The banking sector has experienced a tremendous technological revolution that has paved the way for creating newer, better opportunities for its customers. The impact of technology on the banking industry is manifold and can be witnessed with the speed at which banks operate in the country today. Gone are the days of standing in long queues to open an account, receive a physical statement of account or wait days for loan approval. Each of these processes and more have improved with accuracy and precision, thanks to the positive impact of technology.
POSITIVE IMPACT OF TECHNOLOGY ON THE BANKING SECTOR-
(1)The biggest revolution that comes in banks is Digitization.
(2)Banking process is faster than before and more reliable. Maintenance and retrieval of documents and records have become much faster and easier.
(3)Computerized banking also improves the core banking system. With a core banking system, all branches have access to common centralized data and are interconnected.
(4)With the innovation of the MICR cheque processing system, the processing of cheques become more faster and efficient than before
(5)Unstructured supplementary service data (USSD) was launched by Government so people with no internet- connectivity too can access their bank accounts without visiting the branch.
(6)With increasing internet reach, internet banking was developed and is now offered by almost every bank. Through this, every transaction detail and inquiry can be performed online without visiting the bank.
(7)It offered more transparency in transactions.
(8)The scope of fraud in banks is being minimized through the use of passwords, and double authentication in online banking.
(9)Technology also leads to competition among the banks which eventually provides better services to people.
(10)With the introduction of mobile banking, one can access their bank from anywhere- anytime. Everything is one quick tap away.
(11)To facilitate better service, Banks have introduced Automated Banking Services Solutions like Cash Deposit Machines, Cheque Deposit Machines, and Passbook Printing Machine this service have become easier.
NEGATIVE IMPACT OF TECHNOLOGY ON THE BANKING SECTOR-
(1)The biggest negative impact of technology is the loss of Jobs as automation has replaced a number of jobs in the banking sector.
(2)Through technology comes to the threat of Cyber Attacks, a loophole in the system, and millions of data can be lost in the blink of an eye.
(3)These technologies consume less time, but they also sometimes make people careless which causes loss of personal details as happened in 2016, many debit card details of big banks were compromised.
CONCLUSION
It should be noted that innovation is a standout amongst the most significant variable for the advancement of humankind. Data innovation and correspondence is the greatest volumes in the field of innovation, the telephone is for the handling, stockpiling and scattering of data by electronic methods. Banking is developing quickly with the utilization of innovation in the ATM, bank web-based banking, versatile banking and so on. Plastic card is a financial item that accommodates the necessities of the retail fragment and has seen their numbers develop in geometric movement lately. This development has been unequivocally impacted by advancements in innovation. Since the coin has two sides, innovation additionally has different sides in the financial sector- positive and negative. The dangers are high, however, they are generally limited and technology will become the backbone of the banking industry in the near future.
FAQs
Technology has the potential to promote financial inclusion by expanding access to banking services for underserved populations. Mobile banking, digital wallets, and microfinance platforms have made it easier for individuals in remote areas to conduct financial transactions and access credit.
How technology is disrupting banking? ›
Access: Digital disruptions enable banks to expand their reach beyond traditional geographical boundaries. Through digital platforms, banks can provide services to customers globally, facilitating cross-border transactions, international remittances and increase revenue potential for banks.
How will technology affect the finance industry? ›
Key technological trends, such as the rise of AI and machine learning, the integration of blockchain and cryptocurrency, and the adoption of collaborative financial planning tools, could make financial services more accessible and personalized and help investors to be more informed and engaged.
What are the disadvantages of technology in banking? ›
Disadvantages of Online Banking
- No Actual Branches. ...
- Tech-Related Service Disruptions. ...
- Concerns about Identity Theft and Security. ...
- Deposit Restrictions. ...
- Faster is Not Always More Convenient. ...
- No Relationship with a Personal Banker. ...
- Limited Services Scope. ...
- Possibility of Overspending.
In conclusion, the banking industry is at the cusp of transformative change driven by disruptive technologies such as Generative AI, digital banking, regulatory compliance management, shifting to cloud, and others.
How is technology affecting banking? ›
Technology geared toward improving retail banks' operational efficiency is positively impacting the market. According to Insider Intelligence, 39% of retail banking executives say that reducing costs is where technology has the greatest impact, compared to only 24% who say it's improving customer experience.
What is the risk of technology in banking? ›
Non-financial banking risks
Technology risk is one of them. It includes cybersecurity risks, the risk of non-compliance with data protection regulations, and the risk of legacy systems. While banks develop thorough plans for dealing with financial risks, they may not be aware of technological risks.
How is Fintech impacting the banking industry? ›
Fintech is making banking and financial services more streamlined and accessible. Through the use of technology users can take advantage of automation to speed up processes which previously a human would have managed.
How has technology impacted the finance and accounting industry? ›
Accountancy has changed a lot in recent years, and technological innovation has driven the most significant developments. From strategic software to artificial intelligence and even the decentralization of Web 3.0, many new concepts and solutions promise to upend the accounting profession.
What are the negative impact of information technology in finance? ›
The rapid pace of technological advancements in finance can lead to increased complexity in financial products and services. This complexity may make it more challenging for individuals to understand and make informed decisions about their finances, potentially leading to poor financial choices.
Internet banking, mobile banking applications, and digital payment solutions have empowered customers with round-the-clock access to their accounts, enabling transactions, bill payments, and fund transfers at their convenience.
What problems can occur from banking electronically? ›
Other Risk
Other dangers of e-banking include credit risk, liquidity risk, interest rate risk, market risk, etc., much like with traditional banking. However, because e-banking uses electronic channels and has no physical borders, these risks are heightened.
What are the negative effects of digital banking? ›
However, there are also disadvantages to digital banking. It can lead to an increase in information risks, including cyber security attacks and fraud . The increasing reliance on digital services may also lead to a decrease in the number of bank personnel .
How technology is changing banking and client expectations? ›
Many customers feel that banks are moving to digital offerings at an uncomfortably fast pace. Our research shows a clear majority of customers opposing banks eliminating cash services from branches. More than three-quarters of customers still carry cash, and this rises to 93 percent among elderly customers.
How is the banking industry changing? ›
The most prevalent trend in the financial services industry today is the shift to digital, specifically mobile and online banking (more on each of those in a bit). In today's era of unprecedented convenience and speed, consumers don't want to have to trek to a physical bank branch to handle their transactions.
What is information technology in the banking sector? ›
Information technology in banking sector refers to the use of sophisticated information and communication technologies together with computer science to enable banks to offer better services to its customers in a secure, reliable and affordable manner and sustain competitive advantage over other banks.
How AI is disrupting the banking industry? ›
AI algorithms can help FIs combat fraud and other cybersecurity by analyzing customer data, including transaction records, to establish behavioral baselines. These algorithms can then monitor customer behavior in real time, flagging anomalous — and potentially fraudulent — activity.
How blockchain is disrupting banking? ›
Here are some ways in which blockchain technology could disrupt the banking industry: Transparency and efficiency: The use of blockchain technology in banking would improve transparency and efficiency by reducing the need for intermediaries such as clearinghouses, auditors, and reconciliation agents.
How is fintech a threat to banks? ›
Fintech companies use technology and data-mining to bring lenders and borrowers together to allow the easy raising of money without financial institutions. Consider how disruptive that is for traditional banking business models if lenders and borrowers no longer need banks to mediate.
What advanced technologies are currently having an impact on the way we bank today? ›
With the increasing digitization of banking services, cybersecurity, and fraud prevention have become critical priorities. Banks are investing in advanced cybersecurity technologies, including threat intelligence, encryption, and biometric authentication, to safeguard customer data and protect against evolving threats.
