Advantages and Disadvantages of Technology in Banking Sector
The world is changing at very high rate because of the advancement of technologies. Technologies are changing the face of each country. It also revolutionaries the way an industry performs. Over the year banking industry has also changed. This change has improved the experience of the customer substantially.
Innovation is changing the manner in which organizations work and convey items to customers in numerous divisions. We have cautions that recognize harmful substances in our air, restorative hardware that can distinguish hazardous conditions before they become an issue, or more brilliant PC programming to make controlling fundamental gear simpler than at any other time an industry that has seen gigantic advancements as of late is the utilization of innovation inside the money related world. The new trendy expression ‘FinTech’ is getting to be regular spot in the area and with a consistently developing corporate and customer center, the need to stay aware of progressions is seeing increasingly decision and an improved client experience no matter how you look at it.
There are many impacts of technologies in banking. Some of them are good while some of them are bad. Let us first understand the positive impact of technology in banking. The first thing we need to understand is the biggest milestone achieved by the banking industry is digitization. Digitization essentially refers to taking analog information and encoding it into zeroes and ones so that computers can store, process, and transmit such information. This allows easy and fast operations. The amount of work that used to take months now takes few hours to complete. This not only made the task of employee easier but also it makes the service customer centric. Customer Relationship Management (CRM) is based on this concept only. Technologies are used to provide the required service to the needy customer. In case of CRM, database is used to look into the services that have been availed by customer and what else an employee can provide a customer to make the relationship good between the customer and employee. This strategy has substantially increased the profit of the banks.
Banking process is faster than before and more reliable. Because every process is computer based. All the past records have been stored in the form of database. Maintenance and retrieval of documents and records have become much faster and easier.
Computerized banking also improves the core banking system. With CBS (core banking system) all branches have access to common centralized data and are interconnected, where they can search, compare and use the data. Core banking system is again technology-based innovation. Core banking increased the efficiency of the employee. Also, it helps in finding the laundered money. Anti-money laundering strategies involves the requirement of fully functional core banking solution. Money laundering can be prevented through this method.
Introduction of MICR in cheque is one of the crucial inventions of the banking sector. It helps in more efficient and faster than it used to be before. Cheque truncation system is the faster way of clearing transactions so that the transaction can be completed by the way of magnetic ink character reader which is again a technology-based process. This will help in clearing in one-two days even if the cheque is from different cities. There is one more service in which people with no Internet connectivity too can access their bank accounts without visiting the branch. This service is known as USSD (Unstructured Supplementary Service Data). Apart from these services, Internet banking is very useful in reaching customer at lower cost. All transaction can be done by the customer itself. Customer can also inquire about the transactions performed online without visiting bank. Now all banks offer Internet banking. It is safe and secure. It offered more transparency in transaction. Internet banking is completely secure as it requires user id and password. Along with that before doing transaction it sent one-time password (OTP) to the registered mobile number to validate the actual customer.
With the advancement of technology, the turnaround time of the banks has been decreased. This creates the condition of competition among the bank. This competition leads to better services to the customer.
Introduction of mobile banking, as discussed is very convenient way of doing transactions. Customer can access their bank from anywhere-anytime. Everything is one quick tap away.
To facilitate better services, banks have introduced automated banking services solution like cash deposit machine, cheque deposit machine, passbook printing machine, through these services have become easier.
Apart from the advantages of technologies in banking sector, there are some disadvantages. The biggest negative impact of technology is loss of jobs as automation has replaced number of jobs in banking sector. As the banking sector is increasing their dependency of work on technology, the need of manual task has decreased exponentially. This decreases the demand of employees, which will increase unemployment. This will affect the economy of the country in adverse way.
Though the system of transaction is very secure, there are several loopholes in Internet banking which leads to the cybercrime. In cyberattack, millions of data can be lost in blink of eyes. These technologies consume less time, it also sometimes makes people careless-which causes loss of personal details as happened in year 2016, many debit cards details of big banks were compromised.
In conclusion, it should be noted that innovation is a standout amongst the most significant variables for the advancement of humankind. Data innovation and correspondence is the greatest volumes in the field of innovation, the telephone is for the handling, stockpiling and scattering of data by electronic methods. Banking is developing quickly with the utilization of innovation in the ATM, bank web-based banking, versatile banking, and so on., plastic card is a financial item accommodate the necessities of the retail fragment has seen its numbers develop in geometric movement lately. This development has been unequivocally impacted by advancements in innovation. Since the coin has two sides, innovations additionally have different sides in the financial sector – positive and negative. The dangers are high, however they are generally limited and technology will become the backbone of the banking industry in the near future.