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ROLE OF INFORMATION TECHNOLOGY IN BANKING IT and Management By Asad Ali Attarwala MMS-I Division C The inputs are based

on my experience of doing an internship at ING VYSYA BANK and also from the internet.

The roles of IT in banking are as follows:

1. Cash sorter machine:

A cash sorter machine is a machine used for sorting banknotes.

2. Currency-counting machine
A currency-counting machine is a machine that counts money, either stacks of banknotes or loose collections of coins. Counters may be purely mechanical or use electronic components. The machines typically provide a total count of all money, or count off specific batch sizes for wrapping and storage.

3. ATM
An automated or automatic teller machine (ATM) also known as an automated banking machine (ABM), cash machine, cashpoint, cash line or hole in the wall, is a computerized telecommunications device that enables the clients of a financial institution to perform financial transactions without the need for a cashier, human clerk or bank teller. ATMs are known by various other names including ATM machine, automated banking machine and various regional variants derived from trademarks on ATM systems held by particular banks. On most modern ATMs, the customer is identified by inserting a plastic ATM card with a magnetic stripe or a plastic smart card with a chip that contains a unique card number and some security information such as an expiration date or CVVC (CVV). Authentication is provided by the customer entering a personal identification number (PIN).

Using an ATM, customers can access their bank accounts in order to make cash withdrawals, debit card cash advances, and check their account balances as well as purchase pre-paid mobile phone credit. If the currency being withdrawn from the ATM is different from that which the bank account is denominated in (e.g.: Withdrawing Japanese Yen from a bank account containing INR), the money will be converted at an official wholesale exchange rate. Thus, ATMs often provide one of the best possible official exchange rates for foreign travellers, and are also widely used for this purpose.

4. Magnetic ink character recognition

Magnetic ink character recognition (MICR) is a character-recognition technology used mainly by the banking industry to ease the processing and clearance of cheques and other documents. The MICR encoding called the MICR line, is at the bottom of cheques and other vouchers and typically includes the document-type indicator, bank code, bank account number, cheque number, cheque amount, and a control indicator. The technology allows MICR readers to scan and read the information directly into a data-collection device. Unlike barcodes and similar technologies, MICR characters can be read easily by humans.

5. Electronic funds transfer (EFT)

Electronic funds transfer (EFT) is the electronic exchange, transfer of money from one account to another, either within a single financial institution or across multiple institutions, through computer-based systems. The term covers a number of different concepts: Wire transfer via an international banking network Cardholder-initiated transactions, using a payment card such as a credit or debit card Direct deposit payment initiated by the payer Direct debit payments, sometimes called electronic checks, for which a business debits the consumer's bank accounts for payment for goods or services Electronic bill payment in online banking, which may be delivered by EFT or paper check

6. Teller system
A teller system is the integrated hardware and software used for retail or wholesale banking transactions, most systems communicate with a core banking system or mainframe over a secured network. The hardware may include a computer or terminal, Cash Drawers, Receipt and Passbook Validator/Printers, magnetic strip readers, pin keypads, bill counters, and bill/coin dispensers. The software is usually based on client/server where several clients (teller stations) are networked to a server which communicates to the mainframe via a dedicated line or satellite.

7. Telephone banking
Telephone banking is a service provided by a bank or other financial institution that enables customers to perform financial transactions over the telephone, without the need to visit a bank branch or automated teller machine. Telephone banking times can be longer than branch opening times, and some financial institutions offer the service on a 24 hour basis. From the bank's point of view, telephone banking reduces the cost of handling transactions by reducing the need for customers to visit a bank branch for non-cash withdrawal and deposit transactions.

8. Society for Worldwide Telecommunication



SWIFT (Society for Worldwide Interbank Financial Telecommunication) provides a network that enables financial institutions worldwide to send and receive information about financial transactions in a secure, standardized and reliable environment. Swift also sells software and services to financial institutions, much of it for use on the SWIFTNet Network, and ISO 9362. Business Identifier Codes (BICs) are popularly known as "SWIFT codes". SWIFT does not facilitate funds transfer; rather, it sends payment orders, which must be settled by correspondent accounts that the institutions have with each other. Each financial institution, to exchange banking transactions, must have a banking relationship by either being a bank or affiliating itself with one (or more) so as to enjoy those particular business features. Relationship Management Application (RMA) is a service provided by SWIFT to manage the business relationships between financial institutions. RMA operates by managing which message types are permitted to be exchanged between users of a SWIFT service: the receiver specifies which message types are permitted, and sends this permission data to the sender,

the sender checks the message type against the permission data before sending a message to the receiver.

9. Mobile banking
Mobile banking is a system that allows customers of a financial institution to conduct a number of financial transactions through a mobile device such as a mobile phone or personal digital assistant. SMS banking is a type of mobile banking, a technology-enabled service offering from banks to its customers, permitting them to operate selected banking services over their mobile phones using SMS messaging.


Online Banking ePayment

Online banking (or Internet banking or E-banking) allows customers of a financial institution to conduct financial transactions on a secure website operated by the institution, which can be a retail or virtual bank, credit union or building society. Online Banking ePayments (OBeP) is a type of payments network, developed by the banking industry in conjunction with technology providers, specifically designed to address the unique requirements of payments made via the Internet


Security systems

Banks use wide range of security systems for their security. The use cameras, WPKI codes, 3D secure codes, Smart Identity cards to clock in their timings etc.

Thus banking industry has seen a drastic change due to revolution in IT. Because of technology things like shopping, depositing and withdrawing money has become easy substantially.