IT in Banking

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 among-st
 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

Computers in banking & insurance

ATM

Automated Teller Machines (ATMs) or 'the hole in the wall' cash machine has been around rover 30 years.They let customers withdraw cash 24 hours a day even when the bank is closed.Many customers prefer to use them even when the bank is open as it saves them joining long queue to withdraw money from a cashier From the bank's point of view ATMs mean that customers do all the work meaning that they don't have to pay for so many bank staff .ATMs used to only be available at the bank. Nowadays you will find them in shops, garages, airports and many other places.

Online banking 

Online or internet banking has really taken off over the past five years.Customers are able to access their accounts 24/7 and except for withdrawing cash, they are able to do everything that they could do with a traditional high street bank, for example setting up direct debits, changing payments, moving money from one account to another.Because the customer does most of the work the bank's overheads are reduced. This means that they can pass on some of the savings they make to the customer in the form of higher interest rates for savings and lower rates for borrowing.There have been concerns over security and fraud with online accounts and some customers remain a little wary of opening such an account.

Smart Cards

Smart cards look similar to a credit card but they differ in that they contain a memory chip or microprocessor on the card.This makes it possible for the card to store data such as virtual money where you top up the balance on your smart card using a special machine. You can then use the card to pay for small items such as lunch in the canteen, photocopying, small items from the office shop. The cost of the items is automatically deducted from the balance on your card when the card is 'swiped'.