Role of IT in Banking

sunandaC

New member
What is Information Technology?
Information technology (IT), as defined by the Information Technology Association of America (ITAA), is "the study, design, development, implementation, support or management of computer-based information systems, particularly software applications and computer hardware." IT deals with the use of electronic computers and computer software to convert, store, protect, process, transmit, and securely retrieve information.

An overview – IT in Banking


Indian banking industry, today is in the midst of an IT revolution. A combination of regulatory and competitive reasons has led to increasing importance of total banking automation in the Indian Banking Industry.

Information Technology has basically been used under two different avenues in Banking. One is Communication and Connectivity and other is Business Process Reengineering. 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.


Role of Information Technology in Banking
Over the last decade, there has been a major transformation on the technology front in the banking sector. There has been a sea change compared to the old days when carrying out a transaction as simple as cash withdrawal sometimes took hours. Remember, those were the days when automation had not touched Indian banks.

Now, increasingly, visits to branches of banks especially in the metros and bigger towns are rare. With ATMs, internet banking and phone banking, banking has turned out to be more of an inter-face with a machine or in other words it has become faceless. Any evolution is a gradual process and keeps on changing with time. That's applicable to banking technology with banks now gearing up for the next level-- mobile banking. ETIG Knowledge forum, partnered with KPMG and did a brainstorming, looking at the pros and cons of banking technology, specially the upcoming business of mobile banking.

The Indian banking industry has a very large customer base but with a relatively smaller ticker size (transaction value) per customer. The ticket size in India is 1/10th of the global standard. Further, the ticket size in rural area of India is again 1/10th of the urban area. So for a bank, the physical infrastructure cost per transaction becomes very high. This poses a strong challenge for a bank. And this is where technology can help banking companies.

Many companies in India have adopted this strategy and have managed to lower the interaction of the customer with the bank branches. For instance, 10 years ago, 90% of all transactions made by the customers of ICICI bank were through the branches and 10% were through online. Now, after 10 years, the trend has exactly reversed.

Adoption of technology not only delights the customers in terms of convenience and satisfaction but also brings in certain other advantages-- scalability, reliability and low cost-- to the bank.

For instance, banks can carry out data analytics to gauge the customer’s requirements and thus offer customized products to a specific category of customers. "Banks can use technology as an enabler as well as a differentiator", said Ms Chanda Kochhar, Joint Managing Director of ICICI bank at the Forum.

For a country like India which has a legacy system, the cost of technology is much less compared to developed countries. According to one study, the cost of technology for Indian banks is only 1/5th of most European banks.


The banks in India are constantly innovating newer technology for the convenience of customers. First, it's ATM, then internet banking and now its biometric smart card with mobile banking to follow. The profile of Indian banking customers is much diversified. On the one hand, we have rich high net worth individuals (HNI) and on the other hand there are poor illiterate customers from rural and semi-urban areas. But probably the one thing common between them is the penetration of the mobile phones, at least to a certain extent, thanks to the telecom revolution in the country.


Bank Profile



Established in 1985, The Kotak Mahindra group has long been one of India's most reputed financial organizations. In February 2003, Kotak Mahindra Finance Ltd, the group's flagship company was given the license to carry on banking business by the Reserve Bank of India (RBI). This approval creates banking history since Kotak Mahindra Finance Ltd. is the first company in India to convert to a bank. 3.


Kotak Mahindra Bank Limited. The Group's principal activities are to provide banking and related services. The services provided include car finance, broking, corporate banking, insurance, investment banking, retail lending and others. The Group operates through 178 branch offices and 314 ATMs in 107 locations.
 
IT has helped the banking industry by gathering, processing, analysing, and providing information in order to satisfy the needs of customers. They make the work more easy and convenient. Data processing becomes relatively easy and manageable.
 
Top