Technology helps to make a greater change and competence in the provision of financial services and ultimately determines the toppers in the powerful competitive financial markets of the economic system. Technological advancements have paved the way for fundamental changes in the banking industry. Calculated and arranged business plans have taken into account to give us new ways of doing businesses, expansion in branches with more technology enhancements, more refined risk management systems and better and suitable customer services by some of the developed banks are important examples of technological advancements. Although these have been important milestones for the services of banking industry within Pakistan, the small change in terms of the way business is done has not bring a big change and has not brought the banking services closer to the low income segment of the market, which comprises of a large portion of the market within our region. Hence, it is critical that our banking industry adopts a suitable organizational model that supports business processes to use technology for deriving economies of scale and creating cost efficiencies by targeting the vast population of our country. However, some of the changes in technology that we are witnessing currently have been exceptional and idealize for banking industry, such as the boom in internet usage and mobile phone technology. The use of ATMs and e-banking products has gained prevalence as everyone is using this service nowadays and almost all banks have established networking of their ATMs with the interconnectivity. ATMs provided better in outstation places which has enhanced the customer usage of this service, offering more alternatives and choices to customers. The relatively smaller size banks have also been able to compete with the large banks and retain their market presence by using technology more effectively. In this way technology effects. Information technology is considered as the key driver for the changes taking place around the world. The world banking industry is entering into new phenomena and form of competition, never experienced before, because of steadily growth of information technology, supported by modern information and communication infrastructure. E-commerce has become a trend or essential for companies over operating a couple of years with increased awareness about the use of computers and internet.
A. Internet banking
Internet banking is a relatively new front-office technology. A variety of levels of Internet service and combinations of Internet networks are offered by banks. Transactions are made by transactional site which allows customers different benefits and services, on line such as access to accounts, funds transfer, applying for a loan, etc. Other banks have set up informational websites that provide information about the banks and their services, but do not allow for on-line transactions. A small number of Internet-only banks offer services through transactional Internet sites and access to ATM networks, but with no physical offices open to the public. As of March 2002, there were 20 Internet-only banks and thrifts in the U.S. and approximately a dozen other such institutions have failed, been acquired, or voluntarily liquidated.4 A few large banks set up Internet-only units, and then integrated them into the main bank after poor performance. Finally, many banks continue to offer no Internet services. Internet banking has become widespread in a short time, although there are substantial differences by bank size in implementation strategies. A study of national banks in the U.S. found that as of the end of 2000, 37.3% of these banks offered transactional Internet sites, and an additional 27.7% offered informational websites (Furst, Lang, and Nolle 2001, 2002).5 The vast majority of the transactional sites were set up since the beginning of 1998. The transactional website adoption rate varied...
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