The Role Of Technology In Banking Industry
In the recent years the world has greatly changed with technology without doubt taking lead in almost all the activities we perform from communications to marketing and other transactions among others. Our main interest today is on the banking institution or industry which is basically the center of most businesses worldwide. With technology in the banking institution, not only will every kind of transaction be instant, much accurate as compared to manual or paper work and so much more.
Banking industries all over the globe were very quick to embrace technology so that they can be able to deliver faster services to their clients with less manpower. However this didn’t come cheap because its implementation involved a number of steps and tools but at the end this was entirely worth it with limitless rewards achieved. Now banks have been transformed into a more digitized and networking financial service through the broadband internet which is a lot cheaper and allows easy and first transfer of data.
What is Banking Technology?
Before we look at the different roles lets first understand briefly what banking technology refers to and then we can understand its roles as well in the banking industry.
Definition: Banking technology refers to the application of a combination of a sophisticated and communication technology along with computer technology that is designed to allow the banking sectors provide an improved service to all their clients in a more reliable, secure and reasonably priced manner.
This way the banks that have embraced this technology will uphold a competitive advantage over the other banks. Now with all that said, we can look at some of the roles of technology in banking industry below;
Roles of Technology in Banking Industry:
- E-banking: This is a form of banking in where the client is able to conduct transactions electronically through the internet. This kind of banking is also referred to as the virtual or internet banking in which the clients of a financial institution are able to carry out a range of financial transactions via the website of that particular financial institution. This way the system will then typically make connections or be part of the core banking system that is operated by the bank. Through e-banking, the bank will be able to render its services easily to all its high end customers very conveniently.
Now some of you might be wondering if this kind of e-banking is user friendly and lucky for you and me the answer is yes especially if you are illiterate. Here’s how…..
- Through the GUI which is GRAPHICAL User Interface that is created with software that lets the customers be able to easily access their bank details on their personal computers, print their bank statements perform money transfers from one account to the next and make inquiries about their financial transactions.
- Electronic Date Interchange (EDI) is the other technology that is utilized by banks to allow the proper and quick exchange of data between the clients and the bank. Its a software that can be used to transmit business transactions through a computer-readable form so that the customer on the other side will be in position to clearly read the information.
# Benefits of E-banking:
- Very convenient in a way that you can pay your bills and transfer funds between accounts in your own comfort.
- Online accounts are very easy to open and user friendly
- No queues
- Fast and efficient
- Available at all times provided you have an active internet connection
- Lets you monitor all your transactions and account balance
#Cons of E-banking:
- Can’t be used if the bank institution server is down
- Account information might get hacked by an unauthorized person via the internet
- Might be complicated to understand especially for first timers
- Can’t be assessed without internet connections
- Sometimes it’s hard to determine if a transaction was victorious or not
- Plastic Money: this kind of banking technology is mainly through the use of credit or smart cards for example ‘Visa Electron’ and it has taken the flexibility of the banking industry to a better level. While using a credit card, a client can be able to borrow a particular amount of money from the bank and then use it for personal purchases and the bank is able to then bill them later. The benefit of this is that the clients don’t have to go through the disturbance of borrowing small money from banks or other people. On the other hand the ‘smart Cards’ which are like the Visa Electron operates in a way that the client is able is make payments for anything while using the card and then the money used is subtracted from their bank accounts automatically. This same card can also be used to deposit and withdraw money from their personal accounts via an ATM machine.
This plastic money is also known as polymer money and its constructed using plastic and it was first invented in the 1950s. With this kind of plastic money, you are saved from directly handling a huge sum of cash as it is much more convenient to carry around. In case you lose it then you can contact your banking institution and it is instantly blocked so there is no outside access to your money before you can apply for a new one.
Benefits of plastic money;
- Removes the need to move or travel with a huge sum of money
- Anytime and anywhere access to perform financial activity
- You can still shop or spend when out of money using the credit transaction
- It allows the use of online payments
Cons of plastic money;
- Not entirely a complete replacement for cash
- Can’t be used for all the activities performed daily like for example you can’t use it to pay the newspaper guy or the milkman and so on
- Cards can easily be damaged
- NRI banking services: this is one of the easiest ways for the people that are in other countries to send money to their loved ones. It is for that reason why this kind of technology has been highly embraced in many countries including India, USA, and UAE and so on. This way regardless of which country you are employed in, you can still be able to safely and conveniently send money back home to your families.
Benefits of NRI banking services;
- Its allows easy sending or receiving of money from different countries
- Very convenient
- Safe as compared to other financial institutions
Cons of NRI banking services
- Bank charges might be quiet high
- Signature retrieval facilities: this kind of technology is one good example to assist lessen on the cases of fraud in banking and this way the bank will be able to protect its clients. An example is that most banks are utilizing this kind of technology to assist them verify signatures before a client is able to withdraw a large sum of money from a particular account. This way there will be a lot lesser chances of errors or even risks that are usually caused because of forgery of signatures. You know thieves of today might be really smart but this is one kind of banking technology that is quiet really hard to outsmart and it has proven worth it that is why you will find that a great percentage of the banking institutions have gladly adapted it. This signature retrieval facility uses the combination of geometric and topologic features that will map the client’s signature image into two strings of finite symbols. After that a local associative indexing scheme is used on the strings so as to organize and search the signature image database of the banking institution where a client is signatory.
Benefits of signature retrieval facilities;
- Minimizes on fraud
- Open-minded on some missing features
- Accepts queries with partial signatures
- Clients are guaranteed of their money being safely protected
Cons of signature retrieval facilities;
- It is open-minded on some missing features which can lead to fraud
- Rural banking: gone are the days when banking institutions were only centralized in the urban areas alone and that means the rural people felt left out or they had to travel very many kilometers to perform banking. In this modern era, technology has made it very easy to set up banking facilities in rural areas. A good example is in Africa where mobile money banking facilities have been introduced and quickly adopted for majority of the people. This way the rural areas have been provided with an account with a mobile company that is opened free of charge and this way the people are able to deposit, withdraw and save money using the account through a mobile money agent that is nearby. This kind of banking technology allows the users to perform banking at any time especially sending of money or even withdrawing from it. It is very user friendly making it very suitable even for the illiterate. Other types of rural banking include the RRBs or Regional Rural Banks which is a local level banking organization that is being operated in the various states of India and is created to serve primarily the rural areas with basic banking along with other financial services.
Benefits of rural banking;
- Easy accessibility to people in rural areas
- Banking can be done at any time
- Very user friendly
Cons of rural banking;
- Can’t be assessed if mobile network is down
- Self-inquiry facility: is very important in banking because it will save clients from the hassle of constantly having to line up or go to the help desk to make inquiries. Rather this technology is designed in a way that you can have a simple self inquiry from any branch that is around you. It works in a way that a client is able to make use of their ATM machines to know the amount of balance they have remaining in their accounts or even just obtain their bank statements with a lot of convenience. This kind of technology helps both the client and the bank save a lot of time that could have been wasted working on client by client.
- No queues
- Saves a lot of time
- Can’t be assessed if banking network is down
- Centralized information results to quick services: this role of technology in the banking industry is important in a way that it makes it possible for the banks to transfer information from one branch to the other with a lot of ease. A case in point is if a client registered their account from the rural branch then they can still be able to access the same information of their account details from another branch like the main one that can be found in the urban areas. This way you will not have to run back to the branch where you opened from the account but use the other branch that can be found in your new location.
- Allows information sharing between different branches
- Sometimes might be slow
- Remote banking: the number of ATM machines of a bank is actually more than the numbers of the branches and this way a client won’t have to go up to the main branch in order to perform transactions but rather just do it from the nearest ATM machine while using their ATM cards. This way you will be able to perform banking at any time be it late in the night when the main branch and its branches have been closed through letting you withdraw or even deposit cash in your account.
- Transaction performed at any time
- Comes with a limited transaction amount
- Requires a constant refill of money most times