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Chapter 3.

Reasons for Changes in Banking Technologies

Banking has become a very important part of any persons financial life. It is very important that most number of individuals have atleast a saving account in a bank as it creates a sence of saving in peoples lives. It also provides a census to the nation about the economic strength of its population. It makes people aware of their financial position and helps them to understand how to improve it. Banking sector in india today : Currently, around 40% of the Indian population is connected to the banking system which is around 44 crore clients and is rising steadily. According To World Bank Estimates India could emerge as the third largest domestic banking market in the world by 2040and could ultimately grow faster than China. In the most recent update according to Dun & Bradstreet (D&B) - Leading provider of international and Indian business information mentioned that the RBI has issued a directive to public sector banks to ensure that all villages with a population of above 2,000 are brought under the formal banking net by 2012, and this will bring in an additional 145 million customers into the banking network As mentioned above the growth of Indian banking sector and growing competition among many banks made it inevitable to bring about better and cheap services to customers. This paved the way to new technological changes to make such services financially reasonable for banking organizations. The growing I.T(Information Technology) sector helped these banks to make such new services possible. In Indian banking sector enormous and far-reaching developments have taken place along with the blurring of demarcations between different types of banking and financial industry activities as a result of the following: 1. Governments have implemented philosophies and policies based on an increase in competition in order to maximize efficiency. This has resulted in the creation of large new financial institutions that operate simultaneously in several financial sectors such as retail, wholesale, insurance, and asset management. 2. New technology creates an infrastructure allowing a player to carry out a wide range of banking and financial services, again simultaneously. 3. Banks had to respond to the increased prosperity of their customers and to customers desire to get the best deal possible. This has encouraged banks to extend their activities into other areas. 4. Banks had to develop products and extend their services to accommodate the fact that their customers are now far more mobile. 5. Banks have every motivation to move into new sectors of activity in order to try to deal with the problem that, if they only offer banking services, they are condemned forever to provide only a secondary level of utility to customers.