|








 

i
i

  

 
i  i




 

 

i
==


 =
M Next to cash, checks are the most
frequently used method of payment in
the U.S.

M Account for about 70 % of the total

number of payments
 ë=

  




M =learance

M Settlement
 ¢


M =ommonly called the "Fed"
M =reated by =ongress in 1913 to serve as
central bank of the U.S.
M Made up of 12 regional Reserve Banks and
the Board of Governors in Washington
D.=.
M One of the major reasons for creating the
Federal Reserve was to ensure that the
nation had a safe and efficient means for
transferring funds within the banking
system
 
 =

 
M Manual operation - all paper records and
courier service
M =heck encoding, machine readable
M Small banks to larger banks
M Larger banks to Fed
M Proofing machines & Mag-
Mag-card readers
M P= s and software for sending electronic
files.
M Imaging machines
M MI=R standardization
 ¢= 

 


 ¢ 
 

1) A standard item-
item-processing platform
2) A standard image platform with a
national archive
3) A streamlined adjustments process using
a national adjustments system
 ) Nationally delivered =heck Services via
FedLine for the Web



==



M Intermediate Step

M EFT Processed through A=

Automated =learing
ouse)
 !  =

! 
M Transfers funds electronically without
the paper trail

M Almost 8 billion payments through

A=
in 2001

M Amount expected to double by 2006

è"  
#

|





|


M Provides enormous benefits
M
as been around for a long time as
ATMs and telephone transactions
M Transformed by the Internet
M Internet services are cost-
cost-efficient
M =ustomers can compare banks¶
services
M Allows banks to expand geographical
reach



|


M =oncentrated in the
largest U.S. banks
M Mid--2001,
Mid % of
national banks
maintained
transactional websites
M In 2001 only 6 percent
of U.S. consumers that
had internet bank
services used them
 =|


M =omputer hardware, software and
telecommunication systems needed to
access bank information through a
personal computer
M Telecommunication links may include:
‡ Private networks
‡ Public networks
M
andles many bank transactions:
‡ View account balance
‡ Request transfer between accounts
‡ Pay bills electronically
! $!   
 

M Simple data terminal communicating through a
host processor
M =an be connected through:
‡ a dedicated telephone line
‡ dail
dail--up modem
‡ Internet service provider
! $!   
 

M Money moves
electronically from
user¶s account to host
account to merchant¶s
account.

M New innovations:
machines that verbally
prompt
 =
=

M 3 ways credit card purchases are
conducted:
‡ merchant uses voice authentication
‡ or electronic data capture/magstripe
capture/magstripe--
card swipe terminals
‡ or virtual terminals on the Internet
 
=

M =ontains an embedded microprocessor
M Microprocessor enforces access to the
data on the card
‡ Identity of card user must be confirmed for
each transaction
‡ =ard and card reader verify that each is
legitimate
‡ Then transaction is carried
out in an encrypted format
 
=
=
%
M Most common smart card applications are:
‡ =redit cards
‡ Electronic cash
‡ =omputer security systems
‡ Wireless communication
‡ Loyalty systems frequent flyers points)
‡ Banking
‡ Satellite TV
‡ Government identification

¢
 


|


M Direct Deposit
M Pay--by-
Pay by-Phone
M Electronic Bill
Payment
M Debit =ards
M Electronic =heck
=onversion
M e=hecks
M =ash Value Stored
 
 
&


=



 &

=



& "



M Because they both rely heavily on
the:
‡ Gathering of Information
‡ Processing of Information
‡ Analyzing of Information
 != 

¢

 




M Streamline and Standardize the Loan

Origination and =redit Approval Process
 ! 
"
#
M The Use of Technology to automate
the workflow of the Loan Process

M Technology to shorten the length of

the =redit Approval Process
M Automating The Loan Process
M Workflow Management Systems
Application Software allows Loan
Officers and the Loan Team to:
‡ Manage
‡ Prioritize
‡ Measure
M New Mortgages and Loans
 =



M Successful financial institutions must
be able to make rapid, accurate, and
successful credit decisions

M To do this financial institutions must

embrace technology
The ever-
ever-increasing emergence of
E-commerce, demands that financial
institutions be more efficient and
better meet customers¶ needs

To do this

There are several web-

web-based
applications available to lenders and
financial institutions to assist in credit
decisions
M Web-based applications allow loan
Web-
processing teams to be more
competitive by:
‡ Offering flexible, real
real--time credit
decisions systems
‡ =ustomizable lender guidelines
‡ Generation of instant loan prepre--
qualification
‡ =onnectivity to third-
third-party providers
‡ Response time within minutes, 2 /7
 

 



M Physical security in the bank goes
beyond the traditional armed
security guards.

M Physical security devices are as

important inside a bank as
protection software is to
e-banking.
  
'

‡ Non
Non--traditional
M Micro-Branch systems
Micro-
M Drive--up Pneumatic
Drive
systems
‡ Traditional
M Vaults
M Safes
M Bullet--resistive products
Bullet
 

(



M The oldest form of security in banks is the security guard.

M Security guard duties include: the protection of people and

property from harm, theft, or unlawful activity, deterring,
detecting, observing, and reporting unlawful or
unauthorized activity, and responding to security alarm
systems.

M Security guards must pass a 7-7-hour firearm training

course in order to have the authorization to carry a firearm
while on duty.

M Guards undergo training in camera systems and alarm

systems.

M While the security guard is the oldest form of bank security

but they are still proven to be effective.





 




M Unauthorized
Access
M Data Alteration
M Monitoring
M Spoofing
M Service Denial
M Repudiation
 
M Smart =ards
M Encryption
M Behavior Software
M Informing Employees
M Removing Instant Messengers
‡ Subvert Antivirus Wear
‡ File Swapping
‡ Piggy Backing/Access
 =


From all of this, we have learned that information
technology has spurred competition from nonbanks,
encouraged financial innovations that have allowed
firms to directly access financial markets, and
empowered customers and businesses with
information needed to make better investment
decisions. At the same time, IT is allowing banks
to offer new products, operate more efficiently,
raise productivity, expand geographically and
compete globally. A more efficient, productive
banking industry is providing services of greater
quality and value.