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11 I T IN BANKING SECTOR
1. INTRODUCTION
The Indian Banking system has an old age legacy. Earlier there
were indigenous bankers who consisted mainly of unorganized
moneylenders, mahajans and sahukars. Later, when British came to India
they brought with themselves the concept of organized banking. British
while leaving India left behind large number of small and privately held
banks. In 1964, the first major banking reform took place when 14 banks
were nationalized. It led to the rising of Indian Public Sector Banks. The
second banking reform was witnessed in 1990s when Indian Banking
Sector underwent complete change after the recommendations of the
Narsimhan Committee. Private and MNC banks entered banks entered
into the Indian Banking arena and challenged the monopoly of the PSU
banks. The Private and MNC banks brought new technologies and
technology intensive services with themselves. They rendered quality
service, which PSU banks were not providing, to service starved Indian
customers. There were a series of technological innovations and up-
gradations, e.g., ATMs, Internet Banking, credit cards and online banking,
etc. Private Banks and MNC banks had to provide something extra and it
was their service, which attracted a bulk of customer from the PSU banks.
Indian customers were lacking the world-class service in baking; they
were accustomed to the PSU (Sarkari) culture and the service of Private
and MNC banks was a delight for them.
Technology is helping the Indian Banks to cater to customer needs
in a much more efficient manner continuous and error free services to
customers. With the help of computerization and the use of modern
software, which can be called the gift of technology, the banks have been
able to provide single window system to their customers. In a single
window system, all the needs of the customers are taken care at a single
RESEARCH METHODOLOGY
Articles in newspapers.
SAMPLE FRAME:
The data has been analyzed using ten samples of employees of
three different banks viz., Bank of Maharashtra, HDFC Bank and ICICI
Bank.
Banking and IT
Advancements and innovations in IT industry have created a
revolution in the communication and distribution system of various
products and services through Web networking. Networking, as we know
has connected people around the globe, thus creating a revolution in
modern business activities.
capital intensive.”
- A senior banker
debit cards. To increase the usage of debit cards, banks should concentrate on
increasing installation of PoS terminals in semi-urban and rural areas.
Operational Efficiency
Operational efficiency, in terms of optimum utilization of
resources, has been one of the most positive offshoots of technological
application in banks. Thanks to greater technological application, banking
system has seen a near consistent improvement in the intermediation
efficiency and consequent decline in transaction cost. Yet, technology
application has been by and large confined, especially in the state-owned
banks, towards cost saving and improved service standards through
product innovation. While savings in cost and improvement in service
quality could turn out to be short-term in nature, it is essential that
technology is leveraged as a long-term and efficient cross-functional
application. It is also time that the focus of technology shifts from
product innovation to process innovation commonly referred to as
Business Process Reengineering (BRP), for banks to gain long-term
operational efficiency.
Customer Management
Technology also spells significant benefits on the realm of
customer research and management. In a predominantly buyers’ market
and high propensity if customers to switch service providers, customer
management need no longer is a front office function, but a bank-wide
obsession. Many banks have duly realized the significance of such
functions and introduced new models like the High Net Worth clients’
branch, imbued with state of the art technology, exquisite ambience and
quickest possible processing of transactions. Customer management is a
very sensitive issue entity hears only from 4% of its dissatisfied customer,
while 96% of its customers quietly go away of which 91% never come
back. Technology, thus, already implemented the tech aided e-CRM
application as strategic tool to retain as well as expand their customer
base. The bottom line is that banking products are getting commodities
and price wars are slowly leading to a zero-sum game. In such a scenario,
technology backed customer orientation will hold the key to take service
standards anywhere near to world-class.
Product Research
In the field of product research as well, technology plays a decisive role, in
terms of swift product innovation, an active R&D set up effective pricing of products
to protect banks’ margins and safeguard customers’ interests. Banking product life
cycles are getting shorter day by day and more than delivery, product servicing
defines competitive edge for banks. Marked to market product processes are equally
important for sustained improvement in the value chain of services and command ‘top
of the mind recall’ from the customers. Technology also aids product profitability
research and review, which have not adequate attention in many of the banks.
Distribution Reach
The thumb rule for strategic management masters is that structure
must follow strategy in any business reorganization. Technology, thus,
calls for attendant restructuring endeavors that will be in tune with the
level of technology application. For instance, many banks need to put in a
place a leaner structure and remove intermediate decision-making tiers.
That is how one can see that many of the regional outfits of banks are
slowly being dismantled while branch expansion is not being accorded
the thrust it used to be given earlier. Rightsizing of human and physical
overheads is a major strategy adopted by many banks wherein the role of
the earlier brick and mortar banking is slowly getting dissipated. In turn,
devices like Internet and mobile banking. Technology, thus, facilitates
downsizing of overheads cost without compromising much on clientele
reach. Public sector in the rural and semi-urban areas. Many of these
branches are not performing to their potential mainly because of their
typical business mix, cost diseconomies and lack of technology-based
services offered in these branches. Technology can facilitate the branch
rationalization exercise such as setting up mobile branches and satellite
branches, especially in the rural areas, and bring many of those into the
“Performing” category without affecting the extent of client reach.
settlement systems, banks, especially those in the public sector, need to address
certain core issues expeditiously. These include the following:
technology drive dividends to these banks although the need of the hour
is to consolidate the gains so far and address the weak links.
Recently, a study was conducted by National Institute of Bank
Management, at the behest of RBI, for suggesting a methodology to
integrate IT and business plans in banks. The study has proposed an
‘Enterprise Maturity Model’, for attaining total convergence of
technology and business strategies with focus on selected, generic
business strategies. The model suggests solutions not merely for business
and technology, but for issues related to human resources and customers
who form an integral part of banks’ strategic road map.
The World’s Top 10 tips for ATM Use to Enhance the ATM customer
Experience and Security
CHOOSING AN ATM
Tip 1: Where possible, use ATMs with which you are most familiar.
Alternatively, choose well-lit, well-placed ATMs where you feel
comfortable.
Tip 2: Scan the whole ATM area before you approach it. Avoid using the
ATM altogether if there are any suspicious-looking individuals around or
if it looks too isolated or unsafe.
Tip 3: Avoid opening your purse, bag or wallet while in the queue for the
ATM. Have your card ready in your hand before you approach the ATM.
Tip 9: Keep your printed transaction record so that you can compare your
ATM receipts to your monthly statement.
While the ATM industry is aggressively addressing ATM-related
frauds and crimes, few in the industry know about these extraordinary
efforts. Some of the important works are given below:
Web Spoofing
In Web Spoofing, customers of the bank are lured to log in at the
fraudster’s website, which is similar to the bank’s website. Once the
customer provides sensitive information, they can be stolen easily by the
fraudster, who uses the stolen sensitive information like password and
username etc., to carry out the transaction on the bank as a real customer.
In the whole case, the only loser is the customer because he does
not have any means to prove that it was not he who did those
transactions, but the fraudster.
Ignorance of the customer to intercept Universal Resource Locator
(URL) is the major cause of Web spoofing. Look at the following two
URLs
http://secure.bankname.com/carloanfind/carloans.asp
http://secure.bankname.com?
@569857125/carloanfind/carloans.asp
It is clear that to plug all the loopholes is very difficult for any
regulator. This is a challenge to the mission of fast automation. It is
essential on the part of the banks, the regulators and the service providers
to create a source and safe automation environment that has the
confidence and trust of the customers.
Credit card fraud has become regular on Internet. All the agencies
involved in the transaction, cardholders, online merchants and the card
issuers suffer losses. However, it is the online merchant who suffers the
most. This article examines the nature of credit card fraud, types of credit
card frauds, and the effects. This article also discusses the preventive
measures.
Application Fraud:
In application fraud, the fraudster obtains personal confidential
information of the other person needed in the credit card applications, like
social security number, date of birth using a variety of means. Internet
search engines and databases are making these tasks easier. Using this
information, he fills in an application for a credit card and after receiving
it, uses it as if he is the true holder. The person in whose name the card is
issued might come to know about this only after the damage is done.
Counterfeit Cards:
In this, a criminal gains access to a valid card number and other
information. For example, the salesperson at the supermarket briefly
takes possession of the customer’s card during payment process, which
he runs on a terminal. But without the knowledge of the cardholder, the
salesman can also run it on another machine, which can capture all the
details in the card. Using this information and tools like embossing
Other Forms:
From the point of view of a merchant, credit card frauds can be
divided into three ways. There are organized fraud, opportunistic fraud
and cardholder fraud. The advantages offered by Internet are also
attracting the criminals in a big way. In an organized criminal activity, the
gang’s obtain credit cards using any of the means discussed above. They
normally identify a drop location like a vacant house or warehouse, spend
the card up to the maximum limit, and ask the merchandise to be dropped
at this selected location. These gangs have a thorough understanding of
the system and take advantage of the fact that there is normally a time gap
of more on to the next card. Opportunistic fraud is committed normally
by amateurs who get an opportunity of handling credit cards, like waiters
in restaurants. Cardholder fraud involves the cardholder himself who
might claim that he never placed the order or he never received the goods.
It could also involve one of his family members or friends who used the
card without his knowledge.
Results Documentation
Technology Risk Assessment (TRA) methodologies are not much
different from general risk assessment methodologies and they, too,
follow these steps. However, the risk assessment tools would be different
in case of technology risk because to assess adequately and to prioritize
technology risk, the risk assessment tools must be supplemented with
methodologies specifically geared to technology.
Sys Trust
The American Institute of Certified Public Accountants (AICPA)
and the Canadian Institute of Chartered Accountants (CICA) introduced a
ANALYSIS: -
Bank of ICICI HDFC
Maharashtra
AGREE 96% 98% 100%
DISAGREE 3% 2% 0%
FIFTY-FIFTY 1% 0% 0%
GRAPH: -
100%
99%
98%
97%
96%
95%
94%
Bank of ICICI HDFC
Maharashtra
EXPLANATION: -
ANALYSIS: -
Bank of Maharashtra ICICI HDFC
1:2 30% 0% 0%
2:1 60% 100% 100%
Equal 0% 0% 0%
GRAPH: -
100%
80%
0%
HDFC ICICI Bank of
Maharashtra
EXPLANATION: -
ANALYSIS: -
Bank of Maharashtra ICICI HDFC
GRAPH: -
100%
80%
60%
To some extent
40% No
20% Yes
0%
Bank of ICICI HDFC
Maharashtra
EXPLANATION: -
According to the above data collected it is clear that approximately ninety
three percent of employees says yes, four percent says no and three percent says to
some extent.
ANALYSIS:-
Bank of Maharashtra ICICI HDFC
Online banking 2% 0% 0%
Manual banking 97% 98% 100%
Both 1% 2% 0%
GRAPH: -
1%
0%
2%
100%
80%
60%
100%
97%
98%
40%
20%
2%
0%
0%
0%
Bank of ICICI HDFC
Maharashtra
EXPLANATION:
According to the above data collected it is clear that
approximately ninety seven percent of employees says that manual
banking type of facility is friendly to illiterate customers, two percent
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ROLL NO. 11 I T IN BANKING SECTOR
says online banking and one percent says both online as well as manual
banking is friendly to the illiterate customers.
Q.5) In what way I.T. in banks affects the work of the employees.
Increases the work Decreases the work
ANALYSIS: -
GRAPH: -
100%
5%
5%
7%
80%
50%
55%
63%
60%
40%
45%
40%
20%
30%
0%
Bank of ICICI HDFC
Maharashtra
EXPLANATION:
According to the above data collected it is clear that approximately
thirty eight percent says I.T. in banks increases the work of the
employees, fifty six percent says decreases the work and six percent says
it is same at both the levels.
YES NO EQUAL
ANALYSIS: -
GRAPH: -
0%
0%
1%
2%
100%
5%
80%
60%
100%
98%
94%
40%
20%
0%
Bank of ICICI HDFC
Maharashtra
Yes No Equal
EXPLANATION:
According to the above data collected it is clear that
approximately eighty seven percent of employees says yes i.e. I.T.
increases the cost of banking operations or banking transactions, two
percent says no and one percent says equal.
Indian Scenario
2002 2003
16 20
Citibank
14 18
Stan Chart
9 13
SBI-GE
project is launched, the demand for smart cards will skyrocket,” opines
Sanjay Dharwadkar, Head of Systems Marketing, Smart Chip Ltd.
" Internet Banking " refers to the internet banking service offered by
ICICI Bank to the user including services such as enquiry about balance
in the Account, details about transactions in the Account(s), statement of
Account, transfer of funds, bill payment and any other service as ICICI
Bank may decide to provide from time to time through internet. The
availability/non-availability of a particular service shall be communicated
to the user through email, web page of ICICI Bank or in writing as may
be deemed fit by ICICI Bank. Such Internet Banking may be provided by
ICICI Bank directly or through its associates or contracted service
providers.
1. Applicability of Terms:
These Terms form the contract between the user and ICICI Bank for
availing Internet Banking. The user shall apply to ICICI Bank in the
prescribed form for use of Internet Banking. ICICI Bank shall be entitled
at its sole discretion to accept or reject such applications as may be
submitted by the users. By applying for or availing of Internet Banking,
the user acknowledges and accepts these Terms. Notwithstanding
anything contained herein, all terms and conditions stipulated by ICICI
Bank and/or its Affiliates pertaining to the Account(s) and/or to any
services/facilities offered by ICICI Bank and/or its Affiliates, shall
continue to be applicable to the users, provided, however, in the event of
a conflict in such other terms and conditions stipulated by ICICI Bank
and/or its Affiliates and the Terms herein, the Terms shall have an
overriding effect. These Terms will be in addition to and not in derogation
of the terms and conditions relating to any Account(s) of the user and/or
to those relating to services/facilities offered by ICICI Bank and/or its
Affiliates and availed by the user. The user agrees that in the event the
user avails of any services/ facilities offered by ICICI Bank through the
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ROLL NO. 11 I T IN BANKING SECTOR
Website, the user shall be bound by all the terms and conditions stipulated
by ICICI Bank pertaining to such services/facilities, offered by ICICI
Bank and availed by the user through the Website.
2. Internet Banking:
5. Joint Accounts:
The User shall have the option of applying for facilities provided
by ICICI Bank on Internet Banking. The facility shall be extended to the
User subject to the User complying with ICICI Bank’s credit parameters
and submitting all documents required by ICICI Bank in a physical form
to ICICI Bank. ICICI Bank may in its sole discretion reject the
application for the facility by the User.
The user may request for termination of the Internet Banking any time by
giving a written notice of at least 15 days to ICICI Bank. The termination
shall take effect on the completion of the fifteenth day. The user will
remain responsible for any transactions made through the Internet
Banking until the time of such termination. For the access of depository
account through Internet Banking user and ICICI Bank shall have the
right to terminate the applicability Clause 12 of this agreement after
giving a notice of at least 10 days to the other party.
8. Governing Law:
These Terms and/or the operations in the Accounts of the user shall be
governed by the laws of India. The Parties hereby agree that any legal
action or proceedings arising out of the Terms for Internet Banking shall
be brought in the courts or tribunals at Mumbai in India and irrevocably
submit themselves to the jurisdiction of such courts and tribunals. ICICI
Bank may, however, in its absolute discretion, commence any legal action
or proceedings arising out of the Terms for Internet Banking in any other
court, tribunal or other appropriate forum, and the user hereby consents to
that jurisdiction. Any provision of the Terms for Internet Banking which
is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of prohibition or unenforceability
but shall not invalidate the remaining provisions of the Terms or affect
such provision in any other jurisdiction.
14. BIBLIOGRAPHY
RESEARCH REPORTS
THE EFFECT OF INFORMATION AND COMMUNICATION
ON THE BANKING SECTOR AND PAYMENT SYSTEM
-BY ARBUSSA REIXACH
INTERNET BANKING
COMPTROLLERS HANDBOOK
INTERNET
www.banknetindia.com
www.microsoft.com
www.goggle.com
www.icicibank.com
www.sbi.com