Nowadays information technology is not an additional service/feature provided by the banks, but a necessity in cutthroat market competition. Information technology, coupled with wireless, and mobile technology not only make the life of customers easier who want real time accessibility, but also give a competitive advantage to the banks. Banks, can now conveniently have inter-branch, or inter-bank transactions, but also to the customers who want to access their account.
Banks practice internet banking and sustain that you cannot get information on your accounts any faster than through internet banking. It involves the customers providing their identity through a form of registration, which hence, enables the client to access their financial services through a website. Internet banking has affected banks in such a way that customers have started using banking services at home rather than physically visiting a branch, and this shows how banking has become more I.T. based.
Hackers, or masquerades very easily captured financial information if the internet connections are not safe; this makes e banking risky. On the other hand, on ATMs or tele banking, the chances of hacking are very less as compared to the internet.
The electronic transmission of financial transactions from one bank to another is known as electronic data interchange (EDI). This involves an instantaneous diffusion of monetary transactions in a virtual manner to the other party in the form of electronic mail. Whilst both banks and households can use internet banking, EDI is used for the sole purpose of banking transactions.
EDIs are very helpful, as they make fast, reliable, precise, and automated transactions without human intervention. Still some transactions require special treatment through a clearinghouse. Clearing houses are globally used centralised systems to batch process transactions in real-time.
Financial institutions, using this system, must have a fault-tolerant computer connected to the actual clearinghouse automated payment system (CHAPS). One argument in favour of this payment technique is that once payments are made, they cannot be rolled back, and therefore, it reduces default risk incurred by banks.
Banks maintain a database of records of all kinds of transactions taking place whether of clients, or interbank. Database is a collection of data in form of tables containing each detail of the entity. Credit risk is there as a client takes loan, and is unable to make their payment; banks must keep a track of defaulters, or potential defaulters by keeping a track of the database.
Banks should therefore, constantly keep their databases updated on their potential borrowers, so that they can easily manage their risks. Bank Databases are normally connected through a network configuration, which allows the connectivity of various databases in different branches and hence, permits the sharing of resources, and information. Such a relational database enables the bank teller to access the database of a particular client at any regional branch, indifferently from where the transaction took place.
Edwood Woodward is a financial expert. You may consult with him to take debt help and get more alternatives to make financial decisions of your life at http://www.moneysolve.co.uk.
