A PRESENTATION ON

ROLE OF INFORMATION
TECHNOLOGY IN FINANCE
AND BANKING

PREPARED BY:
78. JYOTI VASAVA
60. SNEHA PATEL
3. KAMINI BARODIYA
59. PRIYANKA PATEL
32. SMITA KANHDOLIYA

INTRODUCTION :
INFORMATION TECHNOLOGY
IT is the technological part of an information system which consists of

hardware, data base, software, networks and other instruments.

Information technology (IT) is the application of computers and

telecommunications

equipment

to

store,

retrieve,

transmit

and

manipulate data, often in the context of a business or other enterprise.

The term is commonly used as a synonym for computers and computer

networks, but it also encompasses other information distribution

technologies such as television and telephones.

ROLE OF IT IN FINANCE
SECTORS:IT on Stock Market:
(1) Screen Based trading system & order matching system:
(2) Negotiation Dealing System
(3) Clearing Corporation of India Ltd., (CCIL) as a fully IT enabled entity

providing for electronic transaction processing as well as reporting has

enabled the market to grow in the depth and coverage as well.
(4) The Internet makes them accessible in the global market. Being more

accessible will give them the opportunity to pick up a bigger market

share, and give them a greater market value.

IT in Insurance Sector:
(1)

Impact of IT in Insurance Business is being felt at an accelerating pace.

(2)

In initial year IT was used more to execute back office functions like
maintenance of accounts, reconcilling broker accounts, client processing etc.
with the advent of database concept , these functions are better integrated
in an administrative efficiency.

(3)

The real evolution is however emerged out of internet boom. The internet
has provided brand new distribution channels to the insurers. The technology
has enabled the Insurer to innovate new products, provide better customer
service and deeper and wider insurance coverage them.

(4)

At present, Insurance companies are giving customers a distinct claim- id

(5)

To track on-line enrolment.

ROLE
OF
IT
IN
BANKING
INTRODUCTION:
With the globalization trends world over it is difficult for any nation big or
small, developed, developing, to remain isolated from what it happing
around.
For a country like India, which is one of the most promising emerging
markets, such isolation is nearly possible.

Importance of banking industry in boosting economic progress of a nation.

Use of information technology for all round growth.

To support the industrial, commercial, agricultural and other services sector,

the banking sector plays a very vital role. Information systems are now
exposed to a number of technology products

IT COSIDERATIONS IN BANKING:
MEETING ITERNAL REQUIREMENT:

The requirements of the banks are different individually depending

upon their nature and volume of business; focus on a particular

of

branches and a like.

EFFECTIVE IN DATA HANDLING:

As stated earlier the banks have most of the needed data but
are distributed. further the cost of collection of data and putting the same to
use is prohibitively high.
EXTENDING CUSTOMER SERVICES:

In case bank A is unable to provide the required service at a

competitive price and in an accurate manner with speed.

 CREATIVE SUPPORT FOR NEW PRODUCT DEVELOPMENT:

It has become necessary for the banks to vitalize the process

of product development. Marketing functionaries needs a lot of
information not only from the outside sources but also from within the
banks.
Banks are looking to retail segment as the future market places
for sales efforts. The emergency of data requirement and an
appropriate architecture to support the same are significant issues to
be handled in this regard.

Recent Developments in Banking

Sector
( 1 ) Internet Banking:

Internet banking is a networking of

different banks through network. In this
marketing message can be transferred
and received worldwide. It includes the
following:
Electronic mailing system.
It is vertual Banking
We can exchange our ideas through

Internet.

we

can

exchange

letters,

figures/diagrams and music recording.

(2) Automated Teller Machine (ATM):

ATM is an electronic machine, which

is operated by the customer himself

to make deposits, withdrawals and
other financial transactions.
The customer is issued an ATM card.

This is a plastic card, which bears

the customers name. This card is
magnetically coded and can be read
by this machine. Each cardholder is
provided with a secret personal
identification number.

(3) Cash Dispensers:

Cash withdrawal is the basic service rendered by the bank branches.
The cash payment is made by the cashier or teller of the cash
dispenses is an alternate to time saving. The operations by this
machine are cheaper than manual operations and this machine is
cheaper and fast than that of ATM. The customer is provided with a
plastic card, which is magnetically coated. After completing the
formalities, the machine allows the machine the transactions for
required amount.

(4) Phone Banking and Mobile Banking:

By using Automatic voice recorder
(AVR)

for

transactions

simple
and

queries
manned

and
phone

terminals for complicated queries and

transactions, the customer can actually
do entire non-cash relating banking on
telephone: Anywhere, Anytime.
For this service, mobile phone should
either be SMS or WAP enabled. These
facilities are available even to those
customers

with

only

accounts with the bank.

credit

card

(5) Voice Mail:

Talking of answering systems, there
are several banks mainly foreign
banks now offering very advanced
touch tone telephone answering
service which route the customer
call

directly

to

the

department

concerned and allow the customer

to

leave

message

for

the

concerned desk or department, if

the person is not available.

(6) Credit Cards and Debit Cards:

A credit card is issued by a credit card provider,

like Capital One, and they are designed to pay

for things in shops or online. You can also use
credit cards for balance transfers and taking out
cash (also known as cash advance or cash
withdrawal) from an ATM.
Bank card used in cash transactions, but which

is not a credit card . In a debit card transaction,

the amount of a purchase is withdrawn from the
available balances in the cardholders account. If
the

available

funds

are

insufficient,

the

transaction is not completed.

Its also called assets card ( in the US) and

payment card ( in U.K )

(7) Society for Worldwide Inter-bank Financial Telecommunications

(SWIFT):
SWIFT, as a co-operative society was formed in May 1973 with 239

participating banks from 15 countries with its headquarters at

Brussels.
It started functioning in May 1977. RBI and 27 other public sector

banks as well as 8 foreign banks in India have obtained the

membership of the SWIFT. SWIFT provides have rapid, secure,
reliable and cost effective mode of transmitting the financial messages
worldwide. At present more than 3000 banks are the members of the
network. To cater to the growth in messages, SWIFT was upgrade in
the 80s and this version is called SWIFT-II.

Banks in India are hooked to SWIFT-II system.

SWIFT is a method of the sophisticated message transmission of

international repute. This is highly cost effective, reliable and safe

means of fund transfer.
This network also facilitates the transfer of messages relating to fixed

deposit, interest payment, debit-credit statements, foreign exchange

etc.
This service is available throughout the year, 24 hours a day.

This system ensure against any loss of mutilation against

transmission.

It serves almost all financial institution and selected range of other

users.

(8) Any where Banking:

With expansion of technology, it is now possible to obtain financial details
from the bank from remote locations. Basic transaction can be effected from
faraway places. Automated Teller Machines are playing an important role in
providing remote services to the customers. Withdrawals from other stations
have been possible due to inter-station connectivity of ATMs.
Now ATM facilities are also available at non-branch locations, airports,
hotels, Railway stations, Office Computers, Remote Banking is being further
extended to the customers office and home.

Impact

IMPACT OF IT IN
BANKING
Of

IT

IN

Banking

Sector

In general, existing studies have concluded two positive effects

regarding the relation between IT and banks performance.
1. IT can reduce banks operational costs For example, internet helps
banks to conduct standardized, low value-added transactions (e.g. bill
payments, balance inquiries, account transfer) through the online
channel, while focusing their resources into specialized, high-value
added transactions (e.g. small business lending, personal trust services,
investment

banking)

through

branches.

Continued
2. IT can facilitate transactions among customers within the same network
(e.g. automated teller machines (ATMs) by banks).
3.

Impact

of

IT

in

banking

sector

On-Line Return Filing System-which as a sub-set of the CDBMS, will act

as a one stop shop for banks to submit all the regulatory returns. This
system which has commenced in a small way is being expanded to cover
all the returns furnished by commercial banks to the Reserve Bank.
On-line Complaint Tracking System-The software, developed at the
request of the Ministry of Finance, enables the office of the Banking
Ombudsmen to track disposal of complaints; access is also available to
the Rural Planning and Credit Department (RPCD) and the Ministry of

continued
Finance

for

monitoring

the

position

on

real

time

basis

Enterprise Wide Knowledge Management System (EKMS)- which would

provide organic linkages across various sets of information available
across different functional units of the Reserve Bank which could be used
for better analysis and obtaining a holistic picture across different
segments of the markets.
Impact

of

IT

in

banking

sector

Centralised Data Base Management System (CDBMS)-the Data

Warehouse of the Reserve Bank, by providing for access to general
users as well, and accessible through the Internet, called the CDBMS.
The IDRBT physically hosts the Secured Web Site of the Reserve Bank
which enable users to have electronic access to the Reserve Banks
offerings

using

the

Internet

Continued..
Multi Protocol Layer Switching (MPLS)-technology for the INFINET so as

to take advantage of lesser costs and widely available technologies has

begun at IDRBT which would usher in more benefits to users
Structured Financial Messaging System (SFMS)-which is takin to
S.W.I.F.T. for exchange of financial messages across member banks has
become the widely used inter-bank messaging system.

Conclusion
To provide a interactive and user friendly service, banks and financial

institutions have adopted the most recent technological trends. Queuning at

banks is a thing of the past; now a days customers can enjoy various facilities
at the doorstep of their banks and at other locations. Phone banking and
SMS banking services can also keep customers updated with status of their
money, investments and offer an array of additional services.
Stock and share trading is also not spared with the changes in technology

stock brokers or even everyday normal buyers can have an almost up-to-date
update and status of market status of stock of their interest. They no longer
need to wait for news paper, news channel or need some fancy program.
You can transfer funds, pay utility bills, deposits your insurance premium ,

and shop online with the assistance of online payment facilities.