Technology in Banking (Part-3)
The Impact of Information Technology on Financial Services
The financial services sector, such as Banking, Insurance, Leasing companies, Mortgages companies, Stock exchange and Investment consultancy process large volume of data. These services have got a big boost with the advent of information Technology.
• The banking and insurance companies use the IT to keep track of their customers’ transactions and apprise the creditworthiness of their customers’ their financial needs and for organizing their business.
• Stock markets use IT for online trading with the help computer-based terminals.
• Depositors and custodial services maintain computerized record of shares and securities held by them on behalf of their customers so as to enable speedy settlement.
• The organizations like Reuters, Knight Rider and Bloom Berg have effectively utilized IT for providing the online data on current development in the financial sector, thereby providing the basic structure of investment.
• The impact of IT has been most significant in payment services in the wholesale and retail segment. The development aided by IT in real customer payments include introduction of Automated Teller Machine (ATM), Magnetic Ink Character Recognition (MICR), cheques Credit cards, Debit cards, Electronic Funds Transfer at Point of Sale (EFTPOS). These developments in wholesale segment have enabled instant and online transfer of funds through REAL TIME GROSS Settlement (RTGS), Delivery Versus Payment (DVP) and Payment Versus Payment (PVP) mechanism. These developments have minimized the risks in payment system.
• The development of information infrastructure coupled with ability to instant and speedy settlement aided by developments in payments system has led to emergence of wide financial markets whish have global coverage. The emergence of global financial markets has led to integration of global financial services and globalization of national economics
Professor Rafiqul Islam
Faculty of Business & Economics (FBE)