TOPIC: Essentials of bank computerization; payment

systems and electronic banking

Computerized Banking System

Computerized banking system is a proven, secure,
modular, on-line, real-time, flexible, scalable, multi-currency.
It is user friendly, easy to manage, and easy to operate
information system, based on fully integrated and co-
operative components.
Data Entry: - Processing presumes data entry. A bank
customer operates an ATM facility to make a withdrawal. The
actions taken by the customer constitute data which is
processed after validation by the computerized personal
banking system.
• Data Validation: - It ensures the accuracy and reliability of
input data by comparing the same with some predefined
standards or known data. This validation is made by the
‘Error Detection’ and ‘Error Correction’ procedures. The
control mechanism, wherein actual input data is compared
with predetermined norm is meant to detect errors while
error correction procedures make suggestions for entering
correct data input.
Processing and Revalidation: - The processing of data occurs
almost instantaneously in case of Online Transaction
Processing (OLTP) provided a valid data has been fed to the
system. This is called check input validity. Revalidation occurs
to ensure that the transaction in terms of delivery of money
by
ATM has been duly completed. This is called check output
validity.
• Storage: - Processed actions, as described above, result into
financial transaction data i.e. withdrawal of money by a
particular customer, are stored in transaction database of
computerized personal banking system. This makes it
absolutely clear that only valid transactions are stored in the
database.
• Information: - The stored data is processed making use of
the Query facility to produce desired information.
• Reporting: - Reports can be prepared on the basis of the
required information content according to the decision
usefulness of the report.

Limitations of computerized
banking system
• Cost of Installation
• Cost of Training
• Self Decision Making
• Maintenance
• Dangers for Health
Payments of system
Payment systems are used in lieu of tendering cash in
domestic and international transactions. This consists of a
major service provided by banks and other financial
institutions.
Traditional payment systems include negotiable instruments
such as drafts (e.g., cheques) and documentary credits such
as letters of credit.

Payment Options
 Cash.
 Checks.
 Debit cards.
 Credit cards.
 Mobile payments.
 Electronic bank transfers.
The most common alternative payment methods are debit
cards, charge cards, prepaid cards, direct debit, bank
transfers, digital wallets, phone and mobile payments,
checks, money orders and cash payments.
The aim of touching lives of every Indian, NPCI has rolled out
a variety of innovative retail payment products viz., IMPS,
RuPay card scheme, UPI, NACH, Aadhaar-enabled Payments
System (AePS), Aadhaar Payments Bridge System (APBS),
NETC, *99# (USSD based) and BBPS.
The customer picks up an item and pulls out their card.
The merchant submits a transaction.
The payment gateway securely sends the transaction to the
processor.
The processor verifies and approves the transaction.
The customer's bank sends money to the processor.

Key Takeaways
Apple Pay and PayPal's Venmo are two of the leading
mobile payment applications.
However, Starbucks has developed one of the most popular
and most-used apps on the market.
The coffee company is seeing increased competition with the
likes of Cash App and other mobile apps.
The payment gateway is the beginning and end of the
transaction, where the customer will enter their credit card
information and receive an approval or denial of the
transaction.
The payment processor moves the information between the
customer's bank and the merchant acquirer, or acquiring
bank

ELECTRONIC BANKING
 Electronic banking is a form of banking in which funds are
transferred through an exchange of electronic signals rather
than through an exchange of cash, checks, or other types of
paper documents.
Transfers of funds occur between financial institutions such
as banks and credit unions.
Internet Banking is a type of e-banking service which
allows you to do several financial and non-financial
transactions through the internet. With the help of Internet
Banking, you can transfer funds to another bank account,
check your account statement, pay utility bills and do a lot
more.
Provides access to financial as well as non-financial banking
services. Facility to check bank balance any time. Make bill
payments and fund transfer to other accounts.
Keep a check on mortgages, loans, savings a/c linked to the
bank account.
In many ways, debit card purchases are similar to credit card
transactions. With electronic banking, you can make debit
card purchases in person, online or over the phone.
It provides the convenience of a credit card, but the money is
taken directly out of your linked account and you can't spend
more than you have.
An example of a small system is an ATM network, a set of
interconnected automated teller machines that are linked to
a centralized financial institution and its computer system.
An example of a large electronic banking system is the
Federal Reserve Wire Network, called Fedwire.

Advantages of online banking

 Pay bills online. ...
 Transfer money. ...
 Deposit cheques online. ...
 Lower your overhead fees. ...
 Technology disruptions. ...
 Lack of a personal relationship. ...
 Privacy and security concerns. ...
 Limited services.

EBN and 6 digit code are two unique numbers you can use to
register for Personal Internet Banking. Your 6-digit code can
also be used as your telephone access code to obtain your
account information by phone.

Demand for banking products compliant with Islamic law, or

Sharia'a, continues to grow throughout the world. The
Islamic assets growth is estimated at 15% annually.
This growth in turn drives the creation of more Islamic banks
and the addition of Sharia'a- compliant products at
conventional banks.
Banks, working with Islamic scholars, have been able to
create a set of profitable banking products that meet the
financial needs of their customer base while insuring
adherence to the principles of Sharia'a.
Large banking software vendors have successfully created
Islamic banking software based on their conventional
platform to fit the Islamic banking requirements.
However their initial customers still feel that they ended up
being midwifes because of the poor understanding of
vendors requirements.
Small IT companies that anticipated the growing Islamic
banking market and managed to be the early entrants do
face a situation whether to invest in further R&D or to wait
for a potential client before committing any more funds.