Essentials of Bank Computerisation | PAPER II – PRINCIPLES & PRACTICES OF BANKING | MODULE C: BANKING TECHNOLOGY
Bank Computerisation and Related Technologies
1. Essentials of Bank Computerisation
Bank computerisation refers to the process of implementing IT infrastructure to improve banking services. Essential components include hardware, software, networking, databases, and human resource training. The goal is to reduce manual work, speed up transactions, enhance accuracy, and enable multi-branch operations.
Example: Instead of manually entering ledger entries, a teller inputs data into a terminal, which is then instantly stored and updated across the bank’s systems.
2. Bank Computerisation
This involves using digital tools and automation in all banking operations like customer service, internal operations, compliance, reporting, etc. Key stages include branch automation, networking, and implementation of core banking solutions (CBS).
3. Networking Technologies in Banks
Modern banks use networking to interconnect branches and data centers. Technologies include:
- LAN (Local Area Network)
- WAN (Wide Area Network)
- VPN (Virtual Private Network)
- Leased Lines and Satellite Communications
4. Uninterrupted Power System (UPS)
Banks depend heavily on uninterrupted operations. A UPS provides backup power during electrical outages to prevent data loss and hardware damage.
Mathematical Illustration:
If a branch has a 10 KVA UPS and each computer consumes 0.5 KVA, then the number of computers that can run during a power cut is:
Number of Computers = Total UPS Capacity / Consumption per computer
= 10 / 0.5 = 20 computers
5. Core Banking
Core Banking Solution (CBS) is centralized software that allows customers to operate their accounts and avail banking services from any branch on a real-time basis.
Features: Real-time processing, customer convenience, centralized database, product uniformity.
Example: A customer can withdraw cash from any ATM or branch, even if it's not the one where the account was originally opened.
6. Data Warehousing and Data Mining
Data Warehousing: This refers to the storage of large volumes of structured banking data in a central repository. It enables historical analysis and strategic decisions.
Data Mining: This is the process of identifying patterns and extracting useful information from data warehouses using AI and statistical tools.
Example: A bank may use data mining to find that customers aged 30-40 are more likely to take home loans, helping it target marketing accordingly.
MCQs
- What is the main purpose of computerisation in banks?
a) To replace employees
b) To enhance manual processing
c) To improve efficiency and speed
d) To avoid customer interaction - Which of the following is a feature of Core Banking?
a) Only in-branch transactions
b) Manual ledgers
c) Real-time access from any branch
d) Limited banking hours - UPS is primarily used in banks to:
a) Prevent virus attacks
b) Ensure power backup
c) Enhance internet speed
d) Manage customer queries - Which network technology allows secure communication over the internet?
a) LAN
b) WAN
c) VPN
d) UPS - Data warehousing enables:
a) Transaction entry
b) Historical data analysis
c) ATM operations
d) Live account updates - What is the full form of CBS?
a) Core Banking Solution
b) Central Bank Service
c) Cash Banking System
d) Core Bank Server - Which is NOT a benefit of computerisation in banking?
a) Faster services
b) Reduced errors
c) Increased paperwork
d) Better customer tracking - Data mining helps banks in:
a) Printing passbooks
b) Discovering customer patterns
c) Accepting cheques
d) Opening branches - Which device ensures continuity of operations during power outages?
a) UPS
b) Router
c) Switch
d) Modem - LAN is used for:
a) National-level banking
b) Intra-branch connectivity
c) International banking
d) Satellite communication
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