Future Of The Banking Sector

Future Of The Banking SectorOnline banking has been shaping and shaking the monetary sector world wide. But sustain capacity depend on proper understanding of consumer, in that location demand and the way they wont it.The of import objective of this report is to focus on engineering (especially IT) use in banking sectors. It in any case focuses on Limited decision Bank and faith Card system. Thus objectives of the study argon toChanges of future banking sector and impact of information systems.Limited purpose bank and use of technology in facilitating special purpose.Consumer banking and various consumer facilities yieldd by bank using information systems.Understand and suggest the online bank on the basis findings.Credit post horse banks, sub-prime lenders, and internet primary banks Mahboob, 2001FUTURE OF BANKING SECTORConsolidation of the banking industry What are the prospects for, and implications of, further consolidation of the banking industry, particularly relating to safety and soundness, market concentration, and fiddling line of reason outing credit?Combinations of trade and banking In future the questions may arise vexationing the pros and cons of allowing common ownership and the options for regulating combinations.Supervisory issues The implications for bank supervision for the growing complexity of large banking organizations may be other questions.Governance issues There are many corporate s usher outdals that have led to efforts to hold our corporate management and directors to a higher level of exemplification Willium, 1996LIMITED PURPOSE BANKLimited-purpose banks are creations that specialize in relatively narrow business lines. Making a certain type of loan, serving as a subset of consumers and offering different innovative products some limited-purpose banks create their market. They focus niche marketing concerning limited set of activities these banking institutions groundwork develop expertise in particular business li nes and depose become efficient producers. Specialization may have been promoted by technological innovations.Credit wit banks offer their customers both public toilet and liquidity by providing a financial product that can be used as a means of payment and a source of flash lamp credit. Some banks succeed banking service through and through internet are known as primary banks American Banker,1996CREDIT CARD BANKThe credit identity card banks endure their customers with both convenience and liquidity by offering a product that can be used as a payment device and as an open-end revolving credit. There is no fixed duration to allow credit card loans that complicates the measurement of interest- rate risk. It creates the problems of adverse selection because of mass marketing of credit cards, small average balances on individual account statements.High interest rates results in high profitability of credit card loans, fee income, securitization, successful use of technology, an d outgo economies in operations. We can expect that the prosperity of credit card banks will continue Ashust, 1996.There are some benefits and be for Participants having a Credit Card.Types of ParticipantsFunctionsAdvantagesCostsCard holderPurchasing of goods and operate.Carrying funds without carrying cashConvenient purchasesHaving ability to payment timely to match cash flowsEasy access to credit gift usingEasy access to floatOthers featuresHaving more interest rates and feesSome difficulties to manage creditMerchantsSales of goods and services.Almost no risks of carrying credit card and selling to consumers.Getting the guaranty of paymentAdvantages of access to large number of consumer base.Interchange fees on sales have to pay to card holdersProblem of Losing backstage credit information such as marketing information, customer loyalty, interest income and so onIssuing BankExtending credit to the card holdersCollection of payments from card holdersDistribution of cardsAutho rization of transactionsReceiv fitteds collectionIt is smooth to collect fees from the card holdersInterest rate spreads can be collect easilyGaining the ability to cross sell to their consumersAbility of being able to share supplant feesThere are some fraud risk concerning credit cardManaging cost of credit cardCard AssociationEstablishment of rules standards and standard protocols for governing participation in their interlockingPromotion of the brand of BankFormation of interchange fee structureCollection of assessment feesCollection of transaction feesCosts of expanding marketCosts of maintaining networkCost of taking different fraud simplification programsTECHNOLOGICAL USE IN BANKING SECTORImprovements in the technological field have played significant role in the growth of financial services industry as well as in the growth of limited-purpose banks. There are some people who th sign that specialization in financial institution comes from improvements in technology.Banking sector is going to get fully technology based. Most valuable reasons are the huge task conducted by business firms. Banks are fine-looking consumer service and getting more consumers oriented such as ATM service, Internet Banking, SME Loan, Priority Banking and so on. Banks are now competitive because of combination of banks and commerce. So they have to rear quick service such as check funding, quick withdrawal, fund switch, LC opening etc.For various purposes data-mining techniques are used in the financial industry. Credit scoring is the most mentionable example of the use. To produce a score to summarize a credit risk banks use statistical techniques and historical data as a credit scoring process. Credit scoring is a common form of speeding up credit decision to attract customers, and institutions use another efficient technique to identify their potential customers that is data-mining.In todays financial services industry electronic payment systems are important innovation s having methods of transferring funds electronically. Because of having less(prenominal) physical branches these banks rely on Automated Teller Machines to give opportunity to their customers to access their cash. It also provides advantage of accessing on the automated clearing house to transfer fund. Credit card banks can process the payments within short time and having no physical existence of branches because of the development of technology. This dramatically reduces the cost of credit card banks. This development benefitted the credit card card banks as well as customers.Credit card banks take the traditional notion of banking as challenge and they provide unique product mixes to draw considerable attention of the new customers. They also have unique business model to get competitive advantage Basel, June, 1996.BANKING engineeringBanking KioskA unique feature of the Versa Banker is its check mark deposit capability. It issues a receipt to deposit a checkout with a scanned image of the cheque. If a cheque is endorsed at the back detail transaction report is generated for the department of MIS of the bank.Personal EnquiriesThe Versa banker allows you to check your account balance, print a mini statement and feature cheque book requests.Internet BankingConnect to the internet and carry out transactions through e-banking, with the help of Versa Banker. It is asked by the bank to view details of ones account and by and by that to make transactions online.ATMTMs were originally developed as just cash dispensers they have evolved to include many other bank-related functions.ATMs include many functions which are not directly related to the management of ones own bank account, such asUpdatingpassbooksPaying routine bills, fees, and taxes (utilities, phone bills, social security, legal fees, taxes, etc.) stupefy currency recognition, acceptance, and recycling.Loading monetary value intostored value cardsPrintingbank statementsPurchasingConcert ticketsPostage stampsShopping mallgift certificates draftingticketsTrain ticketsMovie ticketsDonating to charitiesAdding pre-paidcell phonecredit.Cheque Processing ModuleGames and promotional featuresELECTRONIC FUNDS TRANSFERElectronic funds transferorEFTrefers to thecomputer-based systems used to performfinancial transactionselectronically.There is a number of different concepts that use this termA cardholder makes use of payment card indicate depositpayroll payments for a business to its employees, possibly via apayroll services companyDirect debitpayments from customer to business, where the transaction is initiated by the business with customer permissionElectronic bill paymentinonline banking, which may be delivered by EFT or paper checkWire transfervia an planetary banking network (generally carries a higher fee)Electronic Benefit TransferMICR CheckThe MICR stands for Magnetic Ink Character Recognition.This technology is unique and uses magnetically chargeable ink and/or toner to print the special characters or numbers on the bottom of the checks.E-13BCMC-7United States of AmericaFranceCanadaSpainAustraliaUnited KingdomOther Mediterranean CountriesJapan sec America (except Colombia)IndiaAfter printing, the documents are then processed mechanically and electronically through a reader-sorter machine.BANKS in BANGLADESH USING INFORMATION TECHNOLOGYThe two main technology based bank in Bangladesh are-Dutch Bangla Bank Ltd (DBBL)Eastern Bank Ltd (EBL)TECHNOLOGY USED BY DBBLDutch-Bangla Bank offers a complete electronic banking facility for your company around the clock. Most multi-nationals use this service because it is advanced, secure and affordable. DBBL creates a custom banking service to suit any business of any size. The services have a wide range that includes cash flow services, distribution banking and salary accounts. If a company knows what type of custom and tailored banking service they need, DBBL can provide it instantly and at minimal cost (usually free of charge).For example for your starting point, DBBL has created Employee Banking program which allowsProviding employees with timely salary paymentsTransactions are properly logged for your easy referenceSeamless and error free distribution of salariesHighly secure way of distributing moneyLower manpower neededReduces cash theft and peculationNo cash at hand in the office, all cash finally distributed through the largest ATM network in BangladeshDEBIT / CREDIT separateDutch-Bangla Bank family, always believe that, as in everything else, you deserve the best in banking too. We are here to assist you 365 days round the clock through our Customer Care Center.Normal cards use a magnetic strip at the back of the card. The information and security on that magnetic strip is unmoving and does not change. Hence it can be easily duplicated. But NexusEMVs processor uses its processor to fully digitally lock all the information. It prevents the information from being copied as the processor g enerates security codes rather than store it. It is a form of encryption.INTERNET BANKINGDBBL allows you to do seamless internet banking. This allows you to review your account, statements, paying bills as well as making some transactions. Because of local banking regulations, DBBL is not allowed to provide some types of transactions even though it is fully capable. Additional Internet Banking Features for Corporate BankingLetter of CreditBank GuaranteeLimits QuerySMS/MOBILE BANKINGDBBL pioneered Mobile Banking in Bangladesh. It was the first bank to offer banking facilties through a wide range of mobile phones. SMS (Short communicate System) is an extremely unsecure method to do mobile banking.The mobile phone networks are unsecure and there is nothing DBBL can do but to take precautionary steps. To make the most of this unsecure scenario, DBBL issues you a mobile PIN number which is different from the DBBL pin number for your mobile transactions. Not under any circumstances is th e DBBL PIN number to be used in mobile banking. A different PIN number and a mobile transaction limit imposed by DBBL provide some security (but not all) over the unsecure phone network. Clients should be aware and cautious that although DBBL does its best, it cannot guarantee full security over a phone network it has no control over.EBL INTERNET BANKINGEBL Internet banking application more efficient than others bank and EBL addresses the needs of individual as well as corporate account holders of EBL.List of TransactionsTransfers and Payments modes of EBLThere are different modes of transferring funds and customer can choose the modes he likes to transfer funds from selecting different modes. The user also has the right to choose the source and destination accounts because it depends upon his rights.Utility vertex Payment System of EBLThe customer can transfer funds from his accounts for making Utility Bill Payments to utility companies. The mode payment is as set up by the Bank.D epositsMaintaining DepositsThe user can view all the deposits maintained by the corporate.The customers are able to encash a deposit before its maturity.Session Summary of EBL bankingThe customer now able to view the transactions profiles performed in a session.SECURITY MECHANISMS encodingEncryption is the usual way to meet the data confidentiality requirements and although using a cruciate algorithm (symmetric or asymmetric) could be used, there are good reasons for using symmetric Financial times, November 8, 1996.Message AuthenticationA Message Authentication Code (MAC) is a cryptographic checksum, calculated using a symmetric algorithm, which is appended to a core and which can be verified by the recipient of the message. The use of MAC is one method of providing the integrity and authentication services, but it is not appropriate for meeting the requirements for no repudiation.Digital SignatureA digital signature is a checksum, calculated using the private key of an asymmetri c key pair, which is appended to a message and which can be verified by anyone with access to the corresponding public key. The digital signature is dependent on the complete message, so any change to the message will be detected. The real difference between MAC and digital signature is that as well as providing integrity and authentication, the later also provide non-repudiation.Algorithms and Cryptographic MechanismsThe constraint linked with each cryptographic algorithm (computation resources, time to compute, key management, algorithm capability and design) limits their use for only a presumption number of security services. The following table lists the main security services and states whether RSA or DES (Data Encryption Standard) can address them Denny, 1998CONCLUSIONThe present position of e-banking is not satisfactory in case of virtual banking, call center and SMS banking. But all banks under study have their connectivity with SWIFT channel. Major reason is that security concern. One study in Europe reported that there is 2.6% increase in establishment of Bank branches. That means that E-Banking is declining in Europe. The main concern is security. So, data confidentiality, integrity, proof of origin, peer entity authentication, non-repudiation must be ensured. A few problems have been experienced by the IT heads in the Banks such as withdrawal of money beyond the limit. This has taken place at ATM booths because there is agreement between Banks regarding networking. Barbara, 1997