Information Technology and Banking 1
Information Technology and Banking
Dr. Pembamoto Business 5083: Management Information Systems Palm Beach Atlantic University
Information Technology and Banking 2
Table of Contents
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Characteristics in the Banking Environment: Positive and Negative Impact of Information Technology in Banking: Trends in Banking: How Sectors can affect Banking and Technology: Works Cited:
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Information Technology and Banking 3
Abstract Financial institutions, particularly banks rely heavily on gathering, processing, analyzing, and providing information in order to meet the needs of customers. Banks strive to get the deposits of their customers so in turn, that money can be used to make loans. In order to meet customers’ needs, banks started using automated information processing technology during the 1960’s. With processing transactions becoming automated, it allowed for employees to focus time on other tasks or projects. Also, it helped employees learn how to use a computer. Technological advances have allowed banks to provide innovative, new services or improvements in quality and convenience that attract new customers and increase demand. Today many banks encode their daily work, which allows checks to be digitally scanned. After scanning at the bank, the items are sent to the clearinghouse before sent to the Federal Reserve Bank. Individuals have started to use electronic banking, which allows a customer to check their balances and process bill payments via a secure Internet connection and a computer, and is available twenty four hours a day. It is fast, convenient, and is easier than going to the bank to get funds. With electric banking, there are other functions in IT that have evolved such as: Automated Teller Machine, Direct Deposit, and Electronic Bill Payment, Advancements in Information Technology and Banking have been important to the industry and businesses, on the other hand customers have their concern about their security and privacy especially with Internet transactions. Information Technology, has affected all financial institutions. IT provides an advantage to banks as it helps increase customers and increased the products offered to customers. Also, Information Technology has allowed banks to make better decisions.
Information Technology and Banking 4
Current Banking Environment Banks safeguard money and valuables and provide loans, credit, and payment services, such as checking accounts, money orders, and cashier’s checks. Banks also may offer investment and insurance products; bankers are the link between customers and the bank itself. Some of the traditional distinctions between banks, insurance companies, and securities firms have diminished. Because of the change of services offered in the industry, banks continue to maintain and perform their primary role that is accepting deposits and lending funds from these deposits. Stakeholders of the financial institution are not just the shareholders. For example, David Buzzell (2004) in ‘Principles of Banking’ explains that, “A bank may be closely held by one or more individuals or a family, or publicly held by investors.” (p. 13). Stakeholders are the employees, customers, and even regulatory agencies such as the State where the bank is held, Securities and Exchange Commission, and the Federal Deposit Insurance Corporation. However, the bank is a corporation that is owned by the stockholders. In turn, the stockholders elect the Board of Directors for the organization and it is this governing body that is responsible for the bank operations, regulatory compliance, and performance. All parties mentioned have an interest in the bank to be successful and profitable. Each bank offers a different type of service to their consumers. Buzzell (2004) explains, “Banks provide individuals and business with a wide range of financial services including traditional deposit and credit services,...
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