IT and Finance

DBF II

Content

Introduction to IT

Introduction to Finance

Application of IT in Finance

Banking Sector

Insurance Sector

Investment Sector

Income Tax Sector

Advantages of IT

Limitations

Merits and demerits

References

Introduction

Information Technology

A branch of engineering that deals with computers and telecommunications equipment to store, retrieve, transmit and manipulate data

Use of computers and software to manage information. E.g. Storing, protecting, processing, transmitting and retrieving the information in a large organization

Contd..

Finance

The science that describes the management,

creation and study of money, banking, credit,

investments, assets and liabilities.

Finance can also be defined as “the science of

money management”

Need of IT in Finance

Applications of IT in Finance

Banking Sector

Advances in technology are allowing for delivery of banking products and

services more conveniently and effectively than ever before - thus creating

new bases of competition

Core banking

• Core Banking Solution (CBS) is networking of branches

• Enables customers to operate their accounts and avail

banking services from any branch of the Bank on CBS

network, regardless of where he maintains his account

Applications

Remote banking

• Remote terminals at the customer site connected to the respective branch through a modem, enabling the customer to make inquiries regarding his accounts on-line, without having to move from his office

Anytime banking- Anywhere banking

• Installation of ATMs

• Electronic fund transfer (EFT)

• Remittances

• Inquiry facilities

Applications

Telebanking

• A 24-hour service through which inquiries regarding balances and transactions in the account can be made over the phone

Debit/Credit Cards

• Debit card (also known as bank card or check card) is a plastic payment card that provides the cardholder electronic access to his or her bank account(s)

• May bear a stored value with which a payment is made

• Credit card is a credit facility that enables to buy things up to a pre-arranged limit, and pay for them at a later date

Applications

Insurance Sector

A. Life Insurance Application

Life Administration Module

Statistics and MIS claims

Archiving of historical data and imaging Systems

Applications

B. General Insurance Applications

Front Office System

Policy Management and underwriting system

Co-insurance

Reinsurance

Financial accounts and audit

Risk Management System

Applications

Investment Sector

Get real time stock quotes, Indian and Global market Indices

Manage and track Investment Portfolio

Get in-depth coverage of financial markets, economy and business

Track currencies and commodities

Buying and selling of shares

Applications

Income Tax Sector

Managing enrollment of new payees

Collection of taxes

Finding the defaulters

Applying new regulations

Applications

Personnel system

Payroll system

Performance Appraisals

Attendance and leave system

Applications

Office Services

Purchases

Inventory

Tours and Travels

Corporate Accounting System General Insurance

Advantages of IT in finance

Improved Decision Making

• Use of real time data

• Better understanding

• Cost reduction and process improvement

Competitive Advantage

• Doing things better than the competitors

• Charging less

Contd..

Survival

• Implementation by the firms to stay in business

Globalization

• Share information

• linguistic and geographic boundaries

• Brought the world closer together

Contd..

Cost effectiveness

• Streamlining businesses

• Increase in productivity

Time effectiveness

• Businesses to be open 24 x7 all over the globe

• Purchases became easier and more convenient

Limitations

Bugs

• A bug is an error, flaw, failure, or fault in a computer program or system

that causes it to produce an incorrect or unexpected result

• Most bugs arise from mistakes and errors made by people in

program’s source code

Frameworks and operating systems

• Compilers also produce bugs

Limitations

Computer Viruses

A computer virus is a malware program that replicates itself to affect the

system

Network Vulnerability

• Modification of message

• Denial of service

• Eavesdropping

Merits and demerits of IT

Globalization

Communication

Cost effectiveness

Bridging the cultural gap

Creation of new jobs

Unemployment

Lack of job security

Privacy

Dominant culture

Merits Demerits