Impacts of Technology on Banking System
The old habits of banks making a profit and making money are drastically changing due to the emerging technologies. The entire industry is facing unprecedented changes due to never-ending innovations from financial technology companies. A lot of pressure from ambitious startups in the banking scene as well as industry-leading operators is mounting to the bank executives to focus on strategic development that would shield their sectors from these emerging fintech groups. Information communication has been a great blessing to the banking sector but also it has paved the way to threats from other institutions and the consumers (Carr, 2008).
Technology is influencing the degree of contestability and competition in banking. The advancement in technology has led to the reduction of the bank’s superiority in the information. Secondly, there is an increase in transparency on financial products and services besides customers show the willingness to unbundle the demand for financial products and services. Technology also has a huge impact on the economy of scale by forcing the bank to lower its cost (George & Kumar, 2014). These trends have enforced the bank to secure the competitive imperative and the optional business structure of the economy of scale. Other banks have included confederation and the joint venture of financial firms.fintech has also influenced the economic delivery by introducing a wide range of alternative delivery mechanism, machines such as ATM has reduced the dependence of branch network. The technology has enabled the banks to change their delivery strategy and widen their range of delivery options. The innovative technology includes Mobile Money, Fund Transfer, and Credit Card Online.
Fintech has come with its advantage but it also has its negative effects: hackers gain unauthorized access to the computer network causing massive damage besides being protected by Information Technology Act 2000 which does not make hacking an offense. Apart from that crackers use the information gained to cause disruptions for political or personal motives. Crackers and hackers use various techniqueshttps://essaygroom.com/banking/ like phasing, internet provider (IP) address Domain Name Server (DNS), and spoofing to gain unauthorized access to the user’s computer. They later use the stolen information to make huge profits from the client’s accounts. The automation technology has led to the loss of jobs for many members in the banking sector. Lastly, since the technologies require fewer time clients became careless leading to loss of personal details which in turn can compromise many debit cards (Shen et al., 2010).
References
Carr, M. (2008). Adoption and diffusion of internet banking. Advances in Banking Technology and Management, 33-52. https://doi.org/10.4018/978-1-59904-675-4.ch003
George, A., & Kumar, G. S. (2014). Impact of service quality dimensions in internet banking on customer satisfaction. DECISION, 41(1), 73-85. https://doi.org/10.1007/s40622-014-0028-2
Shen, Y., Huang, C., Chu, C., & Hsu, C. (2010). A benefit-cost perspective of the consumer adoption of the mobile banking system. Behaviour & Information Technology, 29(5), 497-511. https://doi.org/10.1080/01449290903490658