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Trends: Customised Services is The New Mantra

Economic Times Banking Wise 29

Jan 2013
Devendra Mohan
Competition, product innovation, better risk management systems, and new
technology is now emerging as the trendsetter in banking, reports Devendra
There has been a sea-change in services of major commercial banks with
introduction of considerable innovation and diversification, especially with the
launch of consumer credit, credit cards, merchant banking etc. There has been
an increase in the demand of retail credit, ATMs and debit-cards. The
introduction of new technology by banks is now emerging as a trendsetter as
far as banking services is concerned.
IT-Spurred Trends
Real Time Gross Settlement (RTGS): This system, works on real time basis. It
was introduced in India in March 2004. Through this instructions can be given
electronically by banks to transfer funds from their account to another bank. It
is maintained and operated by the RBI.
Electronic Funds Transfer (EFT): EFT is a system whereby anyone who wants
to make payment to another person/company etc. can approach his bank and
make cash payment or give instructions/authorisation to transfer funds directly
from his own account to the bank account of the receiver/beneficiary.
Electronic Clearing Service (ECS): ECS is a retail payment system being used
to make bulk payments/receipts of a similar nature especially where each
individual payment is of a repetitive nature and of relatively smaller amount.
This facility is meant for companies and government departments to
make/receive large volumes of payments. Automatic Teller Machine (ATM): In
the recent times ATMs have become immensely popular device in India, which
enables the customers to withdraw their money 24X 7. The device allows
customer with an ATM card to do routine banking transactions.
Electronic Payment Services (e-cheques): A new technology is being
developed in the US for launching of e-cheque, which will eventually replace
the conventional paper cheque. India has already agreed to the introduction of
e-cheque and the Negotiable Instruments Act has already been amended to
include Truncated cheque and E-cheque instruments.
Point of Sale Terminal: It is a computer terminal linked online to the
computerised customer information files in a bank and magnetically encoded
plastic transaction card that identifies the customer to the computer.
Tele Banking: It allows the customer to do entire non-cash related banking on
telephone. With this facility, Automatic Voice Recorder is used for simpler
queries and transactions. For complicated queries and transactions, manned
phone terminals are used.
Electronic Data Interchange (EDI): EDI is the electronic exchange of business
documents like purchase order, invoices, shipping notices, receiving advices
etc. in a standard, computer processed, universally accepted format between
trading partners. EDI can also be used to transmit financial information and
payments in electronic form.
Old Challenges, New Remedies
A number of Indian banks are burdened with non-performing assets (NPAs). As a
result they would be subjected to tremendous pressures to perform or else
perish to perform. In such a scenario, Information Technology (IT) has come as
a great help.
It not only ensures smooth interrelated transactions over the electronic
medium but also makes complex financial product innovation and product
development easier. Through the application of IT and e-banking, the banking
system is now heading towards virtual banking. There is already so much talk
about e-banking through World Wide Banking (WWB) which would facilitate the
linking of all banks globally. As a result, there will be no individual banks, no
need to have physical bank branches and no extension counters. Customers
would be operating their bank accounts through internet from their homes and
That would be the day when the banks would be inside your premises, serving
as never before.