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INFORMATION TECHNOLOGY IN BANKING

Information Technology in Banking Sector

ATMs Electronic Banking Branch Banking


Branch 3 Branch 2 Branch 1 Head Office Branch 4

Branch n Branch 6 Information Technology in Banking Sector

Branch 5

E-Banking Developments
ALPMs and Back Office Computerization. Need to improve Customer Service. Reconciliation/ union problems.

Competition and Reforms.


Introduction of Computerization. Clearing Houses, ATMs, Electronic Fund Transfers, Banknet, Swift,

Electronic Mail, Credit Cards, Online Banking, Tele-Banking, etc.

Information Technology in Banking Sector

Why Technology In Banks ?


To transform financial services industry in the net-worked world
Banks to be customer centric

Provide services / products across a range of channels


To be futuristic and have time value in all its dealings with customers

Information Technology in Banking Sector

Many Benefits of Technology


Increased operational efficiency, profitability & productivity.

Superior Customer Service.


Multi-channel, real-time transaction processing. Better Cross-Selling ability.

Improved management / accountability.


Efficient NPA and Risk Management. Minimal transaction costs. Improved financial analyses capabilities.

Information Technology in Banking Sector

Pre-requisites for Technology


Human Resource Empowerment Business Process Re-engineering

Planning for

Disasters
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Communication Networks

MICR (Magnetic Ink Character Recognition) Clearing. BANKNET. INFINET. SWIFT. Electronic Funds Transfer at Point of Sale(EFTPOS) Electronic Data Interchange (EDI). Electronic Funds Transfer (EFT) System. Electronic Clearing Services (ECS). ATM network - SWADHAN (Shared Payment Network System).

Information Technology in Banking Sector

MICR Clearing
Magnetic Ink Character Recognition. Introduced in 1987 in the four metros. 1,047 Clearing Houses; 42 with MICR. SB/CA Cheque leaves standardized size (8 X 3 2/3) are pre-printed with

the bank-branch code and account type in MICR strip, while the amount is read manually and fed into the system using the encoders for funds settlements.
Speeds up clearing work.

Information Technology in Banking Sector

Automated Teller Machines


ATMs or 24 hour Tellers Electronic Terminals - allow to bank at any time. On-site and Off-site Automated Teller Machines. Average withdrawal per ATM transaction - Rs 1,500 to Rs 3,000 Total cash movement through ATMs in India is Rs 35,000 - 40,000 crores

every year
Medium for non-cash transactions such as printing of statements, credit

card enquiry, cross selling, etc

Information Technology in Banking Sector

BANKNET
Set up in 1991 by RBI Meant to facilitate transfer of inter-bank/ inter-branch messages within

India by Public Sector banks who are members of this network


Wide connectivity.

Information Technology in Banking Sector

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INFINET
Indian Financial Network. Set up by RBI in June 1999.

Satellite based WAN using VSAT (Very Small Aperture Terminal)

technology .
Major applications: E-mail, Electronic Clearing Service - Credit and

Debit, Electronic Funds Transfer.

Information Technology in Banking Sector

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Electronic Funds Transfer (EFT)


Hosted and operated by the RBI.

Permits fund transfer up to Rs 5 lacs from any account at any branch of any

member bank in any city to any other account at any branch of any member bank in any other city.
RBI acts as the service provider as well as regulator.

Information Technology in Banking Sector

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Electronic Funds Transfer at Point of Sale(EFTPOS)


While travelers' cheques meant 'pay-now-buy-later' and credit cards

had 'buy-now-pay-later' advantages, EFTPOS or debit cards signify 'buy-now-pay-now' but without cash transaction. The user presents his ATM card when he buys goods and the EFTPOS system immediately debits his bank account.

Information Technology in Banking Sector

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Electronic Data Interchange


EDI typically denotes paperless financial transactions across the

locations. EDI is fast becoming the norm for inter-company transactions and also for procurement of bought out items from the suppliers. The companies can now operate their bank accounts through corporate banking terminals in their own offices which are linked to the bank computers. Companies can thus carry out transactions like transferring funds, managing its cash flow, opening letters of credit,etc.

Information Technology in Banking Sector

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ECS
Electronic Clearing Scheme (ECS) operated by the RBI since 1996-97 Utilizes BANKNET and INFINET Facilitates payment from a single account at a bank branch to any

number of accounts maintained with the branches of the same or other banks.
RBI has also launched ECS Debit for payment to utility companies

like Telephones, Electricity etc.

Information Technology in Banking Sector

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SWADHAN
Launched in 1997 India's FIRST Shared Payment Network Service 55 member banks in the network, which include nationalized, private and

foreign banks
Enables member banks to share their ATMs with other participating banks Objective - reduce the huge investment being made by the banks to deploy

ATMs in different locations

Information Technology in Banking Sector

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Services
Bill Payment through Electronic Banking Electronic Shopping Mall Effecting Personal Investments through Electronic Banking
Trading in shares Investing in Mutual Funds

Trade In Derivatives
IPOs Online

Information Technology in Banking Sector

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Real Time Gross Settlement


Introduced in India in 2004 by RBI Internationally accepted system to minimize the settlement risks Settlements occur simultaneously >10,000 bank branches networked Balances held with RBI by banks

Information Technology in Banking Sector

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Smart Cards
Multi-application Smart Card Channel of the future Pilot project started Pilot Project funded by Govt. of India

Project is in progress in partnership with IDRBT, IIT Mumbai and Banks

Information Technology in Banking Sector

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Beware of
Hacking Phishing Pharming Skimming Trojan

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THANK YOU

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