ICT IN BANKING SECTOR – ISSUES AND CHALLENGES

Dr. Ashfaq Ali,

Associate Professor, FMS, Shri Ram Group of Colleges, Muzaffarnagar (U.P.) India Pin- 251002
Call @ +91-9917160786, e-mail@ dr.ashfaqali.09@gmail.com
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The ICT is a comprehensive term which is consists of almost all communication devices such
as radio, television, cellular phones, computer network, satellite systems etc. It includes
service and applications also like video conferencing and distance learning. The term
Information Communication Technology is mostly used as an Information Technology
(IT) .The importance of Information Technology and Communication is less related to the
term technology than its potential to convey information to larger population at distinct area.
Mostly every country of the world has put their efforts in establishing organizations for the
development of advance communication techniques, increasing productivity and
modernization. Today Business environment is very dynamic and go through frequent
changes as a result of technological innovations.

ICT can be helpful in reducing poverty by providing access to education, health &
government services Information Technology is becoming an invaluable part of our society
for development, supporting growth, promoting innovation and enhancing competitiveness.
The one of the best example of Information technology is Banking Sector.
The increase in flexibility and power of wireless provides proper opportunities for rising
services to customers. In the current Business organizations, M-commerce has applications in
various fields such as financial services, retail sector, telecommunication and information
technology etc. M-commerce is broadly accepted and adopted in various field and this fusion
of technology and commerce is becoming quite popular these days. (Jahanshahi Asghar
Afshar, Mirzaie Alireza and Asadollahi Amin,2010)131.
Internet Banking makes various change in the banking sector. This is e-banking which
facilitate the customer to make transactions 24*7 without any inconvenience.  Internet service
providers (ISPs) offer broad range of technologies with different data signaling rate (speed)
to access internet. ISP is the company whoma monthly fee is paid in order to use the Internet.
Some other type of modem like DSL and cable modems also works in similar way.
The Banking sector is developing day by day in many areas and one of these areas relate to
the digitalization of formerly paper-based processes. Now E-Mails basically known as
Electronic mails are preferred as compared to postal mails as these are fast to access and
quick to respond. E-mails are especially being applied for non-legal correspondence like
account statements, marketing and sales. Banks provide several online services to the
customers like credit card bills and other transaction details.
Information and communication technology (ICT) has now become a core of banking sector,
while banking industry is the core part of every vigorous economy. There is a great effect of
globalization, competition and innovation in banking industry. Information and
communication technology (ICT) has in particular brought a complete paradigm shift on the
bank's performance and on the customer service delivery in the banking industry. In order to
compete with global competition and match the global development, the banks have to focus
on the excellence of customer service delivery. Banks also have to invest and focus on ICT
services for diminishing the operation cost. As ICT network has many advantages as better,
convenience and comfortable service, remote reach, time saving, deliver variety of value
added products and services. There is a significant effect of flexible and user friendly banking
service on the ICT growth and development. Customer satisfaction and customer service
delivery is a key parameter for banks to ascertain that how effective and efficient they
achieve their long term objective as customer acquisition, retention and increase share
through ICT . The research on the impact of ICT on bank's performance and customer service
delivery in the banking industry have been broad. However, few areas, with consumer
perspective, are left with less exploratory debate.

ROLE OF ICT IN THE BANKING INDUSTRY

Apparently, there are always potentials of crisis which make the bank endure an
insufficiency; advanced ICT supported by a superior mechanism control is required to make
certain that ICT has achieved the required processes insufficiency; thus, advanced
information system supported by a superior mechanism control is required to make certain
that ICT has achieved the required processes.
The Advancement of ICT and its implementation in banking sector leads to the enormous
improvement in this sector globally. For instance the development of worldwide networks
has considerably decreased the cost of global funds transfer.
ICT has entirely reorganized the scenario and the magnitude of competition in
the banking industry. Following the introduction of online banking, ATMs and card banking,
which are the initial milestones of electronic banking, the diffusion of ICT and increased
penetration of Internet has added a new challenges and distribution
channel to retail banking: online banking for the delivery of services and products. In the
past, banking took place on the High Street. The banking time was limited as branches get
open from 10am to 5pm and five days a week Monday to Friday. This was very inconvenient
for customers who are working fulltime. Banks had to employ many staff to deal with
customers as this was the only way that services could be provided.Banking as a business is
no longer just the domain of Traditional time bound banking. The major supermarkets also
offer banking services to their customers. Now there are also some banks which has purely
online operations with no local branches at all. All this change has come about because of the
rise of the internet and widespread access to broadband.

‘Effective communication links and computerized system are a sine qua non for high quality
service delivery. Globally there is a quick access to information, if there is any shortage in the
market information is circulated quickly through the scattered global network.
Today the banks are now become digitalized and networked. Banks have ejected new
delivery channels for their product and services. The delivery channel include direct dial up
connection , private networks, public networks etc. and the devices are telephone, personal
computer Automated teller machine, smart mobile phone etc. Banks are approaching to
customers through ICT banking services such as internet banking, phone banking, mobile
Banking, Card banking and inter branch banking. Although the Banks offer the different
range of financial product and services vary in their content and sophistication. One can
download the banking apps and can easily operate their account from mobile, tablets, ipad,
laptop etc. Now a day’s private and foreign bank has open there ATMs in several places in
small and big cities.
These ICT services are introduced by banks like ICICI Bank Ltd., HDFC Bank Ltd,
Citibank, Global Trust Bank Ltd., AXIS Bank Ltd., Bank of Citibank, Bank of Madura Ltd.,
Federal bank Ltd etc. The late enterers are Punjab National Bank, Allahabad Bank and State
Bank of India. Innovative banks like ICICI Banks Ltd. have move ahead to transaction of
funds through electronic communication devices. They allow transfer of funds from one
account to another of the banks. Some of the more aggressive such as ICICI Bank Ltd.,
HDFC Bank and AXIS Banks have turn themselves in a one-stop financial outlets. These
banks have knot up with computer training companies, computer manufacturers, Internet
Services Providers (ISPs) and portals, for expanding their Net banking services, and for
widening their customer base. In 2000 ICICI Bank Ltd. has set up a web-based joint venture
with the satyam infoway for online distribution of its retail product and services on the
internet.

TELEPHONE BANKING

It is a banking service provided by a financial institution, which permit its customers to

access their account over the telephone. Telephone banking is relay on the technology called
interactive voice response system (IVRS).This facility can be provided for 24 hour a day,
365days a year. Telephone banking is done through an automated phone answering system
with phone keypad response or voice recognition capability. They provide the security to
their customers by first authenticate the customer identity by a numeric or verbal password or
through security questions asked by a live representative. It offers almost all the features of
ATM except the fund transaction. It provide all the above mention attributes
Telephone banking is a cost saving techniques for banks as they can transfer expensive
branch-based transactions to automated system. This facility helps the banks to reduce the
operation cost and increase their revenues. Mostly all banks adopted this service and they are
also providing attractive deals to their customers to make them want to use this automated
system willing fully. Some banks provide free telephone calls service but majority of banks
provide special telephone number or toll free number which is only charged at the local rate
and which will be subsidized by the bank.

AUTOMATED TELLER MACHINE (ATM)

ATM is the alternative banking channel which provides banking facilities to customer
without any bank teller. It is an electronic computerized telecommunication device that allow
customer to access bank account from other place apart from bank premises. The good thing
about ATM is that it provides 24 hour cash withdrawal facility and account balance inquiry
without having long queue. Through this channel the transaction occur quickly as sliding the
card is faster than writing cheque and it is also more accurate than paying with cash.

INTERNET BANKING

Internet Banking is the type of self service banking. In this customer can access his account
with the help of internet through intelligent communication gadgets. Customer finds it time
saving and convenient, and for bankers it is cost saving. Customer can access their account
through their personal PC, laptops, Tablets etc. Internet has reduced the geographical distance
between the cities, states and countries. So there is no requirement to open the branches in
each area of the city as now long distant place are connected through internet. Customer
perceives Internet banking as usefulness and ease to use than traditional banking service.

Various banks provide their customers the internet banking facility. The bank issues a
security code or personal identification number to the customers to access their account
through their website. First step of internet banking is to verify the user through its PIN. After
the verification user get permission to access their wide range of financial product and
services. E- Banking has also led to the emergence of new banks, which operates only
through the internet and do not exist physically. Such banks are called Virtual banks or
internet only banks.

There are three basic kinds of Internet banking in the marketplace are as following:

Informational- This is the basic level of Internet banking. In this the banks has marketing
information about the bank's products and services on a stand-alone server. In this the risk is
very low, as informational systems typically have no path between the server and the bank's
internal network. This level of Internet banking can be provided by the bank or outsourced.
The risk factor is too low as the bank site is informative only. Appropriate controls therefore
must be in place to prevent unauthorized alterations to the bank's server or Web site.

Communicative-In this the Internet banking system allows some interaction between the
bank's systems and the customer. Initially the interaction system was limited to information
based services such as seeking product and services information, enquiring loan information,
downloading loan form, check balance online etc because these servers may have a path to
access the internal network of the bank which is information based. There are also some other
application like fund transaction which are more risky for the bank and customers too.

Transactional-This is a level of Internet banking in which customer are allowed to

execute transactions. Since a path typically exists between the server and the bank's or
outsourcer's internal network, this is the highest risk architecture and must have the strongest
controls. Customer transactions can include accessing accounts, paying bills, transferring
funds, etc. Many innovative banks provide this type of banking service.

In today’s scenario technology is changing very frequently. Information communication

technology has entered into every sector which makes the persons very much techno-savy.
Now customer looks or accepts the more convenient path for every work. Banks are adopting
advent ways to approach customers as through Web sites, electronic mail, and electronic bill
presentment and payment. Age, gender and technology readiness are consider important
factors for maintaining a relationship between customer and banks and to evaluate the
behavior intention to utilize internet banking. Trust in the bank is also one of the key factor in
driving customer’s intention. Developing a trust on bank will take several years. The
adoption of online banking is not a issue for the customers who have full knowledge about
online security issues but in India there are many or majorityof peoples are not techno-savy
and have very less knowledge about these issues. Apart for this in U.S the consumers are
highly concern about sharing sensitive personal information such as social security, health,
medical and financial data.

MOBILE BANKING

Banks were directed on the regulatory/supervisory issues, registration of customers for

mobile banking, to ensure technology standards, interoperability, interbank clearing and
settlement arrangements for fund transfers, customer grievance and redressal mechanism and
transaction limits in an attempt to ensure safe, secure transfer of funds. Under extant
regulatory prescriptions, there is no monetary restriction on fund transfer effected through
mobile banking as it is left to the risk perception of each bank and policies approved by their
respective boards. In line with these guidelines, banks have been offering mobile banking
services to their customers through various channels such as SMS, USSDchannel, mobile
banking application etc. The committee considered options of using mobile for the merchant
payments whereby the merchants on initiating the payment request completes the transaction
by accepting an OTP generated by customer on his mobile. The committee also considered a
standard and simple process to generate OTP across all banks.

One of the major factors affecting customer on-boarding and usage of mobile banking
services is the concern relating to security of transactions effected using the mobile phone.
While mobile banking application is an end-to-end encrypted channel, the other access
channels viz. SMS, USSD, IVR, are not end-to-end encrypted. However, in order to enjoy the
higher level of security available in the application-based mobile banking, the customer’s
handset has to be GPRS-enabled.Since SMS facility is available on all handsets, the issue of
security can be addressed if the SMS can be encrypted end-to-end, thus allaying any concerns
relating to lack of security in this channel.In addition to this, another important aspect adding
to the concerns on the part of customers relate to how their complaints and grievances will be
addressed for transacting on this channel – whether through their bank or through their
mobile service provider.

SMS is a popular and widely used channel in mobile phones. It is ubiquitously available in all
handsets irrespective of make and model and also GSM and CDMA enabled handsets.Many
customers are use too of this SMS channel. , which they feel are more convenient They uses
services as mobile VAS services such as Cricket, Jokes, Horoscopes, etc. are based on SMS
and used widely by customers.

Following are some of the challenges faced with SMS channel for mobile banking by the
banks:
a. Customer needs to know the exact syntax of SMS for performing transaction.
b. The syntax becomes complex when (i) bank adds more transactions which will
end up as different keywords and (ii) when more input parameters are needed to
complete the transaction. Under these conditions, it is also difficult to
communicate and educate the customer to use the syntax.
c. The SMS channel is not end-to-end encrypted without having an application on
the handset to encrypt the entire SMS. There is a transaction limit as per RBI
mobile banking guidelines, of Rs 5,000/- per transaction without end to end
encryption.
d. The SMS remains in the readable form within the sent items on the mobile
phone. In case the custody of the customer’s handset is obtained, will result into
the risk of losing the confidential information to initiate the financial
transactions.
e. The SMS short code or long code for sending SMS transactions is different for
each Bank, and needs to be communicated to customer

Because of above challenges, the SMS based mobile banking has not picked up
adequately, despite the advantages offered by SMS channel.

USSD is known as Unstructured Supplementary Service Data. It is a mechanism used

between GSM cellular and telecom service provider’s systems for communication. USSD can
be used for various services as WAP browsing, prepaid callback service, mobile-money
services, location-based content services, menu-based information services, and as part of
configuring the phone on the network. The character limit is 182 alphabat or numeric charcter
in length in USSD messages. During session these messages create a real time connection.
When the connection stays open, one can do two way communications by exchanging a
sequence of data. This makes USSD more interactive and advantageous than services that use
SMS.171

The Inter-Ministerial Group (IMG) was constituted on November 19, 2009 to work out the
relevant norms and modalities for introduction of mobile based delivery model for delivery of
basic financial services and to enable finalization of a framework to allow financial
transactions using mobile phones.

The IMG had, among other things, recommended that TRAI may draw up guidelines to
ensure high availability of associated communication services in mobile banking.
Accordingly, based on a consultation with stakeholders, TRAI had issued the Mobile
Banking (QOS) Regulations, 2012 on April 17, 2012. The recent TRAI guidelines, it is open
to banks to tie up with MNOs to offer these services directly to their customers by getting
into arrangements with each of the MNOs. This may be done by the bank with each of the
MNO or their service providers. With this, the customer dialing the USSD code will reach the
bank’s own menu, and the transactions will be routed to the bank directly by MNO. However,
in such cases, this facility is extended only to bank customers who are also the subscribers of
those MNOs with whom the bank has tied up for USSD channel.

Conclusion
The use of ICT in banking services is aimed at not only providing better services to
customer but also to attain competitive advantages among them. Development of a sound and
adequate ICT has become a necessity to meet the challenges of growth and diversification of
banking industry . ICT has given the bank an opportunity to offer a wide range of services such
as ATM, Mobile Banking, e-banking, M-commerce etc to their customers. the concept of
Information Communication technology like M-Commerce. Since the main focus of the study is
on the role of the ICT in banking sector, the detailed discussion have been made of ICT services
in banking industry is given. This chapter also deals with mobile banking, which is essential need
of today
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Online banking has many benefits. Two of the most important

are speed and convenience. People who participate in online banking can
access their accounts, view their statements, make transactions, pay
bills, and more, all from their homes, or on the go. It is because of these
benefits that roughly 51 percent of U.S. adults  participate in online
banking.

However, despite the benefits of online banking, there is also a number of

distinct issues and challenges in the online banking sector. These are
highly significant both for banks that offer online banking, but also for
their customers, who depend on the banks to operate effectively.

Online banking marketers need to know these challenges so that they can
efficiently navigate them.
Here are some of the top issues and challenges in the online banking
sector that marketers need to be aware of:

1. Traditional Banking Habits

Despite the benefits of online banking, 49 percent of American adults  do

not participate in it at all. This happens mainly because traditional
banking is what many people are used to and it can take time for them to
break habits. So, online banking marketers should focus on ways to
convince  traditional banking users to start using online banking services.

These marketing efforts should specifically highlight the numerous

benefits of online banking. They need to show people how online banking
can solve traditional banking problems more efficiently(having to actually
go to bank branches, higher fees, etc.)

2. Security

Security is one of the most significant challenges for online banking

marketers. This is because, in the past, if a robber was going to steal a
person’s bank savings, he or she would have to break into the bank vault,
and make a daring escape with the money. This was an extremely
difficult prospect and involved a lot of danger and risk.

With online banking, cyber criminals simply need to ascertain certain

personal information to break into a person’s account and steal their
money. It can be done anonymously, and involves significantly less
physical danger than in the past.
In fact, in the U.K. in 2015, roughly 130 million British pounds  were stolen
from online bank accounts through fraud. So, security is still a major
issue for online banks, and their customers.

Marketing professionals in the online banking sector need to focus on

demonstrating and explaining the security of online banks to overcome
this challenge.

3. Transaction Difficulty

It can be significantly more difficult and time consuming to deposit or

withdraw money from an online bank. Not only do online banks often
have fewer ATM’s than their traditional counterparts, but it also can
simply take longer amounts of time for deposits to be processed and put
into a bank account.

For example, it takes roughly 3-5 days for deposits  to show up in

accounts for PayPal , one of the largest online banks. This is an issue that
online banking marketers will most likely struggle with, until online banks
speed up their transaction times.
4. Technical Issues
Because online banks rely so heavily on their online platforms, this means
that they can generate substantial losses if their systems crash or if there
are bugs in their code. A single technical issue that causes a bank to be
down for a day could cost the bank millions in losses.

It can also wreak havoc for the bank customers who may not be able to
make payments or conduct transactions during the time that the site is
down. 54 percent of consumers  now use a mobile banking app. So, it is
key not just for banks to have their online platforms running smoothly,
but also, their mobile apps.

A loss of funds or data due to a crash is something that can be very

worrisome for bank customers. So, marketers should prioritize alleviating
this worry by explaining how account funds will not be lost if technical
issues occur.

5. Small Budgets

Many startups have to operate on shoestring marketing budgets before

they grow to a larger size. Obviously this can be a major challenge. If your
marketing budget is small, then you need to focus on the priority
expenses.
The inbound marketing strategies of creating a search engine optimized
website, making accounts for all of the biggest social media networks
(Facebook, LinkedIn, Twitter, etc) and starting a blog should all be
prioritized.

On your website, you should also have an option to allow visitors to join
your mailing list. Further more, a good PPC campaign can be a very good
investment for your company. In fact, businesses make an average of $3
on every $1.60 they spend on Adwords.

Summary

Online banking is one of the most significant developments for the

banking industry in its long history. However, despite the many benefits
that online banking provides to customers, there are also a number of
major concerns and challenges for marketers in the online banking
sector.

Traditional banking habits, security, technical issues, transaction

difficulties, and small marketing budgets are all major challenges that
online banking marketers will have to reconcile if they are to succeed in
this field. However, demand for this industry continues to be very strong.
So it is likely that online banks will only grow more advanced and
successful as they strive to resolve their marketing challenges.

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Are you an education personal trying to understand what is

ICT in Education, its advantages and disadvantages? Its full
form is Information and Communication Technology. Thou
the abbreviation sounds very corporate, it successfully
incorporates into every field, including the educational
sector, to provide the management with a diverse set of
technological tools, definition, and resources to create,
store, communicate, manage and optimize the information.
Today, ICT has progressed to become an integral part of the
education system. Educational organizations in countries like
Australia, India, Finland, the UK, the USA, South Korea,
Nigeria, and others are intensely utilizing the ICT curriculum
and development to resolve the communication and
technological differences.
Wikipedia presents five different types of ICTs namely, Print,
Audio/Video, Radio and TV, Computers and the Internet to
serve the Haddad and Draxler’s five levels of its concept
in education technology namely, presentation,
demonstration, drill and practice, interaction, and
collaboration to add value to teaching and learning, simplify
administration procedures and operations while running
educational institution such as a school, college or a
university; promote the significance of smart classroom,
enhance stimulating and engaging multi-grade classroom
methods and mainly, abridge the gap between the
management and the guardians.
The objectives of ICT is to connect the gap between the
parents, educators, and students by prompting viable,
cooperative and straightforward modes of communication. It
likewise gives advanced information exchanging ways for
educational institutions such as schools, colleges, and
universities to pass on or exchange information. Thus, it
plays a very crucial role in education, especially in the
administration and management of institutions.