The Technology Revolution
• The impact of technology on the real &
financial world around the central banks
– Choice of Channels , Confidence and
Convenience to the end-user
– Facilitating growth of products and services
Technology and Banks
So why are banks interested?
– The widespread adoption of technology .
– The impact of technology on every single
core central banking function
– Supervision and Regulation
– Currency Management
– Monetary & Financial Stability
– The potential technology offers to central banks
for more effective processes and functions.
Technology and Banking
The Quintessence Nature of Banking harmonizes
closely with Technology -
Mass transaction & items processing
Pervasive branch network
Complex credit calculations
Innovative Risk Management
Regulation and Supervision –
• Technology has …
– opened up new markets, products, services,
delivery channels .
– opened up a market for “risks” – derivatives.
– thrown up the challenge of financing tech firms &
IT in Banking
• Technology that holds the key to the future
success of Indian Banking. The
significance of technology is greatly felt in
the financial sector in view of the
competitive advantage for banks resulting
in efficient customer service.
IT in Banking
Why there is need for IT in Banking?
To handle huge volume of transaction with ease.
To introduce innovative new services
To bring cost effectiveness in handling payments
To complete operation with great speed
To provide better customer services by obtaining multi
services from one counter itself.
• To make ease of inter-branch reconciliation.
• To ensure data accuracy and reduce frauds.
• Stand Alone Computer System
Best suited for the decision-making process, which involves processing and analysis of
• Multi-user System
All information is kept and processed at the main central machine and various terminals
are attached to the main computer. Most of the banking system are developed using the
centralized computing concept.
• Branch-level Computerization
The concept of LAN is becoming popular for branch computerization in banks.
Customer interface is at the maximum at the branch level . The emphasis on online
transaction processing at the branch level.
• Total Branch Automation
All the customers and business transactions are done with the help of computers.
• an alternative method of effecting bulk payment
Products where you can use it for
•Facilitates automatic money
Single USER source
transfer from user’s bank
account to a third party.
Systematic Investment Plans in mutual Funds
Premium payment of insurance policies
Payment of home loan A/c Holders
Income Tax Refund
•After the ECS is authorized
Utility bill payment
by the user by RBI(15
Managed,the banks pays centres) and other banks
directly to the third party on
RBI(21 by SBI and 29 by others)
Advantages: (1) Timely Payment
(2) Be sure of refund
on behalf of
RTGS-Real Time Gross Settlement
No bundling up of transactions, RTGS
Rejection (PI) netting
3. No deferral of final settlement
Banking Easy CBS
Sender 1. full value of individual transaction
Participant interface (PI) - RTGS Client Notification
for the participating
2. Real time immediate value transfer
IFTP - Inter-bank Funds Transfer Processor
IAS - Integrated Accounting System
CFMS - Centralised Funds ManagementReturn
INFINET - Indian FInance NETwork
E-payment Services: ECheque
Payment Transaction Sequence in E- Cheque System:
• E-cheques are another form of electronic
•Advantages: (1) eliminates the need for customer education that
To accommodate multiple entities
prefer (2) Electronic on credit or through some
to pay cheques are much faster.
(3) Guarantee that the cheque would be honored.
mechanism other than cash.
--No offline entering of accounts to get account head statements.
--Consumers able to keep track of all their expenses.
H/W Block Diagram:
• Electronic telecommunications device that
Components involved in an ATM Working
enables the clients of a financial institution
(1) Interactive kiosk
TECHNOLOGIES USED WITH ATM:
(2) Talking ATM
(1) Video perform financial transactions without
(3) Scrip Cash Dispenser
the need for a cashier,(4) Teller Assist Unit
human clerk or
(3) Cheque/ Cash Acceptance
(4) Bar Code Scanning
On Demand Printing of items
Dispensing additional media
Coordinating mobile phones
Customer Specific Advertising
Integrated non-banking equipments
(1) Physical Security
(2) Transactional secrecy and integrity
(3) Customer Identity integrity
(4) Device operation integrity
(5) Customer Security
• automated banking machine (ABM),
cash machine, cashpoint,
POS (Point Of Sale)
POS is a computer terminal for tansaction.
Contains costumer information in a bank
During transaction customer account
debited and retailer credited.
Facilitates customer to do non-cash related
banking on telephone.
Automatic voice recorder used for simpler
queries and transaction.
Manned phone terminal for complicated
Easy for customer to operate from their
EDI (ELECTRONIC DATA
EDI is the electronics exchange of
Universally accepted format between
Transmission of financial information and
payment in electronic format.
EFT (Electronic Fund
Transfer of fund from own account to
Complete details of customer is needed.
RBI is the service provider of EFT.
IMPLICATION OF IT IN
ANYWHERE , ANYPLACE AND ANYTIME BANKING
TIMELESS AD PLACELESS BANKING
DISMANTLING OF PHYSICAL STRUCTURE
GOODBYE TO TRADITIONAL INSTRUMENTS AND INVITATION TO
DISAPPEARANCE OF CONVENTIONAL RISK AND ARRIVAL OF NEW
LEADING TO CURRENCY-LESS MONETARY SYSTEM
Choice of right channel
IT investment on ROI
Penetration of IT in rural areas
With the help Of
FireWall & IPS
Information Technology Act 2000
Relief. Thanks to
Recognition of Offenses and
for Cyber crime
BEYOND CORE BANKING
1.Increased adoption of e-payments and
2.Focus towards systems and processes .
3.Cost and profitability management.
4.Internal effectiveness and efficiency.
5.Vision of a comprehensive infrastructure.
6.Training and techniques.
7.Standards and expectations.
ROLE OF IT AS A
Defining fundamental infrastructure goals
Chief information officers (CIOs)
IT fits into one of three broad categories:1. UTILITY
• Future for banking sector is going to make
rapid straights in near future.