FM 6 – LESSON 1 some predefined standards or known data.

This
COMPUTERIZED BANKING SYSTEM validation is made by the 'Error Detection and 'Error
Correction procedures. The control mechanism,
• BANK COMPUTERIZATION wherein actual input data is compared with
• UPDATES: MANUAL/AUTOMATION predetermined norm is meant to detect errors while
• ADVANTAGES AND DISADVANTAGES error correction procedures make suggestions for
• BANKING TRANSACTIONS entering correct data input.

What is Computerized banking? • Processing and Revalidation - The processing of data

• Computerized banking system for creating customer occurs almost instantaneously in case of Online
account also known as computerized banking Transaction Processing (OLTP) provided a valid data has
management system (CBMS), customer account records been fed to the system. This is called check input
management, customer transaction control or customer validity. Revalidation occurs to ensure that the
data report's system. transaction in terms of delivery of money by ATM has
been duly completed. This is called check output
A Computerized Banking System(CBS) validity.
• Is designed to help banks for manage the data base.
Extensive information is available at your fingertips • Storage: - Processed actions, as described above,
through this System. result into financial transaction data i.e. withdrawal of
• Viewing customer data, account open and deletion, money by a particular customer are stored in
managing transaction, withdrawals, balance inquiry, transaction database of computerized personal banking
modify account, customer information, data system. This makes it absolutely clear that only valid
environment and data reports and related issues are transactions are stored in the database.
made simple and easy.
• There are custom search capabilities to aid in finding • Information: - The stored data is processed making
customer information and working on customer use of the Query facility to produce desired
records. information.
• This can make the system easier to navigate and to
use maximizing the effectiveness of time and other • Reporting: - Reports can be prepared on the basis of
resources the required information content according to the
decision usefulness of the report.
The Objective of the system would be:
• Opening new customer’s account BETWEEN MANUAL BANKING AND COMPUTERIZED
• Account modification/updation BANKING
• Deletion/Close an account. Point of MANUAL COMPUTERIZED
• Withdrawal’s difference BANKING BANKING
• Deposit. Balance enquiry. RECORDING Recording of Banking Data
• Customer’s information banking financial content of these
transactions transactions is
• Report’s through books of stored in well-
original entry. designed data
What inside? base.
• Data Entry: - Processing presumes data entry. A bank CLASSIFICATION Banking No such Banking
customer operates an ATM facility to make a Transactions data duplications
recorded in the is made In order
withdrawal. The actions taken by the customer
books of original to produce ledger
constitute data which is processed after validation by entry are further accounts the
the computerized personal banking system. classified by stored
posting them transaction data
• Data Validation: - It ensures the accuracy and into ledger is processed to
reliability of input data by comparing the same with accounts This appear classified
result in so that same
 transaction data presented in the • Anywhere Banking : Refers to banking not only by
duplicity. form of as ATMs, TeleBanking and internet banking, but also to
bank report.
core banking solutions brought in by banks where
SUMMARIZING Transactions are The generation of
summarized to ledger accounts is
customer can deposit his money,cheques and also
produce trial not necessary withdraw money from any branch connected withthe
balance by condition for trial system.
ascertaining the balance.
balances of • Ebanking : E-Banking or electronic banking is a form of
various accounts.
EFT - (Electronic Fund Transfer) : EFT is a device to
ADJUSTING Adjusting entries There is nothing
are made to like making facilitate automatic transmission and processing of
ENTRIES
adhere to the adjusting entries messages as well as funds from one bank branch to
principle of for errors another bank branch and even from one branch of a
matching and rectifications. bank to a branch of another bank. EFT allows transfer of
BANKING The preparation The preparation funds electronically with debit and credit to relative
REPORT & of Banking of Banking
statements statements is
accounts.
BANKING
STATEMENTS assumes the independent of
availability of producing the • Mobile Banking : With the help of M-Banking or
trial balance. trial balance. mobile banking customer can check his bank balance,
order a demand draft, stop payment of a cheque,
ADVANTAGES OF COMPUTERIZED BANKING SYSTEM request for a cheque book and have information about
• Convenience: latest interest rates.
• Ubiquity:
• Transaction speed: banking initiates speedy • Real Time Gross Settlement (RTGS) : It is defined as
transactions and they are very cost effective and is the continuous (real-time) settlement of funds transfers
generally quicker than the transactions conducted at individually on an order by order basis (without
the ATM's or at the bank netting).Real Time' means the processing of instructions
• Efficiency: Feel free to access, manage and control all at the time they are received rather than at some later
bank accounts, including Individual Retirement time. Gross Settlement' means the settlement of funds
Accounts, CDs, even securities, from transfer instructions occurs individually (on an
one secure site. instruction by instruction basis).
• Effectiveness: Manage your money, investment,
bank accounts without even going to the bank.

DISADVANTAGES OF COMPUTERIZED BANKING

SYSTEM
• Cost of computerized system is very high
• High cost for maintenance
• The system can be infected by viruses
• Member of workers have to be reduce as they
are no longer needed

BANK COMPUTERIZATION: BANKING TRANSACTION

• Anytime Banking : With introduction of ATMs,
TeleBanking and internet banking, customers can
conduct their business anytime of the day and night.
The 'Banking Hours' is not a constraint for transacting
banking business.