Computer & Information Technology

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 The amount deposited or withdrawn is inserted by the Bank Teller into the Computer as data.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.