Module Name: Shipping & Banking

Module Code: AMM-4323

Topic: Technologies in Banking and it's impact.
Submitted To
Suhal Ahmed
lecturer, Dept. of AMMT
Shanto-Mariam University of Creative Technology

Submitted By
Md Ibrahim Miah
ID : 172051023
Batch: 30 th

Group : A
Semester: 12 th

Section: AMMT
Program: BA(hon’s)

Submission date: 18 April 2021

 ACKNOWLEDGEMENT

All praise and thanks to God, the Lord of mankind and all that exists, for His
blessings, benevolence and guidance at every stage of our life
.
I am deeply grateful to my module teacher suhal ahmed for his guidance,
support and patience. He has been an invaluable source of knowledge and has
certainly helped us inspire many of the ideas expressed in this assignment.

My words will fail to express my deepest heartfelt thanks to our family,

especially our parents, for all they did and still doing to help us be at this
position and for their continuous support and encouragement. Any mistakes that
remain are ours and we apologize for it.

Thank you.

Md Ibrahim Miah
18 April 2021
Abstract

Contemporary Banking: On the Impact of New Technology

Technological innovation has
contributed to recent changes in
the conduct and character of
banking, but its impact has been
contradictory. First, money-
dealing transactions have become
cheaper, but investment costs have
increased and a broader range of
services had to be provided. The
cost efficiency of banks has not
improved. Second, banks have
developed computationally
intensive, ‘arms length’
techniques to assess
creditworthiness and manage risk.
Thus, they have been able to
generate new revenue streams
from lending to individuals and
from fees for money market
mediation. This shift has signalled a decline of ‘relational’ banking. Third, new technology
and related practices have facilitated the entry of foreign banks into developing countries,
where they can exploit ‘arms length’, technologically demanding niches in domestic markets.
This has not improved the efficiency of host banking systems, nor increased the availability
of credit to the productive sector.

The resultant of technological innovation has been the transformation in operational

dimension of banks over some decades. Internet technology has brought about a paradigm
shift in banking operations to the extent that banks embrace internet technology to enhance
effective and extensive delivery of wide range of value added products and services.
However, the fact that e-banking is fast gaining acceptance in Nigerian banking sector does
not assuredly signify improved bank performance nor would conspicuous use of internet as a
delivery channels make it economically viable, productive or profitable. Whether progression
is made in the use of internet technology (e-banking) or not, there should be parameter to
empirically assess its impact over specified period of adoption. Consequently, the study
examined the impact of electronic banking on banks’ performance. Panel data comprised
annual audited financial statements of eight banks that have adopted e-) and retained their
brand name banking between 2000 and 2010 as well as macroeconomic control variables
were employed to investigate the impact of e-banking on return on asset (ROA), return on
equity (ROE) and net interest margin (NIM). Result from pooled OLS estimations indicate
that e-banking begins to contribute positively to bank performance in terms of ROA and NIM
with a time lag of two years while a negative impact was observed in the first year of
adoption. It was recommended that investment decision on electronic banking should be
rational so as to justify cost and revenue implications on bank performance.

Banking Industry Trends

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.

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. This is especially true of Millennials and the older
members of Gen Z, who have started to become the dominant players in the workforce (and
the biggest earners).

This digital transformation has led to increased competition from tech startups, as well as
consolidation of smaller banks and startups. In 2018, overall fintech funding hit $32.6 billion
by the end of Q3, up 82% from 2017's total figure of $17.9 billion, according to CB Insights.

Mobile Banking

To be frank, mobile banking is all but a requirement for consumers at this point. In Business
Insider Intelligence's Mobile Banking Competitive Edge Study in 2018, 89% of respondents
said they use mobile banking, up from 83% in 2017.

When broken down by generation, 97% of millennials use it (up from 92% in 2017) 91% of
Gen Xers (up from 86%) and 79% of Baby Boomers (up from 69%). Critically for the banks
themselves, 64% of mobile banking users said that they would research a bank's mobile
capabilities before opening an account, and 61% say they would change banks if their bank
offered a poor mobile banking experience.

But we've now reached the point where simply having a mobile app isn't enough for banks to
attract and keep customers. Additional tools and features – such as the ability to put
temporary holds on cards, view recurring charges, or scanning a fingerprint to log into an
account – are becoming increasingly necessary. Take a look at the chart to the right to see
how valuable these features and more are to consumers.

Digital Account Opening

Digital accounting opening (DAO) is the most popular technology for the third year in a row,
with a third of banks and credit unions expecting to add new or replacement systems in 2020.
An additional 46% plan to modify or enhance their existing DAO systems, up from the 39%
who said they would do so in 2019.
Person-to-Person (P2P) Payments

Roughly three in 10 institutions plan to select a new or replacement P2P payment tool in
2020. That percentage is down from the 35% who planned to do so in 2019. But the number
of banks and credit unions looking to enhance or modify their P2P payment capabilities rises
from 25% in 2019 to 40% in 2020.

Online Banking

Online banking is extremely convenient, and is understandably one of the two main ways that
consumers interact with their banks (along with mobile banking). But there is still a
significant contingent of banking customers who want physical branches.

Despite an overwhelming reliance on digital banking channels and services such as chatbots
and mobile banking apps, and the resulting decline in branch visits, consumers have
maintained a preference for depositing checks in-branch, according to a recent Fiserv study.
More than half (53%) of respondents said their top reason for visiting a branch in the past
month was to deposit a check, compared with 41% who went to withdraw cash, and 36% who
went to deposit cash.

Still, there's no denying the rising prevalence of online banking, which has led to other
innovations such as open banking. This system, implemented in the U.K., involves sharing
customers' financial information electronically and securely, but only under conditions that
customers approve.

Investment Banking

Investment banking is a type of financial service in which a person or company advises

individuals, businesses, or even governments on how and where to invest their money. For
decades, this has been a human-to-human process that led to a mutually beneficial
relationship.

But now, with the rise of robo-advisors, artificial intelligence (AI) and robotic process
automation are starting to infiltrate the money management space. Predictive analytics can
help investors make wiser and more profitable decisions in real-time—while saving on costs.
AI can, in some cases, also help identify M&A targets. Lastly, AI can help validate an
investment banker's hypothesis and lead to more informed future decisions.

Banking as a Service (BaaS)

Because of tight regulations (particularly in the U.S.), not everyone can just open a bank.
This is where banking as a service (BaaS) comes in to fill the gap.
Business Insider Intelligence

BaaS platforms enable fintechs and other third

parties to connect with banks' systems via APIs
to build banking offerings on top of the
providers' regulated infrastructure. So,
launching BaaS platforms helps banks benefit
from fintechs entering the finance space, as it
turns them into customers rather than just
competitors.

While BaaS technically falls under the umbrella of open banking, it shouldn't be confused
with the aforementioned Open Banking system in the U.K. Open banking encompasses all
actions in which a bank opens its APIs to third parties and gives those players access to data
or functionality. The UK's Open Banking focuses on providing third parties with data from
incumbent banks, while BaaS looks at how these players can get access to banks' services.

Cloud Computing

A quarter of financial institutions plan to invest in or implement cloud computing

technologies in 2020. Forty percent say they’ve already done so, and half of them will
enhance or modify what they’ve got.

Despite these numbers, many C-level execs still oppose cloud computing. Cloud proponents
fail to sway the holdouts because their arguments run counter to the holdouts’ experiences—
and you can’t fight experience-based perceptions with theory.

Impact of Technology in Banking sector

Bank accounts are cheaper

Banks and credit unions generally offer their account holders free or low-cost services:

 Cashing checks: Using a check cashing outlet really adds up. You can deposit and
cash your checks at the institution where you have a bank account for free.

 Paying bills: Without a bank account, you probably rely on check cashing outlets,
telephone bill pay or money orders—all of which have attached fees—to pay your
bills. With a checking account, you can write checks for free or pay online at a low
cost.

 Transferring/wiring money: If you use a money transfer company to wire money to

another person’s account, you will pay a fee, usually a percentage of the amount of
the transfer. Depending on the amount you want to transfer, this fee can be
expensive. If you wire from your bank account to another person’s account, your bank
will usually charge a flat rate that is generally lower than the money transfer
company.
 Accessing cash: When you need cash but don’t have a bank account, you may decide
to use a credit card to get a cash advance from an ATM. The credit card company will
charge you a transaction fee and interest. If you have a bank account and an ATM or
debit card, you can access your money from your own bank’s ATM for free. Although
you can access your money from any ATM, you will likely pay a transaction fee if
you use an ATM other than your bank
 Bank accounts offer convenience
For example, if you have a checking account, you can easily pay by check or through
online bill pay. It's also cheaper than buying a money order (and you'll have proof of
bank statements that you paid your bills). If you get an Automated Teller Machine
(ATM) or debit card for the account, you can withdraw money easily or make
payments at stores. A debit card is usually accepted for purchases anywhere credit
cards are accepted.

Bank accounts are safe
Your money will be protected from theft and fires. Plus, your money will be federally
insured so if your bank or credit union closes, you will get your money back. The
maximum amount of money that can be insured is $100,000.

It's an easy way to save money
Many banks offer an interest rate when you put your money in a savings account. The
interest will help your money grow over time. Be sure to shop around and check what
fees are involved - you don't want to wind up paying more in fees than you are
gaining in interest.
 Typically lower fees. Online banking has much less overhead than a brick-and-
mortar operation, and some of the savings can be passed on to consumers. That means
online bank accounts generally have few or no fees, such as monthly maintenance
charges on savings, and often do not require minimum account balances or charge
transaction fees. Some big banks may charge small fees, such as $5 a month, for
maintaining a savings account.

 Immediate transfers. Whether you need to repay a friend for a concert ticket or
move a large sum from checking to savings, online banking transfers sometimes
happen almost immediately. Online accounts allow consumers to move money
quickly between their own accounts, between financial institutions and between some
business and personal accounts — without ever stepping foot in a branch or
physically handling a check or cash. Some big banks are even offering services
similar to Venmo and PayPal where consumers can send money to friends through a
mobile app.

 Better services. Managing your personal finances is often simply easier with online
banking thanks to the multiple services available from a mobile app or banking
 website. With a few clicks, you can view your online bank statements, have your
paychecks directly deposited into your account, set up automatic bill pay and keep up
with your account status in real time. The benefits are significant — you’ll save paper,
save time, never miss a bill payment and stay on top of your personal finances.

Banking Technologies That Are Shaping our banking sector

For long, banks have been reluctant to update their systems – and for good reason. The
current systems that they use are the product of years of continued innovation to meet
immediate customer requirements.

But this has resulted in siloed systems being used for the transaction, savings, investment and
loan accounts. This is not suited for the digital age when the competition for banks is coming
from technology-based FinTech startups.

Banks and other traditional financial service provider have had to respond with an array of
digitization and innovation initiatives. These initiatives employ cutting-edge technologies to
ensure a customer-centric perspective rather than the traditional focus on products, real-time
intelligent data integration rather than slow analysis being performed after-the-fact and open
platform foundation.

In this assignment i will take a brief look at ten technologies that are disrupting banking and
financial service

1. Augmented Reality

2. Blockchain

3. Robotic Process Automation

4. Quantum Computing

5. Artificial Intelligence

6. API Platforms

7. Prescriptive Security

8. Hybrid Cloud

9. Instant Payments

10. Smart Machines

Augmented Reality

The possibilities of the implementation of augmented reality technology in banking sector are
only limited by imagination, though these are still in a very early stage of development. The
end-state is to give customers complete autonomy in actions and transactions they could
perform at home. Hybrid branches are envisioned by technology experts who believe that
bank branches as we know them today are a thing of past

THE END

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