banking technology systems are still far from the
sophistication and quality of conventional systems.
• With existing products, there is limited flexibility to customize /
alter the products according to the Sharia’a board of the bank.
• Systems lack some of the critical requirements like Zakat
calculation and holiday treatment as per Lunar calendar which
are mandatory as per Islamic principles
• Obtaining top level view of customer relationship is extremely
difficult and even more difficult in case of Islamic banks with
conventional sister concerns
• Client References of Islamic banking technology providers are
few and assessing a vendor by reference is extremely difficult
• Islamic Bank implementation team members feel they end up
in providing the vendors with more Islamic knowledge instead
of vendors providing the banks with IF specific expertise

14. A list of features that will set any Islamic banking
system vendor at an advantage is presented below:
• Provide an efficient front end system so that the front end activities are also
integrated to the core activities
• Provide a strong workflow to enable the bank to redefine or copy and
customize the existing products/ processes and aid in new product launches
• Provide flexibility to ensure that the new product is set up within a short
period
• Provide less dependency on the IT team and more flexibility to business
users
• Comply with Industry Standards and Regulations (AAOIFI, IFSB, IFRS, IAS,
etc.)
• Support the basic functionalities of Islamic products like Murabaha,
Musharaka, Mudarabah, Istisna, Ijarah, etc.
• Support different profit allocation methods for accounting purposes
• Capable of integrating with conventional core banking systems
• Provide or customize reports which aid Sharia’a scholars during their
routine audit (e.g. discrepancy report for the sequence of contracts
execution in a Murabaha deal)

15. Islamic Banking Solution
Providers - Geographic Location

16. • Large banking software vendors have successfully
created Islamic banking software based on their
conventional platform to fit the Islamic banking
requirements. However their initial customers still
feel that they ended up being midwifes because of
the poor understanding of vendors requirements.
Small IT companies that anticipated the growing
Islamic banking market and managed to be the
early entrants do face a situation whether to invest
in further R&D or to wait for a potential client
before committing any more funds.

17. Global Vendors with Conventional Core Banking Systems that support Islamic Banking
Products (end of 2008)
# Vendor HQ Core System
1 Oracle FS(formerly i-flex Solutions) India Flexcube for Islamic Banking
2 Infosys Technologies India Finacle Islamic Banking
version
3 Misys International Banking
Systems
England Equation Islamic Banking
version
4 Sungard Ambit System Access Singapore System Access Ambit Islamic
Banking
5 TCS FS | TATA Consultancy
Services Financial Solutions
India BaNCS - TCS BaNCS Islamic
Banking
6 Temenos Systems Switzerland T24
Source: Inntron

18. Conclusion
• Demand for banking products compliant with
Islamic law, or Sharia'a, continues to grow
throughout the world. The Islamic assets growth is
estimated at 15% annually.
• This growth in turn drives the creation of more
Islamic banks and the addition of Sharia'a-
compliant products at conventional banks. Banks,
working with Islamic scholars, have been able to
create a set of profitable banking products that
meet the financial needs of their customer base
while insuring adherence to the principles of
Sharia'a.

19. L/O/G/O
DISCUSSIONS