Information needs of Banking
The information requirements of banking business differ from other businesses on account of the following:
a. Banking converts money into information and vice-versa
Modern banking offers a large variety of services. But the most fundamental activity of any bank is ‘accepting deposits for purposes of lending’. By accepting deposits it converts money into a piece of information that is commonly known as ‘bank balance’. It converts this information into cash at ATMs and its branches.
b. Banking manipulates this information to produce services
The large pool of banking services is a result of various ways in which banks manipulate this information. For instance, banks offer payment services through cheques, drafts, electronic remittance, plastic cards, and mobile phones.
What actually moves is the information, and what actually changes is also the information. It comes as no surprise, therefore, that banks worldwide are the major users of information technology.
c. Like any service industry, banks produce in real time
All services are produced and consumed in real time. When you want to deposit money, the bank produces ‘the deposit accepting service’ at that point of time. If you want to remit money to another person, the bank produces the remittance service to you by taking your instructions, money and effects the remittance.
When you pay through a credit or debit card at a merchant establishment, card issuing and transaction capturing banks collaborate (with other service providers like Visa acting as facilitators) to produce the payment service at that point of time.
d. Banks are geographically dispersed
Before the advent of technology-enabled alternate delivery channels, banks needed to have ‘points of presence’ to produce services for their customers near their physical location. Each ‘point of presence’ has its specific information requirements.
This geographic dispersion, in turn, dictates the ‘control structures’ in a banking organisation. In India, these are commonly known as ‘regional’, ‘zonal’, ‘circle’, or ‘local head’ offices. These offices used to depend on the ‘points of presence’ or ‘branches’ under their control area for all the management information needs.
e. Banking services have rich variety
The variety of banking services springs from the variety of requirements of their customers. Banks cater to individuals regardless of their financial status or profession, small businesses, industries, and large diversified corporate groups. Each of these customer segments has different needs for banking services.
This variety has given rise to multiplicity of technology solutions in banking. No single software solution today can satisfy even the transaction processing
requirements of a large bank.
To produce this variety of banking services at dispersed geographical locations, and to gain the competitive advantage, banks have an equally complex business intelligence (BI) requirements.
Posted on May 4th, 2009 by Ashwin Dedhia
Filed under: Business Intelligence, Emerging Trends
Very informative. Added to my RSS, Thanks!