Role of Information Technology in Banking sector by Sanjay Gupta

“Role of Information Technology in Banking sector” RESEARCH PROJECT REPORT

CERTIFICATE

This is to certify that the Project work titled “ Role of the Information Technology in Banking sector ” has been carried out by Mr. XYZ under the guidance of Mr. XYZ The work is original and has not been submitted any where in part or full for any other degree or diploma.

(Mr. XYZ)

(Mrs. XYZ)

Department of MBA(IT) Head of the Institution

CONTENTS

 ACKNOWLEDGEMENT

 EXECUTIVE SUMMARY

 INTORDUCTION

 METHODLOGY OF RESEARCH

 ANALSIS & INTERPRETATION

 BIBLIOGRAPHY

ACKNOWLEDGEMENT

I express my sincerest gratitude and thanks to honorable, Mr. XYZ (Faculty of Information Technology) in A.I.M., for whose kindness he advising me during whole time of my research report. Under his brilliant untiring guidance I could complete the research report being undertaken on the â&#x20AC;&#x153;Role of the Information Technology in Banking sectorâ&#x20AC;? successfully in time. His meticulous attention and invaluable suggestions have helped me in simplifying the problem involved in the work. I express my gratitude to Mrs. XYZ (Executive Director.) and Mr. XYZ (Chairman.) who encouraged me while conducting this study. And Mr. XYZ (Head of Department) criticized me on my mistakes and hence I could come up with a good research report. So I am grateful to him also. In the end I would like to thank my family members who provided me the required help when I needed.

(XYZ)

Executive summary In Banking sectors are use computers for just about everything â&#x20AC;&#x201C; from communicating with staff and storing information on clients to running complex computer models to price financial products. They are known for having some of the worldâ&#x20AC;&#x2122;s cutting-edge computer systems, especially for the trading floor, where financial products and commodities are bought and sold electronically and the Payment Card Industry (PCI) Data Security Standard is a set of collaborative security requirements for the protection of credit card transactions and cardholder data. The standard was initiated by VISA in 2001 and merged with a similar program by MasterCard in 2004. Other major credit card providers, including American Express and Discover have since adopted the PCI standard

Now a days information technology provide the growth to every sector like finance, marketing, banking sector and health sector. If we are think that we have not ATM card, Credit card, e-banking, e-payment, ERP, SAP, e-signature, smart card, Data base and more facilities that are provide to banking sector to our customers than we spend more time in every function in banking, here I represent an example that a customer is come in bank for withdraw the money with manual process than he or she suffer with lots of difficulties in getting money like as big problem of wasting time, counting of problem and etc if he or she take the ATM card that time he or she id not take all types problem. So today all function of banking sector is easy, that are withdraw the money, transfer of

money to any place in the world within minutes, customers pay the electronic bills, mobile, water and telephone bills, and more work do with the help of information technology. Objectives of study, when any organization wishes to use information technology it must be very clear the need of IT required by different levels of management, following •

To store and manage data efficiently from all the functional areas of the business,

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To process the collected data and derive information out of them,

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To provide information quickly as and when required,

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To provide information regarding production and inventory,

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To provide the information with this system for regarding the financial health of business organization,

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To smooth up the flow of data through various levels of the organization. These are some reasons for adopting IT in organization or service sectors.

Information system is a set of people, procedure and resources that collects, transfers and disseminates information in an organization. It can be defined as a set of organized procedure that when executed, provide information for decision-making and/or control of the organization. Information is some tangible or intangible entity that reduces uncertainty about a state or event. Importance of the information technology in present business or banking organization, Today Information Technology plays a very important role; it is a

process of collection and storing of the data useful for the organization. Executives retrieve these data, when required and process them for generating information. Previously, the business organizations were not perceived as a system. All the functional areas were independent and there was not a cross discussion amongst the managers of different functional areas. However, in present days, all departments hold equal responsibility. This mechanism helps the organization to achieve its objectives efficiently and economically. On this report taking the research design of exploratory research design. In this research report, I find that in banking sector of role information technology and the result come that the data storing and managing efficient and effectives on all functions by use of technology in banks. And I suggest after making report that day to day information technology increase their areas in human life and one of them banking area so technology give much facilities to customers and they are use this technology but Indian half population live in rural and villages areas so most of people, they do not understand this facilities so they provide local languages in software or they give knowledge or demonstration about technology in these areas.

Introduction

Information technology as the term is generally understand, is an integrated, user-machine system for providing information to support operations, management and decision making functions to supports in an organizations. The information technology utilizes computer hardware and software; manual procedures, models for analysis, planning, control and decision making and a database. It is also popularly known as the information system, the information and decision-making system, the computer based information system. Information technology is analyzing the management process. It is better to know that create the help to manager in following functions that used in management •

Planning

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Staffing

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Co-ordination

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Organizing

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Direction

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Control and etc.

Compliance - To fully take advantage of the opportunity to address the market's need for IT products and services that enable compliance, vendors need to understand industry and government regulatory compliance requirements specific to individual vertical markets. Linux/ OSS - What is the impact of OSS on current commercial and technology strategies Outsourcing - Offshore, onshore, in source. As companies focus on their core businesses functions, IT functionality is 9

outsourced, but how much and to whom. Convergence - As the boundaries between IT and Telecoms become more blurred, how is the market adopting technology? Deregulation - How much of the latent demand will be expended as the deregulation of the telecoms industry continues. Dynamic IT as a foundation in the enterprise based on SOA, Web-based standards (including Web services), virtualization, standard components, and end-to-end awareness from metal to business process Assessment of the level of market opportunity for a major country security technology company, the research was executed by doing extensive primary research of the chosen market segment. BMI-T made recommendations and helped the client make crucial business decisions regarding viability of the local operations and future product strategy. Economic impact study of a market sector to determine how much the client's product marketing impacts the South African economy. BMI-T applied extensive economic modeling, desk and primary research to assess the impact on GDP, employment and subsequent tax and fixed cost expenditure. We have assisted various State owned entities make the right decisions regarding commercialization, specifically how much revenue can they expect from which markets, how much do they need to survive. Items such as market growth, demand side adoption, levels of competition and distribution channel structures are investigated in this type of assignment to provide a wide yet focused context upon which observations and recommendations are made.

Vertical Markets: •

Construction, Education, Transportation and Consumer sectors have indicated a strong propensity for growth.

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Government's intention to upgrade infrastructure, the continuing strong property market and the stronger rand are the most important reasons behind the upbeat outlook.

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The Rand exchange rate and continued strength continues to have strong influence on vertical markets, with some being positively (Distribution) and others being negatively (Manufacturing) influenced.

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Government IT expenditure grows, as IT in this sector becomes mission critical. Driving adoption will be technology's ability to enhance productivity and manage costs. While cost control is a factor, it is not as important as enhancing productivity.

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The Finance sector is set to grow at a CAGR of 8.1% to reach R14.9 billion by 2008. Regulatory forces, new markets like SMEs and underbanked, integration, banc assurance efforts and one view of the customers are continually driving IT spend in the finance sector. Technology strategy focus moved from a cost cutting orientation towards one that relies on innovation for growth.

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The Manufacturing sector is expected to reach R13.3 billion by 2008 on a CAGR of 8.9%. Manufacturing opportunities have moved down the company size scale to the SME level. The emergence of supply chains

competing against supply chains has catapulted SCM solutions to the strategic level of manufacturing companies. IT trends include system consolidation, outsourcing, supply chain integration, collaboration and various ERP solutions. Increased competition and customer scrutiny of vendor capabilities will drive consolidation of the IT industry. Corporate Market: •

A more optimistic and forward-looking outlook is noted

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Market maintained the status quo with no radical changes predicted in spending trends, business processes and solutions used and company priorities and challenges

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BEE however is predicted to have a significant effect on the corporate market

Main drivers are the improving economy, strong business confidence and the need to upgrade infrastructure. SMB Market: •

Companies with 100-499 employees are expected to be the fastest growing segment in South Africa due to their more stable financial situation than the smaller companies (1-99 employees) and their increasing recognition of the value that IT can bring to their business.

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The main drivers are improving economy, strong business confidence as well as an increasingly positive attitude towards IT investments by the SMB sector

Information Technology uses in Banking sector: •

Business banking

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Retail banking

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Banking technology

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Banking environment

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Card Market

Business banking: BMI-Tec Knowledge has been publishing their annual report on Business Electronic Banking for the past 13 years. The report provides valuable year on year trend analysis for the major banks in South Africa. There are two parallel research objectives of the publication, to report on business banking trends and more specific information on each of the electronic banking products offered by the banks. Each year, the questionnaire used for the research process retains a generic core but incorporates changes that reflect the ever changing banking environment and the related impact of technology. The research is focused on business banking and specifically for companies that use an online or electronic banking product in their day-to-day administration of their business banking administration. 13

The key area of segmentation for this report is by the four major banks in South Africa: Absa, First National Bank, Nedbank and Standard Bank. Other areas of segmentation include size of company by employees and annual turnover and whether these companies are single banked or multi banked. Retail banking: Understanding the financial delivery channels BMI-T has conducted a recent benchmarking study to highlight external expertise and knowledge that is currently available in the ATM and SST environment. From this collated information, the client was able will be able to benchmark their own operations against these parameters. This study assisted the client in identifying and determining the current and potential best practices around ATMs and to see where they are currently placed in this context. The scope of the research covered both local and international perspectives with the international perspective be segmented further by a split between Africa in comparison with the Rest of the World and South Africa Business Electronic Banking in the Small to Medium Business sector BMI-Tec Knowledge has been publishing their annual report on Business Electronic Banking in the corporate sector for the past 13 years. This new report, Business electronic banking in the SMB sector will be a parallel report in order to

fully understand both markets; corporates and the SMB sector. There are two parallel research objectives of the publication, to report on business banking trends in the small to medium business sector and provide more specific information on each of the electronic banking products offered by the banks. The research is focused on business banking and specifically for companies that use an online or electronic banking product in their day-to-day administration of their business banking administration. The key area of segmentation for this report is the four major banks in South Africa: Absa, First National Bank, Nedbank and Standard Bank. Other areas of segmentation include size of company by employees and annual turnover and whether these companies are single banked or multi banked. Multi-Channel Banking for Retail Financial Services 2005: BMI-T conducts research in the financial delivery channels to the retail market. This research covers the following issues: •

The optimum balance between customer experience and lower costs,

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International overview of financial delivery channels and the road to multichannel integration,

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Trends and market drivers and/or inhibitors that have driven the changes in global banks,

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South African comparison of financial delivery channels and their related offerings from the banks,

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Comparison of pricing and products and services that are available on each channel from each financial provider,

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Number of customer points such as ATMs,

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Number of banking branches and level of change and expected growth for the future.

Research to test the future for High-value-low frequency channels or low-valuehigh frequency channels, current and future usage patterns of financial delivery channels from the South African retail customers (which channels, frequency, timing and for which transactions plus trend analysis with past annual data). Banking technology: South Africa is in many ways a global leader in the adoption and use of technology to improve competitiveness and delivery in the financial services industry. The purpose of this research is to provide a detailed trend analysis of technology adoption at the major banks in South Africa. Specific focus on market expectations, decision criteria and future outlook are the thrust of this initiative. This sector study will investigate the following key business questions that are critical for success in this competitive arena: •

What is the size and structure of the banking market in South Africa and how is technology expenditure prioritized and allocated from a technology and functional perspective?

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What drives key IT adoption drivers and inhibitors facing banks today and in the near future and what are the foremost IT investment criteria in the SA banking sector?

Banking environment: Financial delivery channels for the SME and Underbanked sector in South Africa BMI-T conducts research into the SME and underbanked markets on an ongoing basis. This research addresses the following issues: •

Global case studies, their varying levels of success and reasons behind these levels,

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Profiles and initiatives of the key players in the environment, e.g. the banks, non-banks, micro lenders, NGOs, government et al,

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The key benefits and risks facing current and potential providers in this market,

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Current and potential size of the market in transaction volume and revenue,

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Logistics of access and delivery channels to delivery banking services to the underbanked - the role of technology and use of existing infrastructure in the applicable areas.

Dedicated Bank Bill Second tier banks for South Africa

The National Treasury of South Africa plans to introduce limited banking licenses later in 2004. Trevor Manuel said that the new Dedicated Bank Bill would soon be put before Parliament. The primary aim of the new bill is to create a second tier of commercial banks to serve the low-income earners. (Source: Business Day 17 July 2004). Issues that will be covered in this research include: •

International comparisons - how does the South African current banking infrastructure compare against other countries that have embarked on a similar strategy?

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What are the key drivers and motivators behind this move?

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What will be the short term and long term implications of this Bill?

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Estimated share of potential market - cannibalize existing banking market shares or attract new banking customers?

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What would be the key obstacles that these second tier banks would face?

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Proposed cost of banking licensees vis a vis current costs and levels of liquidity that have to be maintained?

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Opinions from key players, corporate business,

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SME sector and the retail banking customer or the potential retail banking customer

Africa banking focus Banking in Africa - African banking excellence achieved by technical innovation:

As an emerging market, Africa represents an exciting opportunity for future growth and investment. The growth in these markets is fuelled by drivers such as increased telecom market liberalization, acceptance of open and competitive market practices and the desire to participate in the global economy on an equal footing - this has massive implications for the banking sector in Africa. The key objectives of this report include the following areas of research. To introduce and create linkages between banks, technology companies, state organizations and people across Africa, to feature the major trends and forces driving the development of the banking sectors in Africa, to provide detailed development information by country in Africa, to highlight successful banking industry initiatives and projects in Africa and to expose the business opportunities that exist in Africa Specific African in-country research BMI-T has conducted profiling studies that highlighted the external expertise and knowledge that is currently available in the ATM and SST environment within specific African countries. These studies assist the client in identifying and understanding the current and potential ATM infrastructure plus all the peripheral aspects and to see where the client and associated competitors are currently placed in this context. The scope of the research covers both local and international perspectives with the primary focus on specific African countries and their associated ATM

deplorers. A political, economic and banking overview is also part of the research. Three key areas formed the key objectives of this study: Technology providers and revenue, functionalities and the customer interface. Card Market: The card market is becoming increasingly competitive and as such, it is difficult for competitors to maintain or even grow market share. With new entrants attracted to the potentially lucrative return that the market offers and new innovative products being launched, the competition looks set to intensify. BMI-T has ongoing research into the card market environment. This research study provides the information needed for the three following key entities in the card market environment: •

Suppliers - The technology providers' perspective

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Retail Merchants - The merchants' perspective

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Card issuers - The customers' perspective

Trends of Information Technology in Investment banks’ IT spending is a big, but erratic, business. Banks spend millions on IT when they have to, but since IT is a cost, any money spent on new IT systems will, in the short-term at least, have a negative impact on a bank’s balance sheet. The good news for Australian graduates right now is that while IT spending is sluggish in Europe, it’s a growth area in Australia. Australia tends to be an early

adopter of technology, and banks and financial institutions are looking at smart ways to be more efficient, and to drive productivity. That means that despite the trend towards outsourcing banking IT jobs to low cost countries like China and India, the overall number of financial IT jobs in Australia is growing. It’s the commodities, back-office roles that have been moved offshore, while more money is being poured into client interfacing, business-interfacing technology and specialist, mission-critical technology, such as enhanced security systems. If you have IT and security skills, you’ll be in hot demand. In the introduction this report’s of objective and focus on title through Business banking, Retail banking, Banking technology ,Banking environment, Card Market and Planning, Staffing, Co-ordination, Organizing, Direction, Control and etc that manage by information technology today’s.

Methodology of Research

In Banking sectors are use computers for just about everything – from communicating with staff and storing information on clients to running complex computer models to price financial products. If we are think that we have not ATM card, Credit card, e-banking, e-payment, ERP, SAP, e-signature, smart card, Data base and more facilities that are provide to banking sector to our customers than we spend more time in every function in banking, here I represent an example that a customer is come in bank for withdraw the money with manual process than he or she suffer with lots of difficulties in getting money like as big problem of wasting time, counting of problem and etc if he or she take the ATM card that time he or she id not take all types problem. Banks use computers for just about everything – from communicating with staff and storing information on clients to running complex computer models to price financial products. They are known for having some of the world’s cutting-edge computer systems, especially for the trading floor, where financial products and commodities are bought and sold electronically. Investment banks’ IT spending is a big, but erratic, business. Banks spend millions on IT when they have to, but since IT is a cost, any money spent on new IT systems will, in the short-term at least, have a negative impact on a bank’s balance sheet. The good news for Australian graduates right now is that while IT spending is sluggish in Europe, it’s a growth area in Australia. Australia tends to be an early adopter of technology, and banks and financial institutions are looking at smart ways to be more efficient, and to drive productivity

That means that despite the trend towards outsourcing banking IT jobs to low cost countries like China and India, the overall number of financial IT jobs in Australia is growing. It’s the commodities, back-office roles that have been moved offshore, while more money is being poured into client interfacing, business-interfacing technology and specialist, mission-critical technology, such as enhanced security systems. If you have IT and security skills, you’ll be in hot demand. The banking and finance sector is the primary graduate opportunity for those wanted a career in IT, says Cyrus D’Cruz, executive general manager for IT practice for Hudson Australia: “Banks in particular, and certainly many of the larger financial institutions, insurers, retail banks, invest quite heavily in their recruitment programs for graduates and have very highly-developed and industry recognized programs,” he says.

Technology Vision in 2020 : Technology Information, Forecasting and Assessment Council (TIFAC), an autonomous organization under the aegis of the Department of Science & Technology (Govt. of India) plays a vital role in technology development and promotion in India through its various programmes. •

Need for a Vision

The role of technology development in the economic progress of a nation is being increasingly recognized. Efforts are being made globally to develop

technology strengths and firms are becoming more and more competitive. The developing countries especially have shown a marked risein the pace of economic growth. The trends indicate that there is likely to be a shift in economic power towards the third world countries in the 21st century. To become an economic power, technology and economy need to be considered in an integrated manner rather than as separate entities. With the opening up of economy, Indian industry needs to be globally competitive. Hence, "what is required is a clear vision of what can be achieved and how best to achieve it". The Indian Industry will have to support the nation in acquiring economic leadership and progress by 2020. The foundation of this leadership will depend to a great extent on the technological excellence of the firms. TIFAC had taken up the challenge of delivering a Technology Vision for India for 2020 to provide directions for national initiatives in Science & Technology and a strong basis for a policy framework not only for investment but also for the development of an integrated science and technology policy both at the state(s) and national levels. In actual working, with sub panels and sub groups Technology Vision 2020 exercise covered more than 100 sub areas directly involving around 500 members from Industry, Government, R&D Institutions and Academia in the studies, and indirectly involving around 5000 nation wide experts from Industry, Government, R&D Institutions and Academia through questionnaires, interviews etc.

Out of 17 task forces and panels, experts from Industry, 5 from R&D Institutes, and 2 from the government headed 10. Each task force had, a chairperson, a co chairperson, and a coordinator along with other members & experts apart from others who took part in this exercise. •

Areas

Seventeen sectors were identified for Technology Vision 2020 under the following broad categories: •

Technologies with socio-economic Implications

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Major infrastructures

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Advanced technologies

Task Forces/Panels constituted by TIFAC and the sub sectors covered thereof: •

Advanced Sensors

Mechanical sensors Chemical sensors Magnetic sensors Bio sensors Optic sensors Emerging technology scenario Demand for advanced sensors Capabilities in the area of advanced sensors Suggested action programs •

Agro Food Processing

Cereal Sector 26

Milk Sector Fruits & Vegetables Sector •

Chemical Process Industries

Petroleum & Natural Gas including Safety Petrochemicals including Polymers & Rubber Heavy Chemicals (Chlor-Alkali Chemicals) Basic Organic Chemicals Fertilizers Pesticides & Growth Regulators Drugs & Pharmaceuticals Leather Chemicals Specialty Chemicals Incl. Marine, Cosmetics, Perfumery & Flavors Coal Processing & Coal based Chemicals Chemical Processing

•

Civil Aviation

Airline operations Manufacturing & maintenance Pilot training Airports Technology status Opportunities Market for aircraft Supplemented by Technology Market Survey: Market opportunities for Indian Civil Aviation Products & Services: Overview Vol I; Pilot & Engineering Personnal Training VolI; Aircraft Maintanence and Overhaul VolII •

Driving Forces Impedances 27

Driving forces & Impedances for a need based development Education Technology Infrastructure

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Food & Agriculture

Agro-Industry: Agricultural Linkages Resource Management: Soil & Water Crop-Improvement, Bio-diversity – Agricultural Crop Diversification Socio-Economic Scenarios Input Management: Seeds, Pesticides, Fertilizers, Machineries, Equipment, Energy Medicinal Plants Animal Sciences & Fisheries •

Electric Power

Electricity Policy options- private power, alternatives to capacity addition Transmission and Distribution Policy options- R & D Instrumentation and switch gear Materials Policy options- renewable energy sector

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Electronics & Communications

Components, Consumer Electronics 28

Photonics / Optoelectronics, Emerging Areas & R&D Microelectronics Power Electronics, Components, SPV, Electronics in Energy Management Computers & Applications, CAD / CAM, Software Computers (Including Software) Communications Interface with TIFAC Task Force on Telecommunications Telematics, Fibre Systems, Networking Computer Communication, Information Highway •

Engineering Industries

Capital Goods including Foundry & Forging Transport Vehicles Textile Industry Electric machinery •

Health Care

Infectious Diseases 0 Gastro-Intestinal Diseases MCH & Nutrition Genetic, Metabolic & Degenerative Disorders Cardio-Vascular Diseases & Diabetes Cancer & Lung Disorders Renal Diseases & Hypertension Mental Disorders & Addiction Eye Disorders Injuries & Locomotive Disorders •

Materials & Processing

Mining & Extraction of Metals Metals, Alloys & Surface Engineering Polymers / Plastics Composite Materials Nuclear Materials Biomaterials & Devices Photonic Materials 29

Semi conductor Materials Building Materials Super-Conducting Materials Glass & Ceramic Materials • Life Sciences & Biotechnology

Health Care Environment Agriculture Industrial Biotechnology Marine Biotechnology Herbal Biotechnology •

Road Transportation

Transportation Demand Road Construction Designs & Materials Appropriate Technologies & rural Roads Road Building machinery & Transportation Vehicles Transportation Management Systems, Traffic Management & Multimodalism National Highways & Expressways Metro Systems & Urban Systems Transportation Development & Social Interface Legal Framework

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Services

Financial Services Marketing : Advertising, Media Consultancy & Infotainment Marketing Logistics & Trading HRD : Regular Education, Vocational Training, Retraining Travel & Tourism Legal Services Including IPR Technical & Management Consultancy Testing, Certification & Calibration Services 30

Government Administration Security Services •

Strategic Industries

Aircraft/Aviation Radar/Weather Survey Strategic Electronics Space Communications, Remote Sensing Critical materials & Processing Structure Advanced Sensors Industries for Strategic Technologies Robotics & Artificial Intelligence Breakthrough Technologies •

Telecommunications

Position paper on Telecom Access Network Transport Network Services Switching Network Management R&D Strategies Socio-Economic Impact & Vision •

Waterways

Water transport scenario in India Current status of inland waterways and water transportation Waterways classification Technology imperatives for developing smart waterways

•

Methodology 31

In actual working, with sub panels and sub groups Technology Vision 2020 exercise covered more than 100 sub areas directly involving around 500 members from Industry, Government, R&D Institutions and Academia in the studies, and indirectly involving around 5000 nation wide experts from Industry, Government, R&D Institutions and Academia through questionnaires, interviews etc. Out of 17 task forces and panels, experts from Industry, 5 from R&D Institutes, and 2 from the government headed 10. Each task force had , a chairperson, a co chairperson, and a coordinator along with other members & experts apart from others who took part in this exercise.

The studies employed various techniques of forecasting like Brainstorming sessions, Preparation of perspective and scenario reports, Delphi technique, Nominal group technique in some cases and a subsequent Workshop(s). A separate panel of experts for each area was constituted to bring out technology assessment in the form of perspective reports. A team of expert readers who prepared an objective scenario report read the perspective reports for each area. In order to derive the benefit of inputs by many other experts, the Delphi technique was adopted soliciting responses from experts to specific questions on various issues, which may prevail in future, based on scenario reports. Nominal group technique was applied in some areas. In some areas responses from individuals were obtained at a workshop. The perspective and scenario reports of panels , Delphi responses , NGT rankings formed as the basis, to finalize the vision and action reports and to arrive at suggestions for â&#x20AC;&#x201C;Policy Guidelines, Strategies, and Action plan, for Govt, Industry, R&D Institute and Academia to realize the vision for India, up to 2020.

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Reports

The recommendations of this exercise Technology Vision 2020 have been brought out for the wider access to different users like technology managers, scientists, policy makers, professors, new entrepreneurs etc, Technology Vision 2020 reports was released on 2nd October 1996, by the then Prime Minister of India.

Each Vision report runs into numerous pages having the valuable information on current status, the forecast, and the assessment in the Indian context. They bring out strategies for policy and action plans for Government, Industries, R&D Institutes and Acamedia. Actions suggested range from, simple modification of policies, and/or administrative measures, or the introduction of relatively simple technology practices on the one hand, as well as those involving mastery of new and emerging complex technologies. One would find them have a thread of inter connection. It is very difficult to choose one or the other to be sufficient for India. It would be essential, to orchestrate all of them in a systematic form and also with a reasonable time synchronism. The full depth of the technology visions brought out & action plans would be understood only when these detailed reports are studied by several groups of interested people for drawing plans for action.

Main feature of Technology Vision: 2020 While Technology Vision: 2020 exercise covered classical technology sectors like Banking sector, Agro- Food Processing, Chemical Industry, Engineering Industry, Electronics etc., this article focuses on Services sector due to its immense potential for value-addition and employment generation. The services sector draws heavily on Information Technology (IT) for its advanced applications:

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Banking Sector

Banking the 'tertiary sector' of the economy covers a wide gamut of activities like trading, finance, infotainment, real estate, management & technical consultancy among several others. The contribution from banking sector today stands over satisfactory percent of the total GDP in India. The sector currently employs close to 20 million people in India. The TIFAC study on Services covered nine select sub-sectors ranging from advertising, HRD services, testing & certification to Government administration. For all the aforesaid areas IT plays the prime role in information processing, storage & access with a view to providing improved services to the consumers. Some of the typical IT applications in major services sector are outlined in the following sections. â&#x20AC;˘

Financial Services

Financial services have been the major users of IT and communication technologies. IT expenditure by US banks has recorded a compounded annual growth rate of 8.4 per cent. The Management Information System (MIS), distributed computing devices, open systems, high-speed data networks (LAN, NIAN, WAN, ISDN etc.), RDBMS have been important development milestones in IT with ma or impact on financial services. The development of optical fiber has greatly improved the communication speed, anticipated to touch 2 trillion bits per second eventually. Packet switching 35

transmission method like asynchronous transfer mode achieving a speed unto 622 million bits per second have been the major breakthrough in communication technology. CD-ROMs with storage capacity of 1.6 GB of data have been instrumental in fast information retrieval and access. Use of multimedia for storage of text, graphics, video, sound etc. has immensely benefited the information storage system. All these technologies are used extensively by the banking and financial services sector. â&#x20AC;˘

Automated Teller Machines (ATM)

ATMs though operational in the country for quite some time, are expected to make a big headway in India. It has been estimated that there are around 400,000 ATMs worldwide out of which 100,000 are located in Japan alone. The latest generation networked ATMs allow the user to perform up to 150 kinds of transactions ranging from simple cast withdrawals & deposits, to fund transfer to trading in stocks to buying mutual funds to something mundane like payment of electricity bills, booking air-tickets and making hotel reservations. ATMs are synonymous with credit cards - 578 million credit cards issued worldwide were involved in a transaction of US $ 1092 billion by June 1993. India is poised to become one of the world's largest credit card users by 2000 AD. â&#x20AC;˘

'Virtual' Bank : Multimedia technology has been quite effective 'm bringing the banking services to the doorstep of its customers. The Customer Activated Terminal (CA]) or Kiosk is an interactive multimedia display unit,

housed in a small enclosure, typically consisting of a computer workstation, monitor, videodisk player and a card reader. It allows the customers to browse through information and use the available banking services at their own speed. Some banks are thinking of establishing 'virtual' branches where a customer can walk through the door, explore services by touching parts of the screen and at any time call up a member of the bank staff by video conferencing. While the banks do not need to 'mvest heavily in real estate for setting up such a branch, the customer gets the benefit of 'one-stop banking' at a convenient location. •

Home Banking

Smart phones with screen built-in modems and programmable microprocessors let the customer access a variety of financial services from home. •

Electronic Funds Transfer at Point of Sale (EFTPOS)

While travelers’ cheques meant 'pay-now-buy-later’ and credit cards had 'buynow-pay-later’ advantages, EFTPOS or debit cards signify 'buy-now-pay-now' but without cash transaction. The user presents his ATM card when he buys goods and the EFTPOS system immediately debits his bank account. •

Smart Cards

The 'processor' type Smart Cards with in-built integrated circuits (ICs) or microchips offer a wide range of transactional opportunities even from remote

areas. The Smart Cards are extensively being used for employee 'clocking in', withdrawing cash from ATM, using pay phones, payment of various bills etc. â&#x20AC;˘

Electronic Data Interchange (EDI)

EDI typically denotes paperless financial transactions across the locations. EDI is fast becoming the norm for inter-company transactions and also for procurement of bought-out items from the suppliers. The companies can now operate their bank accounts through corporate banking terminals in their own offices, which are linked to the bank computers. Companies can thus carry out transactions like transferring funds, managing its cash flow, opening Letters of Credit etc. without any paper work. Singapore has established Trade- Net to facilitate electronic submission of trade documents by traders to various Govt. agencies and the response of these agencies to the sender. It has reduced document-processing time from one day to 15-30 minutes and the estimated savings are of the order of $ 1 billion annually. â&#x20AC;˘

Image Processing

As financial services including capital markets and banking are highly document intensive, image-processing technology can have a far-reaching impact for such applications for its 'less paper' handling characteristics. In banks, image technology could be used for automatic identification or character recognition to read text and diagram wherein the cheques or documents can be scanned. 38

â&#x20AC;˘

Expert Systems

The financial services sector is increasingly using decision support systems (DSS) or expert systems for functions such as credit risk appraisal, forecasting loan delinquencies, investment decisions etc. One of the most promising developments in this field is the use of 'neural network' approach to build an expert system, which lets the software literally learn from example and experience. Several banks today are using neural network programmes to detect credit card fraud. Some leading investment banks to track stock price patterns and predict their movements are also using it. â&#x20AC;˘

Information Technology & Financial Services: Key Issues

While the technological possibilities of IT may be unlimited, their applications and adoption in India need a conscious approach towards Business Process Reengineering of existing practices and procedures to take the fullest advantage of IT. Continuous training & skill up gradation of human resources assume critical importance towards absorption of new technologies. The elimination of manual records, the introduction of electronic fund transfer, ATMs etc. raise the important issue of security and integrity of data. This includes issues relating to confidentiality of information, preventing data corruption and prevention of fraud. Appropriate technologies for encryption of data for secured transaction, regular & multiple backups, extensive use of passwords and other forms of authorization would need to be adopted.

For paperless and electronic financial transactions in India, a host of legal aspects need to be looked into. As in case of EFT, a cheque is not required to be presented physically for making payment as per the current practice. Also the legal liabilities of banks and customers in case of loss of ATM cards, ATM frauds etc. are not quite understood in the present system. The adoption of new technologies would warrant a thorough review of the system towards changed legal stipulations. Finally, the most important aspect of costs involved and benefits expected need a closer scrutiny. Expenditure on IT has always not been in tune with the returns envisaged. The American example of spending US $ 100 billion on IT applications in financial services during 1970-80 has been a pointer. With 100 per cent more expenditure on IT per worker, it increased productivity by only 0.7 per cent per year. Hence, proper implementation program and technology management aspects assume much importance.

In banking sector uses of some software of information technology: - â&#x20AC;&#x153;The first rule of any technology used in a business is that automation applied to an efficient operation will magnify the efficiency. The second is that automation applied to an inefficient operation will magnify the inefficiencyâ&#x20AC;?-Bill Gates There has been an exponential increase in the advancement of technology in the past 30 years and it will only continue to do so. And therefore, there is a need to implement and maintain technology. With implementation of new methods and 40

processes in technology, there is a need to keep pace with the rapidly changing business environment. As the market is growing extremely saturated, optimizing information and technology is crucial. This conference is carefully crafted to bring topics, which are currently hot in the Middle East banking, and financial services industry. With the increase in technology, managing other aspects has also turned out to be unavoidable such as IT security, IT Asset management, IT risk management, IT governance etc. This event is designed in such a way that it provides maximum information that needs to be discussed on a broader platform with peers from the same industry. Leading companies in the industry will come together and put their issues forward on how they have implemented successful techniques and emerged as thriving market players. You can also get a chance to interact with them and exchange your knowledge and viewpoint leading to future cooperation

Sybase - through its Financial Fusion division- is a leading provider of online banking and payment solutions to large financial institutions worldwide. Financial Fusion provides robust, proven software solutions for online banking including a comprehensive feature set for consumers, small businesses and large corporations. Designed to offer a streamlined easy-to-maintain e-Finance platform to support multiple online business & delivery channel banking services for online customers, Financial Fusion solutions are ranked as one of the leading

solutions for Tier 1 banks in USA. More than 200 of the worldâ&#x20AC;&#x2122;s leading financial institutions, including 17 out of the top 100 banks in USA are powered by Financial Fusion Solutions. In the Middle East, Sybase has six banking references since introducing Financial Fusion early 2006 Official Internet Access Provider & Exhibitor:

OXYGEN Middle East - is a mobility solutions provider, focusing on designing, distributing, and implementing high performing, scalable, and secures wireless solutions in the Middle East Region. Founded since 2004, Oxygen Middle East has established today a regional reference for wireless solutions that are based on best mobility products in the Market, including Enterprise wireless products, Home and Small Office wireless products, wireless end-devices and applications. Oxygen Middle East is excited about our relationship with other resellers and partners, our business resellers are given a generous discount from retail pricing and technical support on all Oxygen products line, credit facility, and significant revenue potential exists for the aggressive solution provider or reseller. This relationship will be the basis for working together to pursue the opportunities in the marketplace and to develop our businesses, contributing to success of both our companies.

Silver Sponsor:

Identita provides unbreakable, turnkey identity authentication solutions to organizations

requiring

absolute

customer

identification.

Security, and in particular identity verification, is the foundation of virtually all personal transactions, from phone banking to Government service delivery. Identity’s solutions are not only extremely secure, but are also the most costeffective identity authentication systems available. Identity’s solutions can be deployed rapidly across existing infrastructure and integrate seamlessly with existing security frameworks and protocols. Exhibitor:

SAB provides a “global banking” software integrating all banking and financial business with homogeneous applications derived from the same concept. Due to its modular architecture, it also offers a departmental solution. It is a multilanguages and multi-currencies system characterized by an open and wide parameterization,

adapted

the

international

market.

SAB adopts a single version for all of its clients. New releases will be distributed

within the scope of the maintenance. More than 120 banks and financial institutions in over 15 countries are using SAB for their entire activity.

INFORMATION TECHNOLOGY IN THE BANKING AND FINANCIAL SECTORS: Smartcards, banks and telephones A brief historical introduction; what this suggests about the future Banks first started using computers linked to telecommunications systems in a big way in the 1970s and 1980s, when local area networks allowed them to start automating accounts—and thus to introduce automatic teller machines (ATMs) which customers could use to find out how much money was in their accounts and make cash withdrawals. ATMs appeared to offer two things: — A competitive advantage: better service for customers. — Savings on staff costs, as tellers were replaced with machines. The first of these is undoubtedly true. A network of ATMs operating 24 hours a day takes the necessity out of planning when to get money for individuals—it is hard to imagine anyone accepting a bank without an ATM network for their day-to-day financial needs (though judging by the queues in some banks, some people do not seem to have realized quite what can be done with an ATM card). The second, however, has not really happened, at least in the way it was originally imagined. What has happened is that on the one hand staff have been freed up for other things—such as handling the huge array of financial services banks now offer compared with a couple of decades ago—and on the other IT has taken on a life of its own as banks think of new ways to wire themselves and their customers. In Hong

Kong this has meant people being able to pay everything from their electricity to their tax bill by phone—just press in the numbers—or pay for goods with money direct from their accounts—the EPOS system, now widely available. Although banks still talk about reducing the number of their branches—perhaps in Hong Kong because of its aggressively high rents, rather than staff costs—this does not appear to be happening (those queues again). With further technological advantages banks can now take ATM cards a step further — enter the smartcard, a card with a chip on it, that can store much more information on it, and do much more with this information. The world's best-known smartcard is Mondex. About Mondex

Mondex is a smartcard system that aims at replacing cash, developed by British banks NatWest and Midland (owned by HSBC) and telecoms operator BT. Most of its technology is developed by Japan's Hitachi, which manufactures the card's chips and balance readers. Transactions are handled off-line—with the money being stored on the cards and transferred off them direct to another party. In theory the card will also be able to do all sorts of other transactions: giving other cards money either through an accompanying electronic wallet, down telephone lines or via personal computers. Mondex is being tested in the English town of Swindon, with 30,000 people, and many shops, car parks and phone boxes wired to handle the card. New uses for the card are being added, the latest being local buses in January this year. Just this month (March 1996) computer company Unisys and card and related equipment maker Keycorp joined the party, signing an agreement with Mondex to provide servers,card readers, point of sales equipment

and the software needed to use all these.BT plans eventually to stop using conventional phonecards and replace them with smartcards. If Mondex takes off, then it would probably be linked to this system. Europe

leading

the

way

the

momentâ&#x20AC;&#x201D;for

two

reasons.

First,

telecommunications costs are far lower in the USA, so there is less commercial pressure for companies to develop a means of off-line transaction there. And second, credit cards are ubiquitous in the USAâ&#x20AC;&#x201D;and competition makes them cheap. Interestingly France is leading the way in Europe, with about 85% of all the smartcards there; perhaps that investment in Mintel systems was worth it. About Asia Mondex is also getting a fair amount of international exposure, not least through HSBC, which has plans to get the system running through Hongkong Bank and Hang Seng Bank (both of which it owns) in 1997,. or maybe earlier? Hongkong Bank is also currently talking with Bank of China in Hong Kong about getting it in on the party, and also has rights to franchise the system in other countries around the region. China is another likely advocate of some form of smartcard. Its Golden Card project is the most ambitious of all its various Golden projects aimed at building a nationwide series of information networks. The Chinese government's motive for rolling out these networks is principally because it believes it can gain greater control over even the most far-flung corners of the country. That is to say, it takes very seriously the idea that telecommunications will soon be distance insensitiveâ&#x20AC;&#x201D; officials will be able to monitor and control events in Guangdong as well as in Beijing. Smartcards make cash and/or credit cards redundant

Smartcards could replace cash for many transactions involving small amounts of money. But then you have to ask what is the disadvantage of cash. Why carry a card around when you can carry a few hundred Hong Kong dollars? Fair enough, but why are credit cards so useful? The answer is they aren't if you don't travel a lot. A card which can deduct money straight from your account (such as Hong Kong's EPOS) works very well, and involves none of the extra costs of a credit card (the insurance, the risk of forgetting to pay your bill on time and having to hand over all that interest, etc). Combined with cash, readily available from an ATM on your same card, it is possible to see how a smartcard could fall flat on its face. Where credit cards come into their own is going abroad, where a Visa card, MasterCard, American Express or Diner’s Card saves all the hassles of having to change money, apart from small trivial amounts for taxis, cups of coffee, etc. And the transaction cost is small. What about phone cards? Well, what about mobile phones? Which threatens phoneboxes more? Think about it: what makes a smartcard attractive? Lower transaction costs—important where you have to pay for phone calls for verification (eg Britain), but less so where local calls are free (eg Hong Kong). And just think how much the minimum charge is when you stuff a credit card into a phone in an airport. In the latter case the competitive advantage a smartcard would offer would be cost: no need to verify the card, and so incur the cost of making the phone call to the card centre. Then there is the business related to loyalty cards, ie cards tied to stores— Marks & Spencer, Lane Crawford, Park N Shop, Wellcome. In Britain, loyalty cards are proving popular and successful with merchants, particularly when they are tied in to special offers. One organization that is doing particularly well in this area is the

Cooperative Society—which not only is as a chain of stores, but also is a bank: the perfect tie in for a smart card.

Smartcards make banks redundant Not at their core business—lending money. But what about retail services? An electronic cash system such as Mondex does not require a centralized clearing facility to handle transactions: the "money" goes direct from card to recipient. Does this threaten jobs in banks? Not necessarily—look at automatic teller machines —as mentioned above, their introduction freed up staff to do other things. (Ironically, smartcards could make ATMs redundant: if you can load your card at home—or indeed anywhere—through a telephone/computer, then you would not need to go out onto the street and push it into a machine.) Also, remember that people will still want to do something with their money: it will not earn interest on a card. Smartcards are ideal for regular small cash transactions, and the occasional large one. Could smartcards—or at least the technology they incorporate—make banking centres redundant Here the answer is to think of what consumers want, rather than what they need, and what are the facilities that will provide this. Shanghai is building a brand new stock exchange building in Pudong - replacing its current stock exchange, housed in the former ballroom of a colonial hotel - as part of its bid to reestablish itself as the financial centre of Asia. Ironically, the reason the current exchange can operate at all, despite the makeshift nature of its facilities, is because it is a highly wired exchange—trading is electronic, so it does not need a trading hall at all, let alone the building of large, new premises. Most people who trade on the exchange do so from

remote sites—though ones still in Shanghai. Of course, they need not be in Shanghai, but that is where people want to be. In other words, the technology alone will not determine what people want and set out to achieve. If Shanghai does emerge as a financial centre it will be because people believe they can do business there. (In much the same way, it is not technology that has made companies move out of Central in Hong Kong to other areas, but technology that allows them to. What has driven them out—or persuaded them to leave—is above all high rents.) Smart cards make governments redundant If information can be stored on a smartcard, why would it need to be stored elsewhere? Take, for example, medical information about an individual: if this could be stored in a card, and only accessed by a hospital when someone visited a doctor there, not only would the individual be able to visit any hospital near at hand when they needed to (say on holiday) but their privacy could be preserved. Looked at another way, transactions direct from one card to another would be untraceable—privacy would be protected, but so would illegal acts, such as money laundering, as would legal transactions liable to be taxed. Issues here include the amount of money that could be stored on a card (Hongkong Bank is in discussion with the Hong Kong Monetary Authority on this issue concerning Mondex cards). Also, who else would be able to get access to money. Would it be much easier to transfer it to another country and take advantage of better interest rates? Would tax evasion become an even bigger problem if people could transfer money at will around the world without governments being able to track them? Wired magazine has speculated that on-line gambling could be the killer entertainment application of the future: already this is happening. Football

magazines in Asia advertise betting in Europe that can be conducted with a credit card: at least such transactions go through the bank that issued the card and so could be subjected to monitoring; if the transaction was done directly with a smartcard there would be no separate record. Similarly without restrictions on currency transfers (and there are few in many countries: the biggest being the impracticality of changing money—ie a trip to the bank, plus the transaction fees) then it is possible to see how individuals using smartcards tied to computers and automated currency trading could deal fruitfully on forex markets. (An interesting point to bear in mind is that taxation has traditionally been tied to things governments can easily find, ie property and jobs—patches of land and factories cannot move, therefore it is easy for tax officials to locate the owners and take taxes off them; electronic commerce is far harder to monitor: someone living in Britain, say, could trade on the Hong Kong stock exchange, realize capital gains and dividends, without the authorities in Britain either being aware or even being in much of a position to find out.) The probability is that a lot of governments would want to regulate the use of smartcards very closely. Indeed it is this possibility that makes them so attractive to the Chinese government. In a closed system this would seem a possibility. But how closed will future systems be? Could a country restrict access? Given China's growing integration into the international economy it would certainly have to accept payments from smartcard networks, and the desire to transform cities like Shanghai into international banking centres means that sooner or later China’s ability to police channels of funds transfer will be undermined. This would effectively end a country’s ability to pursue a domestic monetary policy independent of world market forces. Can, or should, a Government attempt to put off the day when it has

to abandon specified monetary goals? Imagine also an Internet packed with virtual malls where some people could only window shop—why? Because their government told them so.

On-line security an issue If someone is cracking the code of your smartcard, or intercepting your credit card number, yes security is a problem. But how many of us already cash in our pockets ready to be picked, and easily give our card numbers to merchants and by telephone and by mail without further thought? Probably the greater risk issue concerns legally binding transactions, such as commercial contracts, letters of credit, etc. Encryption technology is the sophisticated way to tackle the problem, cryptographic technology the simplest, and possibly the safest, but maybe not sophisticated enough for the major commercial deals. Visa International and MasterCard are racing each other to establish an industry standard for encryption, Visa in conjunction with Microsoft and MasterCard in a pact with Netscape. He who controls the little black encryption box controls the monopoly rent or royalties on every little transaction that passes through the network. (Mr Rupert Murdock had similar ideas for cable TV in China!). Cryptography or ‘blinding’ technology is less exciting but rather more practical for the average consumer. The cardholder registers with the issuer and receives a PIN number in exchange. The PIN enables the issuing bank to certify an electronic payment or e-cash without reference to whom it was issued. E-cash becomes as anonymous as paper money or coins. The European-based DigiCash, is an example. The European Commission has sponsored its own version, CAFE. Mondex and other smart cards use similar principles. Its as safe as houses, which of

course get broken into from time to time. Telecom facilities for banks

High-speed 64 Kbts and above, all the way to 2 Mbts, readily leased circuits with lots of redundancy, packet switching and frame relay, compensation service agreements and above all a telco that goes out of the way to serve the customer. Not much really, oh but just one more thing. A regulator that permits the bank to self-provision, by-pass, callback and anything else. In short, telcos and the regulator should treat the banks with the same flexibility and understanding that the banks have traditionally shown their own customers ... no, rephrase that, just like the banks are learning to treat their own customers.

INFORMATION TECHNOLOGY GOVERNANCE IN THE NOT-FORPROFIT SECTOR: 1Organizations in all sectors are increasingly using information technology (IT) in their work. In the not-for-profit sector, the implementation of suitable and affordable IT systems can bring considerable benefits, be it in providing a better maintained membership database or in enabling Trustees to share information more quickly. As with all new ventures, though, there are potentially costly drawbacks. Some of these may be avoidable some may not. The purpose of this Guide is to provide help for Directors, Trustees and senior management on the effective governance of IT use within not-for-profit organisations, particularly with a view to maximising the rewards it brings while minimising risk and operating within the law.

There is a clear distinction to be made between IT governance and the use of IT in aiding governance. The former assumes a system of checks and balances that oversees the performance of IT systems in supporting the organisations’ objectives. This might include IT strategy, a policy on the staff use of IT, and performance indicators to monitor the benefits and cost-effectiveness of the technology in use. The latter concerns new opportunities and methods of working that IT may bring for Trustees, Directors and senior management. The appropriate and considered implementation of new technologies can speed up the dissemination of information, and provide improved access to critical documents. The result can be the better and smarter use of an organisation’s limited resources The implementation and use of IT within an organisation is subject to the implications of the Data Protection Act 1998, which requires that certain conditions be met in order to ensure that personal data has been processed fairly and lawfully. The Data Protection Act applies not only to electronic data but to paper copies as well. Definitions: Information Technology Throughout this guide the term “Information Technology” or “IT” is used, to encompass technology, communications, systems, people and organizations. The less familiar expressions, “ICT” (Information and Communications Technology) and “IS” (Information Systems), do not appear: their meaning is implied within the use of the broader term, “IT”.

Governance Governance is the means by which those with ultimate responsibility for an organisation, or for responsibility with a particular function within it, direct, monitor and evaluate its work towards stated objectives, within the terms of its governing document and the relevant law. In not-for-profit organisations, this responsibility rests with the board of Directors or Trustees, who set the agenda for the organisationâ&#x20AC;&#x2122;s work and lay down the parameters within which this work will be carried out. The board is then responsible for monitoring and evaluating progress, and for reviewing priorities. IT Governance IT governance is the system that controls the access to and management of IT by an organisation. In essence, it should be fully integrated into the overall process of organisational governance. IT is just one aspect of an organisationâ&#x20AC;&#x2122;s affairs that requires governance. The same disciplines used to report on operational duties under corporate governance can be used to help govern IT. The overarching aim of IT governance is to ensure that its use adds value, whilst minimising and balancing risk. IT governance important to not-for-profit organizations IT governance is important to all types of organisations. However, the not-forprofit sector faces a number of particular challenges. One of these is the need to account to multiple stakeholders, which makes effective communication more difficult. The use of IT provides greater opportunities for not-for-profit organisations to communicate effectively and efficiently with a variety of audiences. The inclusive culture of the sector dictates a need for contribution,

consensus, communication and commitment, and IT can be a useful tool in achieving these goals. 1 Not-for-profit agencies are increasingly aware of the benefits that IT can bring, both day-to-day and long-term, and are increasingly investing in this area. However, it is important that appropriate controls are put in place to ensure that the rewards IT brings are in proportion to the sums invested in it. When public money is being spent on IT, public scrutiny will focus heavily on any undertaking that is thought to be costly or inefficient. 2 The risks As well as bringing fresh opportunities, IT can also expose an organisation to new risks. These may occur as a result of external factors, changes in working methods, or changes in policy direction. The key to effective risk management is knowledge: an organisation cannot decide how to approach a risk if it is unaware that it exists or is ignorant of its potential effects. It is hard to handle the unknown. This Guide identifies the most common risks that an organisation may face regarding IT, and suggests a number of ways in which those risks can be managed. Examples of model documents and material policies might address can be found. 3 The rewards If IT is used and managed effectively the rewards can be substantial. There is much to be gained from achieving more at a decreased cost, making the best use of available resources, delivering core operations reliably, and exceeding expectations. Identifying the rewards that a not-for-profit organisation wants to

achieve, setting targets and monitoring progress are all part of an effective system of governance.

STRATEGY: 1.

The activities of not-for-profit organisations are much more intrinsically tied

to their prescribed objectives than is often the case in the private sector. In the case of registered charities, charitable funds can only be spent in furtherance of the charity’s purposes. When developing an IT strategy, then, the role of IT in developing these purposes should be at the core of the strategy. 2.

clear,

comprehensive

strategy,

carefully

considered

and

implemented, will enable an organisation to achieve its aims in a pragmatic and efficient way, and at minimum risk. For maximum ongoing benefit, this IT strategy should be reviewed as and when the organisation’s business plan is reexamined. Strategic planning for IT should be an intrinsic part of that plan, supporting the organisation’s aims rather than driving it in new – and possibly inappropriate – directions. 3 Defining objectives Clearly, the strategy should aim to add value to the organisation’s functioning and service delivery, and so should relate closely to that organisation’s wider objectives. Particular aims may concern internal administration – improved management of membership information via a computerised database, for example, or financial management or an intranet for staff information – as well as the external face of the organisation. Wider possibilities include the distribution of information, support groups run via email, chat rooms or even an email counseling service.

4 Once the broader purposes of IT use have been agreed, these should be refined to produce a mix of short, medium and long-term goals. Short-term goals can be particularly important as they may provide the impetus to maintain commitment to the IT plan. An example of a short-term objective may be a promise to distribute all board papers via email within the next six months; a longer-term objective (over, say, two years) may be to hold virtual board meetings via the Internet. 15 Above all, the strategy should be realistic. All objectives should be achievable and capable of being measured against predetermined targets. The SMART model, of gains that are Specific, Measurable, Achievable, Realistic, and with a specified Timescale, can be invaluable here. 26 Political factors, such as changes in government policy system â&#x20AC;&#x201C; the Data Protection Act 1998 is just one example â&#x20AC;&#x201C; will have an impact on an organisationâ&#x20AC;&#x2122;s IT or on its reporting to regulators by electronic means. An integral part of IT strategy will therefore, be to ensure its use remains within the law. 37 The increasing ubiquity of IT in the home is opening the door to using the Internet for community work and volunteering. Any opportunities for more flexible working arrangements and home working should be considered as part of an IT strategy, supported by a clear policy for volunteers and employees.

8 Social factors may influence the running of an IT system. Certain

types of not-for-profit organisations will need to gain access to websites that may be deemed sensitive by others, for gaining research and following current trends in their chosen field. 9 Managing an IT strategy When developing the strategy, board members and senior management need to consider internal management issues, such as the following: • What IT in the organisation is actually used for – for example, in grant-making systems or for the provision of information to stakeholders; 1• The results IT in the organisation can bring – for example, the timely delivery of care or efficient processing of donations; and 2• The processes needed to keep things up and running – for example, IT staff recruitment or procurement of hardware/software. 10 The financial resourcing of IT equipment and the training of staff and users are crucial elements in any IT strategy. The full possibilities of an IT system will not be realised unless the staff are trained to use the equipment effectively, so training is essential.

11 To get a complete picture of the system’s success, it is necessary to measure hard (quantitative) and soft (qualitative) performance measures. The ultimate test, of course, is the degree to which IT is helping the organisation to meet its objectives. Both quantitative and qualitative measures, applied correctly, are valuable ways of getting a picture of present success and/or failure, and can aid future long-term planning. Assuming the purpose in having an strategy on the use of IT is to define exactly what it is the organisation is trying to achieve from it, that strategy should include provision for ‘feed forward’ – i.e. processes aimed at predicting IT needs and activities (budgeting, planning and forecasting) – and for ‘feed back’, e.g. IT user satisfaction surveys or measures of performance against service level agreements. 12 Risk management Having first identified the potential rewards, Trustees should ensure that IT managers should highlight and manage the potential risks that apply. Risk can either be ‘perceived’ or ‘actual’ and it is important to differentiate between the two. An individual’s experience is far more likely to reflect perceived risk than actual risk. This is partly because people rarely have access to sufficient statistical information to enable them to make a meaningful assessment of the ‘actual’ risk involved. Where empirical evidence to assess actual risk is available, it makes sense to incorporate it into a risk management policy. RISK ASSUMPTION MONITOR

INVEST

High

IGNORE

COST

Severity

Low Low

High Likelihood

A TOOL OF GOVERNANCE This section aims to highlight the benefits of IT systems when used as a tool of governance. The positive use of IT can facilitate increased and speedier dialogue between Trustees, staff, members and other stakeholders. Intranet An intranet is an organizationâ&#x20AC;&#x2122;s internal equivalent to the worldwide web, and the same software and technology used in developing a website may be used to develop an intranet. As intranets are designed for internal use they provide an ideal opportunity for increased communication across departments, separate office locations, branches, and Trustees. An intranet may be used to improve access to operational and performance-related material, such as management reports and budgets. Internal communications could be posted onto the intranet, reducing the use of paper and promoting a more efficient use of resources. Having a copy of allimportant organizational procedures on the intranet enables staff, volunteers and Trustees to have access to essential information whenever they require it. The

following are just some of the more likely documents that could be made available for download on the intranet: 1• Health and safety policy 2• Grievance procedures 3• Organizational/personnel charts 4• Equal opportunities statement/anti discriminatory policies 5• Codes of practice for volunteers 6• Staff handbook 7• Internal news 8• Internal recruitment 9• Expense claim forms/time sheets/requisition forms 10• Budgets/performance targets 11• Guidelines covering the use of IT Data storage and retention An integral part of an IT strategy is the storing of essential data and/or programmes. Ensuring that regular backup copies are kept offsite will help to reduce the risk of materials being destroyed. Organizations might want to consider the use of IT systems to facilitate the retention of official and regulatory records, which could then be maintained in a suitable format – for example, a WORM (write once read many) Electronic banking Electronic banking, be it over the internet or via the telephone, offers Trustees access to financial information at any time. It allows access to statements, and the power to make payments and transfer funds, as would traditional forms of banking. An added benefit, however, is that it also

enables the organisation to take payments such as credit card subscriptions or donations: it will not necessarily have to use internet banking to receive electronic payments, but the payee will need access. Electronic banking might be of additional use to those organisations that operate a branch system. It enables individual branches to have their own accounts, whilst still allowing Trustees to access information about, and to exercise overall control over, each branchâ&#x20AC;&#x2122;s financial activities.

GOVERNANCE OF IT IT can provide many benefits for the not-for-profit sector if considered and monitored management systems are in place. Governance of IT systems applies not only to internal procedures, but affects the impact the organisation might wish to make upon the wider community. This chapter will look at possible systems for monitoring IT use and performance, and will highlight some of the legal considerations for voluntary organisations. Measurement of IT performance IT governance systems, once in place, should be audited regularly to ensure compliance and to ensure that the balance between risk and reward is being properly managed. The auditor should be independent â&#x20AC;&#x201C; where possible a third party. It is recommended that some elements of this checking be carried out at least once a year, with particular areas scrutinized more frequently if major changes occur to the organisation, its IT or the way IT is managed.

IT systems can also be monitored against external measures such as norms, benchmarks or quality standards. A set of measures can be developed to monitor system delivery – for example, the number of website ‘hits’, the number of networked users, or the number of identified faults. If the system is outsourced, a set of performance criteria should be agreed with the service provider (see below). Such measures provide reassurance that the best use and best practice principles are reflected and incorporated. Working with an established system can also save development time and cost. There are a number of general standards in organisational governance and management that apply to all organisations, including the not-for-profit sector. Investors in People, for example, may be applicable to IT systems. There are also standards that have been developed exclusively for the not-for-profit sector, such as PQASSO (Practical Quality Assurance System for Small Organisations). The following external standards are either specific to IT or contain a dedicated IT element: • The ISO 9000 Family of Standards is a quality management system, which aims to enable organisations to demonstrate their commitment to customer satisfaction by preventing problems in the products or services they produce, at all stages from design to delivery. 8 • TickIT is a quality standard that applies whenever software development is carried out and the software is incorporated in the delivered product or service of the organisation applying for certification. It is a mandatory requirement of ISO 9001 and ISO 9002 certification for software development functions

BS 7799: 1999 is a quality standard on information security management from the British Standards Institute. It includes the main standard and drawing up a specification for IT security.10 â&#x20AC;˘ BS 15000 is aimed at both providers of IT management services and organizations that have outsourced IT provision. The standard provides a set of interrelated management processes and is intended to form the basis of an audit of the managed service. It also covers relationship management.

Once the relevant measures have been chosen, performance can be monitored internally or externally. Ideally, performance measures should be incorporated into a regular management cycle and handled internally. Many of the standards detailed above include a system of self-assessment, which can be combined with auditing by an external third party where appropriate. The combination of internal and external assessment offers the opportunity to develop skills within the organization, at the same time as learning from others. Managing service providers When external agencies are involved in managing, implementing or monitoring IT, it is essential that relationships are clear. A Service Level Agreement is an agreement between two parties that defines the responsibilities of each and the level of service both can expect. A very useful tool in the management of relationships between the IT provider and users, an SLA can help both parties to improve the level of service. A Key Performance Measurement (KPM), meanwhile, is a hard, quantitative measure of service quality. It is not a measure of the performance of any one individual â&#x20AC;&#x201C; rather, it focuses on measuring the delivery of the service as the customer experiences it.

For example, an SLA may read, “The supplier will arrange for support calls to be resolved within the agreed timescales’, whereas the KPM might state that, ‘95% of calls will be resolved within 48 hours’ but would only apply provided a given workload (1500 calls per month, for example) is not exceeded. Legal issues Although the Internet is often referred to as being unregulated, there are legal requirements that relate to an organization’s use of IT. All organizations should act within the law in the countries in which they operate. Existing law (for example, on copyright and consumer issues) relates as much to IT as it does to more traditional business concerns, and checks on legal compliance should automatically include IT. The conclusion of this guide aims to give an overview of the issues that should be considered when using IT systems within not-for-profit organizations. The extent to which IT solutions are adopted, and the manner in which they are governed and controlled, will be dependent upon the culture and affluence of the organization and the nature of its services. Organizations that are not in a position to implement a comprehensive system of IT governance should focus on priority areas, in terms of both risk and opportunity. Controls in some areas are better than no controls at all. The setting of an IT strategy is important in enabling an organization to achieve the objectives that it sets. Consideration should be given to the connection between the IT strategy and the wider organizational strategy. A clearly developed strategy will have a positive impact on the delivery of the organization’s work and will reduce risk Monitoring the impact of IT is key to ensuring value for money and the meeting of objectives, as well as laying the

foundations for future developments. Regular monitoring and evaluation will provide a strong base for future IT developments. In the secondary data, data collected through various websites, publication of the central, state and published data are available, various publications of foreign governments or of international bodies and their subsidiary organizations, technical and trade journals and etc. In banking sectors that the research of this report find, the data storing and managing by efficiently and effectively to all functions, provide information regarding production and inventory, provide information quickly as and when required thatâ&#x20AC;&#x2122;s make by information technology.

Analysis & Interpretation

According to data the secondary data, I collected data through various publication of the central, state and published data are available, various publications of foreign governments or of international bodies and their subsidiary organizations, technical and trade journals and etc. In banking sectors that the research of this report find, the data storing and managing by efficiently and effectively to all functions, provide information regarding production and

inventory, provide information quickly as and when required thatâ&#x20AC;&#x2122;s make by information technology. And this report, we take suggestion that today life make easy by technology and provide luxuries life style to human and one of them is banking sector, this sector day to day working process is having complicated and customers are not understood that problems of banks so I want to suggest to technology developers than they developed new software or technology that time understand of nation peoples needs or requirements in that sector, because banking sector today use many innovation like ATM card, Credit card, smart card and etc. According to Australian bank survey suggestion, on the use of technology in the delivery of banking services is becoming increasingly prevalent as it is being employed to reduce costs and eliminate uncertainties. This research investigates the role that technology plays in Australian banking and its impact on the delivery of perceived service quality. A sample of 440 electronic banking customers was taken and 300 useable questionnaires were analyzed. Using the Hemmasi et al. importance-performance grid, results indicated that consumers have perceptual problems with some aspects of electronic banking. Some strategic implications are discussed. â&#x20AC;&#x201C; Consumer response to merchandise shortage in the online supply chain outlet is an interesting and important issue for e-vendors because of the high risk associated with the online environment. The purpose of this study is to examine the effects of the online environment on consumer out-of-stock behaviors. In addition, it aims to examine the relative impact of non-web site situational factors on consumer out-of-stock behavior. Companies implement

TQM initiatives because they seem to be a â&#x20AC;&#x153;fast trackâ&#x20AC;? to improved performance and profitability. TQM is also customer driven because as more and more firms receive accreditation they prefer to deal only with similarly accredited companies.

Bibliography 69

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