Information Technology-The Driver of Transformation in Financial Services
This report focuses on the relationship between technology and change, both past and future, in the financial service industry. The roles of technology as both a motivator and a facilitator of change are analyzed. Other agents of change are considered only to the extent that they help define the market for new technology or its impact. Key factors that have changed the nature of financial services: the ways in which they are created, delivered, priced, received, and used. Relationships between and among users and providers of financial services are changing Information processing and communication technologies are being used to * Enhance existing services,
* Implement new ones
* Make them available in new ways.
Technology is a key factor responsible for the rapidity and magnitude of change in the financial service industry. However, other factors such as the legal/regulatory environment general economic conditions and the demands of users have also have a significant impact on the industry The changes that have taken place in the financial service industry affect a number of areas including * Industry structure
* The legal/ regulatory environment,
* Financial service delivery systems, consumer interests
* The safety and soundness of the industry.
Faster and effective communication is the key to delivering financial services efficiently. Networks are used to connect shared systems of automated teller machines and also to provide the basis of systems permitting electronic initiation of fund transfers from the merchant’s counter. Access to funds from virtually any place in the Nation regardless of where they are deposited is possible now. Advanced communication technologies including satellite relays, video cable, fiber optics and cellular radio have found wide application in the financial service industry. Decreasing computer costs has created the opportunity for large numbers of individual consumers and managers of small businesses to take advantage of technology in using financial services. Large computers are being used to support the data bases and the communication processing needed to operate the large, interactive financial service delivery systems adopted by the banks and other financial service providers. Computers that accept voice inputs and recognize fingerprints may become cost effective for financial service delivery systems by the turn of the century. Small, inexpensive personal computers in both home and office have made it possible for customers to interact with a multiplicity of financial service offerors. Computer processor and memory chips imbedded in plastic cards are in wide spread use in the financial service industry.
Role of information Technology in the Banking Industry:
Banks are the bloodline of any economy and Indian banks are no exception. Banks in India have a long way adopting technology in a big way which has transformed the way banking services were provided. The entry of private banks has given an edge to the banking sector, introducing the much needed competitive edge. The private banks have adopted technology right from the beginning and the public sector banks are also following suit. The following paragraph gives a brief idea about the use of technology in Indian Banks Present and Future Technologies Supporting the Banking Industry
The application of technology in banks and other financial services are described in the following paragraphs:
The initial applications of technology “automated’ existing processes. For example, the application of computers to account maintenance simply translated existing manual processes into automated ones. The adoption of MICR encoding on checks has done little to change the way checks are used. Thus, early application of automation in the financial service industry had little, if any, direct effect on the...