Information Technology & Banks Essay

800 words - 3 pages

How do banks benefit from Information technology?Banks and financial institutions are relying increasingly on information technology to support growth and expansion into the global marketplace. The major technologies which are used nowadays include Internet banking, mobile banking, telephone banking, smart cards, credit cards, and automated teller machines (ATM's). These methods allow customers to carry out many routine transactions without going into a branch. However, with all of the benefits that technology brings to the banking industry, it also brings increased risks and threats. Many banks are faced with a growing concern over the impact of dissatisfied employees, unauthorized users, industrial spies and hackers exploiting and compromising their information systems and networks. As technology becomes more sophisticated, so do those who would like to enter the world of information, such as these professional hackers. That is why banks should not only invest in providing new I.T. based services but they should also invest in a good security system to protect themselves and their customers against viruses, spyware, keystroke loggers and eavesdropping programs.(Jordan,2005)Information technology does not always mean fewer costs for banks to operate, but it has become a necessity in today's competitive market. This showed very clearly when visiting both the leading bank branches in Malta. They seem to be competing by offering new I.T. bank services. For example Bank of Valletta started using mobile banking while HSBC are launching this service in March 2005. Mobile and wireless technology enable banks to satisfy clients who demand real-time information and mobile payment accessibility for example buying top-up cards for your mobileSmart cards and credit cards are another two electronic forms of payment offered by banks. The actual smart card differs from the student smart card because even though the latter has a magnetic stripe and is also used as a form of payment, it is not related to banks. The smart card resembles a credit card in size and shape but inside it is embedded with an 8-bit microprocessor. An example of such a smart card in Malta is the Sterling Jewellers smart card which enables the client to enact a purchase via plastic money. Smart cards provide banks with very high security; enabling additional services such as electronic purse and internet payment as well as a credit or debit facility, allowing secure access to electronic commerce and online transactions. EFTPOS refers to electronic funds...

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