Computer & Information Technology
[ From chapter-1 of the book "Information Technology in Banking" written by Abul Kashem Md. Shirin and Nusrat Tamanna Prianka and published by Institute of Bankers, Bangladesh (IBB) ]
1. What
is Computer?
As per definition given by C.S. French, a Computer
is a device which can accept data, process data and output data. In other
words, Computer is a machine which is controlled by some programs, accept data
as input,
process
them and finally submit result or required information to the users as output.
For example, customers make deposit and withdraw
money from Banks. The amount deposited or withdrawn is inserted by the Bank
Teller into the Computer as data. Now
Computer processes the data which
includes updating customers balance in the Customer Ledger. At the day-end the
Computer generates “Balance Listing” and “Statement of Affairs” which is called
information or output. Based on the output
or information, the users and
management undertake important decisions.
However now-a-days, the Computer is used in many
other ways such as for e-mailing, browsing, playing games, listening music,
viewing video and TV, making a phone call etc.
2. What
is Information Technology?
In short, the Information Technology is known as IT.
As per C.S French, the Information Technology (IT) is the technology which
supports activities involving the creation, storage, manipulation and
communication of information, together with their related methods, management
and application.
Information Technology not only limits to the
processing of information, but also works with communication of information. All
the process and systems needed to capture, store, process and communicate
information is collectively called Information Technology.
3. Importance
and use of IT
Use of Information Technology (combination of computer
and software) in Banking has brought a revolutionary change in the customer
services. The features of the Information Technology for which it contributed
much in the financial services are discussed below:
a. High
speed:
Computer can work with very
high speed. A computer can complete a 100 year’s work of a man in a few minutes
only.
In 1980s, there was no Information
Technology in use in Banking sector in Bangladesh. Thus Bankers used to
maintain a manual ledger. When a customer came to the counter for withdrawal of
money, the Teller first made a manual entry into a large ledger and then handed
over money to the customer. This took long time and thus customers had to stay
in queue for hours together. After introduction of Information Technology in
Banks, the posting in computer-based ledger became an activity of a minute only,
and as such quick customer service became possible. On the other hand the day-end,
week-end, month-end and year-end activities such as calculation of interest,
income-expenses, and preparation of financial reports including trial balance,
balance sheet, statement of affairs and income-expenditure report were a
nightmare job for the bankers. However after computerization, these activities
are done by the computer in an hour and all the Bankers were set free. Thus the
Bankers were able to give much attention in other activities such as business
development.
b. Available
anytime:
Before introduction of IT in
banking services, the customers had to complete all the transactions before a
set time in working days only. Now a customer can avail the banking services 24
hours a day, 365 days a year. A customer can use ATM for withdrawal of money anytime. The computers in the Bank’s
data center are in running mode all the time and thus can update the customers
balance instantly. The bankers on the other hand can obtain all the activity
reports (such as who has withdrawn money, what is the amount and from where he
has withdrawn etc.) in due time. Using the Internet Banking system, a customer
can do banking from his office or house anytime.
Customers can buy goods and services from a shop and pay bills online using his
card and POS terminal installed at the shop anytime.
A customer can also use his mobile phone and do some transactions anytime.
c. Available
anywhere:
Before introduction of IT in
banking services, a customer had to go to a branch physically for obtaining
banking services. Now the customer can avail the banking services from anywhere
he desires. Not a matter where he has opened his account, he can go to any
branch and avail full range of banking services. He can go to an ATM in any
city and withdraw money, check balance, print mini statement, deposit money and
pay utility bills. The customer can go to any shop in any city of the world and
buy goods and services using his credit or debit card. He can also access his
account through internet from any part of the world.
d. Accuracy:
Computer (a component of
Information Technology) can work with 100% accuracy if the program and data
supplied is correct. “Garbage in garbage out” is very true for the computer.
Computer can never be incorrect. However it can give wrong result if the data
is wrong or the programming logic is incorrect. If a customer withdraws
Tk.100/- and the Teller during posting in the computer, types Tk.1000/- instead
of Tk.100/-, customer’s balance will be updated wrongly. This is not an error
for the computer as the data was provided wrongly.
e. Memory:
Computer has a very huge
memory – it can store and process a large number of data. Its storage is more
than the storage of a big library. It can store customer data for several
years. The computer can retrieve the data from the storage very quickly and
accurately.
f. Diligence:
Computer can work
continuously for a long time without tiredness which is not possible for a man.
A computer server in a Bank starts once and never stops for years together.
Thus non-stop 24/7 service is possible for banking products such as ATM, POS
terminals, Internet Banking etc.
g. Interfacing:
Interfacing is the way of
communicating one system with another system of Information Technology such as
communicating IT system of one bank with that of another bank. Thus a customer
of ‘May Bank’ of Malaysia is able to withdraw money from the ATM of
Dutch-Bangla Bank in Bangladesh using his Visa or MasterCard. On the other hand
a customer of Dutch-Bangla Bank can pay shopping bills at a shop in USA using
his MasterCard or Visa Card.
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