Banking and finance are two important parts of commerce and are constantly developing. The scope of banking traditionally meant the accepting of money from their customers and lending any surplus to other people who had the need for funds. This has since evolved to providing a whole range of services to serve both financial and non-financial needs.
Technology has significantly helped these changes. How is technology helping banking institutions? Initially, technology was used by banks for back office operations. This led to all accounting transactions and the collection of management information being done through computers and other devices. Clearing and settlement were also helped by the development of MICR technology.
Technology is a revolution that is responsible for and has had an impact on almost all fields of human activity and endeavor. Information technology has had a major impact on the financial and capital markets. Below are some of the major ways that the technology improves the banking services.
1. Technology has made internet banking easy.
Gone are the days when one had to join the queues at banks to deposit money, withdraw money, obtain drafts or other financial instruments. The customer can do all this from wherever he is, with just the need to have an internet connection. Mobile smartphones have further increased the reach of this technology and made banks still more accessible.
2. Technology has brought about the use of plastic money.
Most banks offer these cards to their customers and offer various degrees of credit depending on their perception of the customer’s financial strengths. These cards allow for the borrowing of money for the buying of products or services. Credit limits are variable, and some cards, debit cards, offer a facility where the amount borrowed is immediately deducted from the bank account of the customers using this card. This facility saves the customer the problem of keeping track of his credit limits and allows for immediate payments to merchants. However, as you use the debit or credit cards, Lisa Angelot from FNB Norcal advises that you should keep your account information as well as PINs confidential so as to avoid fraud and/or loss of funds in your account.
3. It has facilitated the fast growth of use of ATMs
This has enabled the bank’s customers to withdraw cash from their accounts without the need to go to the bank. Debit cards serve as the means of identification, and the customer is protected by the use of personal identification numbers or PINs that are kept confidential. ATMs are connected directly to the accounts of the customer and will dispense money if there is sufficient balance in the account. They will also give the customer details of the withdrawal and available balance in the account, through printouts if necessary. Technology has also advanced so that ATMs of all banks recognize cards given by other banks and allow operation of accounts from any ATM. This has made banking universal in reach and greatly extended the scope for banking. Many ATMs are also geared to accept cash deposits and to perform other functions that customers may require.
4. Due to technology, there has been an increase in E-banking.
Net banking or E-banking is increasingly popular with retail banking customers. Technology has developed to allow this banking to be done through smartphones that can be connected to the internet. How is technology helping banking institutions? Technology has gone a long way to help banks to reduce costs, as people who use these remote services are able to pursue their financial and other business requirements without the need to visit the bank personally. The cost of stationery and printing has been reduced with E-statements sent to customers. Dispatch of documents and their attendant costs are reduced.
5. Improve communication between the banks and their stakeholders.
The use of Email, auto responders, voice response systems has allowed for automation that has increased efficiency and saves costs. Banks have also used technology to help in reconciliation and auditing of operations and to reduce the chances of mistakes or fraud. Technology has also contributed to reducing the processing time of applications, their scrutiny, and final disposal. Banking software has not only helped to cut costs but made it very easy to have constant real-time updates of accounts and finances. It has also been instrumental in providing banks with better security, physical and financial through the use of alarm systems, CCTV, etc.
