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FINANCE & BANKING SECTOR PRESENTED BY: NISHANT WHAT IS FINANCE SECTOR ? Financial sector refer to services provided by the finance industry. The finance industry encompasses a broad range of organizations that deal with the management of money. Among these organizations are Organisations & Services of finance sector

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Banks Credit card companies Insurance companies Consumer finance companies Stock brokerages Investment funds Some government sponsored enterprises.

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What is banking ? In general terms, the business activity of accepting and safeguarding money owned by other individuals and entities, and then lending out this money in order to earn profit The banking regulation act,1949,Section(b) defines banking as accepting for the purpose of lending and investing of deposits of money from public , repayable, on demand or otherwise withdrawable by cheque , draft order or otherwise. Functions Of Banks The functions of a commercial banks are divided into two categories: Primary functions ii) Secondary functions including agency functions. Primary functions: The primary functions of a commercial bank include: accepting deposits; and b) granting loans and advances; ii) Secondary functions Issuing letters of credit, travellers cheques, circular notes etc. b) Undertaking safe custody of valuables, important documents,securitiesby providing safe deposit vaults or lockers; Continued c) Providing customers with facilities of foreign exchange. d) Transferring money from one place to another; and from one branch to another branch of the bank . e) Standing guarantee on behalf of its customers, for making payments for purchase of goods, machinery, vehicles etc. f) Collecting and supplying business information; g) Issuing demand drafts and pay orders; and, h) Providing reports on the credit worthiness of customers.

9. 10. BANKING BEFORE COMPUTERISATION

Large no of queues in banks

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Large no of files to record the data manually Waste of time

11. Computers in the banking sector The Reserve Bank of India (RBI) installed its first computer in 1968, and a larger one in 1979. But the United Commercial (UCO) Bank, the Standard Chartered Bank, Lloyds' Bank, Grindlays, and others had installed accounting and other machines before 1966. The 1983 agreement provided an opening for individual banks to make their own computerization agreements, and many foreign banks immediately took advantage of this 'openness' to negotiate agreements giving them a free hand to introduce new technology 12. Banking after computerisation 13 ATMs Branch Banking Branch 3 Branch 2 Branch 1 Head Office Branch 4 Branch 5 Branch n Branch 6 13. Electronic Banking SBIs Mobile ATM in Kerala 14. Stock market A stock market or equity market is a public market (a loose network of economic transactions, not a physical facility or discrete entity) for the trading of company stock shares andderivatives at an agreed price; 15. The role of stock exchanges Raising capital for businesses Mobilizing savings for investment Profit sharing Facilitating company growth 16. IMPACT OF TECHNOLOGY IN STOCK MARKET There has been a migration from a Screen based trading system for Government Securities to an Order Matching System so as to result in better price discovery and more transparency in the market related transactions in Government securities Negotiated Dealing System (NDS). Clearing Corporation of India Ltd., (CCIL) as a fully IT enabled entity 17. BENEFITS OF IT IN STOCK MARKET

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More accessible in the global market. Being more accessible Opportunity to pick up a bigger market share Give them a greater market value Ability to compete with the larger corporations Information technology enhances investor growth. The Internet has created global availability of information.

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Use of the Multi-Lateral Net Settlement Batch Use of credit transfer based RTGS transactions by brokers,

19. ONLINE BANKING 20. History In 1980s the modern home online banking services were the distance banking services over electronic media. The term online became popular in the late 80s . In 1981s Online services started in New York In 1983s The UK's first home online banking services was set up by Bank of Scotland for customers of the Nottingham Building Society (NBS). 21. Online banking Definition :- Online banking (or Internet banking) allows customers to conduct financial transactions on a secure website operated by their retail or virtual bank, credit union or building society. Features :- The common features fall broadly into several categories. Transactional (e.g., performing a financial transaction such as an account to account transfer, paying a billect) 22. Online banking(cont..) Non-transactional (e.g., online statements, check links, cobrowsing, chat) . Bank statements. Financial Institution Administration. Support of multiple users having varying levels of authority. Transaction approval process. Wire transfer. 23. Attacks/threats to Online banking Based on deceiving the user to steal login data and valid TANs. In this correct transactions are shown on the screen and faked transactions are signed in the background. The most recent kind of attack is the so-called Man in the Browser attack. 24. Mobile banking: a major competition to online banking 25. 26. Credit card History :-in 1887 the concept of using a card for purchases was described. in 1950 the concept of customers paying different merchants using the same card was implemented. In 1938 several companies started to accept each other's cards. in 1921 . Western Union had begun issuing charge cards to its frequent customers. 27. Credit card A credit card is a small plastic card issued to users as a system of payment. For merchants, a credit card transaction is often more secure than other forms of payment. 28. ATM Cards An ATM card (also known as a bank card, client card, key card or cash card) is a card issued by a bank. Some ATM cards can also be used:at a branch, as identification for in-person transactions. at merchants, for EFTPOS (point of sale) purchases. 29. GLOBAL RANKINGS RANK1 RANK2 30. 31. 32. MANAGEMENT ASPECTS WHY PEOPLE REVOLTED AGAINST COMPUTERIZATION WHAT ARE THE ADVANTAGES OF COMPUTERIZATION

HOW COMPUTER CUTS COSTS RELEVANT DATA AND STATISTICS 33. Technology differentiation fails gradually 34. WHY PEOPLE REVOLTED AGAINST COMPUTERIZATION 35. WHY PEOPLE REVOLTED AGAINST COMPUTERIZATION

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RESISTANCE TO CHANGE FEAR OF LOSING JOBS PERCEIVED AS EXTRA BURDEN ON THEM SCARCITY OF SKILLED COMPUTER PROFESSIONALS TO DO THE JOB

ADVANTAGES OF COMPUTERIZATION HOW COMPUTERIZATION CUTS COST MIGRATION OF BANK CUSTOMERS COST CUTTING INDIAN IT SECTOR COMPARED WITH OTHER ECONOMIES OF THE WORLD A CASE STUDY PNBs IT-ENABLED JOURNEY 42. PNB had adopted two-pronged strategy to IT-enable itself Scenario As on March 2000

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IT systems were deployed only at 500-odd branches 35 percent of the bank's business was computerized small software packages ran on standalone PCs. The bank used seven different software, which ran on 13 different flavors of Unix, on standalone PCs. The overall expertise in IT among users was low.

Scenario In 2003

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101 branches on WAN deployed a core banking infrastructure runs 175 networked ATMs deployed a reliable security infrastructure

HOW IT WAS DONE..?

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CVC issued directive to the bank to computerize at least 70 percent of its business by December 2000. PNB needed strategy to tackle the daunting task in the short period of time.

43. SWOT analysis was performed. produced the following results: Strengths:

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The bank personnel would be able to readily embrace the use of IT. An existing pool of qualified knowledge-based personnel.

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Strong financial position of the bank- no constraint of funds to facilitate IT initiatives. The bank wasn't bound to too much legacy systems and equipment.

ANALYSIS 44. WEAKNESSES IDENTIFIED

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Different Unix OS flavors in different branches. Different standalone financial applications on PCs at different branches. Lack of interoperability due to disparity in systems. Limited expertise on the software packages currently deployed-increased dependence on vendors. Systems audits were pending. Most branches did not have a proper LAN in place. There was almost no WAN connectivity. The bank realized that there was a lot of opportunity to create a stable IT infrastructure which would fuel future growth. But there was also the need to honor the CVC deadline to computerize at least 70 percent of its business within December 2000.

RESULT: The bank now has around 4,000 branches. 45. Action PNBs two-pronged plan of action comprised: 1. A short term goal - To meet the CVC deadline. 2. A long term goal - To create a dependable core banking infrastructure.

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Bank deployed simple IT infrastructure to computerize 70 percent of its business. Application made to run on standalone PCs across its nationwide branches. PNB chose a product from company -Nelito. It was a DOS-based, 'Partial Branch Automation' application. The interface was simple in design, and thus easy for the bank personnel to use.

46. HARDWARE AND TRAINING

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Nelito's package was deployed at 1 branch at a time , replicated after each successful implementation. Internal training sessions for the bank personnel were conducted. The IT team was specially trained to re-architect the source code, and make any modifications, improvements , value additions, and enhancements. By March 2001, 70.60 percent of the bank's business was computerized.

47. CORE BANKING ARCHITECTURE

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It took help of Infosys. Infosys trained 200-odd personnel from a core team over six months. The core team modified and customized the package according to its specific needs.

Hardware modified according to new software-PNB purchased servers, security infrastructure, and storage equipment and decided to house it in its own central data center in New Delhi. April 2002 - Finnacle in 7 branches as a pilot venture. This was done because the bank had seven different application packages, and it wanted to ensure smooth migration of the data into Finnacle. By mid May 2002, all data from other software was successfully migrated into Finnacle.

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48. CULTURAL AND TECHNOLOGICAL ISSUES

Mostly cultural-most staffers were used to working in a manual environment, and some had worked in standalone environments. In the new networked environment, personnel at the node/counter didn't actually 'see' the transactions updating in the various account books.

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Gave rise to a number of queries and suggestions from personnel Around six months later, the personnel felt that the environment

'change' had done them good, and was used to working on the systems.

Few integration issues when migrating to Finnacle-in-house

IT team was able to resolve them all. 49. PNBs Internet Banking PNB got license from RBI to offer Internet banking services. Bank recruited technically trained staff to provide the necessary knowledge pool. With the Internet banking launch, the bank strengthened its security policy. 50. WAN AND CONNECTIVITY

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101 branches of the bank are on a WAN. Plans to put 500-odd branches on the WAN this year In three years the WAN will have 2000-odd branches. PNB Tried a number of connectivity options. The bank then explored the option of leased lines and used connectivity from MTNL and BSNL. now uses Reliance Infocom's fiber optic.

51. Future of IT in banking sector Management integrated systems (MIS)

Better control-so better policies.

e.g. large account of engineering industries. ICICI-large accounts of salaried people. Large no. of villagers dominate the accounts. 52. OTHER ADVANCEMENTS Human error reduced to zero. ATMs will have the facility to receive cash. Black money transaction stoppage(KYC norms)

Unbilled transactions are easily identified. E-purse technology 53. With e-purses the transaction can involve a transfer of value from payer to payee without information on that transfer immediately going to the financial institution involved. 54. IT can bring an end to the use of national currency only when government prescribes that all transactions must go through an electronic device. Safa T1000 MP3 player with e-wallet 55. ADVANTAGES High level of security Fake currency issue will no longer exist. No need to carry heavy amount in purse. Spoiled notes wont come into picture.