Information System

1. 4. 4 Information Systems for the Banking & Financial Sector: Audit is one of the major controls for monitoring management activities in the banks and financial institutions. In a computerized environment, IS audit is a very effective and necessary activity. Usually the IT implementation in the banking and financial organizations is done by adopting a mix of different methodologies – internal development and deployment and third party product development and deployment. In case of internally developed and deployed IT systems, IS audit will require to be done by a team of specially trained internal or external auditors.

However, it is preferable to have the IS audit conducted with the help of suitable external agencies with the required skills and expertise to ensure independent nature of audit. In case of development and deployment of the IT systems by third parties, the IS audit requires to be conducted by trusted auditor/s with skills and expertise, required for the purpose. IS audit assumes greater significance because a large number of critical and strategic financial operations in the banking and financial sector are wholly or partly being handled by the computerized systems.

There is a significant need for determining the role of IS in banks. This would assure the top manage- ment that the IS development is in the right direction. This would also help in exploring the intended and the real role of IS in banks. The knowledge of the real role of IS in banks would help IS managers in managing information systems by judging the business needs of the IS projects, associated risks, importance and ranking of IS managers in organizational hierarchy, need for innovation and flexibility in IS planning approach, etc.

The IS practitioners may use the variables used here for self-evaluation and for deciding about the IS development. It has been well recognized that IS plays different roles in different industries. However, there is limited research examining the differences in the role of IS within a single industry. This study empirically explores the differences in the role of IS among public, private, and foreign ban. ks. Results indicate that while, at present, only private and foreign banks have obtained strategic advantages using IT, public sector banks, although late, have also realized the importance of IT.

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It has been empirically proved that the future impact of IS does not vary significantly with the banking groups. This suggests that IS efforts put in by the public sector banks are in the right direction and can be expected to give them a strategic advantage in future. Foreign and private banks, though in the strategic group today, have to constantly harness IS for strategic advantage to maintain their position. Sustaining competitive advantage is very difficult, because IS managers have to continuously evaluate the bank’s applications portfolio with respect to technology and their competitors.

Public sector banks have to search for ways to shift from support group to the strategic group in order to enjoy a strategic advantage from the use of IS. In order to achieve this objective, they may have to formulate a different IS strategy so as to make them competitive enough to survive. Future research could evolve suitable IS strategies for all the three sectors. This paper has tried to locate the banks on the Strategic Grid. However, the level of computerization of various branches of a bank may be different and hence their dependency on IT may be different.

Future research may involve locating the various branches and departments of a bank on the Strategic Grid and suggesting a suitable strategy for the branch. This study has the limitation that data are collected only from key IT executives. Perceptions of the bank’s business executives may be different from that of the IT executives. Therefore, future research could also attempt obtaining and analysing the opinion of bank’s business executives and looking for perceptual differences, if any.

Another interesting area of future research could be to unearth the reasons for adopting a particular role of IS and to explore facilitators and inhibitors in using IS for strategic use. Uses of information technology in banking Write your abstract here. Applications of Information Technology in Banks in India While computer by itself is the most cherished invention that man has ever accomplished, its union with communication technology which is at its pinnacle, has brought yet another amazing extension to its already fabulous capabilities.

From the period of Marconi to this day , the improvements that have taken place in the television , have literally brought the entire world into an individual’s bedroom. Joining this powerful communication environment , the IT has opened flood gates for global economic activity. The contribution of economic and political changes that have so far taken place to encourage international trade will bear fruit only when banking and the associated services can catch up with the new trends. The modern IT has enough capabilities to enable banks, financial institutions and others to bring about the desired changes.

Banking sector reforms introduced a decade ago in 1992-93 , have been based on five fundamentals: 1. Strengthening of prudential norms and market discipline. 2. Appropriate adoption of International benchmarks. 3. Management of organizational change and consolidation. 4. Technological upgradation. 5. Human resource development. The Financial Reforms that were initiated in the early 90s and the globalization and liberalization measures brought in a completely new operating environment to the Banks that were till then operating in a highly protected milieu.

Services and products like “Anywhere Banking” “Tele-Banking” “Internet banking” “Web Banking” , e-banking, e-commerce, e-business etc. have become the buzzwords of the day and the Banks are trying to cope with the competition by offering innovative and attractively packaged technology-based services to their customers. Reserve Bank of India constituted a committee under the chairmanship of Dr. C. Rangarajan. The main task of the committee was preparation of a plan for computerization for the period 1990-1994 ( for 5 Years ).

For the purpose of computerization , the committee selected the important areas relating to customer service , internal-decision-making process , productivity and profitability. The committee furnished its report on November 9, 1989 with the following recommendations- 1. The branches having daily average level of vouchers at more than 750 should be computerized . 2. Computerization on branch level should be achieved on any of the following basis- (i)Selected branches will have on-line terminals with micro and mini-computers which will be linked with central main-frame computer to provide counter service and other office-services. ii)Personal computers will be installed at counters which will be linked with local area network. (iii)For third option , the banks will have to depend on Telecom line. 3. The banks should gradually use developed devices such as- Photocopier , FAX , Duplicator , Microfilm , Signature Storage , Scanners etc. 4. Non-computerized branches can take the services of other local computerized branch / office in case of important task. 5. The customers should have the facility to route their business to any branch of the bank. 6. All-Bank Credit Card should be issued. . Computers should be made bilingual and proper training arrangements should be made to provide training to staff members. 8. The regular customers should be offered On-line facility. 9. Like some European countries , there should be a system of credit clearing. 10. BANKNET should be used for interbank and intra bank applications. 11. All Regional offices and Zonal offices to be computerized in a phased manner. Rangarajan Committee – 1989: A Statistical Analysis Rangarajan Committee ( 1989 ) has focused its stress on computerization of banks.

A statistical analysis was also made in the report of committee. In this analysis ,it was mentioned that following jobs can be rapidly and easily performed at Regional Office/Zonal office level. 1. To ascertain the bad and doubtful debts and to make provision for them. 2. To claim the amount under Credit Guarantee Schemes of DICGC. 3. To communicate , analyze and forecast the data for trade-plan. 4. To make action plan for recovery of advances. 5. Personnel Information System. 6. Credit Information System. 7. Checking of figures of priority sector advances. . Consolidation of statements/figures to be sent to the RBI. Present level of Computerization: Based on the norms worked out by Rangarajan Committee (II), 7827 branches of the Public Sector banks were identified for full branch computerization up to March 2000 of which around 4620 were computerized as on March 99. Meanwhile, the networking of the already-computerized branches also assumed urgency and some of the Banks have started inter-connecting their computerized branches using leased telephone lines or Very Small Aperture Terminals (VSATS).

This is meant to provide a more comprehensive service to customers and at the same time give banks better centralized control over the branch operations. As of now, New Private Sector and Foreign Banks have an edge over Public Sector Banks as far as implementation of technological solutions is concerned. However, the latter are in the process of making huge investments in technology. Source: http://www. shvoong. com/humanities/1748375-applications-information-technology-banks-india/#ixzz2ONAVoUdI

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