Impact of Technological factor in Banking Industry

Introduction

In present world peoples’ lives have been complicated a lot due to complexity of needs wants and life goals. Because of this people are really busy so that they have to look for maximum efficiency in any given activity in order to save time, cost and energy. Banking sector also facing this challenge when fulfilling customers’ complex banking and finance needs.  When dealing with this challenge banks have to have proper balance between both people factor and the technology factor, since both of these factors have significant influence on the performance and stability of the banking industry.

Impact of Technological factor in Banking Industry

In present, Banks are using new technology to serve its client’s faster and also to provide more with fewer resources. Not like in past, broadband internet is comparatively cheap now a days and it transfer the data easy and fast. Therefore those technologies have changed the banking industry from paper and branch based banks to “digitized and networked banking services”. In addition to that technology has changed the accounting and management system of all banks. Because of this, the way how banks are delivering services to their customers has been changed drastically.

Advantages of Using Technology in Banking Industry

1.      Technology has opened up new markets, new products, new services and efficient delivery channels for the banking industry.

Some Examples are,

·         e-banking facilities

·         Plastic Money Concept (Credit and Debit cards)

·         Providing remote banking through Point of Sales machines, ATM and cash deposit machines

2.      Information technology has been the major factor of recent financial sector reforms aimed at increasing the speed, accuracy and reliability of financial operations

3.      The progress of technology and the development of world wide networks have facilitate global fund transfer at a lowest cost

4.      Information technology has enabled banks in meeting high expectations of the customers who are demanding more instant, anytime and anywhere banking facilities

5.      IT facilities are supporting banks to take care of their accounting and back office requirements, passing entries automatically and generating important reports for management decision making

Disadvantages of Using Technology in Banking Industry

1.      Technology always comes at a cost. Most of the time banks have to bear a huge installation and maintenance cost when new technology and machines are introduced

2.      Since banking is a people business understanding customers real needs and developing a proper customer relationship is a significant factor in banking industry. But technology cannot accurately interpret the psychological and emotional requirements of the customers.

Impact of People factor in Banking Industry

‘People’ is the most important and valuable resource every organization or institution or institution has in the form of its employees. For banking industry, the importance of human resource has grown because the nature of banking industry is mainly the service based. Even though the technology has replace most of banking functions which were previously done by people, still the service of people has become important factor in banking service delivery.

Advantages of People Factor in Banking Industry

1.   Only a human can understand the need of another human well. Therefore people are needed to improve new products which are really suit for the customer requirement. In addition to that all these technologies have been developed by using human brain. So the service of people is essential in doing modifications in technologies, trouble shooting, continue smooth functioning of banking activities during system break downs.

2.   Efficient and skilled manpower is needed in the sector to handle and manage the risks in banking business properly. (Ex: In pawning business we use densimeter to measure the carotage of gold articles. It gives same carotage for both gold and tungsten articles. But experienced pawning officer can identify those gold articles and tungsten articles separately by examine their physical conditions.)

3.   People are handling the day to day affairs in the banks to keep the customers well satisfied. Here the people working at the front office will be the inter face where customers and bank get in to a bond. The strength of this bond will be mainly depending on the quality of the service provided by front office staff.

4.   At the end of the day people or staff members who are working in the banks will be leading the introduction process of new technology to the customers. Once bank adopt new technology staff will act as a transmitting agent and make customers aware of those technologies and encourage them to use those technologies

Disadvantages of People Factor in Banking Industry

1.   People are less efficient and accurate compere to the new technology introduced to the banking industry

Conclusion

After considering all above pros and cons of people and technological factors we can come to below conclusions.

Technology is important and has become an essential factor to deliver accurate, efficient and convenient service to the customers. Technology will provide facilities for the banking industry to reach and treat any individual in any place at world and fulfill their financial service needs at a law cost and time.

But human factor also equally important in banking industry mainly because banking is service oriented business as well as it is highly depending on the trust. Here customer satisfaction is a main concern and it cannot be done by technology alone since people always need to human touch for getting the highest mental satisfaction.

Therefore we have to use technology to improve the effectiveness and efficiency of the banking industry while human factor is used to give maximum satisfaction to customers and create innovative techniques to improve the nature and the process