I T IN BANKING
By
Dr. R. Rajeswari, Reader in Commerce & Principal,
Sri Sarada College for Women (Autonomous), Salem-16.
INTRODUCTION
India’s banking sector has made rapid strides in reforming and aligning itself to the new competitive business environment. Indian banking industry is in the midst of an IT revolution. Technological infrastructure has become an indispensable part of the reforms process in the banking system, with the gradual development of sophisticated instruments and innovations in market practices.
AN OVERVIEW OF IT IN BANKING
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.
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.
With the fierce competition and liberalized policies, the banks have diversified into non-traditional areas like:
- Merchant banking.
- Lease Finance.
- Project Finance.
- Trust and Pension Management.
- Executor / Trusteeship Business.
- Free Based Services.
- Investment Banking.
- Cash Management Product.
- Real Estate Financing, especially Housing Finance.
- Negotiating and Syndicating borrowings for Corporate Customers in international markets.
- Forex Loans.
- Securities Operations.
- Gold and gold related Products.
- Management Consultancy for Corporate Customers.
- Mergers, Acquisition and Divestitures.
- Factoring Forfeiting.
Today, 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.
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