Role of Information Technology in Banking Sector

Role of Information Technology in Banking Sector

Image Description
General
Image Description
Created By Admin Last Updated Wed, 30-Dec-2020

Banks are going for the latest technologies for growing in the changing market environment. Technology has continuously played an important role by providing services like safekeeping public money, transfer of money, issuing drafts, exploring investment opportunities, and exploring investment. IT (Information Technology) enables sophisticated product development, better market infrastructure, implementation of reliable techniques for control of risks and helps the financial intermediaries to reach geographically distant and diversified markets. The Internet has significantly influenced the banking system as it has emerged as an important medium for the delivery of banking products and services. Customers can view their accounts, get account statements, transfer funds, etc. No doubt banking services have undergone drastic changes and so also the expectation of customer from the banks has increased greater. Let’s discuss some of the role and impact of IT (Information Technology) briefly here-

·         Development of distribution channels: E-banking

A shift has been made from traditional banking to e-banking with the help of IT. In India e-banking is of recent origin. Many banks have modernized their services with the facilities of computer and electronic equipment. The electronic revolution has made it possible to provide ease and flexibility in banking operations.  The e-banking offers credit/debit card, ATM, E-cheques, electronic fund transfer, mobile banking, telephone banking, Internet banking facilities to their customers. The customers now can enquire related to their balance, request services from anywhere at any time. E-banking makes cash withdrawal easy with the help of an ATM. And same to the banks it provides benefits in promoting various schemes of bank and act as a marketing tool.

·         Use of MICR Technology.

MICR overcomes the limitation of clearing the cheques within the banking hours and thus enables the customer to get the credit quickly. These are machine-readable codes added at the bottom of every cheque leaf which helps in bank and branch wise sorting of cheques for smooth delivery to the respective banks on whom they are drawn.

·         Impact of IT on the banking system.

The banking system is slowly shifting from traditional banking towards relationship banking. IT contributes to the banking system by saving time for the customers and the employees. It cuts down the expenses and facilitates network transactions.

·         Impact of IT on privacy and confidentiality of data

Data is stored in the computers is now being displayed when required on through internet banking, mobile banking, ATM’s, etc all these gives ease in knowing their account-related information but apart from this it raises threaten about the inadequacy of privacy being maintained by the banks with regard to their transactions and link at computerized systems with suspicion.

CONCLUSION- The banking industry in India is rapidly progressing with increased customer base and due to newly improved and innovative facilities offered by technology. As the coin has two faces likewise technology also has its two sides to the Indian banking sector. The risks are high, though it can be minimized so that the customers feel confident and can take the advantage of technology in banking. In the upcoming years, Information Technology is definitely going to be the backbone of the Indian banking industry.