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[T116]Technology In Banking Sector

by James Marriot, Jam

With second highest growth rate of economy, India is gaining prominence in the world market. However, a robust banking industry is essential to uphold the enhanced levels of activities, both in domestic as well as global market. Despite undergoing dramatic changes during the past decade, the existing risk management system of Indian banking sector is still in its nascent stage and needs to be augmented.

The government of India during the past few months announced a series of banking reforms. These reforms were designed to give greater autonomy to state-controlled banks & provide guidelines for the expansion of foreign banks.

Many of the analysts were disappointed, as the measures did not materially change as to how foreign banks can operate. Significant restrictions on foreign banks are still there and RBI (Reserve Bank of India) retains wide discretionary power over both the timing as well as implementation of reforms.

Indian banking system is still dominated by government banks, as public sector banks make up for three-quarters of the total assets of commercial banking in the country. However the banking system in India is fragmented and none of the banks, except SBI (State Bank of India), holds above 10% of the total assets.

To sum up, Indian banking sector has come across a drastic improvement during the recent years. Booming economy & low interest rate environment have enabled the banks to increase their earnings via expanding lending, widening the interest margins and so on.

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The concept of Internet Banking rose from Global FinancialHouses whose primary objective was to ensure that customers were tuned to theirfinances from any part of the world. The main transactions include Online MoneyTransfer and Online Lending. Online Banking services are hassle free andguarantees data confidentiality and security. Individuals residing in one country could usethe internet as a medium to transfer funds from that country to another,provided the country he is transferring the money too has a branch located. Thebasic modus of operandi is conducted by allowing users to conduct financialtransactions on a secure website operated by their retail or virtual bank,credit union or building society. Other major transactions that are commonlysecured through Online Banking Services include Electronic Bill Payments,Loans, Investments and Banking Statements. The Financial Institute Administrationfeatures allow it to manage the Online Experience of their end users and theHosting administration features allow the hosting company to administer thesolution across the financial institute.

Features that are unique to Internet Banking includePersonal Financial Management Support, Personal Accounting software &account aggregation to allow the customers to monitor all of their accounts inone place whether they are with their main bank or with other institutions. Protectionand Security is provided through Single Password authentication. In mostcountries shopping websites are not considered secured enough for personalOnline Banking Applications, hence the use of single password. Basically acouple of methods are approached to secure transactions. The first one used isa combination of a Pin (Personal Identification Number)/ TAN (TransactionAuthentication Number), where Pin represents a password used for login and Tana one time password to authenticate transactions. Usually online banking withPIN/TAN is done via a web browser using SSL secured connections, so that thereis no additional encryption needed. The second option is signature based onlinebanking where all transactions are signed and encrypted digitally. The Keys forthe signature generation and encryption can be stored on smart cards or anymemory medium, depending on the concrete implementation.

The Advent of the Internet has leveled the advantages thatwere previously held by Global Financial houses. It has afforded open access tocustomers in the global marketplace by being a cost effective delivery channel.It has changed the outlook of the Banking Industry and has helped developcustomer relationships. Its prime focus is to improve customer access, facilitatethe offering of more services, increase customer loyalty & attract newcustomers. Online banking services are continually evolving, and as theservices expand, it will keep getting better for customers.

Article Source : Top Investment Banking Firms

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Both James Marriot & Oswal are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.

James Marriot has sinced written about articles on various topics from Recreation and Sports, computers and the internet and Information Technology. RNCOS offers complete e-publishing solutions for your business. We provide personalized world-class content development and management solutions that are qualitative and result-oriented.. James Marriot's top article generates over 40500 views. Bookmark James Marriot to your Favourites.

Oswal has sinced written about articles on various topics from Banking. Banking Consultant for a Major Financial Institute in Oman. To know more on Internet Banking click here.. Oswal's top article generates over 1300 views. Bookmark Oswal to your Favourites.