Chanhging Technology In Changing Banking Operations

4539 words - 19 pages

Impact of IT in Changing banking operation
Introduction of Indian banking industry
History of Indian Banking
The oldest bank in existence in India is the State Bank of India, which originated in the Bank of Calcutta in June 1806, which almost immediately became the Bank of Bengal. This was one of the three presidency banks, the other two being the Bank of Bombay and the Bank of Madras, all three of which were established under charters from the British East India Company. For many years the Presidency banks acted as quasi-central banks, as did their successors. The three banks merged in 1921 to form the Imperial Bank of India, which, upon India's independence, became the State Bank of ...view middle of the document...

They have a combined network of over 53,000 branches and 17,000 ATMs.

Business Segmentation
The entire range of banking operations are segmented into four broad heads- retail banking businesses, wholesale banking businesses, treasury operations and other banking activities. Banks have dedicated business units and branches for retail banking, wholesale banking (divided again into large corporate, mid corporate) etc.
Retail Banking
retail banking includes exposures to individuals or small business.retail banking products include all kinds of deposits accounts on the liability side and mortgages and loans on the asset side of bank. It also includes ancillary products and services such as credit cards, demand draft etc.
Wholesale banking
Wholesale banking includes high ticket exposures primarily to corporates. Internal processes of most banks classify wholesale banking into mid corporates and large corporates according to the size of exposure to the clients. A large portion of wholesale banking clients also account for off balance sheet businesses. Hedging solutions form a significant portion of exposures coming from corporates. Hence, wholesale banking clients are strategic for the banks with the view to gain other business from them. Various forms of financing, like project finance, leasing finance, finance for working capital, term finance etc. form part of wholesale banking transactions. Syndication services and merchant banking services are also provided to wholesale clients in addition to the variety of products and services offered
Treasury Operations
Treasury operations include investments in debt market (sovereign and corporate), equity market, mutual funds, derivatives, and trading and forex operations. These functions can be proprietary activities, or can be undertaken on customer’s account. Treasury operations are important for managing the funding of the bank.

Other Banking Businesses
This is considered as a residual category which includes all those businesses of banks that do not fall under any of the aforesaid categories. This category includes para banking activities like hire purchase activities, leasing business, merchant banking, factoring activities etc.
Products of the Banking Industry
The products of the banking industry broadly include deposit products, credit products and customized banking services. Most banks offer the same kind of products with minor variations. The basic differentiation is attained through quality of service and the delivery channels that are adopted. Product differentiating services have been attached to most products, such as debit/ATM cards, credit cards, nomination and demat services.

Operation in Early Days
In traditional banking, much of the operations of the banking industry were manually operated. There was large amount of human intervention. Manual registers and pages using dot matrix printer were used for storing record. As it is said “To err is human”, so the system was...

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