Impact Of Technology In Banking

In the world of banking and finance nothing stands still. The biggest change of all is in the, scope of the business of banking. Banking in its traditional from is concerned with the acceptance of deposits from the customers, the lending of surplus of deposited money to suitable customers who wish to borrow and transmission of funds. Aside from traditional business, banks more recently provide a wide variety of services to satisfy the financial and non financial needs of all types of customers from the tiniest account holder to the biggest company and in some cases of non customers. The number of services offered differs from bank to bank depending mainly on the type and size of the bank.

RESERVE BANK'S EARLY INITIATIVES

As a central bank in a developing country, the Reserve Bank of India (RBI) has adopted development of the banking and financial market as you of its prime objectives. "Institutional development" was the hallmark of this approach from 1950s to 1970s. In the 1980s, the Reserve Bank focused on "improvements in the productivity" of the banking sector. Being convinced that technology is the key for improving in productivity, the Reserve Bank took several initiatives to popularize using technology by banks in India.

Periodically, almost once in five years because the early 1980s, the Reserve Bank appointed committees and working Groups to deliberate on and recommend the appropriate use of technology by banks give the circumstances and the necessity. These committees are as follows:

-Rangarajan committee -1 in early 1980s.

-Rangarajan committee -11 in late 1980s.

-Saraf working group in early 1990s.

-Vasudevan working group in late 1990s.

-Barman working group in early 2000s.

Using the recommendations of these committees and working groups, the Reserve Bank issued suitable guidelines for the banks. In the 1980s, using technology for the trunk office operations of the banks predominated the scene. It was by means of accounting of transactions and assortment of MIS. In the inter-bank payment systems, it was in the form of clearing and settlement utilizing the MICR technology.

Two momentous decisions of the Reserve Bank in the 1990s changed the scenario permanently there are:

a) The prescription of compulsory using technology completely measure by the new private sector banks as a precondition of the license and

b) The establishment of a special research institute for banking technology institute for development and Research in Banking Technology.

As the new private sector banks came on the scene as technology-savvy banks and offered several innovative products at the front end office for the clients predicated on technology, the demonstration effect caught on the reset of the banks. Multi channel offerings like machine based (ATMs and pc-Banking), card based (credit/Debit/Smart cards), Communication based (Tele-Banking and Internet Banking) ushered in Anytime and Anywhere Banking by the banks in India. The IDRBT has been instrumental in establishing a safe and sound, advanced communication backbone in the from of the Indian Financial NETwork (INFINET) as a closed user group exclusively for the banking and financial sector in India.

CHANGING FACE OF BANKING SERVICES

Liberalization brought several changes to Indian service industry. Probably Indian banking industry learnt a significant lesson. Pre-liberalization, all we did at a bank was deposit and withdraw money. Service standards were pathetic, but all we could do was grin and bear it. Post-liberalization, the tables have turned. It's a consumer oriented market there.

Technology is revolutionizing every field of human endeavor and activity. One of them is introduction of it into capital market. The web banking is changing the banking industry and is having the major effects on banking relationship. Web is more important for retail financial services than for many other industries.

Retail banking in India is maturing as time passes, several products, which further could possibly be customized. Most happening sector is housing loan, which is witnessing a cut-throat competition. The house loans are very popular as they help you to realize your most cherished dream. Interest rates are decreasing and market has seen some innovative products as well. Other retail banking products are personal loan, education loan and vehicles loan. Almost every bank and lender is offering these products, but it is vital to understand the various areas of these loan products, which are not mentioned within their colored advertisements.

PLASTIC MONEY

Plastic money was a delicious gift to Indian market. Giving rest from carrying an excessive amount of cash. Now several new features put into plastic money to make it more appealing. It works on formula purchase now repay later. You can find different facts of plastic money charge card is synonyms of most.

Credit card is a financial instrument, which may be used more than once to borrow money or buy products and services on credit. Banks, retail stores and other businesses generally issue these. On the basis of their credit limit, they're of different kinds like classic, gold or silver.

Charged cards-these too carry almost same features as bank cards. The essential difference is you can not defer payments charged generally have higher credit limits or some times no credit limits.

Debit cards-this card is may be characterized as accountholder's mobile ATM, for this you have to have account with any bank offering credit card.

Over the years, the banking sector in India has seen a no. of changes. Most of the banks have begun to take a forward thinking approach towards banking with the aim of creating more value for customers and therefore, the banks. Some of the significant changes in the banking sector are discussed below.

MOBILE BANKING

Taking advantages of the booming market for mobile phones and cellular services, several banks have introduced mobile banking that allows customers to execute banking transactions utilizing their mobile phones. For instances HDFC has introduced SMS services. Mobile banking has been especially directed at individuals who travel frequently and to keep an eye on their banking transaction.

RURAL BANKING

Among the innovative scheme to be launched in rural banking was the KISAN CREDIT CARD (KCC) SCHMME started in fiscal 1998-1999 by NABARD. KCC mode it easier for framers to purchase important agricultural inputs. Along with regular agricultural loans, banks to provide several other products geared to the requirements of the rural people.

Private sector Banks also realized the potential in rural market. In the first 2000's ICICI bank began setting up internet kiosks in rural Tamilnadu alongside ATM machines.

NRI SERVICES

With a substantial amount of Indians having relatives abroad, banks have begun to provide service which allows expatriate Indians to send money more conveniently to relatives India that is one of the major improvements in money transfer.

E-BANKING

E-Banking is becoming increasingly popular among retail banking customers. E-Banking helps in cutting costs by giving cheaper and faster means of delivering products to customers. It also helps the customer to choose the time, place and way he wants to utilize the services and provides effect to multichannel delivery of service by the bank. This E-Banking is driven by twin engine of "customer-pull and Bank-push".

CONCLUSION

Technology has been the most important factors for the development of mankind. Information and communication technology may be the major advent in the field of technology which is used for access, process, storage and dissemination of information electronically. Banking industry is fast growing with the use of technology in the from of ATMs, on-line banking, Telephone banking, Mobile banking etc., credit card is one of the banking products that focus on the needs of retail segment has seen its number grow in geometric progression recently. This growth has been strongly supported by the development of in neuro-scientific technology, without which this could not need been possible of course it will change our lifestyle in coming years.

E.Jeevitha