A Brief History of Technology in Banking

The story of technology in banking started with the use of punched card machines like Accounting Machines or Ledger Posting Machines. The use of technology, at that time, was limited to keeping books of the bank. It further developed with the birth of online real time system and vast improvement in telecommunications during late 1970’s and 1980’s.it resulted in a revolution in the field of banking with “convenience banking” as a buzzword. Through Convenience banking, the bank is carried to the doorstep of the customer.

The 1990’s saw the birth of distributed computing technologies and Relational Data Base Management System. The banking industry was simply waiting for these technologies. Now with distribution technologies, one could configure dedicated machines called front-end machines for customer service and risk control while communication in the batch mode without hampering the response time on the front- end machine. Intense competition has forced banks to rethink the way they operated their business. They had to reinvent and improve their products and services to make them more beneficial and cost effective. Technology in the form of E-banking has made it possible to find alternate banking practices at lower costs.

More and more people are using electronic banking products and services because large section of the banks future customer base will be made up of computer literate customer, the banks must be able to offer these customer products and services that allow them to do their banking by electronic means. If they fail to do this will, simply, not survive. New products and services are emerging that are set to change the way we look at money and the monetary system. Round the clock banking E-banking facilitates performing basic banking transactions by customers round the clock globally. In fact there is no restricted office hours for E-banking.

• Convenient Banking. Customers can perform basic banking transactions by simply sitting at their office or at home through PC or LAPTOP. No personal visit to the branch is required for routine basic transactions.
• Low Cost Banking. The operational costs have come down due to technology adoption. The cost of transactions through internet banking is much less than any other traditional mode. There is also much saving on the cost of infrastructure as the banks can have access to a greater number of potential customers without the commitment costs of physically opening branches. Moreover, requirements of staff at the banks get reduced to a greater extent.
• Profitable Banking. The increased speed of response to customer requirements, can enhance customer satisfaction and consequently can lead to higher profits as a result of handling more number of customer accounts.