Information technology in the banking sector : opportunities, threats and strategies.

Hassan Ghaziri
Graduate School of Business and Management, American University of Beirut, 1998

The New Era

The 21st century will bring about an all-embracing convergence of computing, communications, information and knowledge. This will radically change the way we live, work, and think. The growth of high speed networks, coupled with the falling cost of computing power, is making possible applications undreamed of in the past. Voice, data, images, and video may now be transferred around the world in micro-seconds. This explosion of technology is changing the banking industry from paper and branch banks to' digitized and networked banking services. It has already changed the internal accounting and management systems of banks. It is now fundamentally changing the delivery systems banks use to interact with their customers. All over the world, banks are still struggling to find a technological solution to meet the challenges of a rapidly-changing environment. It is clear that this new technology is changing the banking industry forever. Banks with the ability to invest and integrate information technology will become dominate in the highly competitive global market. Bankers are convinced that investing in IT is critical. Its potential and consequences on the banking industry future is enormous.

Technology and Banks Transformation

Computers are getting more sophisticated. They have given banks a potential they could only dream about and have given bank customers high expectations. The changes that new technologies have brought to banking are enormous in their impact on officers, employees, and customers of banks. Advances in technology are allowing for delivery of banking products and services more conveniently and effectively than ever before - thus creating new bases of competition. Rapid access to critical information and the ability to act quickly and effectively will distinguish the successful banks of the future. The bank gains a vital competitive advantage by having a direct marketing and accountable customer service environment and new, streamlined business processes. Consistent management and decision support systems provide the bank that competitive edge to forge ahead in the banking marketplace.

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 inter-city and intra-city, will permit customers of these branches, when interconnected, to transact from any of these branches. Telebanking: 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 computer-readble form between organizations and individuals in a standard format. As information is centralized and updates are available simultaneously at all places, single-window 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 ledgerkeeper 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 timeconsuming 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. A search of the banking literature reveals that banks are moving rapidly to take advantage of recent and new customer service and cost reduction opportunities that new technologies offer. A sampling is in the table below: Technology Infrastructure PC Networks: Tellers 48% Sales Tracking Software 44% Relational Data Base 36% Automate Credit Scoring 8% E-mail 60% Equipment Management Software 33% Imaging Checks / Statements 12% Imaging Documents 7% Delivery Systems Internet Banking Home Page 3% 25% 80% 80% 76% 48% 95% 57% 72% 45% Current Use Use in Next 3 Years.

Internet Electronic Office Telebanking Smart Cards Debit Cards Electronic Banking

1% 56% 35% 12%

15% 88% 70% 76%

Internet: Riding the tiger. The Internet is rapidly becoming the information superhighway of a global electronic marketplace. The rising commercial interests in the Internet are especially evident in "frontend" applications such as electronic catalogs, yellow pages, storefronts, malls, and customer support centers. All these applications are based on the World Wide Web (WWW) -- the fastest growing segment of the Internet. Although "back-end" applications such as electronic data interchange (EDI) are equally important, their adoption has not been as rapid. One major concern is security: the Internet is generally perceived as not secure enough for transmitting sensitive data such as payments. Upon a closer look, however, this view is not warranted, since technologies such as public key encryption and firewalls address essential security concerns. Moreover, such technologies are already available. The only remaining barrier is the lack of real world users of those technologies. The pilot project between Bank of America (BofA) and one of its large corporate customers involves transporting financial EDI transactions over the Internet. If successful, BofA expects that this new EDI option will lead to a reduction in telecommunications costs, an improved position with respect to its value-added network (VAN), and valuable learning experience with the Internet environment, which is becoming increasingly important to the bank. The project is also significant beyond BofA: because it is one of the first large-scale, real-world trials, its outcome will help dispel many uncertainties surrounding Internet-based EDI, and encourage more companies to move in this direction. Investing in technology. According to a survey conducted by the American Bankers Association, US banks expenditure on information technology grew from $16.3 billion in 1994 to $18.7 billion in 1995-an increase of 14.7%, and $1 billion more than the same bankers forecasted they would spend in last year's survey. By 1998, the banks expect to spend $21.2 billion (an increase of 7. 1 %). How to survive. The key to survival is customer service. Customer loyalty will be determined by convenient and innovative delivery of products and personalized services. In the '70's and '80's, banks were marketing to a generation raised on old style banking: personal interaction at a banking office. That generation was disdainful of "impersonal" service and afraid of computers. Convenience was having a "branch" in one's neighbourhood.

Today, personal service and convenience are still the critical factors in the banking relationship, but they are defined differently. Consumers still want to bank with a financial institution they "know," and one who "knows" them, but they do not necessarily want to go to the bank. They are not afraid of computers and technology; they embrace them. Convenience is doing their banking when they want, and where they want. They are now comfortable with personal computers and other electronic devices. They expect fast, efficient, and accurate service And the only way to cost effectively provide the instant, quality service that customers demand, and that the competition provides, is through intensive use of the most advanced information technologies and through good people trained in the use of these technologies. For all these reasons, the banks delivery systems are completely changing. The new Delivery Systems. The increasing cost of building brick-andmortar branches, decreasing cost of computers, high delivery costs and slow revenue growth force a relook at the conventional delivery systems. Moreover, growing comfort of technology usage by the customer is rapidly fostering usage of non-branch channels for routine transactions. The new strategy changes the focus of the branch from being a high cost transaction center to a provider of a wide range of services like telebanking, customer service kiosks, ATMs, and remote electronic banking. New Marketing Opportunities. As the new technology is so expensive banks need to use the new systems to do more than deliver information and basic services. Banks need the ability to also sell insurance and investment products to get a better return on this investment. Telephone banking can bring financial services to the home or office, especially if they are affordable screen phones. By noticing how much interest the customer expresses, the bank can market stock quotes and insurance quotes. Interactive videos are new technology that banks can make available to the customer to maintain personal contact while still lowering the expense of delivery service. With an interactive video an expert employee is not needed in each branch. Complex life insurance products, open brokerage accounts, customized product illustrations can be widely available where needed. The interactive videos will be cost effective expertise. The internet is a medium to allow banks to offer products to customers outside the normal customer base of a branch. Banks are aware of the customer's need for these services and plan to make them available before other sources do. Drawbacks. Early experiences with electronic commerce in the banking industry, which has been a pioneer in the use of electronic systems, can be used to learn of some potential dangers and issues to be taken into

account. The use of Automated Teller Machines and electronic home banking systems has increasingly allowed customers to bank outside of traditional bank facilities, for most of their usual transactions. This was consistent with the cost-savings strategy of most banks, which discovered that electronic transactions were about seven times less costly compared to the manual handling of these transactions by a bank teller. Nevertheless, the fact that customers' only contact with their banks was through (rather unsophisticated) electronic interfaces, and the major difficulties in integrating the legacy systems of a typical bank, prevented banks in many cases from selling additional products to customers (crossselling). In some European markets, the insurance companies took opportunity of that to grab business from banks, selling savings products to customers through their extensive distribution network. Similarly, the decrease in human interaction with customers could also lead to a less sophisticated understanding of their needs, as they're not always able to express comments, criticisms or requests for new products while interacting with machines. This should lead to a design of electronic commerce systems which incorporate capabilities for customer understanding and for proactive selling of new products. Electronic business transactions can only be successful if financial exchanges between buyers and sellers can occur in a simple, universally accepted, safe and cheap way. Various systems have been proposed, some of them based on traditional mechanisms (e.g. credit cards accounts) while others rely on new designs, such as electronic money. The key here will be to find a few widely accepted mechanisms, which can be used by most actors. The recent agreement between Mastercard and Visa on one security standard for credit card transactions over the Internet, and its backing by most major software vendors is one step in the right direction. This doesn't diminish the need for more specialized systems, for instance to allow microtransactions, the exchange of very small amounts of money (a few cents) in exchange for information or services. These new payment mechanisms will in turn enable new business models such as pay-perarticle newspapers.

The Lebanese Case

During the last civil war (1975-1990), eighty percent of the Lebanese infrastructure was destroyed. The remaining twenty percent are now outdated. The Lebanese banking sector was heavily affected by the war. They lacked the information technology revolution in the banking sector. It becomes a strategic necessity for the Lebanese banks to implement the new technologies at all levels, transactional level, managerial level and executive level. In the 1990's they started implementing IT capabilities to change the work organization, raise the productivity, cut costs and deliver

the best services to their customers and increase their profits in the same time. Most of the Lebanese bankers believe that IT will enable them to face the foreign competition and the possible consequences of the coming peace. Technology Adoption. The vast majority of the Lebanese banks have set very high standards of excellence for themselves in terms of technology, state-of-the-art facilities, customer service and customer orientation with all facets of operations totally computerized. The banks also make extensive use of communication technology to provide off-site banking facilities including ATMs. Their ambition is to position themselves as technology-driven banks offering superior services to both their clientele classes - the corporate customer and the retail customer. The corporate customer typically requires quick disposal of loan applications and maximum returns from the cash balance. The needs of the corporate customer are functions of the speed of response. Technologically the answer to this is a reliable network connecting branches that run on-line. The first steps. At the early stage , Lebanese banks started to build their databases and automate their work procedures. Most banks have adopted ready made packages for their internal operations. Currently, these banks are replacing their old information systems. The banks branches are planning to provide state-of-the-art services to their customers enabling a rapid growth of the bank's performance in a very competitive marketplace. Different approaches are followed in the Lebanese banks to acquire and implement the new technologies. Banque du Liban et d'outre-mer (BLOM), for example, has developed its own complete banking information system. While Ban k Audi followed another strategy and purchased an on-line information system providing a real time on line branch network with an up-to-date banking and customer information to senior management, middle managers, end users and business analysts. Both information systems, in BLOM in Bank Audi are scheduled to run during this year. The major reasons behind adopting or developing new information systems are:

Rapid geographical expansion has forced banks to replace their offline systems by an on-line system linking the branches to the head office through the telecommunications network. Restructuring bank's processes in order to reduce staff expenses which constitute a large part of the operating costs and a heavy burden on its operating profitability. Incompatibility of the old systems with the strategic necessity of integrating new technologies like ATMs, telebanking, etc. in order to

provide the high quality services to the customers and competing on an equal foot with the foreign banks. The competition. The Lebanese banks are also planning to offer the entire range of services like telebanking, ATMs, etc. They also respond very actively in the marketplace in introducing new products and services. Arab Bank was the pioneer in introducing ATMs in Lebanon. Arab bank started to install ATM machines in 1993. Other banks followed, by establishing in 1994 a network called Link Network, using Link cards. About 25 banks have joined this network and are sharing now its almost 60 machines located in the major cities of Lebanon. The central bank is expecting that about 700 ATM machines will be installed in Lebanon by the year 2000. Lebanese banks are also introducing remote banking services. Arab bank was also the first bank in Lebanon to offer this service. Early in 1994, Arab bank installed an interactive voice response system, called Phone Banking. At the same time, it introduced the computer based remote banking service which is called Corporate banking. Four other banks, Allied Business Bank, BLOM, Universal Bank, and the British Bank of the Middle East followed and introduced their telephone based remote banking. However these services are providing only inquiry facilities because they are off-line systems. Technology Assessment. The diffusion and successful implementation of IT in Lebanese banks is not an easy process. Lebanese banks are facing enormous challenges in mastering the new tools provided by IT. An important constraint to the diffusion and success of IT implementation is the telecommunications infrastructure, another obstacle is managerial practices and organizational weaknesses. In the following section, I will analyse and discuss these obstacles. In evaluating banks'use of technology, we look at both the technology in place to serve today's customer and the plans for serving tomorrow's. The first objective is to examine the bank's deployment of technology relative to what is available, tested, and proven to enhance bank performance. The second is to examine the bank's preparation for the future. We want to answer the following questions: The most important issues to be analysed are : To what degree is the bank using proven technologies to enhance performance? Are there any technologies not deployed that would have a significant, positive effect on performance? What level of specialized training has been received by the officers and employees assigned to selecting, deploying, and managing

technology? What level of systems training has been provided to other officers and employees? How effective are the systems that are being used? Is Management monitoring the evolution of banking technologies and planning for the future?

Telecommunication infrastructure. The greatest obstacle to real time electronic banking in Lebanon is the telecommunications infrastructure. Telecommunications in the banking sector is a major factor to the success or failure of any application or service. The Lebanese telecommunications infrastructure was devastated by the civil war. The process of rehabilitation and modernization of this infrastructure started in 1993.According to the recovery plan developed by CDR the telecommunications rehabilitation plan will be completed by the year 1998. This means that banks will not be able to rely on the public network until 1998. The result of such situation is a delay in implementing new services and products like remote banking, electronic funds transfer, real time bank information systems. This has also an effect on the reliability of the services already implemented like ATMs. In order to face this challenge, banks began studying the feasibility of installing a private telecommunications network. Four banks, Bank Audi, Arab Bank, Byblos Bank, and BLOM, started in the early 1996 considering the installation of a private network to connect their branches and thus conduct real time banking operations. This network will also be used to connect the ATMs machines which will thus function on-line. However three problems are delaying the implementation of such network:

Obtaining a license from the Ministry of Post and telecommunications. The high cost of the equipment 0 The lack of coordination between the members of the Lebanese Banks Association.

Human Resources Problems. Banking industry is heavily depending upon information technology that needs professionals for development, implementation and support. Despite the programs performed by many banks to develop their local expertise in IT, there is still a real shortage of qualified personnel. According to a recent survey ( T. Abdul Reda and M. Dayya, Banking IT: a look at Lebanon, AUB, 1996) the following problems were identified:

almost half of the Lebanese banks do not have one engineer among their staff.

lack of professional training programs. Financial institutions in Lebanon offer a wide range of training programs to their employees. However, with respect to their technical IT staff the percentage of training programs is much less, because IT staff are considered to be trained, highly qualified and hence do not need extended training sessions. The consequence of such policy is a reduction of the capability of IT staff to be up to date in the most recent advances . High turnover rate of technical staff. The turnover rate of the technical staff in some 40% percent the Lebanese banks is around 20%. The low salaries and better opportunities in other industries are the main reasons for this high rate. Resistance to change. Resistance to change and the absorption capacity is often neglected once the automation system is adopted. However, this human factor is a critical factor in the success of any banking application of information technology. The only way to solve this problem is to design adequate training programs and increase the awareness of the employees. Most Lebanese banks have realized this fact and some of them have established a training centre.

These are the major obstacles for implementing IT in Lebanese banks. Another point that should be mentioned is the necessity of planning very carefully the development of any new application. A computerization plan is the basis for implementing successful information technology solutions. To be relevant, these plans have to be linked closely to organizational strategies, objectives, priorities and processes.

Strategy for the future

Banks face a serious challenge. The basic structure of the bank is increasingly in conflict with the changing product, delivery, and service needs of the customers The future belongs to financial service providers not traditional banks. The vast majority of large banks, will create value networks. Doing so presents tremendous challenges. Banks will have to first develop a comprehensive distribution system that will enable customers to touch them at multiple points. Banks must also create performance measurement systems to assure the mix products and services they offer are beneficial to both the customer and the bank. They must determine whether to deploy new technologies themselves or with other service providers. Nevertheless, technology alone will not solve issues or create advantages. This technology needs to be integrated in an organization, with the change management issues linked to people resisting new concepts and ideas. It also needs to support a clearly defined and well communicated business strategy.

Created by the Digital Documentation Center at AUB in collaboration with Al Mashriq of Hgskolen i stfold, Norway. date- BL - Email: ddc-info@aub.edu.lb

In the five decades since independence, banking in India has evolved through four distinct phases. During Fourth phase, also called as Reform Phase, Recommendations of the Narasimham Committee (1991) paved the way for the reform phase in the banking. Important initiatives with regard to the reform of the banking system were taken in this phase. Important among these have been introduction of new accounting and prudential norms relating to income recognition, provisioning and capital adequacy, deregulation of interest rates & easing of norms for entry in the field of banking. Entry of new banks resulted in a paradigm shift in the ways of banking in India. The growing competition, growing expectations led to increased awareness amongst banks on the role and importance of technology in banking. The arrival of foreign and private banks with their superior state-of-the-art technology-based services pushed Indian Banks also to follow suit by going in for the latest technologies so as to meet the threat of competition and retain their customer base. Indian banking industry, today is in the midst of an IT revolution. A combination of regulatory and competitive reasons have led to increasing importance of total banking automation in the Indian Banking Industry. Information Technology has basically been used under two different avenues in Banking. One is Communication and Connectivity and other is Business Process Reengineering. Information technology enables sophisticated product development, better market infrastructure, implementation of reliable techniques for control of risks and helps the financial intermediaries to reach geographically distant and diversified markets. In view of this, technology has changed the contours of three major functions performed by banks, i.e., access to liquidity, transformation of assets and monitoring of risks. Further, Information technology and the communication networking systems have a crucial bearing on the efficiency of money, capital and foreign exchange markets. The Software Packages for Banking Applications in India had their beginnings in the middle of 80s, when the Banks started computerising the branches in a limited manner. The early 90s saw the plummeting hardware prices and advent of cheap and inexpensive but high-powered PCs and servers and banks went in for what was called Total Branch Automation (TBA) Packages. The middle and late 90s witnessed the tornado of financial reforms, deregulation, globalisation etc coupled with rapid revolution in communication technologies and evolution of novel concept of 'convergence' of computer and communication technologies, like Internet, mobile / cell phones etc.

MILESTONES In India, banks as well as other financial entities entered the world of information technology and with Indian Financial Net (INFINET). INFINET, a wide area satellite based network (WAN) using VSAT (Very Small Aperture Terminals) technology, was jointly set up by the Reserve Bank and

Institute for Development and Research in Banking Technology (IDRBT) in June 1999. The Indian Financial Network (INFINET) which initially comprised only the public sector banks was opened up for participation by other categories of members. The first set of applications that could benefit greatly from the use of technological advances in the computer and communications area relate to the Payment systems which form the lifeline of any banking activity. The process of reforms in payment and settlement systems has gained momentum with the implementation of projects such as NDS ((Negotiated Dealing System), CFMS (Centralised Funds Management System) for better funds management by banks and SFMS (Structured Financial Messaging Solution) for secure message transfer. This would result in funds transfers and funds-related message transfer to be routed electronically across banks using the medium of the INFINET. Negotiated dealing system (NDS), which has become operational since February 2002 and RTGS (Real Time Gross Settlement system) scheduled towards the end of 2003 are other major developments in the area. Internet has significantly influenced delivery channels of the banks. Internet has emerged as an important medium for delivery of banking products & services. Detailed guidelines of RBI for Internet Banking has prepared the necessary ground for growth of Internet Banking in India. The Information Technology Act, 2000 has given legal recognition to creation, trans-mission and retention of an electronic (or magnetic) data to be treated as valid proof in a court of law, except in those areas, which continue to be governed by the provisions of the Negotiable Instruments Act, 1881. As stated in RBI's Annual Monetary and Credit Policy 2002-2003: "To reap the full benefits of such electronic message transfers, it is necessary that banks bestow sufficient attention on the computerisation and networking of the branches situated at commercially important centres on a time-bound basis. Intra-city and intra-bank networking would facilitate in addressing the "last mile" problem which would in turn result in quick and efficient funds transfers across the country".

Implementation of Centralised Funds Management System The centralised funds management system (CFMS) provides for a centralised viewing of balance positions of the account holders across different accounts maintained at various locations of RBI. While the first phase of the system covering the centralised funds enquiry system (CFES) has been made available to the users, the second phase comprising the centralised funds transfer system (CFTS) would be made available by the middle of 2003. So far, 54 banks have implemented the system at their treasuries/funds management branches. Certification and Digital Signatures The mid-term Review of October 2002 indicated the need for information security on the network and the use of public key infrastructure (PKI) by banks. The Controller of Certifying Authorities,

Government of India, have approved the Institute for Development and Research in Banking Technology (IDRBT) as a Certification Authority (CA) for digital signatures. Consequently, the process of setting up of registration authorities (RA) under the CA has commenced at various banks. In addition to the negotiated dealing system (NDS), the electronic clearing service (ECS) and electronic funds transfer (EFT) are also being enhanced in terms of security by means of implementation of PKI and digital signatures using the facilities offered by the CA. Committee on Payment Systems In order to examine the entire gamut of the process of reforms in payment and settlement systems which would be culminating with the real time gross settlement (RTGS) system, a Committee on Payment Systems (Chairman: Dr. R.H. Patil) was set up in 2002. The Committee, after examining the various aspects relating to payment and settlement systems, submitted its report in September 2002 along with a draft Payment Systems Bill. The draft Bill provides, inter alia, a legal basis for netting, apart from empowering RBI to have regulatory and oversight powers over payment and settlement systems of the country. The report of the Committee was put on the RBI website for wider dissemination. The draft Bill has been forwarded to the Government. Multi-application Smart Cards Recognising the need for technology based payment products and the growing importance of smart card based payment flows, a pilot project for multi-application smart cards in conjunction with a few banks and vendors, under the aegis of the Ministry of Communications and Information Technology, Government of India, has been initiated. The project is aimed at the formulation of standards for multi-application smart cards on the basis of inter-operable systems and technological components of the entire system.

Special Electronic Funds Transfer As indicated in the mid-term Review of October 2002, national EFT (NEFT) is being introduced using the backbone of the structured financial messaging system (SFMS) of the IDRBT. NEFT would provide for movement of electronic transfer of funds in a safe, secure and quick manner across branches of any bank to any other bank through a central gateway of each bank, with the inter-bank settlement being effected in the books of account of banks maintained at RBI. Since this scheme requires connectivity across a large number of branches at many cities, a special EFT (SEFT) was introduced in April 2003 covering about 3000 branches in 500 cities. This has facilitated same day transfer of funds across accounts of constituents at all these branches. National Settlement System (NSS) The clearing and settlement activities are dispersed through 1,047 clearing houses managed by RBI, the State Bank of India and its associates, public sector banks and other institutions. In order to facilitate banks to have better control over their funds, it is proposed to introduce national settlement system (NSS) in a phased manner. Real Time Gross Settlement System (RTGS)

As indicated in the mid-term Review of October 2002, development of the various software modules for the RTGS system is in progress. The initial set of modules is expected to be delivered by June 2003 for members to conduct tests and familiarisation exercises. The live run of RTGS is scheduled towards the end of 2003. Reporting of Call/Notice Money Market Transactions on NDS Platform Negotiated dealing system (NDS), which has become operational since February 2002, enables on-line dealing and dissemination of trade information relating to instruments in money, government securities and foreign exchange markets. Membership in NDS is open to all institutions which are members of INFINET and are maintaining subsidiary general ledger (SGL) Account with RBI. These include banks, financial institutions (FIs), primary dealers (PDs), insurance companies, mutual funds and any other institution as admitted by RBI. At present, all deals in government securities, call/notice/term money, CDs and CP executed among NDS members have to be reported automatically through NDS, if the deal is done on NDS and within 15 minutes of concluding the deal, if done outside NDS. However, it has been observed that a very sizeable proportion of daily call/notice money market deals is not reported by members on NDS as stipulated. With a view to improving transparency and strengthening efficiency in the market, it is proposed that: 1. From the fortnight beginning May 3, 2003, it would be mandatory for all NDS members to report all their call/notice money market deals on NDS. Deals done outside NDS should be reported within 15 minutes on NDS, irrespective of the size of the deal or whether the counterparty is a member of the NDS or not. 2. Full compliance with the reporting requirement to NDS will be reviewed in September 2003. In case there is repeated non-reporting of deals by an NDS member, it will be considered whether non-reported deals by that member should be treated as invalid with effect from a future date.

Areas, which will get the emphasis in IT plans/Strategy of banks... Mrs S A Panse, Deputy General Manager (Information Technology), Bank of Maharastra is of view that as Asset-Liability management and Risk management have gained importance after liberalization and globalization, getting the data updated on real time basis for the organization is of prime importance. Establishing a WAN for connecting all the branches and moving towards Core Banking Solution is the prime business need. Further, in view of RBI's initiative for implementing various payment and settlement systems such as- NDS-PDO, CFMS, SMFS and RTGS, connectivity intrabank as well as interbank is also the basic necessity for every bank. With RTGS being implemented by Jan.2004, every bank would have to not only computerize the entire functioning of the Treasury department but also would have to consolidate the treasury function and move towards integrated treasury for better funds management. In order to achieve this, IT would be playing a major role. This has gained more importance after the establishment of the CCIL.

Mr C.N. Ram, Chief Technology Officer, HDFC Bank feels that Connectivity of banks, Risk Management, Asset Liability Management systems and core banking will rank high in plans of Banks.According to Mr Pravir Vohra, Chief Technology Officer, ICICI Bank, Networking of branches, ALM & Risk management are going to be areas of top priority in IT plans/Strategy of banks. According to Mr Neeraj B Bhai, Chief Technology Officer, IDBI Bank, in view of RBI's policy this year, Inter-bank payment systems are poised to move to a much higher degree of advancement during the year. WIth impending arrival of RTGS, all banks will have to gear up for it. While Multiapplication smart card pilot has been indicated in the policy, its active usage is still quite some time away. The earlier Smart Card project of RBI had met with a limited success. National Settlement System will enhance the efficiency of funds management, which can now be centralised in a much better way. Mr V.K. Ramani, President (Information Technology), UTI Bank is confident that the Policy announcements on the payment systems will pave the way for the establishment of the legal framework, for electronic settlements. The technology initiative taken by the RBI for setting up RTGS will have far reaching impact As follow up to the electronic clearing ECS, the move for an RTGS is logical extension. According to Mr Ramani, the standards for inter operability of smart cards will enable multiple applications on a single chip. Currently smart cards are used for select applications. The technology for integrated applications is available but unless the volume of transactions is large, it is not an attractive proposition. Mr Ravikiran Mankikar, Chief of Information Technology, Shamrao Vithal Co-Operative Bank feels that RBI's initiatives and encouragement to the Banks to implement payment and settlement systems in a secured environment is surely the first logical steps towards the introduction of the electronic funds transfer mechanism in a big way. Banks that are not geared up for the networking should fear to be left behind. Implementation of the Core Banking solutions are to be planned by Banks as part of their strategy to align with the RBI initiative. Mr V Chandrasekhar, General Manager & Chief Technology Officer, Bank of Baroda summarises the key areas, which will get the emphasis in IT plans/Strategy of banksa. Networking of branches b. Secure Messaging for launching funds transfer products c. Integrated Treasury Management System d. Focus on technology based initiatives for Intra-day liquidity Management e. Core Banking Solution implementation

T has had a great impact on the banking industry. I suggest in the future that payments will be instant across the globe, plastic cards will be replaced with integrated devices (watches, mobile phones etc) although how these will be secured is still unknown. A long time into the future, the removal of small cash amounts (coins) may be transferred over to these integrated devices - although the current card issuers (visa/mastercard) will have to look at their charging model to achieve widespread use.

A majority of existing banks today are also moving to paperless statements and billing - however this does raise an interesting side issue in that a lot of banks & loan companies still ask for proof of income or evidence of a bank account by viewing the paper statements - will these be trusted if you have printed them yourself ?

Technology is a boon to several industries in the post modern world, and the banking industry is another one to benefit from the multi dimensional efficiency levels of technology. Technology banks helps in the process of clarity, simplicity and efficiency in complex banking processes, also reaches out for something superior and a wider range of customers. Services provided through the means of computers, mobiles and other telecommunication mediums have also added upon the benefits and multitude of tasking for the banks. The importance of technology in the banking sector has made banking a very easy affair. The introductions of ATMs, internet banking and phone banking are all the outcomes of the technological modifications. Banking has definitely improved from just being somewhere one had to rush every now and then to keep a tally of their accounts and to deposit and withdraw cash, to something which is so easy and efficient that it does not at all seek for added attention. Electronic banking has also emerged as one of the most efficient delivery channel for the banking industry. Information technology of IT revolution has essentially changed the face of the world and the economic, financial and social status has taken a giant leap from what it used to be previously. The financial operations are very fast and reliable and that has eventually resulted into strengthening the banking sector. The cost of global funds transfer has gone down drastically due to the progressive nature of the technology. An unprecedented economical and financial expansion is witnessed across the globe and the IT revolution forms the basement of it. The new age customer faces has also undergone a radical change from its yester years counterparts and they are much more tech savvy themselves and demanding and would essentially want to avail the most improved version of services for themselves. The back office requirements and financial accounting is also managed by the banks through the development of advanced software. Other services include everything from medical, electrical, telephone and shopping bill payments to payment of excise duty and service tax, railway and air ticket booking, prepaid mobile recharges, instant alerts, sports updates, movie tickets bookings, mobile banking, international money transfer and so on and so forth. Express delivery, funds transfer, card to card transfer, instant software download to stop payment, payment blockings every little detail and service is provided by internet banking and other technological services. The importance of technology has eventually contributed a lot in the way of cost reduction for the customers and has offered a varied number of products and services. Thus costs cuttings have a direct effect influencing the profit margins therefore resulting into a thriving business sector. Technology henceforth, is the main reason of development and growth of the banking sector.

Apart from all this, technology aids the adept security measure for the banking houses in order to secure the customer confidentialities and monetary details. Giant business houses have their important papers, documents and passwords stored up in the banks which are taken care of by the highly sensitive and skillful technological security devices.

Credit Card, VISA Card

IFIC Bank VISA Credit Cards are issued in two types namely Gold and Classic for both local and international use. The Local Cards can be used at any ATM displaying VISA Logo for withdrawal of cash and at any POS displaying VISA Logo for purchase of goods & services within Bangladesh whereas the International Cards can be used at any ATM and POS displaying VISA logo anywhere in the world. International credit card is a dual currency card and as such you can use the same plastic at home & abroad. Classic cards are for lower limits and less costly. IFIC credit cardholders can enjoy 20 to 50 days interest free period depending on the date of transaction and the date of statement generation. Therefore, you can make your schedule of spending & payment at your convenience. Interest free period will not be allowed for cash advance. Flexibility in Repayment You can repay any amount not less than the minimum payment due within the due date and keep your account regular to enjoy revolving credit facility.

Visit IFIC Card Division on any working day or dial 9559703 or PABX: 9563020 Ext. 500, 502 or Fax: 9570282 or email: card@ificbankbd.com for further information. Please dial 9559703 or 01713229817 at any time for help.

IFIC Debit Card

FIC Bank VISA Debit Card can be used at any ATM displaying VISA Logo for withdrawal of cash and at any POS displaying VISA Logo for purchase of goods & services within Bangladesh. ATM transactions are to be secured by Personal Identification Number (PIN) known by the concerned customer only. POS transactions will not require PIN. However, all the transactions are to be authorized by the system electronically

IFIC debit card is issued against any individual savings/ current account maintained with any branch of IFIC Bank Limited. The designated savings/current account can be operated by using the debit card without using cheques 24 hours in a day, 7 days in a week, 365 days in a year. The customers are not required to pay any charge for transactions at Merchant Point of Sale (POS) for purchasing goods and services. For cash withdrawal from ATM/Branches, a little

charge may be applied. No interest will be calculated on cash withdrawal or purchases. No minimum amount due and no hassle of payment of monthly bills. Visit IFIC Card Division on any working day or dial 9559703 or PABX: 9563020 Ext. 500, 502 or Fax: 9570282 or email: card@ificbankbd.com for further information. Please dial 9559703 or 01713229817 at any time for help.

FIC Prepaid Card

by IFIC Bank IFIC Bank VISA Prepaid Card can be used at any ATM displaying VISA Logo for withdrawal of cash and at any POS displaying VISA Logo for purchase of goods & services within Bangladesh. ATM transactions are to be secured by Personal Identification Number (PIN) known by the concerned customer only. POS transactions will...

IFIC Prepaid card is issued by the branches instantly on filling-up the Application Form and making initial deposit. There is no need to have any account with the Bank. Prepaid card are suitable for the customers who does not maintain any account with IFIC. No interest will be calculated on cash withdrawal or purchases. No minimum amount due and no hassle of payment of monthly bills. visit IFIC Card Division on any working day or dial 9559703 or PABX: 9563020 Ext. 500, 502 or Fax: 9570282 or email: card@ificbankbd.com for further information. Please dial 9559703 or 01713229817 at any time for help.