A

PROJECT REPORT ON
RECENT DEVELOPMENTS IN BANKING SECTOR

SUBMITTED BY
AASHIMA
M.COM – II
ROLL NO. 3622

IN PARTIAL FULFILLMENT OF THE REQUIREMENT FOR THE

AWRAD OF DEGREE
MASTER OF COMMERCE (ACC. & FIN.)
SESSION (2020-21)

THROUGH
DEPT. OF COMMERCE
R.S.D COLLEGE FEROZEPUR CITY
 ACKNOWLEDGEMENT

I take this opportunity to express my profound gratitude and deep regards to my

guide Mr. vinay Guglani for his exemplary guidance , monitoring and constant
encouragement throughout the course of this thesis. The blessing , help and
guidance given by him time to time shall carry me a long way in the journey of
life on which I am about to embark .

Lastly , I thank almighty , my parents , sister and friend for their constant
encouragement without which this assignment would not be possible.
 TABLE OF CONTENTS

S.NO. PARTICULARS

1. Bank Introduction

2. The History of Indian Banking System

3. Objective of study

4. Types of Banks

5. Role of Banking Sector in Economic Development

6 Recent Trends in Banking SEctor

7 IT in Banking

8 Conclusion
 BANKS INTRODUCTION

A Bank is an institution that provides financial service , particularly taking deposits and
extending credit.The Banking sector has been immensely benefited from the implementation
of superior technology during the recent past, almost in every nation in the world.
Productivity enhancement, innovative products, speedy transactions seamless transfer of
funds are some of the advantage derived through the technology. Information technology has
also improved the efficiency and robustness of business processes across banking sector.
India's banking sector has made rapid strides in reforming itself to the new competitive
business environment. Indian banking industry is the midst of an IT revolution.
Technological infrastructure has become an indispensable part of the reforms process in the
banking system, with the gradual development of sophisticated instruments and innovations
in market practices. Banking Structure in India A well-regulated banking system is a key
comfort for local and foreign stake-holders in any country. Prudent banking regulation is
recognized as one of the reasons why India was less affected by the global financial crisis.
Banks can be broadly categorized as Commercial Banks or Co-operative Banks. Banks which
meet specific criteria are included in the second schedule of the RBI Act, 1934. These are
called scheduled banks. They may be commercial banks or cooperative banks. Scheduled
banks are considered to be safer, and are entitled to special facilities like re-finance from
RBI. Inclusion in the schedule also comes with its responsibilities of reporting to RBI and
maintaining a percentage of its demand and time liabilities as Cash Reserve Ratio (CRR) with
RBI.

THE HISTORY OF INDIAN BANKING SECTOR

 
The history of Indian banking can be divided into three main phases.
 
Phase I (1786- 1969) - Initial phase of banking in India when many small banks were set up
Phase II (1969- 1991) - Nationalization, regularization and growth
Phase III (1991 onwards) - Liberalization and its aftermath
 
With the reforms in Phase III the Indian banking sector, as it stands today, is mature in
supply, product range and reach, with banks having clean, strong and transparent balance
sheets. The major growth drivers are increase in retail credit demand, proliferation of ATMs
and debit-cards, decreasing NPAs due to Securitization, improved macroeconomic
conditions, diversification, interest rate spreads, and regulatory and policy changes (e.g.
amendments to the Banking Regulation Act).
 
Certain trends like growing competition, product innovation and branding, focus on
strengthening risk management systems, emphasis on technology have emerged in the recent
past. In addition, the impact of the Basel II norms is going to be expensive for Indian banks,
with the need for additional capital requirement and costly database creation and maintenance
processes. Larger banks would have a relative advantage with the incorporation of the norms.

TRADITIONAL BANKING SYSYTEM

Traditional banking has three distinct components:

1.Capital
2.Deposits
3. Loans

Capital

The pillars of Traditional Banking (Deposits & Loans) rest upon the foundation of Capital.
All banks must have access to Capital, which is leveraged with deposits and then prudently
converted into loans that generate jobs and economic growth. Friends of Traditional Banking
support policies that facilitate the flow of capital into our banking system and which allow
market driven returns to be earned on capital that is placed at risk. We oppose any policies
that make it more difficult to attract capital into this critical process.
Deposits

Once Capital is invested, it is leveraged through the collection of deposits that represent the
savings or liquid reserves of individuals and businesses in the community. The collection of
these deposits is facilitated by the fact that they are insured up to $250,000 by the full faith
and credit of the U.S. Government through the Federal Deposit Insurance Corporation
(FDIC). This guarantee lowers the required return and results in an appropriate level of
regulation. Depositors have ready access to their deposits through a number of tools (i.e.
checks, debit cards, internet, and other electronic transfers, etc.) Friends of Traditional
Banking supports policies that promote the ability to attract deposits and oppose policies that
unduly increase the cost (regulatory or financial) of those deposits, or in any way disrupts an
individual's or business' access to these deposits.

Loans

The combination of Capital and FDIC insured Deposits constitutes the basis for the amount
of money that can be disbursed in Loans. Prudent loans to individuals and businesses drive
healthy economic growth. Friends of Traditional Banking supports policies that facilitate the
market based pricing and granting of loans which accurately reflects risk. We oppose policies
that increase the cost of lending, inject political, non-market based criteria into the lending
process, or arbitrarily restrict or distort the allocation of credit in the economy.

Our focus is on achieving policies that promote and preserve Traditional Banking,
recognizing that there are many types of FDIC insured charters, and varying corporate
structures of all sizes, engaged in this critical process.

Services typically offered by banks earlier :-

 Taking deposits from their customers and issuing checkingand saving accounts to
individual and businesses.
 Giivng loans to indivoduals and businesses.
 Cashing cheques
 Issuing cerdit cards , ATM , debit cards.
OBJECTIVES OF THE STUDY

1. Explaining the types of banking sector.

2. Role of banking sector in development of economy
3. To examine recent trends and developments in banking sector
4. To present the technological developments in Indian banking sector

TYPES OF BANKING SECTORS

In banking sector banks are classified into 7 types. In these each banks has their own
specialisation and can play different actions which are useful to everyday of our life for
monetary transactions .Those can be explained as follows.
RESERVE BANK OF INDIA (RBI)

The country had no central bank prior to the establishment of the RBI. The RBI is the
supreme monetary and banking authority in the country and controls the banking system in
India. It is called the Reserve Bank’ as it keeps the reserves of all commercial banks.

SCHEDULED & NON –SCHEDULED BANKS

A scheduled bank is a bank that is listed under the second schedule of the RBI Act, 1934. In
order to be included under this schedule of the RBI Act, banks have to fulfil certain
conditions such as having a paid up capital and reserves of at least 0.5 million and satisfying
the Reserve Bank that its affairs are not being conducted in a manner prejudicial to the
interests of its depositors. Scheduled banks are further classified into commercial and
cooperative banks. Non- scheduled banks are those which are not included in the second
schedule of the RBI Act, 1934. At present these are only three such banks in the country.

COMMERCIAL BANKS

Commercial banks may be defined as, any banking organization that deals with the deposits
and loans of business organizations. Commercial banks issue bank checks and drafts, as well
as accept money on term deposits. Commercial banks also act as moneylenders, by way of
instalment loans and overdrafts. Commercial banks also allow for a variety of deposit
accounts, such as checking, savings, and time deposit. These institutions are run to make a
profit and owned by a group of individuals.

SCHEDULED COMMERCIAL BANKS (SCBS)

Scheduled commercial banks (SCBs) account for a major proportion of the business of the
scheduled banks. SCBs in India are categorized into the five groups based on their ownership
and/or their nature of operations. State Bank of India and its six associates (excluding State
Bank of Saurashtra, which has been merged with the SBI with effect from August 13, 2008)
are recognised as a separate category of SCBs, because of the distinct statutes (SBI Act, 1955
and SBI Subsidiary Banks Act, 1959) that govern them.
Types of Scheduled Commercial Banks :-

Public Sector Banks

These are banks where majority stake is held by the Government of India. Examples of public
sector banks are: SBI, Bank of India, Canara Bank, etc. Private Sector Banks
These are banks majority of share capital of the bank is held by private individuals. These
banks are registered as companies with limited liability. Examples of private sector banks are:
ICICI Bank, Axis bank, HDFC, etc.

Foreign Banks

These banks are registered and have their headquarters in a foreign country but operate their
branches in our country. Examples of foreign banks in India are: HSBC, Citibank, Standard
Chartered Bank, etc.

Regional Rural Banks

Regional Rural Banks were established under the provisions of an Ordinance promulgated on
the 26th September 1975 and the RRB Act, 1976 with an objective to ensure sufficient
institutional credit for agriculture and other rural sectors. The issued capital of a RRB is
shared by the owners in the proportion of 50%, 15% and 35% respectively.

Type of Commercial Banks Major Shareholders Major Players

Public Sector Bank Government of India SBI, PNB, Canara Bank,

Bank of Baroda, Bank of
India, etc

Private Sector Banks Private Individuals Mahindra Bank, Yes Bank etc
 Bank, HDFC Bank, Axis
Bank, Kotak
ICICI

Foreign Banks Foreign Entity Standard Chartered Bank,

Citi Bank,
HSBC, Deutsche Bank, BNP
Paribas, etc

Regional Rural Banks Central Govt, Concerned Andhra Pradesh

State Govt and GrameenaVikas Bank,
Sponsor Bank in the ratio UttranchalGramin Bank,
of 50 : Prathama Bank, etc.
15 : 35

COOPERATIVE BANKS

A co-operative bank is a financial entity which belongs to its members, who are at the same
time the owners and the customers of their bank. Co-operative banks are often created by
persons belonging to the same local or professional community or sharing a common interest.
Co-operative banks generally provide their members with a wide range of banking and
financial services (loans, deposits, banking accounts, etc).
 Cooperative banks are the primary financiers of agricultural activities, some small-
scale industries and selfemployed workers.
 Co-operative banks function on the basis of “no-profit no-loss”.

The co-operative banking structure in India is divided into following main five
categories:

 Primary urban co-operative banks

 Primary agriculture credit societies
 District central co-operative banks
  State co-operative banks
 Land development banks

ROLE OF BANKING SECTOR IN ECONOMIC DEVELOPMENT OF

THE COUNTRY :-

The banking system plays an important role in the modern economic world. Banks collect the
savings of the individuals and lend them out to business- people and manufacturers. Bank
loans facilitate commerce.
Manufacturers borrow from banks the money needed for the purchase of raw materials and to
meet other requirements such as working capital. It is safe to keep money in banks. Interest is
also earned thereby. Thus, the desire to save is stimulated and the volume of savings
increases. The savings can be utilised to produce new capital assets.
Thus, the banks play an important role in the creation of new capital (or capital formation) in
a country and thus help the growth process. The following are the some of roles played by
banks :-

 Banks arrange for the sale of shares and debentures. Thus, business houses and
manufacturers can get fixed capital with the aid of banks. There are banks known as
industrial banks, which assist the formation of new companies and new industrial
enterprises and give long-term loans to manufacturers.
 The banking system can create money. When business expands, more money is
needed for exchange transactions. The legal tender money of a country cannot usually
be expanded quickly. Bank money can be increased quickly and used when there is
need of more money. In a developing economy (like that of India) banks play an
important part as supplier of money.
 The banking system facilitates internal and international trade. A large part of trade is
done on credit. Banks provide references and guarantees, on behalf of their customers,
on the basis of which sellers can supply goods on credit. This is particularly important
in international trade when the parties reside in different countries and are very often
unknown to one another.
  Trade is also assisted by the grant of loans by discounting bills of exchange and in
other ways. Foreign exchange transactions (the exchange of one currency for another)
are also done through banks.
 Banks act as advisers, counsellors and agents of business and industrial organisations.
They help the development of trade and industry.
 Banks motivate people to make savings.
 Banks mobilizes savings for the purpose of investment
 For the formation of capital banks play a coordination function between savings and
investment
 Banks provides financial infrastructure and funds for backward region which made
balanced regional development in the country.
 Banks plays a crucial role for expanding size of market.
 Through banks government fulfil every objective of planned economic development.

RECENT TRENDS IN BANKING SECTOR

1. ELECTRONIC- CHEQUES :-

Electronic cheques works same as paper cheques but payment transaction can be done
through digital format.XML document provide mechanism to authenticate parties to make
transactions. In e-cheques signatures are accompanied by bank –issued certificates which tie
with signer’s key to bank account. Nowdaysit is very commonly using by everyone .many of
transferring amount transaction can be done through electronic cheques. E-cheques make
easy transfer of payments to customers which are easily available to make payment for online
purchases. It reduces chance to cheque bouncing banks always give awareness about their
account details when any transaction can be done.

Benefits of E- Cheque:-

 Lower Costs:-The cost of an electronic check is much cheaper than that of a paper

check.
 Convenience and Time Saving:- Electronic cheques are more convenient than paper
cheque and it aslo helpful for saving a lots of time
2. REAL TIME GROSS SETTLEMENT

Real time gross settlement is a fund transfer system. Settlement in “real time” means the
transactions happen almost immediately “grosssettlement “means transaction is settled one to
one basis unlike national electronic fund transfer (NEFT). Where the transaction happen in
bulk at a given point in time during the day. This is mainly used for transaction which high in
value and need to be cleared immediately. In this the bank that receives money has to credit
the amount in the account with in 30 min after receiving it. Services of RTG’s window for
transaction are available to banks from 9.00 am to 4.30 p.m in a week and 9.00 am to 4.00 pm
in Saturday’s for settlement at from RBI’s end.

Benefits of RTGS :-

 The fund transfer occurs in real time.

 The transfer can occur online.
 RTGS is predominantly used for high-value transactions.
 The system is highly reliable and is powered by the RBI.
 It offers immediate clearing.
 The process follows a one-to-one basis for crediting the funds.
 One can execute these transactions on an individual basis.
 Organisations can execute these transactions on a gross basis.
3. ELECTRONIC FUND TRANSFER

It is a system of transforming money from one bank account direct to another without any
paper money charging hands. Direct deposits are one of the most widely used EFT program.
It refers transfer of funds initiated through on electronicterminal, including credit cards,
ATM, and point of sale transactions. It used for both credit transfer and debit transfer.
Electronic fund transfer transactions are processed through the automated clearing house
network. The growing popularity of EFT for online bill payment in paying the way for
paperless universe where checks,stamps, envelops, and paper bills are obsolete. Through EFT
administrative costs should be reduced, increase efficiency, simplified bookkeeping and
greater security.

Benefits of Electronic fund transfer:-

 Electronic funds transfer provides an easy, cheaper and faster method of transferring
money.
 It helps individuals and organizations to save on costs such as printing checks as well
as the time to deliver or collect checks and deposit them in the banks for processing.
 The money moves to the recipient’s account much faster since there is no manual
moving of checks from one bank to the other.
 It is more efficient.
  Has less administrative procedures, hence reduced labor and staff costs.
 An electronic funds transfer is much safer and secure. For instance, it eliminates the
need to carry huge amounts of money

4. ELECTRONIC CLEARING SYSTEM (ECS) :

ECS is an electronic mode of funds transfer from one bank account to another. It can be used
by institutions for making payments such as distribution of dividend interest, salary, pension,
among others. It can also be used to pay bills and other charges such as telephone, electricity,
water or for making equated monthly installments payments on loans as well as SIP
investments. ECS can be used for both credit and debit purposes.

Types of ECS:-
ECS can be used for both ECS credit and ECS debit.
ECS Credit
ECS credit is used for allowing credit to a large number of beneficiaries by raising a single
debit to the customer’s account, such as dividend, interest or salary payment.
ECS Debit
ECS debit is used for raising debits to a number of accounts of consumers or account holders
for affording a single credit to a particular institution, in cases such as utility payments like
electricity bills and telephone bills
Benefits of ECS
 Cost Effective.
 Freedom for paper handling and its associate disadvantages.
 The smooth process of reconcilliation for the sponsoe bank
 Easy processing
5. MOBILE BANKING

A new revolution in the realm of e-banking is the emergence of mobile banking. On-line
banking is now moving to the mobile world, giving everybody with a mobile phone access to
real-time banking services, regardless of their location. It provides a new way to pick up
information and interact with the banks to carry out the relevant banking business. The
potential of mobile banking is limitless and is expected to be a big success. Booking and
paying for travel and even tickets is also expected to be a growth area. This is a very flexible
way of transacting banking business.

Benefits of Mobile Banking :-

 In mobile banking user can transfer fund from your bank to another bank with a
smartphone just with the help of the internet from anywhere to everywhere
 It is avaliable for 24 hours and easy and convenient mode for many mobile user in
rural area.
 Mobile banking is more secure and risk free than online internet banking.
 Mobile banking is a cost effective and bank offer this services at less cost to the
customer.
 With the help of mobile banking user can avail various services like transfer fund ,
checking account balance , study recent ransaction , block ATM card at home.
6. INTERNET BANKING:

Internet banking involves use of internet for delivery of banking products and services.
Banking is no longer confined to the branches where one has to approach the branch in
person, to withdraw cash or deposits a cheque or request a statement of accounts. In internet
banking, any inquiry or transaction is processed online without any reference to the branch
(anywhere banking) at any time.

Benefits of Internet Banking:-

 Reduce the transaction costs of offering several banking services

 Increase convenience for customers, since they can conduct Many banking
transaction 24 hours a day.
 Increase customer loyalty.
 Improve customer access.
 Attract new customers.
7. TELE – BANKING
Tele-banking is the another tool which provide the facility of 24 hours banking to the
customer. Tele- banking is based on the voice processing facility avaliable on bank
computers. The caller usually a customer calls the bank anytime and can enquire balance
in his accounts or other transaction history. In this
system , the computers at banks are connected to a telephone link with the help of a
modem . voice processing facility provided in the software. This software identifies the
voice of the caller and provides him suitable reply . some banks also use telephonic
answering machine but this is limited to some breif functions. This is the only telephone
answering system and now tele-banking. Tele – banking is becoming popular since
queries at ATM ‘s are now becoming too long

8. IMPS (Immediate Payment Service)

IMPS stands for Immediate Payment Service in Indian banking system terminologies. It is a
money transfer mechanism made available by the apex bank of the country, the Reserve Bank
of India and the National Payments Corporation of India (NPCI). Initiated in 2010 by the
NPCI with the help of a pilot project with 4 major banks, IMPS has now grown to 150+
banks.
The major feature of IMPS is that it is available at all times for usage.

 It transfers funds instantly and is a great banking platform in case of emergencies.

The transaction charges of this platform are also very nominal and the transfer limit is
also considerable, approximately Rupees 2 lakhs per day. Moreover, IMPS is
available on mobile too which makes it super-convenient.
 National Electronic Fund Transfer (NEFT) and RTGS (Real-time gross settlement)
transfer mechanisms are only available during their business hours. Moreover, NEFT
and RTGS are not available on bank off-days and holidays. However, IMPS scores a
point in this regard as it is available 24 x 7.

National Payments Corporation of India (NPCI) is responsible for managing the IMPS fund
transfer mechanism. This mechanism is regulated by the Reserve Bank of India. One can
define IMPS as an immediate, inter-bank real-time fund transfer mechanism enabled through
electronic means.

9. UPI (Unified Payments Interface)

UPI or Unified Payments Interface is an immediate real-time payment system that helps in
instantly transferring the funds between the two bank accounts through a mobile
platform.Hence, UPI is a concept that allows multiple bank accounts to get into a single
mobile application. This idea was developed by the National Payments Corporation of India
and is controlled by the RBI and IBA (Indian Bank Association).

Key Features of UPI

 Instant transfer of fund through Immediate Payment Service (IMPS) which is faster
than NEFT.
 Since it is completely digital, one can use UPI 24 hours and on all public holidays.
Single mobile application for accessing various bank accounts.
 Uses Virtual Payment Address which is a unique ID as given by the bank
 Bill Sharing facility.
 Best for doing merchant payment, utility bill payments, in-app payments, OTC
payments, Barcode based payments.
 One can file a complaint from Mobile App directly.
10.DE-MAT ACCOUNT
India adopted the de-mat system for electronic storing. According to depositary act 1996 to
maintain shares and securities electronically and eliminating the troubles associated with as
per shares. De-mat system was introduced .to invest shares and securities every investor
should have registration. Instead of investor taking physical passion of certificates a de-mat
account is opened. De-mat account can be provided by through stockbrokers. It can be held
electronically. For the purpose of purchase and transfer of shares and their process for sales.
To access de-mat account it requires two types of passwords.
1. Internet password
2. Transaction password

Benefits of De-mat account:-

 Lower risks:- Physical securities are risky due to thefts, losses, or damages. In
addition, bad deliveries or fake securities pose further risks. These risks are
 completely eliminated with the opening of a Demat account, which provides holders
with the option of holding all their investments in electronic form..
 Easy holding:- Maintaining physical certificates is a tedious job. Moreover, keeping
track of their performance is an added responsibility. Demat account holders can
make it more convenient to hold and track all their investments through a single
account
 Reduced costs:- Physical certificates involved several additional costs, such as stamp
duty, handling charges, and other such expenses. These extra expenses are completely
eliminated with Demat accounts.
 Reduced time:- Due to the elimination of paperwork, the time required in completing
a transaction gets reduced. The reduced time requirement enables the account holder
to make more purchases and sales of security holdings in a shorter time and with
greater efficiency.

11. NATIONAL ELECTRONIC FUNDS TRANSFER (NEFT)

National Electronic Funds Transfer (NEFT) is a nation-wide system that facilitates

individuals, firms and corporate to electronically transfer funds from any bank branch to any
individual, firm or corporate having an account with any other bank branch in the country. In
order to issue the instruction, the transferor should know not only the beneficiary's bank
account number but also the IFSC (Indian Financial System Code) of the concerned bank.
IFSC is an alpha-numeric code that uniquely identifies a bank-branch participating in the
NEFT system. This is a 11 digit code with the first 4 alpha characters representing the bank,
and the last 6 numeric characters representing the branch. The 5th character is 0 (zero). IPSC
is used by the NEFT system to route the messages to the destination banks / branches.

Benefits of National Electronic Funds Transfer (NEFT):-

 It is economical to use NEFT for money transfer.

 NEFT is built on a secure platform.
 No need of using a cheque or demand draft for money transfer.
 Transferring money does not require you to visit the bank.
 Initiate funds transfer online.
  The transfer can be completed faster, with convenience.

12. POINT OF SALE (POS)

Making a payment in exchange of for goods and for retail transaction point of sale is useful.
The transaction usually can be done by using debit and credit cards. Since 1990 POS
transaction had become very common and it is using overall the world. To complete pose
transaction cards usually authenticated with a pin number. The information transmitted via
the pin number travel through ATM network until it reaches the bank it is used to register
products by a bar scanner and to read the descriptions and price on the tag of every time. All
the activities can be done automatically like finding the total balance deducts any discounts
and applies the sales tax and sending customer information to marketing database and
transactions record to an investors system. Once payment has been credited to the account the
post terminal check of validity of cards and connects to bank.
13.AUTOMATIC TELLER MACHINE:

The ATM's are used by banks for making the customers dealing easier. ATM card is a
device that allows customer who has an ATM card to perform routine banking transaction at
any time without interacting with human teller. It provides exchange services. This service
helps the customer to withdraw money even when the banks are closed. This can be done by
inserting the card in the ATM and entering the Personal Identification Number and secret
Password. It allows the customers.
1. To transfer money to and from accounts.
2. To view account information.
3. To order cash.
4. To receive cash.
14.BIO- METRIC AUTHENTICATION

For the purpose of security the bio-metric authentication places a major role. Now a day’s
many organisations are implementing bio-metric authentication. It works comparing two sets
of data
 Owner of the device
 Visitor of device
Both are one and same gives access to person. There are different types of scanners
 Finger print scanner
 Eye scanner
 Speaker reorganisation

Benefits of Bio- metric authentication :-

 Protecting Banking Information – Biometric technology provides the strongest

method of authentication that protects banking information from being compromised
by unauthorized personnel.
 Fast and Accurate Branch Banking – Biometric technology provides fast and
accurate identification for the banking industry. Customers can be quickly
authenticated in mere seconds through a fast biometric scan.
 Protection Against Insider Fraud – Biometric identification of employees
performing transactions on the back end is a crucial step to ensuring identity
protection and reducing fraud. Biometrics in banking will help financial institutions to
prevent insider fraud by establishing secure employee authentication, accountability
and concrete audit trail of each transaction.
 Secure Online Banking – Over the past years the banking sector has been suffering
from massive online service cyber attacks. In most of these cases customers lose their
money from the negative effects of identity theft. Biometrics in banking helps the
bank to protect customer identities when using online banking services.
 ATMs with Biometrics – Biometrics in banking for ATMs authentication brings
outstanding benefits to both customers and banks. This system now gives customers
 flexibility to make transactions without bringing bank cards. Banks can avoid the
costs and liabilities of customer problems due to lost or stolen bank cards.
 Audit Trails – Banks can easily track and monitor employee and customer activity in
the system to create concrete audit trails with biometric technology solutions.
 Fast, Secure and Accurate Customer Care Service – The banking sector is always
in need of tighter security solutions to provide improved and more secure customer
care service over the phone and internet. A biometric voice recognition system for
example provides a secure and flexible solution to verify any customers executing
transactions outside of a brick and mortar environment

15.UNIVERSAL BANKING

Universal banking is a system in which banks provide a wide variety of comprehensive

financial services, including those tailored to retail, commercial, and investment services.
Universal banking is common in some European countries, including Switzerland.
In the United States, by law banks are required to separate their commercial and investment
banking services. Proponents of universal banking argue that it helps banks better diversify
risk. Detractors think dividing up banks' operations is a less risky strategy. Universal banking
combines the services of a commercial bank and an investment bank, providing all services
from within one entity. The services can include deposit accounts, a variety of investment
services and may even provide insurance services. Deposit accounts within a universal bank
may include savings and checking.
 Universal banking is a term for banks that offer a wider variety of services than their
competitors, or when compared with traditional banks.
 Universal banking is not yet common in the United States, but it's growing; right now,
banks in the United States focus more exclusively on investments than their European
counterparts.
 Banks in a universal system may still choose to specialize in a subset of banking
service, even though they technically offer much more to their client base.
16.FINANCIAL TECHNOLOGY FIRMS

Financial technology is the new technology and innovation that aims to compete with
traditional financial methods in the delivery of financial services. The main aim of fin-tech is
to provide technology and finance to start-ups and to enhance the usage of financial services
for existing financial companies. For the automation of insurance, trading and risk
management. Fin-tech is used for firms. Banks are collaborating with fine-tech firms to build
an environment that mixtures innovation of customers. Finetech firms have entered in the
industries with innovation of products and services and targeting the most profitable
segments. Viewing to their innovative commitment and caper offerings. Fine-tech firms have
started acquiring customers from traditional banks due to lack and favourable environments
for innovation are finding it hard to complete with them. The main key purpose of fin-tech to
provide lack of leadership support, regulatory budges, cultural and infrastructure limitations
are hampering in house innovation bank.

ROLE OF IT IN BANKING 
 
Indian banking industry, today is in the midst of an IT revolution. A combination of
regulatory and competitive reasons has led to increasing importance of total banking
automation in the Indian Banking Industry. Information Technology has basically been used
under two different avenues in Banking. One is Communication and Connectivity and other
is Business Process Reengineering. Information technology enables sophisticated product
development, better market infrastructure, implementation of reliable techniques for control
of risks and helps the financial intermediaries to reach geographically distant and diversified
markets. 
 
The bank which used the right technology to supply timely information will see productivity
increase and thereby gain a competitive edge. To compete in an economy which is opening
up, it is imperative for the Indian Banks to observe the latest technology and modify it to suit
their environment. Not only banks need greatly enhanced use of technology to the customer
friendly, efficient and competitive existing services and business, they also need technology
for providing newer products and newer forms of services in an increasingly dynamic and
globalize environment. Information technology offers a chance for banks to build new
systems that address a wide range of customer needs including many that may not be
imaginable today.
 
 It is becoming increasingly imperative for banks to assess and ascertain the benefits of
technology implementation. The fruits of technology will certainly taste a lot sweeter when
the returns can be measured in absolute terms but it needs precautions and the safety nets. 

  The increasing use of technology in banks has also brought up ‘security' concerns. To avoid
any pitfalls or mishaps on this account, banks ought to have in place a well-documented
security policy including network security and internal security. The passing of the
Information Technology Act has come as a boon to the banking sector, and banks should now
ensure to abide strictly by its covenants. An effort should also be made to cover e-business in
the country's consumer laws. 

Impact of IT on Banking System:

The banking system is slowly shifting from the Traditional Banking towards relationship
banking. Traditionally the relationship between the bank and its customers has been on a one-
to-one level via the branch network. This was put into operation with clearing and decision
making responsibilities concentrated at the individual branch level. The head office had
responsibility for the overall clearing network, the size of the branch network and the training
of staff in the branch network. The bank monitored the organisation’s performance and set
the decision making parameters, but the information available to both branch staff and their
customers was limited to one geographical location.
The modern bank cannot rely on its branch network alone. Customers are now demanding
new, more convenient, delivery systems, and services such as Internet banking have a dual
role to the customer. They provide traditional banking services, but additionally offer much
greater access to information on their account status and on the bank’s many other services.
To do this banks have to create account information layers, which can be accessed both by
the bank staff as well as by th customers themselves. The use of interactive electronic links
via the Internet could go a ling way in providing the customers with greater level of
information about both their own financial situation and about the services offered by the
bank.

Impact of IT on the Service Quality:

The most visible impact of technology is reflected in the way the banks respond strategically
for making its effective use for efficient service delivery. This impact on service quality can
be summed up as below:
 With automation, service no longer remains a marketing edge with the large banks
only. Small and relatively new banks with limited network of branches become better
placed to compete with the established banks, by integrating IT in their operations.
 The technology has commoditising some of the financial services. Therefore the
banks cannot take a lifetime relationship with the customers as granted and they have
to work continuously to foster this relationship and retain customer loyalty.
 The technology on one hand serves as a powerful tool for customer servicing, on the
other hand, it itself results in depersonalising of the banking services. This has an
adverse effect on relationship banking. A decade of computerization can probably
never substitute a simple or a warm handshake.
 In order to reduce service delivery cost, banks need to automate routine customer
inquiries through self-service channels. To do this they need to invest in call centers,
kiosks, ATM’s and Internet Banking today require IT infrastructure integrated with
their business strategy to be customer centric

Impact of IT on Privacy and Confidentiality of Data:

Data being stored in the computers, is now being displayed when required on through internet
banking mobile banking, ATM’s etc. all this has given rise to the issues of privacy and
confidentially of data are:
  The data processing capabilities of the computer, particularly the rapid throughput,
integration, and retrieval capabilities, give rise to doubts in the minds of individuals as
to whether the privacy of the individuals is being eroded.
 So long as the individual data items are available only to those directly concerned,
everything seems to be in proper place, but the incidence of data being cross
referenced to create detailed individual dossiers gives rise to privacy problems.
 Customers feel threatened about the inadequacy of privacy being maintained by the
banks with regard to their transactions and link at computerised systems with
suspicion.
Aside from any constitutional aspect, many nations deem privacy to be a subject of human
right and consider it to be the responsibility of those who concerned with computer data
processing for ensuring that the computer use does not revolve to the stage where different
data about people can be collected, integrated and retrieved quickly. Another important
responsibility is to ensure the data is used only for the purpose intended.

CONCLUSION
An upgradation of technology banks are playing vital role in economic development. The
banking today is re-defined and re-engineered with the use of Information Technology and it
is sure that the future of banking will offer more sophisticated services to the customers with
the continuous product and process innovations. Banking sector in India is resulting with
increased growth in customers. By providing innovative facilities of banks. The changes
made by banks are mostly focused on financial inclusion for expansion into rural areas and
bringing stability by boosting credit growth making banking services near to the customer
directly and reducing customer valuable time.
REFERENCES

WEBSITE
 www.time4education.com
 www.investopedia.com
 www.rbi.org.in
 www.google.com
 www.scribd.com
 www. Wikipedia.org
BOOKS
 c.h gupta ‘ e-banking in india ’
 jagroop singh ‘ banking and insurance’