Computers in the banking sector have enhanced customer service and productivity
regarding account management, while streamlining back-office activities. The biggest
impact is in the area of competition. Small banking institutions can access the same
technology as large banking institutions and, therefore, can compete with them more
effectively for business
i) Account Management
In banking, activities start with banks automating customer accounts, which allows personnel to
create, update and maintain customer records. Banking hardware and software have enhanced
the accuracy of accounts that tellers and other banking personnel process. Banking software
performs customer transactions through a centralized data record system. Account management
is the genesis and backbone of all banking information systems.
ii)Hardware Technology
In the 1960s, bank hardware consisted of a mainframe and a punch card machine. Punch cards
contained customer account information and were read into the main system by a punch card
machine. Midrange and client/server hardware configurations, which are no larger than a
minitower system, can run an entire bank in addition to receiving transactions from affiliated bank
branches. These new hardware technologies can process more transactions than legacy banking
hardware systems. Hardware technologies have enabled advances into wireless banking and
telecommunications banking.
iii)Electronic Transactions
Banking systems must perform electronic transactions. Direct deposit is an example of an
electronic transaction. Computers processing electronic transactions must have hardware and
software encryption capabilities to keep data from being compromised during a transmission. After
the computer performs electronic transmissions, it transfer the information to the main computer
system for processing and updating. Banks have extended electronic transaction capabilities
through landline and cell phones, the Internet and ATMs.
iv)Web-based Banking
Web-based banking systems use a dedicated server through a bank network system. An area of
the banking system is partitioned for Internet applications. Web-based banking systems by law
must include secure servers and authenticated certificates regarding transactions from the Federal
Deposit Insurance Company and the Federal Reserve Board. Customers who choose to bank
online can access their account through a web interface, which integrates with the main computer.
A customer's credentials -- user ID and password -- pass through several checkpoints before
entering the main system to perform a web-based transaction.
What are the Application Of information technology in banking industry in Nepal ?
Major applications. The advantages accruing from computerization are three-directional
- to the customer, to the bank and to the employee.
For the customer. Banks are aware of customer's need for new services and plan to
make them available. IT has increased the level of competition and forced them to
integrate the new technologies in order to satisfy their customers. They have already
developed and implemented a certain number of solutions among them:
Self-inquiry facility: Facility for logging into specified self-inquiry terminals at the branch to
inquire and view the transactions in the account.
Remote banking: Remote terminals at the customer site connected to the respective
branch through a modem, enabling the customer to make inquiries regarding his accounts,
on-line, without having to move from his office.
Anytime banking- Anywhere banking: Installation of ATMs which offer non-stop cash
withdrawal, remittances and inquiry facilities. Networking of computerized branches intercity and intra-city, will permit customers of these branches, when interconnected, to
transact from any of these branches.
Tele banking: A 24-hour service through which inquiries regarding balances and
transactions in the account can be made over the phone.
Electronic Banking: This enables the bank to provide corporate or high value customers
with a Graphical User Interface (GUI) software on a PC, to inquire about their financial
transactions and accounts, cash transfers, cheque book issue and inquiry on rates without
visiting the bank. Moreover, LC text and details on bills can be sent by the customer, and
the bank can download the same. The technology used to provide this service is called
electronic data interchange (EDI). It is used to transmit business transactions in computerreadable form between organizations and individuals in a standard format.
As information is centralized and updates are available simultaneously at all places, singlewindow service becomes possible, leading to effective reduction in waiting time.
For the bank
During the last decade, banks applied IT to a wide range of back and front office
tasks in addition to a great number of new products. The major advantages for the bank
to implement IT are:
Availability of a wide range of inquiry facilities, assisting the bank in business development
and follow-up.
Immediate replies to customer queries without reference to ledger-keeper as terminals are
provided to Managers and Chief Managers.
Automatic and prompt carrying out of standing instructions on due date and generation of
reports.
Generation of various MIS reports and periodical returns on due dates.
Fast and up-to-date information transfer enabling speedier decisions, by interconnecting
computerized branches and controlling offices.
For the employees.
IT has increased their productivity through the followings:
Accurate computing of cumbersome and time-consuming jobs such as balancing and
interest calculations on due dates.
Automatic printing of covering schedules, deposit receipts, pass book / pass sheet, freeing
the staff from performing these time-consuming jobs, and enabling them to give more
attention to the needs of the customer.
Signature retrieval facility, assisting in verification of transactions, sitting at their own
terminal.
Avoidance of duplication of entries due to existence of single-point data entry.
Define Hardware and Software.
Hardware is the Physical parts of the computer, which can be seen and touched. It is
just the mechanical parts of the computer. All the devices attached to the Computer
system like Mouse, Keyboard, Monitor, CPU, Motherboard, Hard Disk etc are Hardware. It
includes all the components used to make the computer. It also includes all the cables,
Connectors and computer peripherals. Hardware can be see, touch, have shape and
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