TOP 10 Use of Computer in Banking |Uses of Computer in Banking

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Computer had a significant impact on the banking and financial services sector. The widespread usage of computers has made it easier for banks to manage their customers’ accounts, track transactions and keep records.

Banks have also been able to reduce operating costs by automating processes that were previously manual and paper-based. With the help of computers, banks can process loan application forms more quickly, with less risk of human error.

As well as speeding up loan processing, computerization helps reduce the cost of lending by eliminating the expense of keeping paper records and reducing staff time spent on record-keeping tasks.

Computerization also makes it easier for people to bank from home or when they travel; this helps drive up customer satisfaction and reduces operating costs at branch locations. Below is an overview of how computers are used in banking:

TOP 10 Uses of Computers in the Banking | What is the Use of Computer in Banking?

1. Electronic Banking

Online banking is a type of computer-based banking. Banking online allows customers to access their account information, execute transactions, and communicate with their bank using the internet.

Many banks provide online banking services to their customers, allowing anyone with internet access to bank from home or on the go. Online banking simplifies many banking tasks by allowing customers to view account information, transfer funds, and initiate other transactions from their computer or mobile device.

Although online banking has many advantages, it is important for customers to protect against cyber threats and other risks. Customers should use strong passwords, keep their computer virus-free, use two-step verification when available, and be careful about what information they share when using online banking.

2. Electronic Funds Transfer

Electronic funds transfer (EFT) is a computer-based money transfer. EFT refers to an automated process for sending and receiving money between accounts. This is often done through automated clearing house (ACH) networks.

ACH networks are networks of computers that process electronic transactions between financial institutions, such as when a customer uses a debit card to make a purchase. Types of EFT include automated clearing house (ACH) and direct deposit.

When banks provide EFT services to customers, they can use computers to request that a customer’s employer or other payer make a payment to the bank. The banks then credit the customers’ accounts with the amount of their payments. Banks also use computers to transfer money between accounts and to process payments to creditors.

3. Computerized Credit Analysis

Credit analysis is the process of determining whether to grant a customer a loan, at what interest rate, and what collateral to require. When banks were largely paper-and-manual-based, credit officers had to rely on their knowledge and experience to make these decisions.

With computerization, banks can use algorithms to help make credit decisions faster and more efficiently. Using computer algorithms, banks can collect and analyse large quantities of data about customers, their spending habits, and other financial information to make credit decisions more accurately and efficiently.

Credit scoring, a computerized method of credit analysis and one of the most common uses of computer technology in banking, is especially helpful for banks because it allows them to process larger quantities of loan applications more quickly and efficiently.

Credit scoring has made it easier for banks to lend money and has driven up customer satisfaction by making credit more readily available. Credit scoring has also reduced the cost of lending by making it easier for banks to make accurate credit decisions.

4. Computerized Customer Relationship Management

Customer relationship management (CRM) refers to a business strategy that aims to manage relationships with customers to increase profitability. CRM systems are often computerized and include features such as databases, customer service software, and automated sales and marketing tools.

CRM software allows banks to better understand their customers’ spending habits, identify potential opportunities for new business, and respond quickly to customer complaints. CRM can help banks drive up customer satisfaction by making it easier for customers to access their account information and receive customer service.

Customers who interact with computers to manage their accounts may find it easier to track their spending and resolve account issues. Banks may also benefit from CRM systems by being able to manage a larger number of customers with fewer employees.

5. Computerized Loan Processing

Computer-assisted loan processing (CALP) is a type of computer-based loan processing. CALP allows banks to automate several tasks in the loan processing process. For example, banks often use computers to calculate the monthly payments owed by customers who are applying for a loan, including how much money the bank should set aside for servicing the loan.

CALP allows banks to make better use of their employees, who were previously responsible for many of these tasks. CALP also helps banks make loans more quickly by reducing the time it takes to process loan applications.

Computerization has significantly reduced the cost and time of processing loans, which has helped increase customer satisfaction by making it easier to apply for and obtain a loan. CALP also helps banks capture larger quantities of customers by lowering the cost of lending.

6. Computerized Record Keeping

Computer-based record keeping enables banks to maintain accurate customer and transaction records, which is important for complying with government regulations and auditing practices.

Computer systems are especially helpful for recording information that would be time-consuming to write down and track manually, such as electronic payments and customer account balances.

Computerized record keeping also allows banks to record information in real time and store it indefinitely, which is helpful if banks need to refer back to the information later. Computerized record keeping has reduced costs and made it easier for banks to comply with government regulations.

7. Remote ID Screening

New screening techniques are helping banks use remote ID screening (RIS) to verify accounts, verify transfers, and approve transactions remotely. That means they no longer have to hold accounts in “secured” or “suspended” status while they wait for customers to verify their information by mail.

This accelerates the process of getting accounts up and running, which is particularly important for new businesses and startups that often don’t have copious amounts of cash on hand to fund their operations. RIS has been around for a while, but it’s becoming increasingly common as technology evolves.

8. Real-time Fraud Detection

Fraudsters are always looking for new opportunities to exploit security gaps and steal money. Banks know this, which is why they’re always on the lookout for new ways to detect and prevent fraud.

That’s where real-time fraud detection comes in. Real-time fraud detection tools are the blockchain equivalent of the human eye. They’re programmed to look for suspicious activity and flag it for human review.

If a transaction seems fishy or out of the ordinary, it will raise a flag and ask an employee to look into it further. This helps banks protect themselves from fraud without inconveniencing legitimate customers.

9. Automated Customer Service Agents

Have you ever tried to call your bank’s customer service department only to be placed on hold forever before finally getting disconnected? Automated customer service agents (ACSA) aim to fix all that and provide a better customer experience while they’re at it.

ACSA software is programmed to understand the most common customer questions and provide answers. It can also perform rudimentary checks on accounts and flag issues that require human intervention.

Some banks have even begun to integrate artificial intelligence (AI) into ACSA software, which means these programs have the ability to learn and get smarter over time. use of computer in banking, uses of Computer in Banking.

10. Blockchain-based Security

The blockchain is an unbreakable digital ledger that keeps track of every single transaction ever made. It’s considered impenetrable and tamper-proof, even by governments and hacker groups.

Banks have recently begun using the blockchain to secure and protect sensitive customer data. When you go online to log into your bank account, blockchain security will keep your information private and away from prying eyes.

Even if hackers somehow manage to breach the bank’s network, the information they steal will be useless. This is thanks to the code behind the blockchain. It’s such a powerful way of protecting data that even the U.S. government has started using it to secure vital information.

Conclusion: Use of Computer in Banking | Uses of Computer in Banking

Computerization has had a significant impact on the banking and financial services sector. The widespread usage of computers has made it easier for banks to manage their customers’ accounts, track transactions and keep records.