TECNOLOGY IN BANKING

2 MARKS

1. State the meaning of “LAN”.

Local Area Network:
 It is a collection of networking equipments located geographically close
together. It is a network that spans a small geographic area, such as a single
building or buildings close to each other.
 Examples: Ethernet, Local Talk, Token Ring, FDDI, ATM.
 Data is transferred in high speed which ranges from 100mbps to gigabit for
system development and have a low cost of implementation.
 It is designed to share resources between personal computers and
workstation such as hardware or data.

2. What is debit card?

 A debit card is a payment card that deducts money directly from a
consumer’s checking account to pay for a purchase.
 Debit cards eliminate the need to carry cash or physical checks to make
purchases.
 In addition, debit cards, also called check cards, offer the convenience of
credit cards and many of the same consumer protections when issued by
major payment processors like Visa or MasterCard.

3. Explain the term “WAN”.

Wide area network:
 It is a network that provides long distance for transmission of data, voice,
image and video information over large geographical areas that may
comprise a country or a continent.
 This network ranges beyond 100 km. Under this network messages can be
sent very quickly to anyone on the network.

4. Explain the concept of “Document storage”.

 Document storage is a part of the document management system. Document
management is the process of storing, locating, updating, and sharing data
for the purpose of workflow progression and business outcomes.
 Centralized sharing and data storage within specific servers help
organizations access information efficiently and effectively, along with
securing protected data.
 Programs and servers are used in the process of document management.
Important metadata is centralized, as opposed to decentralized or difficult to
locate.
5. State any two technologies followed in the cheque transfer.
Magnetic Ink Character Recognition (MICR) technology: MICR (magnetic ink
character recognition) is a technology used to verify the legitimacy or originality of
paper documents, especially checks. Special ink, which is sensitive to magnetic
fields, is used in the printing of certain characters on the original documents.
Information can be encoded in the magnetic characters.
Cheque Truncation System: In CTS, the presenting bank (or its branch) captures the
data (on the MICR band) and the images of a cheque using their Capture System
(comprising of a scanner, core banking or other application) which is internal to them,
and have to meet the specifications and standards prescribed for data and images.

6. Explain “Debit Clearing”.

 ECS Debit is used by an institution for raising debits to a large number of
accounts (for instance, consumers of utility services, borrowers, investors in
mutual funds etc.) maintained with bank branches at various locations within
the jurisdiction of a ECS Centre for single credit to the bank account of the
user institution.
 ECS Debit is useful for payment of telephone / electricity / water bills, cess /
tax collections, loan instalments, repayments, periodic investments in mutual
funds, insurance premium etc., that are periodic or repetitive in nature and
payable to the user institution by large number of customers etc.

7. Write a brief note on difficulties of computerisation in banks.

• Cost of Installation
• Cost of Training
• Self Decision Making
• Maintenance
• Dangers for Health

8. Give any two impact of technology in banks.

 Development of Credit/Debit Cards (Plastic Money):The magnetic data

recording technology was used with the magnetic strips on the plastic cards
and hence, the ATM/Debit/Credit Cards are used along with the ATM
Machines which reduces the account holder's requirement to visit the branch
within the banking hours to withdraw the money from his/her account.
 Development of Computerized Banking Software: With the development of
Banking Applications, the banks process becomes faster and more reliable
and the record keeping and retrieval becomes much easier.

9. What is RBINET?
 It is a communication system spreading over the BANKNET. RBINET is a
communication software, developed in 'C' and available for both DOS and
UNIX machines.
 It allows free format messaging and file transfer on the existing
BANKNET infrastructure with the help of UNIX servers installed at the 4
NCCs. Each RBINET user interacts with the local UNIX server through
PADs connected to the X.25 switch. The UNIX servers in turn
communicate with each other using TCP/IP over the X.25 protocol.
 The software allows free format messaging without any restrictions on the
length of the message, enables file transfer of both ASCII-text and Binary
(spreadsheets, data bases, programs etc.) files, facilitates dial-up access,
and has security features such as end-to-end encryption, audit trail, etc.

10. Define “Home Banking”.

Home banking is the practice of conducting banking transactions from home rather
than at branch locations. Home banking generally refers to either banking over the
telephone or on the internet (i.e. online banking).
11. What is Smart card?
It is a Plastic card with embedded microprocessor chip, electronic memory, and a
battery. Used for information storage and management and authentication, it looks
like, works like, and is of the same size as a bank or credit card but may not have a
magnetic stripe on its back. Of the several types of smart cards, some are contact-
less (do not require to be swiped through a magnetic stripe reader) whereas others
require contact with the reader.

12. What is ATM Card?

A plastic card used to withdraw money from a banking institution's automatic teller
machine (ATM). Sometimes this card may also be used as a debit card, but not all
ATM cards have this capability.

13. Expand - EFT and ECS.

EFT – Electronic Fund Transfer
ECS – Electronic Clearing System

14. Give any two advantages of computerisation in Banks.

• Transaction speed: Banking initiates speedy transactions and they are very cost
effective and is generally quicker than the transactions conducted at the ATM’s or at
the bank
• Efficiency: Feel free to access, manage and control all bank accounts, including
Individual Retirement Accounts, CDs, even securities, from one secure site. 

15. How to protect computer documents?

Cyber security or computer security  helps in the protection of computer
systems from the theft and damage to their hardware, software or information, as
well as from disruption or misdirection of the services they provide.

16. What is Credit Card?

A credit card is a payment card issued to users as a system of payment. It allows the
cardholder to pay for goods and services based on the holder's promise to pay for
them.

17. What is the meaning of Document Management System?

 Document management is the process of storing, locating, updating, and
sharing data for the purpose of workflow progression and business
outcomes.
 Centralized sharing and data storage within specific servers help
organizations access information efficiently and effectively, along with
securing protected data.
 Programs and servers are used in the process of document management.
Important metadata is centralized, as opposed to decentralized or difficult
to locate.

18. Explain ECS.

 ECS is an electronic mode of payment / receipt for transactions that are
repetitive and periodic in nature.
  ECS is used by institutions for making bulk payment of amounts towards
distribution of dividend, interest, salary, pension, etc., or for bulk collection of
amounts towards telephone / electricity / water dues, cess / tax collections,
loan instalment repayments, periodic investments in mutual funds, insurance
premium etc
 . Essentially, ECS facilitates bulk transfer of monies from one bank account to
many bank accounts or vice versa. ECS includes transactions processed
under National Automated Clearing House (NACH) operated by National
Payments Corporation of India (NPCI).

19. Expand ‘SWIFT’

SWIFT - The Society for World-wide Inter-bank Financial Telecommunication
 It was formed with its headquarters at Brussels to provide rapid, secure, reliable and
cost-effective mode of transmitting the financial message across the world to the
offices of SWIFT members.
 India was the 74th country to join the Society for Worldwide Inter-bank Financial
Telecommunication (SWIFT) network on December 2, 1991. The initial membership
of Banks in India was 34.
 Using advanced data-processing and telecommunications technology, the SWIFT
system is based on the following features:
 It is available worldwide, 24 hours a day, 7 days a week;
 standard message formats for transactions enable members to avoid
language and interpretation problems and permit the automated handling of
messages;
 delivery of a message is very 'swift';
 ensures a high level of security while transmitting all messages;
 It assumes financial liability for the accuracy, completeness and timely
delivery of all validated messages.

20. State any two objectives of Customer Service.

 To fulfil the requirements and needs of the customers.
 To seek customer feedback to ensure alignment with customer needs.

21. Define retrieval system.

Document retrieval is the simple act of connecting the requester with a necessary
document or set of documents. When an online document management system
is in use, documents are available for retrieval 24 hours each day. This allows for
global retrieval and workers can access documents without being in the central
office. 

22. What do you mean by credit clearing?

ECS Credit or credit clearing is used by an institution for affording credit to a large
number of beneficiaries (for instance, employees, investors etc.) having accounts
with bank branches at various locations within the jurisdiction of a ECS Centre by
raising a single debit to the bank account of the user institution. ECS Credit enables
payment of amounts towards distribution of dividend, interest, salary, pension, etc., of
the user institution.

23. Define customer service.

  As applicable to banking, “customer service “ may be defined as the ability to
satisfy the customers’ requirements and needs to the fullest extent and be
able to replicate this on an on-going basis.
 Customer service is important in the banking sector because the product they
deal with is only money. Banks must systematically build a structure that aims
at providing Total Quality Customer Service(TQCS).

24. What is ‘PIN’?

 PIN is the numeric password which is separately mailed / handed over to the
customer by the bank while issuing the card. Most banks require the customers to
change the PIN on the first use. Customer should not disclose PIN to anybody,
including to bank officials. Customers should change the PIN at regular intervals.

25. Write a note on security electronic record.

Security in Internet banking comprises both the computer and communication
security. The aim of computer security is to preserve computing resources
against abuse and unauthorized use, and to protect data from accidental and
deliberate damage, disclosure and modification. The communication security
aims to protect data during the transmission in computer network and distributed
system.

26. Define confidentiality and secrecy of data.

 The concept of providing for protection of data from unauthorized disclosure is called
data confidentiality. Due to the open nature of Internet, unless otherwise protected,
all data transfer can be monitored or read by others.
 Although it is difficult to monitor a transmission at random, because of numerous
paths available, special programs such as 'Sniffers', set up at an opportune location
like Web server, can collect vital information. This may include credit card number,
deposits, loans or password etc.
 Confidentiality extends beyond data transfer and includes any connected data
storage system including network storage systems. Password and other access
control methods help in ensuring data confidentiality.

27. What is single window concept?

A single window is a system is where all facilities are available in one place. In
banking there are various dealings like withdrawing cash from a savings account,
current account, purchase of drafts or pay orders, making fixed deposits, etc. All
these facilities can be availed of at one counter or window. Hence, it's called a
single window facility.

28. What is “Security procedure”?

"Security procedure" means a procedure employed for the purpose of verifying
that an electronic signature, record or performance is that of a specific person or
for detecting changes or errors in the information in an electronic record.
"Security procedure" includes a procedure that requires the use of algorithms or
other codes, identifying words or numbers, encryption, or call-back or other
acknowledgment procedures.

29. Give any two computerised services rendered by the bank.

  Internet banking: Online banking, also known as internet banking, it is
an electronic payment system that enables customers of a bank or other
financial institution to conduct a range of financial transactions through the
financial institution's website.
 ATM services: An automated teller machine (ATM) is an electronic
banking outlet, which allows customers to complete basic transactions
without the aid of a branch representative or teller. Anyone with a credit
card or debit card can access most ATMs.

30. Define data.

Data are the symbols or signals that are input, stored, and processed by a
computer, for output as usable information. Gathering data can be accomplished
through a primary source (the researcher is the first person to obtain the data) or
a secondary source (the researcher obtains the data that has already been
collected by other sources, such as data disseminated in a scientific journal).

31. What is management control?

Management control can be defined as a systematic effort by business
management to compare performance to predetermined standards, plans, or
objectives in order to determine whether performance is in line with these
standards and presumably in order to take any remedial action required to see
that human and other corporate resources are being used in the most effective
and efficient way possible in achieving corporate objectives.

32. Give the meaning of technology.

Technology is the collection of techniques, skills, methods, and processes used
in the accomplishment of objectives of various sectors. Technology is
the branch of knowledge that deals with the creation and use of
technical means to attain the desired results.

33. Define the term “Signature Storage”.

Signature storage means a computer data compilation of any symbol or series of
symbols executed, adopted, or authorized by an individual to be the legally
binding equivalent of the individual's handwritten signature.

34. What is a cyber law?

Cyber law is the part of the overall legal system that deals with the Internet,
cyberspace, and their respective legal issues. Cyber law covers a fairly broad
area, encompassing several subtopics including freedom of expression, access
to and usage of the Internet, and online privacy. Generically, cyber law has been
referred to as the Law of the Internet.

35. Give the meaning of computerization.

Computerisation refers to the function of controlling, performing, processing, or
storing (a system, operation, or information) by means of or in an electronic
computer or computers.