IT Trend in the Finance Industry
IT Trend in the Finance Industry
The finance industry of the modern society includes institution like banks - IT Trend in the Finance Industry introduction. Bank is often regarded as a financial institution where clients can borrow, invest, lend and store money. Banking of today’s modern society is greatly influenced by the information technology. The newest trend in the field of banking is the introduction of the term “E-Banking.” E-banking is the newest trend in the banking society where the requirements for computers turned into large scale. E-banking is the kind of banking that requires computers to transact business. The banking industry has just found a way to keep clients in a very convenient way. Clients can access accounts and transact business from any location. E-banking also enables the customers to catch up transaction and continue banking 24/7 (Insley 2002).
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E-Banking aims to provide the services of both the new and traditional bank processes on its customers. The technological gadgets that E-banking embarks are the following: computers, Touch Tone Telephones, Personal Digital Assistant, and Automated Teller Machine. The primary technology that E-banking relies on is the use of internet to process and to assist customers in their transactions. The internet’s accessibility to the public made it possible for banks to create interactive and electronic communication channels for the clients.
The impact of the services that e-banking produced on the business processes was astonishing. It was able to combine both the old and new methods of banking for the best convenience of the clients. The impacts of e-banking produced better services on both retail services and wholesale services. Banking retail services that was flourished was the following: account management, bill payment and presentment, new account opening, consumers wire transfer, investments services, loan application and approval, and account aggregation. All this retail services of the bank where flourished and enhanced using the electronic advantages of e-banking. Banks also offer wholesale services which were enhanced by the real and on-time services provided by e-banking. Among the services were: account management, cash management, small business loan applications, approvals or advances, commercial wire transfers, business to business payments and employee benefit administration. All the said services were improved using e-banking for the convenience of the clients (FFIEC 2008).
The traditional banking system was greatly enhanced and the over-all structure was changed in relation to the new banking system using electronic devices. The new design of the banking industry overthrew the old structure of the traditional banks. The structure for e-banking was more complex and needed a lot of new systems and applications to continue the e-banking needs. Among the needed applications that redesigned the structure of the banking industry was: the use and need for internet service provider, the use of core banking vendor or processor, the requirement of the use of the managed security service provider, the needs for a credit bureau and the use of affiliations to credit scoring companies (FFIEC 2008).
The structure was redesigned and additional components and processes were included to fully facilitate the e-banking processes this provided impact on the internal processes. The following processes were included: web design and hosting, firewall configuration and management for security purposes, the installation of intrusion and detection system or the IDS, network administration, security management, usage of applications related to e-commerce, maintenance of the core processing system, programming support and the maintenance of automated decision support system (FFIEC 2008).
The shifting from offline to online services increased the awareness on whether the banks have increased or decreased cost and the relationships to their revenues. A study was conducted by the EMAC and was presented on their 34th EMAC Conference in Milan Italy. The name of the study was “Evaluating the Impact of online Channel Usage on Customer Profitability.” The study basically aims to determine the revenue differences among off-line and online users. On the said study, it was noted that the serving customers for banking online is more cost-efficient. The cost efficiency of the online services was due to the increase in automation services on the said environment thus the use of banking personnel were reduced and the cost were also reduced (EMAC 2005). It was also noted that the revenues for the online customers are relatively higher than the offline customers. This was primarily due to the fact that customers tend to gain convenience on on-line services and have them connected anywhere and anytime. In effect to this consideration, there is greater number of customers shifting from offline to online services. The study provided the idea that e-banking is more cost efficient and can provide higher revenues for the banking and finance industry. The trend of e-banking did not produced significant markets however, it fortified the market for IT equipments.
The new system of e-banking greatly affected the type of employee hired. Usually, the employees being hired for banks that use e-banking solutions needs to have a god background in computer application. Positions are offered for the stated qualifications above are for the basic position however due to increase in the complexity in the use of computers, IT personnel numbers were also increased. Computer programmers, computer analysts, web designers and other IT professionals have significantly increased its demand on the banking industry due to the e-banking trend.
The trend of e-banking greatly influenced the finance industry for the banks of today uses computers and application that are all IT related. The trend showed that e-banking gives considerably higher revenues than the traditional banking and it is more cost efficient. The trend of E-banking surely provided a new face to the finance industry.
Insley, Richard. “What is E-Banking?” 4 March 2002. BankersOnline. 30 May 2008. <http://www.bankersonline.com/ebanking/gurus_eb030402b.html>
EMAC 34th Conference. “Evaluating the Impact of Online Channel Usage on Customer Profitability.” 2005. European Marketing Academy. 30 May 2008 <http://www.is-frankfurt.de/publikationenNeu/EvaluatingtheImpactofOnlineCha1379.doc>
FFIEC. “Booklet: E-Banking” 2008. Federal Financial Institutions Examination Council. 30 May 2008 <http://www.ffiec.gov/ffiecinfobase/html_pages/ebanking_book_frame.htm>