New Technology and Innovations in Bank Sector
You are gonna know new banking technology innovations in recent times. The world is rapidly marching to be turned into a cashless society because e-cash or digital cash has replaced the currency in circulation. E-cash can consist of stored value cards, network money, and e-wallets:
- Stored value cards store prepaid funds electronically on a chip in the card. Customers can download cash from their accounts into the card so that they can be used like cash.
- Network money, a recent technology of banking innovations, is also prepaid but stored on a computer hard disc and transferred between agents via a network such as the internet. Agents can only use that transferred amount for purchasing goods and services.
- The e-wallet, also known as digital wallet, is an electronic version of a credit or debit card. It’s one of the greatest new banking technology innovations. Money is transferred from an individual’s account to the e-wallet that can be used to purchase via the internet.
Payment Facilities: Central bank plays an important role in the settlement function. Banks use a central bank for the settlement of balances with the help of deposit kept with the central bank.
Taking deposit & making loans: In case of e-cash, the time and cost of collecting the information required to locate the optimal place for a deposit, to pool risk with other depositors or to locate the most suitable borrower will be high. In this case, the chance of banks being replaced is thin.
Liquidity position: The liquidity service offered by banks is more suitable than the e-cash system. The matching between the borrower and the lender is hard to find.
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Though the above features support the traditional banking system and show the drawbacks of e-banking, the growth of electronic delivery of core banking services has already given rise to the emergence of payment system independent of banks. Thus the new banking technology innovations have become more powerful.
Nowadays, established investment banks have developed a system to put initial public offering on-line which help a large pool of investors to access to the IPO information and thus erode the dominance of institutional investor in the market. Thus the presence of IT (Information Technology) has challenged the current favorable position of institutional investors.