Information technology has been changing the shape of many things around us, banking being one of the major sectors. It not only lowers the cost of transaction, but also provides convenience to the customers by enabling them to have real time access to their accounts, and other financial services, for instance, payment through mobiles, or wireless technology. Even the mobile and the wireless technology use the underlying internet technology, facilitating not only the customers, but also the inter-branch, and inter-bank transactions.
E banking that is banking through internet is becoming popular, and upholds the reputation that one cannot access accounts any faster than through e-banking. Customers must logon to the website of banks using their identity, and security key to perform their activities using E banking from their homes, offices, or anywhere they want. This makes banking service easier as most people now perform their tasks remotely, thus less number of customers physically visit the banks, making it dependent upon the internet.
Hackers, or masquerades very easily captured financial information if the internet connections are not safe; this makes e banking risky. On the other hand, on ATMs or tele banking, the chances of hacking are very less as compared to the internet.
Huge number of financial transaction data must be shared by banks on daily basis, Electronic Data Interchange (EDI) is used. Special software designed according to the specifications of the transacting entities transmits the data directly in the form of an e-mail. E banking uses general formats to accommodate banks, and customers, but EDI is software to assist the business entities.
The major advantages of such an electronic payment system are its speed and reliability, which increase accuracy, and eliminate delays, but still financial documents, and payments cannot be covered. Such payments are done through another form of technique, widely used by banks, known as the automated clearing system. This allows banks to batch process cheques in real-time.
Banks connected to CHAPS i.e. clearing house automated payment system should be fault resistant. Clearinghouses help banks by removing the risk of rolling back as clearing house transactions cannot be rolled back.
Banks maintain a database of records of all kinds of transactions taking place whether of clients, or interbank. Database is a collection of data in form of tables containing each detail of the entity. Credit risk is there as a client takes loan, and is unable to make their payment; banks must keep a track of defaulters, or potential defaulters by keeping a track of the database.
Banks should therefore, constantly keep their databases updated on their potential borrowers, so that they can easily manage their risks. Bank Databases are normally connected through a network configuration, which allows the connectivity of various databases in different branches and hence, permits the sharing of resources, and information. Such a relational database enables the bank teller to access the database of a particular client at any regional branch, indifferently from where the transaction took place.
Edwood Woodward is a financial consultant. You may consult with him to take debt help and get more alternatives to make financial decisions of your life at http://www.moneysolve.co.uk.
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