Role of Technology In Modern banking

Introduction
The term banking technology refers to the use of sophisticated information and communication technologies together with computer science to enable banks to offer better services to its customers in a secure, reliable, and affordable manner, and sustain competitive advantage over other banks

Current Banking Industry

Credit Institution (31)

Public Sector Banks (26)

Foreign Banks (40)

Regional Rural banks (82) Private Sector Banks (20)

Urban Cooperative Banks (51) Cooperative Banks(82)

Scheduled Commercial Banks (SCBs)(168)

Rural cooperative credit institution (31)

Note: The figures in brackets represent number of respective banks as on 31st March 2012

Growth of Banking Industry

The industry in recent times has recognized the

importance of private and foreign players in a competitive scenario and has moved towards greater liberalization Indian banks have mobilized around 80% In today's scenario, Current and saving accounts(CASA) are the bank's lifeline for profitable growth, Credit growth of the Scheduled Commercial Banks (SCBs) slowed down to 18.10%1 on FY2012, which was 22.90%1 in FY2011

Banking Technology
Information Technology Finance & Risk Management Communication Technology Computer services Marketing Science

Information Technology
Net banking
Mobile banking Online payment of excise and service tax

Bill payment
Shopping Ticket booking Anywhere banking Bill payment

Finance & Risk and management

Risk management is a business activity that helps an

organization limit (or prevent) risks of loss that may originate in its operations. mechanisms and staff that a financial institution's top management puts into place to avoid losses

Risk management processes include policies, guidelines,

A financial institution manages operational risk, the risk of

losses due to human error or technology malfunction, through internal controls and guidelines such as human resources policies.

Communication Technology
Todays business environment is very dynamic and undergoes rapid changes as a result of technological innovation, increased awareness and demands from customers. Electronic Home and Office Banking Telephone Banking Electronic Funds Transfer Automated Delivery Channels: These include interactive television and the Internet. Railways ticket booking through SMS

Computer Services
It is globally belief that the computers are able to provide

useful information It helps enhance and improve its services and systems e-Trading Software Development Web based solution Improvement in efficiency In 2007-85.6% In 2010-97.8%

Marketing Science
A long-standing challenge in middle-market commercial

banking is making the best use of relationship managers (RMs). Directly interacting with customers, these field representatives play the most visible role in generating balances and revenues. effective marketing can have a large impact on consumers who are choosing new services.

Levels of use of technology in an Banking Institutions.

Transactional Bill payments and wire transfers to third parties Fund transfer between customer's transactional and savings account Sale and purchase of investments Applications and transactions for loans and enrollment repayments Non-transactional Analyzing recent transactions Downloading bank statements Viewing paid cheques Financial Institution Administration Portfolio Management of multiple users at different authority levels Transaction approval process

Online Banking
Online

BankingIt empowers customers to conduct financial banking transactions on a secure website which can be operated by a retail, virtual bank, credit union or building society. The most unique feature of online banking is: Personal financial management support Importing data to personal accounts software. Supporting account aggregation which allows the customers to manage all of their accounts in one place irrespective of their location.

Mobile Banking
It is used for performing through mobile device such as a mobile phone or a Personal Digital Assistant (PDA), banking activities such as:

Balance checks, Account details, Portfolio management Account transactions, Payments and investments, Credit applications and other transactions. Mobile banking became popular with the

introduction of first primitive smart phones supported with Wireless Application Protocol (WAP).

Video Banking
It is used for conducting banking transactions or consultations through a remote video connection. It can be performed over purpose built banking transaction machines similar to Automated Teller Machines (ATM) or through bank branches enabled with video conferencing.

A. Benefits of video banking are: In-branch Location Convenience i. Video banking improves following banking

activities: Customer authentication, Cash and check deposits, Cash and coin withdrawals, Account transfers and bill payments, Processing new accounts and loans, Bank consultations and inquiries.

Telephone Banking
It is a bank service provided by financial institutions allowing

its customers to conduct banking transactions over the telephone.

A. Telephone banking make use of: Automated phone answering system, Phone keypad response resources, Voice recognition capability. Telephone banking offers many self-services as well as traditional bank features such as: Account balance information List of latest transactions, Electronic bill payments, Funds transfer between customer accounts, Loan and account applications, Purchase and redemption of investments, Chequebook orders, Debit or credit card replacements., Requests such as change of address.

ATM
An automated or automatic teller machine (ATM) is a computerized telecommunications device that enables the clients of a financial institution to perform financial transactions without the need for a cashier, human clerk or bank teller. Alternative uses: Printing bank statements Updating passbooks total number of ATMs was 1,04,500. Public sector banks and the State Bank group with about 61,500 ATMs accounted for 59 per cent of the ATMs. The private sector and foreign banks put together have about 41,800 ATMs accounting for 40 per cent of the ATMs and the balance 1 per cent represents about 1,150 ATMs that have been deployed by co-operative banks/RRBs. Nearly 200 million transactions are processed every month in NFS, of which 75 per cent are cash withdrawal transactions with an average ticket size of Rs 3,300. The balance 25 per cent transactions are nonfinancial transactions.

ECS
The Electronic Clearance Service (ECS) scheme provides an alternative method of effecting bulk payment transactions like periodic payments of

interest/ salary/ pension/ commission/ dividend/ refund by Banks/Companies /Corporations /Government Departments. The transactions under this scheme move from a single User source (i.e. Banks/Companies /Corporations /Government Departments) to a large number of Destination Account Holders (Customers/Investors). The Scheme is in operation at 15 centers where Reserve Bank of India manages Clearing Houses, 21 centers where SBI is managing ECS on behalf of RBI and 29 other centers where PNB and other banks are managing ECS on behalf of RBI.

Inter Bank Transfer

Inter Bank Transfer enables electronic transfer of

funds from the account of the remitter in one Bank to the account of the beneficiary maintained with any other Bank branch. There are two systems of Inter Bank Transfer - RTGS
and NEFT.

Both these systems are maintained by Reserve Bank

of India.

RTGS(Real Time Gross Settlement)

This is a system where the processing of funds transfer

instructions takes place at the time they are received (real time). Also the settlement of funds transfer instructions occurs individually on an instruction by instruction basis (gross settlement). RTGS is the fastest possible interbank money transfer facility available through secure banking channels in India.

NEFT(National Electronic Funds Transfer)

This system of fund transfer operates on a Deferred

Net Settlement basis. Fund transfer transactions are settled in batches. Presently, NEFT operates in hourly batches from 8 am to 7 pm on week days and 8 am to 1 pm on Saturdays.

Innovation in the Banking Industry

Bioetric ATMs
These ATMs use the finger print of the card holder or eye retina scan as a PIN for verification purpose Banks are more focused to put these ATMs in rural areas because biometrics makes it possible for the low literacy population to us banks

M- pesa
M-pesa is a mobile-phone based money transfer and micro financing service, which allows users with a national ID to use their money easily with a mobile
Vodafone is expected to launch M-pesa in India, in association with ICICI & HDFC bank

Plastic Money
Plastic money, cash cards, credit/debit cards and polymer notes will boom as the e-commerce space boom in India and people get used to the idea of carrying less cash. Many cards have a micro chip embedded in them which makes it a transit card also

Virtual banking
This technology will have a deep impact on the lives of professionals who believe in the life-on-the-go approach A user can have access to his/her bank accounts at a nominal cost and at a fast speed from anywhere in the world

CONCLUSION
Indian Banking sector holds 6th rank in the GDP.

Though, it faced many challenges and have some drawbacks. To overcome from this challenges this sector is constantly upgrading itself with well maintained and updated technology. Required to adopt smoothly the advanced technology and other benchmarked systems in the Global Banking sector.