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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
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Committees onComputerisation
2. Committee onMechanisation inthe Banking
Industry (1984)Chairman : Dr C
Rangarajan,Deputy Governor,
Reserve Bank ofIndia
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Committees onComputerisation
3. Committees on CommunicationNetwork for Banks and SWIFTimplementation (1987)
Chairman : Shri TNA Iyer, ExecutiveDirector, RBI
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Committees onComputerisation
4. Committee onComputerisationin Banks (1988)
Chairman : Dr CRangarajan,
Deputy Governor,RBI
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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/7/29/2019 Technology at Banks
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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/7/29/2019 Technology at Banks
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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
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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/7/29/2019 Technology at Banks
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THANK YOU
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