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Executive summary
The consumption of information technology (IT) resources by employing the functions of computers has elucidated incredible intensification in service industries. The effect on banking is evident in enhanced competence and output. This achievement comes from the introduction of products related to IT. This encompasses internet banking, electronic payments, security reserves, and information relations. In general, the two positive effects regarding the correlation between IT and banks performance include reduced banks operational costs and facilitating dealings among customers within the same network (Ho & Mallick 2006, pp. 2). Indeed, this has posed both constructive and harmful challenges to the industry.
Introduction
IT is the use of computers to lever information. Computers can direct equipment used; furthermore, they act as a source of information (Stoyles et al 2003, pp. 4). The surfacing of internet banking began in the 1980s and several people utilize its facilities. It has allowed customers to view account statements, make money transfers, and pay bills . The most noticeable issue about internet banking is evident in speed and availability in different regions (Stoyles et al 2003, pp. 6). In this respect, technology has changed the shapes of three chief tasks undertaken by banks, which incorporate access to liquidity, the revolution of resources, and observation of risks. IT together with internet networking systems has a crucial posture on the effectiveness of funds, resources, and foreign exchange bazaar.
Impacts of IT on Banking Sector
IT has influenced two dissimilar areas in banking including communication and connectivity together with business progression reengineering. This has led to sophisticated product expansion, advanced market infrastructure, execution of reliable methods to curb risks (SCN Education B.V 2001, pp. 167). Furthermore, it helps the financial intermediaries to attain geographically isolated and expanded markets. Online services, internet facilities , as well as mobile banking are no exception. The benefits of IT expenditures include reduction in payroll expenses, a boost in market share, tremendous raise in proceeds and turnover, and improvement of competitive advantage (Ho & Mallick 2006, pp. 2). The technology has also provided the banking industry with a breakthrough in dealing with the challenges brought by the present financial system.
Disadvantages experienced by the banking industries include high cost of purchasing and installation of equipment, extra cost that comes with maintaining and ensuring security of these systems, doubling of work, security risks, and flexibility of work (Hunter & Tan 2007, pp. 190). Clientele do not trust the services of the bank through the internet especially in money concerns. In addition to this, cases of forgery are rampant. Another disadvantage is that it takes long to acquire an active internet account. Some clients avoid the use of internet banking as they have trouble in understanding its mode of operation. Furthermore, a mere wrong click may cause huge monetary loss while money laundering and other financial felony are also vulnerable (Gkoutzinis 2006, pp. 285). The expertise sometimes poses inconveniencies if there is technological failure in a particular area (Muralidharan 2009, pp. 311)
Conclusion
List of ReferencesIT has led to emergence of novel markets, merchandise, services and adept release apparatus for the banking sector. Use of ATMs, mobile and internet banking are just but a few cases. It has been the basis of recent financial segment reforms intended to raise the pace and consistency of financial processes together with the customer responsive services. The drawbacks include high cost of execution maintenance, and security risks. A few cases of forgery reported in online banking and time taken to get the Internet account are all negative to the business growth. In addition, it can be deterrent since an erroneous click may culminate to monetary losses. Despite all these, IT remains powerful in banking and better off than the human intensive sector. Commendably, passwords and usernames be personalized and only used on familiar and reliable sites.
References
Gkoutzinis, A. (2006) Internet banking and the law in Europe: regulation, financial integration and electronic commerce. New York, NY: Cambridge University Press.
Ho, S. & Mallick, T. (2006) The Impact of Information Technology on the Banking Industry: Theory and Empirics.
Hunter, G. & Tan, F. (2007) Strategic use of information technology for global organizations. Pennsylvania: Idea Group Inc (IGI).
Muralidharan. (2009) Modern Banking: Theory and Practice. New Delhi: PHI Learning Pvt. Ltd.
SCN Education B.V. (2001) Electronic banking: the ultimate guide to business and technology of online. Braunschweig: Birkhäuser.
Stoyles, P et al. (2003) Information Technology. South Yarra: Black Rabbit Books.
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