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.