CHAPTER - 32

ROLE OF TECHNOLOGY UP-GRADATION AND ITS IMPACT ON BANKS

Data
Warehousing

Data Mining

Vasudevan Committee recommended implementation of Data ware hosing for

banks.
This is an emerging trend amongst banks. To create space in the live system,
Data warehouses are created where data from the live system is transferred
and stored through application of latest IT techniques. The features are:
It is customer oriented. Storage of information can be useful for
different requirements of customers.
There are no inconsistencies with the live data.
The data is Non-Volatile that means, it can be assessed but cannot be
amended or up dated.
It is time variant. Time zone is longer say 5-10 years.
Data Mining is a method/technique to extract the hidden information from
Data warehouses.
It is a process of automatically finding patterns and relations of large data
basis.
Data Mining Techniques are applied in :
Risk Performance in loans
Credit Risk Analysis
Analysis of stock Portfolio (Securities of capital Market)
Risk analysis by Insurance Companies and Banks.
Data analysis about Demographic information about customers.

EDW

Data and
Message
transferring

Enterprise Wide Data Ware House

It has been established by almost all the banks for better control and
Management Information System. EDW provided sufficient space for storage
which enables the banks to solve operational difficulties.
Computers facilitate processing of data whereas Communication technology
helps in transmission of data. Therefore, following are required to combine the
both i.e. processing and communication:
Computer
Telephone line i.e. Lease line or V-sat
Modem which is used to connect
E-mail is an example of combination of processing and communication which
is called Data formation and Message transferring.
Banks also process the data and transmit the same through modem and data
server with the support of communication system.

EDI
(Electronic
Data Inter
charge)

Electronic Data Interchange

When messages (financial or non-financial) are exchanged between different
institutions using standard formatted data and similar Computer applications.
For example VSNL provides gateway for SWIFT messages..

NEFT, RTGS, ECS are other examples.

EDI guidelines require minimum communication standards such as :
Type of electronic envelops to be used.
Transmission speed and protocols on which messages are to be
interchanged.
Time Slots during the day for accepting and receiving messages.
Corporate
Websites

MIS
(Management
Information
System)
Impact of IT
on banks

Role
Transition

Impact on
Privacy and
Confidentialit
y of Data
Public Key
and Private
Key

Internet provides opportunity to banks to popularize through different

websites. Banks are having their own websites for the following purposes:
Dissemination of Information
Financial advice
Highlighting non-banking activities
E-commerce transactions
Selling financial products
Gateway to Internet
Account services
Management Information system
It is transformation of data into information.
Change in organizational Structure is the impact of IT on banks:
Banks have shifted from 3-tyre to 2-tyre structure
Control Mechanism has improved
Information System has been fastened
Service Quality in the banks has improved:
Customer Satisfaction
Aspirations of customers
Quick and Efficient Dealing
It is redefining of work which manifests itself in the following manner:
Job profiles and role definitions have changed.
Shift in Decision making powers to the point of information.
Competition has increased and technically literates are able to survive.
Data privacy assumes two dimensions:
Authority to access data
Authority to use data only for specific purposes.
It is a pair of keys used in case of Electronic signatures:
Public Key
It is used to encrypt data by verifying Private Key in electronic signatures.
Private Key
It is kept secret. It is used to decrypt the information.