technology at banks

7/29/2019 Technology at Banks

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IT IN BANKING

INDUSTRY


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Electronic

Banking

ATMs

Head Office

BranchBanking

Branch 1

Branch 2Branch 3

Branch 4

Branch 5

Branch 6

Branch n


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Committees onComputerisation in

Banks in India 1982-1995

1. Working Group to considerfeasibility of introducing MICR / OCRTechnology for Cheque processing(1982)

Convenor : Dr Y B Damle, Advisor,Management Services Department,RBI
http://images.google.co.in/imgres?imgurl=http://upload.wikimedia.org/wikipedia/commons/thumb/0/0a/Reserve-Bank-of-India.jpg/250px-Reserve-Bank-of-India.jpg&imgrefurl=http://www.rupya.com/archives/2006/07/&h=188&w=250&sz=15&hl=en&start=9&tbnid=nXZBhDFMtSZbmM:&tbnh=83&tbnw=111&prev=/images?q=Computers+in+Banks+in+India&gbv=2&svnum=10&hl=en&sa=G


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Committees onComputerisation

2. Committee onMechanisation inthe Banking

Industry (1984)Chairman : Dr C

Rangarajan,Deputy Governor,

Reserve Bank ofIndia
http://images.google.co.in/imgres?imgurl=http://apfr.co.in/images/rbibldng.jpg&imgrefurl=http://apfr.co.in/290103/rbibungling.htm&h=349&w=200&sz=10&hl=en&start=293&tbnid=omucA-8wYj6wZM:&tbnh=120&tbnw=69&prev=/images?q=Bank+Computerisation+in+India&start=280&gbv=2&ndsp=20&svnum=10&hl=en&sa=N


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3. Committees on CommunicationNetwork for Banks and SWIFTimplementation (1987)

Chairman : Shri TNA Iyer, ExecutiveDirector, RBI


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4. Committee onComputerisationin Banks (1988)

Chairman : Dr CRangarajan,

Deputy Governor,RBI
http://images.google.co.in/imgres?imgurl=http://apfr.co.in/images/rangarajan.gif&imgrefurl=http://apfr.co.in/290103/rbibungling.htm&h=263&w=178&sz=24&hl=en&start=294&tbnid=0LLinECa0FSh4M:&tbnh=112&tbnw=76&prev=/images?q=Bank+Computerisation+in+India&start=280&gbv=2&ndsp=20&svnum=10&hl=en&sa=N


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Indian Banking-Now... Transparency in Banking; Compliances Narrow Banking Relationship Banking Retail / Personal / Private Banking

Hi-tech Banking E Age-Banking Mobile Banking / Phone Banking Network Banking

Virtual Banking Universal Banking Online Banking / Internet Banking


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WHY TECHNOLOGY IN BANKS ?

TO TRANSFORM FINANCIAL SERVICESINDUSTRY IN THE NET-WORKEDWORLD

BANKS TO BE CUSTOMER CENTRICPROVIDE SERVICES / PRODUCTS

ACROSS A RANGE OF CHANNELS

TO BE FUTURISTIC AND HAVE

TIMEVALUE IN ALL ITS DEALINGS WITH

CUSTOMERS


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Many Benefits of Technology

Increased operational efficiency, profitability &productivity

Superior Customer Service

Multi-channel, real-time transaction processing

Better Cross-Selling ability

Improved management / accountability

Efficient NPA and Risk Management

Minimal transaction costs

Improved financial analyses capabilities


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Pre-requisites for Technology

Planning for

Disasters

Business Process

Re-engineering

Human Resource

Empowerment


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Focus aspects of Commercial Banking

Core

Banking (CBS)

ATMs

CardManagement

Any Branch

BankingDocument

Management

Risk

Management

Resource

Management

MIS &

Intranet

CRM

Corporate

Network

Electronic

Banking

POS Terminalsand Cashdispenser

BANKS BUSINESS

BANKS BUSINESS

RAI

SINGD

EP

OSITS

LOANS&

MISC.SERVICES


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Benefits of IT in Banking

To Banks

Large satisfied customers and higherretention

Scope to attract new customers

Improve quality and differential services

Greater opportunity to cross sell

Sharing network and Cost Saving

Increased volumes and profits Reduce overall risk with proper MIS


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Benefits to Customer

More convenience & flexi timings

Better awareness of products & services

Up-to-date information on accounts

Low cost of accessing the accounts


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BANKS IT STRATEGY

INVESTMENT IN HARDWARE

ACQUIRING / DEVELOPING SOFTWARE

TRAINING OF STAFF AT DIFFERENTLEVELS

NETWORKING OF OFFICES R-S-U-M?

SECURITY FOR TRANSACTIONS & INFO

GLOBAL REACH

ONLINE BANKING, OUTSOURCING


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DEVELOPMENTS

ALPMs

CLEARING HOUSE

CREDIT/DEBIT CARDS

INFINET, RBINET

BANKNET

MICR, ATMs, SWIFT

CRM, KYC, AML

Core Banking Solutions

KISAN /SME CARD

SMART CARDS

INTERNET BANKING

ECS, EFT, SEFT, RTGS


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ALPM

ALPM

Advanced Ledger PostingMachine Micro processor based

electronic device used for maintenanceof primary ledgers, working out

products and interests at periodicalintervals, preparation of accountstatements and listing of standing

instructions to be executed in theaccounts.


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MICR CLEARING Magnetic Ink Character Recognition

Introduced in 1987 in the four metros

1,047 Clearing Houses; 42 with MICR

SB/CA Cheque leaves standardised size

(8 X 3 2/3) are pre-printed with thebank-branch code and account type in

MICR strip, while the amount is readmanually and fed into the system usingthe encoders for funds settlements

Speeds up clearing work

BC/DW/TC/DD/PO/GC/IW/RW/SI...


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Automated Teller Machines

ATMs or 24 hour Tellers Electronic

Terminals - allow to bank at any time...

On-site (near branch) and Off-site ATM

ATMs facilitate withdrawal/deposit....

Customer provided with a PIN / Card

Introduced in India by Foreign Banks

SWADHAN / SPNS wef Feb 1, 1997 Introduced in Mumbai by IBA initiative

www.iba.org.in
http://www.iba.org.in/http://www.iba.org.in/http://www.iba.org.in/http://www.iba.org.in/http://www.iba.org.in/http://www.iba.org.in/http://www.iba.org.in/http://www.iba.org.in/


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ATMs

On-site and Off-site Automated Teller

Machines -MOBILE, BIOMETRIC ATMs

Total installed ATM base >21,000

Average withdrawal per ATM

transaction - Rs 1,500 to Rs 3,000 Total cash movement through ATMs in

India is Rs 35,000 - 40,000 croresevery year

Medium for non-cash transactionssuch as printing of statements, creditcard enquiry, cross selling, etc


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SBIs Mobile ATM in Kerala


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Communication Networks

MICR (Magnetic Ink Character Recognition)

Clearing BANKNET

INFINET

SWIFT

Electronic Data Interchange (EDI) Electronic Funds Transfer (EFT) System

Electronic Clearing Services (ECS)

ATM network - SWADHAN (Shared Payment

Network System -SPNS)


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BANKNET Set up in 1991 by RBI

Meant to facilitate transfer of inter-bank/ inter-branch messages withinIndia by Public Sector banks who aremembers of this network

Wide connectivity - Major Centres likeMumbai, Delhi, Calcutta, Madras,Nagpur, Bangalore, Hyderabad, Pune,Ahmedabad, Kanpur, Lucknow,

Chandigarh, Kochi, Jaipur, Bhopal,Patna, Bhubaneshwar, Thiruvanantha-puram, Guwahati, Panaji, Jammu, etc


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INFINET Indian Financial Network

Set up by RBI in June 1999

Satellite based WAN using VSAT (VerySmall Aperture Terminal) technology

The hub and Network Management

System of INFINET are located in theInstitute for Development andResearch in Banking Technology, Hyd

Major applications: E-mail, Electronic

Clearing Service - Credit and Debit,Electronic Funds Transfer http://www.idrbt.ac.in/index_fromsm.html

?infinet1.html?infinet
http://www.idrbt.ac.in/index_fromsm.html?infinet1.html?infinethttp://www.idrbt.ac.in/index_fromsm.html?infinet1.html?infinethttp://www.idrbt.ac.in/index_fromsm.html?infinet1.html?infinethttp://www.idrbt.ac.in/index_fromsm.html?infinet1.html?infinethttp://www.idrbt.ac.in/index_fromsm.html?infinet1.html?infinethttp://www.idrbt.ac.in/index_fromsm.html?infinet1.html?infinethttp://www.idrbt.ac.in/index_fromsm.html?infinet1.html?infinethttp://www.idrbt.ac.in/index_fromsm.html?infinet1.html?infinethttp://www.idrbt.ac.in/index_fromsm.html?infinet1.html?infinethttp://www.idrbt.ac.in/index_fromsm.html?infinet1.html?infinethttp://www.idrbt.ac.in/index_fromsm.html?infinet1.html?infinethttp://www.idrbt.ac.in/index_fromsm.html?infinet1.html?infinethttp://www.idrbt.ac.in/index_fromsm.html?infinet1.html?infinethttp://www.idrbt.ac.in/index_fromsm.html?infinet1.html?infinethttp://www.idrbt.ac.in/index_fromsm.html?infinet1.html?infinethttp://www.idrbt.ac.in/index_fromsm.html?infinet1.html?infinethttp://www.idrbt.ac.in/index_fromsm.html?infinet1.html?infinethttp://www.swift.com/


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SWIFT www.swift.com

Society for Worldwide Inter-bank FinancialTelecommunication

HQ La Hulpe, Brussels, Belgium

Provides reliable, fast tele-communicationfacilities for exchange of financial messages allover the world between Banks and FIs

As non-profit making co-operative society in1973 by 239 banks in 15 countries

Hubs in Brussels, New York and Netherlands

Rules in 1975; first message in 1977

>7,000 members in 200 countries now Handles over 7 million messages every day

India a member since 1991

88 Indian banks are members as on date
http://www.swift.com/http://www.swift.com/


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Electronic Data Interchange Facilitates transfer of banking transa-

ctions using agreed protocol andstandard data structure b/w computers

Norms developed in respect of specificmessages for transmission of business

transactions which are electronicequivalents of commercial invoices,purchase orders, transport bookings,payment instructions etc

Appropriate message formats andstandards for financial applications inEDI developed by Message DevelopmentGroup-Finance (constituted by IBA)


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Electronic Funds Transfer (EFT)

Hosted and operated by the RBI

Permits fund transfer up toRs 5 lacs from any account at anybranch of any member bank in any

city to any other account at anybranch of any member bank in anyother city

RBI acts as the service provider aswell as regulator


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ECS Electronic Clearing Scheme (ECS)

operated by the RBI since 1996-97 Utilises BANKNET and INFINET

Facilitates payment from a singleaccount at a bank branch to anynumber of accounts maintained withthe branches of the same or otherbanks Eg., Payment of dividends

RBI has also launched ECS Debit forpayment to utility companies likeTelephones, Electricity etc


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Launched in 1997

India's FIRST Shared Payment NetworkService covers > 1000 ATMs in 64 cities

55 member banks in the network, which

include nationalized, private andforeign banks

Enables member banks to share theirATMs with other participating banks

Objective - reduce the huge investmentbeing made by the banks to deployATMs in different locations

SWADHAN


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Core Banking Solutions(CBS)

POOLING DATA AT CENTRAL SERVER TRANSACTIONS OF DELIVERY CHANNELS

FROM DELIVERY POINTS (BRANCH/ATM) FEEDONLINE TO HOST NO BACK OFFICE

HOST DATABASE IS UP TO THE MINUTE

END OF DAY (EOD) AND START OF DAY(SOD) TASKS PERFORMED AT BRANCHES

WILL BE DONE BYHOSTSERVER ELIMINATES BR RECONCILIATION WORK

STAFF PRODUCTIVITY BANK CUSTOMER!


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Smart Cards The Future

Multi-application Smart Card

Channel of the future Pilot project started

Pilot Project funded by Govt. of India

Project is in progress in partnershipwith IDRBT, IIT Mumbai and Banks

Visit www.scafi.in The Smart Card

Forum of India is a non-profit, multi-industry organization promoting thewide spread acceptance of multipleapplication smart card technology.
http://www.scafi.in/http://www.scafi.in/http://www.scafi.in/http://www.scafi.in/http://www.scafi.in/http://www.scafi.in/


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THANK YOU

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