SAVITRIBAI PHULE PUNE UNIVERSITY

PROJECT REPORT ON
ROLE OF INFORMATION TECHNOLOGY IN BANKING SECTOR

Submitted
In partial fulfillment of the requirements
For the award of the degree of
Bachelor of Business Administration
By
RACHANA MANGESH THORAT

PROJECT GUIDE
DR. APARNA DESHMUKH
BACHELOR OF BUSINESS ADMINISTRATION
SEMESTER IV
(2021-2022)
Suryadatta Education Foundation’s

SURYADATTA COLLEGE OF MANAGEMENT INFORMATION

RESEARCH & TECHNOLOGY, BAVDHAN, PUNE- 411021
 SURYADATTA COLLEGE OF MANAGEMENT
INFORMATION RESEARCH AND TECHNOLOGY, PUNE-
411021
SAVITRIBAI PHULE PUNE UNIVERSITY
BACHELOR OF BUSINESS ADMINISTRATION

DECLARATION

I RACHANA MANGESH THORAT student of BBA-Semester IV

(2021-2022) hereby declare that I have completed this project on
( ROLE OF INFORMATION TECHNOLOGY IN BANKING
SECTOR )
The information submitted is true and original to the best of my
knowledge.

Date Name of Student

RACHANA MANGESH THORAT
 SAVITRIBAI PHULE PUNE UNIVERSITY
BACHELOR OF BUSINESS ADMINISTRATION

Acknowledgement

I would like to express my gratitude towards my teacher Dr. Aparna

Deshmukh for contributing their valuable time and efforts in helping me out
with this project. Her suggestion and feedback have helped me a lot in
improving the quality of the project.

She has been a constant source of encouragement and inspiration in helping

out this study. I am grateful to all respective people who have guided me
throughout the project.

I would even like to express my gratitude towards the principal Dr. Abbas
Lokhandwala for making us available all the amenities required and also the
program coordinator Prof. Swati Inamdar for guiding us throughout the
entire program
 INDEX

SR NO CONTENT PAGE NO

1 INTODUCTION 6

2 OBJECTIVES 7

3 BANKING SECTOR IN INDIA 8-9

4 USE OF INFORMATION 10-11

TECHNOLOGY IN BANKS

5 ARTIFICIAL INTELLIGENCE 12

6 REASONS BANKS USE AI 13-14

7 ROBOTIC PROCESS AUTOMATION 15-16

8 CORES SOFTWARES USED IN 17-20

BANKING

9 CLOUD COMPUTING 21-22

10 BENEFITS OF DIGITAL BANK 23

11 CONCLUSION AND REFERENCE 24

12 ANNEXURE 25-30
 CHAPTER 1 : INTRODUCTION

Information technology in banking sector refers to the use of sophisticated

information and communication technologies together with computer science to
enable banks to offer better services to its customers in a secure, reliable and
affordable manner and sustain competitive advantage over other banks.

Banking environment has become highly competitive today. To be able to survive

and grow in the changing market environment banks are going for the latest
technologies, which is being perceived as an ‘enabling resource’ that can help in
developing learner and more flexible structure that can respond quickly to the
dynamics of a fast changing market scenario. It is also viewed as an instrument of
cost reduction and effective communication with people and institutions associated
with the banking business.

The Software Packages for Banking Applications in India had their beginnings in
the middle of 80s, when the Banks started computerizing the branches in a limited
manner. The early 90s saw the plummeting hardware prices and advent of cheap
and inexpensive but high powered PC’s and Services and banks went in for what
was called Total Branch Automation (TBA) packages. The middle and late 90s
witnessed the tornado of financial reforms, deregulation globalization etc. coupled
with rapid revolution in communication technologies and evolution of novel
concept of convergence of communication technologies, like internet, mobile/cell
phones etc. Technology has continuously played an important role in the working
of banking institutions and the services provided by them. The banking system is
slowly shifting from the Traditional Banking towards relationship banking. 

Technology has opened new products and services, new market and efficient
delivery channels for banking industry. IT also provides the framework for
banking industry to meet challenges in the present competitive environment. IT
enables to cut the cost of global fund transfer
 CHAPTER 2: OBJECTIVES

 To understand the banking system in India

 To learn about the information technology used in banking sector

 To understand artificial intelligence

 To know various core software used in banks

 To get knowledge of cloud computing

 To understand the future of digital banks

 CHAPTER 3: BANKING SECTOR IN INDIA

The Indian banking system consists of 12 public sector banks, 22 private sector
banks, 46 foreign banks, 56 regional rural banks, 1485 urban cooperative banks
and 96,000 rural cooperative banks in addition to cooperative credit institutions As
of September 2021, the total number of ATMs in India reached 213,145 out of
which 47.5% are in rural and semi urban areas. The banking sector is the lifeline of
any modern economy. It is one of the important financial pillars of the financial
sector, which plays a vital role in the functioning of an economy. It is very
important for economic development of a country that its financing requirements
of trade, industry and agriculture are met with higher degree of commitment and
responsibility. Thus, the development of a country is integrally linked with the
development of banking. In a modern economy, banks are to be considered not as
dealers in money but as the leaders of development.

They play an important role in the mobilization of deposits and disbursement of

credit to various sectors of the economy. The banking system reflects the economic
health of the country. The strength of an economy depends on the strength and
efficiency of the financial system, which in turn depends on a sound and solvent
banking system. A sound banking system efficiently mobilized savings in
productive sectors and a solvent banking system ensures that the bank is capable of
meeting its obligation to the depositors.

In India, banks are playing a crucial role in socio-economic progress of the

country after independence. The banking sector is dominant in India as it accounts
for more than half the assets of the financial sector. Indian banks have been going
through a fascinating phase through rapid changes brought about by financial
sector reforms, which are being implemented in a phased manner. The current
process of transformation should be viewed as an opportunity to convert Indian
banking into a sound, strong and vibrant system capable of playing its role
efficiently and effectively on their own without imposing any burden on
government. After the liberalization of the Indian economy, the Government has
announced a number of reform measures on the basis of the recommendation of the
Narasimhan Committee to make the banking sector economically viable and
competitively strong.

Indian banking system consists of “nonscheduled banks” and “scheduled banks”.

Nonscheduled banks refer to those that are not included in the second schedule of
the Banking Regulation Act of 1965 and thus do not satisfy the conditions laid
down by that schedule. Schedule banks refer to those that are included in the
Second Schedule of Banking Regulation Act of 1965 and thus satisfy the following
conditions: a bank must (1) have paid up capital and reserve of not less than Rs. 5
lakh and (2) satisfy the Reserve Bank of India (RBI) that its affairs are not
conducted in a manner detrimental to the interest of its deposits.

A scheduled bank consists of “scheduled commercial banks” and scheduled

cooperative banks. The former are further divided into four categories: (1) public
sector banks (that are further classified as “Nationalized Banks and the “State Bank
of India (SBI) banks”); (2) private sector banks (that are further classified as “Old
Private Sector Banks” and “New Private Sector Banks” that emerged after 1991);
(3) foreign banks in India, and (4) regional rural banks (that operate exclusively in
rural areas to provide credit and other facilities to small and marginal farmers,
These scheduled commercial banks except foreign banks are registered in India
under the Companies Act.
CHAPTER 4 : USE OF INFORMATION TECHNOLOGY IN
BANKING SECTOR

Banking industry is a backbone of Indian financial system and it is afflicted by

many challenging forces. One such force is revolution of information technology.
In today’s era, technology support is very important for the successful functioning
of the banking sector. Without IT and communication we cannot think about the
success of banking industry, it has enlarged the role of banking sector in Indian
economy. For creating an efficient banking system, which can respond adequately
to the needs of growing economy, technology has a key role to play.
In past 10 years, banks in India have invested heavily in the technology such as
Tele banking, mobile banking, net banking, ATMs, credit cards, debit cards,
electronic payment systems and data warehousing and data mining solutions, to
bring improvements in quality of customer services and the fast processing of
banking operation. Heavy investments in IT have been made by the banks in the
expectation of improvement in their performance. But important in the
performance depends upon, differences in the deployment, use and effectiveness of
IT.

The launch of United Payments Interface (UPI) and Bharat Interface for Money
(BHIM) by National Payments Corporation of India (NPCI) are significant steps
for innovation in the Payment Systems domain. UPI is a mobile interface where
people can make instant funds transfer between accounts in different banks on the
basis of virtual address without mentioning the bank account.(Rao,2002) Today
banks aim to provide fast, accurate and quality banking experience to their
customers. Today, the topmost agenda for all the banks in India is digitization.
According to the RBI Report in 2016-17 there are 2,22,475 Automated Teller
Machines (ATMs) and 25,29,141 Point of Sale devices (POS). Implementation of
electronic payment system such as NEFT (National Electronic Fund Transfer),
ECS (Electronic Clearing Service), RTGS (Real Time Gross Settlement), Cheque
Truncation System, Mobile banking system, Debit cards, Credit Cards, Prepaid
cards have all gained wide acceptance in Indian banks.
 These are all remarkable landmarks in the digital revolution in the banking sector.
Online banking has changed the face of banking and brought about a noteworthy
transformation in the banking operations. National Electronic Funds Transfer
(NEFT) is the most commonly used electronic payment method for transferring
money from any bank branch to another bank in India. It operates in half hourly
batches. At present there are 23 settlements. Real Time Gross Settlement (RTGS)
is primarily used for high-value transactions which are based on ‘real time’. The
minimum amount to be remitted through RTGS is Rupees Two Lakhs. There is no
upper limit. Immediate Payment Service (IMPS) is an instant electronic funds
transfer facility offered by National Payments Corporation of India (NPCI) which
is available 24 × 7.
 CHAPTER 5 : ARTIFICIAL INTELLIGENCE

Artificial intelligence (AI) refers to the simulation of human intelligence in

machines that are programmed to think like humans and mimic their actions. The
term may also be applied to any machine that exhibits traits associated with a
human mind such as learning and problem-solving.

The ideal characteristic of artificial intelligence is its ability to rationalize and take
actions that have the best chance of achieving a specific goal. A subset of artificial
intelligence is machine learning, which refers to the concept that computer
programs can automatically learn from and adapt to new data without being
assisted by humans. Deep learning techniques enable this automatic learning
through the absorption of huge amounts of unstructured data such as text, images,
or video.

Artificial intelligence is based on the principle that human intelligence can be

defined in a way that a machine can easily mimic it and execute tasks, from the
most simple to those that are even more complex. The goals of artificial
intelligence include mimicking human cognitive activity. 

Artificial intelligence also has applications in the financial industry, where it is

used to detect and flag activity in banking and finance such as unusual debit card
usage and large account deposits—all of which help a bank's fraud department.
Applications for AI are also being used to help streamline and make trading
easier. This is done by making supply, demand, and pricing of securities easier to
estimate.

AI drives down the time taken to perform a task. It enables multi-tasking and eases
the workload for existing resources. AI enables the execution of hitherto complex
tasks without significant cost outlays. AI operates 24x7 without interruption or
breaks and has no downtime.
 CHAPTER 6 : REASONS BANK USE ARTIFICIAL
INTELLIGENCE

1. Reduction in operational costs and risk

The banking industry is largely digital in operation, but it is still riddled with
human-based processes that sometimes are paperwork-heavy. In these processes,
banks face significant operational cost and risk issues due to the potential for
human error. Robotic process automation (RPA), software that mimics rules-based
digital tasks performed by humans, is being applied in banking to eliminate much
of the time-intensive and error-prone work involved in entering customer data from
contracts, forms and other sources.

2. Improved customer experience

There's a reason people derided banking hours. Banks never seemed to be open
when you needed them most, such as later in the day or on holidays and weekends.
Call centers of yore were notorious for long wait times and operators, when finally
engaged, often couldn't resolve the customer's issue. AI technologies are changing
that. Chatbots on call.  One of the big benefits of AI in banking is the use of
conversational assistants or chatbots. A chatbot, unlike an employee, is available
24/7, and customers have become increasingly comfortable using this software
program to answer questions and handle many standard banking tasks that
previously involved person-to-person interaction.

3. Improved fraud detection and regulatory compliance

Fraud detection. Fraud detection is an area where machines are "genuinely

superior to people," Bennett said."They can crunch vast amounts of numbers,
applying different algorithms. They don't make mistakes, unless they're badly
programmed," she said. Humans have a habit of making mistakes, especially with
repetitive tasks." Banking regulatory compliance has significant cost and even
higher liability if not followed. As a result, banks are using smart, AI virtual
assistants to monitor transactions, keep an eye on customer behaviors, and audit
and log information to various compliance and regulatory systems.

Big-data-enhanced fraud prevention has already made a significant impact on

credit card processes, as noted above, and in areas such as loan underwriting, as
discussed below. By looking at customer behaviors and patterns instead of specific
rules, AI-based systems help banks practice proactive regulatory compliance, while
minimizing overall risk.

4. Improved loan and credit decisioning

Similarly, banks are using AI-based systems to help make more informed, safer
and profitable loan and credit decisions. Currently, many banks are still too
confined to the use of credit scores, credit history, customer references and
banking transactions to determine whether or not an individual or company is
creditworthy.

5. Automation of the investment process

Finally, some banks are delving deeper into the world of AI by using their smart
systems to help make investment decisions and support their investment banking
research. In addition, many financial services companies are offering robo-
advisers to help their customers with portfolio management. Through
personalization, chatbots and customer-specific models, these robo-advisers can
provide high-quality guidance on investment decisions and be available whenever
the customer needs their assistance.
 CHAPTER 7 : ROBOTIC PROCESS AUTOMATION

Robotic Process Automation (RPA), a technology that uses software robots

to automate repetitive tasks and manual processes—enhancing the work of your
employees by interacting with websites, business and desktop applications,
databases and people to execute repetitive and often mundane work RPA has been
significantly adopted in this sector, for making time-consuming banking operations
more organized and automated. According to reports, RPA in the banking sector
is expected to reach $1.12 billion by 2025.

Robotic process automation has also dramatically streamlined a wide variety of

back-office processes that once bogged down bank workers. By shifting much of
these tedious, manual tasks from human to machine, banks have been able to
significantly reduce the need for human involvement, which has had a direct
impact on everything from performance and efficiency levels to staffing issues and
expenses.

Bank employee’s deal with voluminous data from customers and manual processes
are prone to have errors. Banks around the world are considering RPA to minimize
the manual processing of this huge data to avoid errors. Processing data manually
is also a time-consuming task. Simple validation of customer information from 2
systems can take seconds instead of minutes with bots. Introducing bots for such
manual processes can reduce processing costs by 30% to 70%. Several processes in
the banks can be automated to free up the manpower to work on more critical
tasks.

RPA has a plethora of different applications in the BFSI segment to free up the
manpower to work on more critical tasks. Some of these processes include:

 Customer Service
Banks deal with multiple queries every day ranging from account
information to application status to balance information. It becomes difficult
for banks to respond to queries with a low turnaround time.
RPA can automate such rule-based processes to respond to queries in real-
time and reduce turnaround time to seconds, freeing up human resources for
more critical tasks
 Compliance
Banking being the center of the economy is closely governed and needs to
adhere to many compliances. According to an Accenture survey in 2016,
73% of respondents believed that RPA can be a key enabler in compliance.
RPA increases productivity with 24/7 availability and the highest accuracy
improving the quality of the compliance process.
 Accounts Payable
Accounts payable is a simple but monotonous process in the banking
system. It requires extracting vendor information, validating it, and then
processing the payment. This does not require any intelligence making it the
perfect case for RPA.
 Credit Card Processing
Traditional credit card application processing used to take weeks to validate
the customer information and approve credit cards. The long waiting period
was dissatisfaction to customers and cost to banks. However, with the help
of RPA, banks now can process the application within hours.
 Mortgage Loan
In the United States, it takes approx. 50 to 53 days to process a mortgage
loan. Process of approving a mortgage loan goes through various checks like
credit checks, repayment history, employment verification, and inspection.
A minor error can slow down the process. As the process is based on a
specific set of rules and checks, RPA can accelerate the process and clear the
bottleneck to reduce the processing time to minutes from days.
 Fraud Detection
With the introduction of digital systems, one of the major concerns of banks
is fraud. It is really difficult for banks to track all the transactions to flag the
possible fraud transaction. Whereas RPA can track the transactions and raise
the flag for possible fraud transaction patterns in real-time reducing the
delay in response. In certain cases, RPA can prevent fraud by blocking
accounts and stopping transactions.
 KYC Process
Know Your Customer (KYC) is a mandatory process for banks for every
customer. This process includes 500 to 1000+ FTEs to perform necessary
checks on the customers. According to Thomson Reuters, banks spend more
than $384 million per year on KYC process compliance.
Considering the cost of the manual process, banks have started using RPA to
validate customer data. With increased accuracy, banks no longer have to
worry about the FTEs and the process can be completed with minimal errors
and staff.
 CHAPTER 8 : CORE SOFTWARES USED

In India, there is mainly three core banking software used by public sector banks.
They are 1) Flexcube 2) BaNCS 3) Finacle

1) Flexcube -
This software designed by Oracle. Flexcube software used in this public sector
bank Canara Bank

2) BaNCS -
This software designed by TCS. This software used by these banks.

Bank of Maharashtra
Central Bank of India
Indian Bank
State Bank of India

3) Finacle -
This software designed by Infosys. This software used by

Bank of Baroda
Bank of India
Punjab National Bank
Punjab and Sind Bank
Indian Overseas Bank
UCO Bank
Union Bank of India.
Banking sector is India is dependent on the following three banking software
platforms:

 Flexcube: Flexcube's banking architecture is trusted by various banks

because it offers:

1. Centralized data processing

2. Replacement and changing of products based on marketing trends
3. Globalized services
4. Machine learning technology for generating insights
5. Standardizing the system of secured payments
6. Component based banking architecture
Used by: HDFC Bank, Yes Bank, Canara Bank, Syndicate Bank and etc.

 Finacle: A powerful banking software supporting complex services like:

1. Application management, development and maintenance

2. Customer-centric testing services
3. Data migration with secured engineering services
4. Iterative services for tuning application services
5. Corrective maintenance & incident management
Used by: Bank of India, Andhra Bank, ICICI Bank, Vijaya Bank, United Bank of
India, Punjab National Bank, DENA Bank and more.

 BaNCS: Another preferred banking solution because:

1. Centralized multi-currency and multi-entity payments

2. Consolidated treasury management platform
3. Proactive AML risk mitigation
4. FATCA compliance
5. Trade matching with registry functions and collateral management
6. OPEX optimization for cloud scalability
 CHAPTER 9 : CLOUD COMPUTING

Cloud computing is a type of on-demand service that provides access to shared

resources, applications, or storage over the Internet. It enables financial institutions
to store and process data in remote servers instead of local systems. Cloud
computing offers a number of benefits for banks such as increased security, faster
processing speeds, and lower costs. While the financial industry has been slow to
adopt cloud technology due to concerns about giving up their legacy on-premises
applications, regulatory compliance and data privacy issues, this position is starting
to change as more financial institutions realize how technology can help them meet
their business objectives while satisfying customers’ needs at the same time.

With banks and financial institutions taking time to check every aspect of cloud
from the security and privacy angle, cloud computing in banking is moving at an
overly cautious speed.
However, if there is one thing that COVID-19 has taught us, it is the fact that
consumers need services on their fingertips without visiting a brick and mortar
shop – whether it is shopping for groceries online or managing their end-to-end
banking needs. In light of this, banks, however slow they are in adopting IT cloud
infrastructure and cloud computing virtualization, know that their 2030 version
will be very different from what it looks now. And that they need to put strategies
in place today to prepare for their future-self. 

The following are some crucial advantages that come with using public clouds for
banking and financial services:

1.      Improved customer experience: Banks can provide a better customer

experience by offering anytime, anywhere access to banking services.

2.      Reduced costs: Banks can save money by moving their applications and

data to the cloud. The pay-as-you-go pricing model of public clouds makes it more
affordable for financial institutions to use these services.

3.      Faster processing speeds: Cloud platforms are designed for fast

performance and can handle large amounts of data quickly and easily. This allows
banks to improve their transaction processing speeds and reduce latency problems.
4.      Greater scalability: Cloud platforms can scale up or down as needed,
which gives financial institutions the flexibility they need to best serve their
customers.

5.      Enhanced security: The public cloud is a more secure environment than

most on-premises systems, and it offers multiple layers of protection against data
breaches and other attacks.

6.      Compliance with regulations: Banks can meet regulatory compliance

requirements by using cloud platforms that are compliant with financial industry
regulations

Challenges that Come With Cloud Computing in the Banking

Industry

While there are many benefits to using cloud technology in banking, the challenges
that come with cloud adoption may be the reason so many financial institutions are
lagging behind other industries. According to Forbes, a 2019 survey found that
only 18 percent of financial institutions had broadly deployed cloud services. The
following are some of the main issues that financial institutions face when moving
to the cloud:

 Data privacy and security: Banks need to ensure that their data is safe and
secure when it is stored in the cloud. They also need to make sure that their
systems conform to any applicable regulations governing data privacy.
 Regulatory compliance: Banks must comply with a variety of financial
industry regulations, many of which require specific procedures for handling
customer data. It can be difficult for banks to meet all of these requirements
when their systems are hosted in the cloud.
 Lack of control: Financial institutions may fear that they will lose some
degree of control over their systems when they move them to the cloud
 CHAPTER 10 : BENEFITS OF DIGITAL BANK

Digital banking aims to make life easier for the customers of a bank. Some of its
benefits are
 The convenience of banking from the comforts of home
 24*7 availability of access to banking functions
 Paperless banking
 Enables set up of automatic payments for regular utility bills
 Facilitates online payments for online shopping etc
 Extends banking services to remote areas
 Reduces the risk of counterfeit currency with digital fund transfers
 Strengthens privacy and security for customers

 Allows misplaced credit cards to reported and blocked instantly

 Restricts the circulation of black money

 Lowers the minting demands of currency
 CHAPTER 11 : CONCLUSION AND REFERNCE

CONCLUSION
The arrival of technology and the escalating use of technology has given the
banking industry a new platform. Connecting a customer anytime and anywhere to
their money and needs is a must have service that has become an unstoppable
necessity.  This worldwide communication is leading a new generation of strong
banking relationships. The banking world can achieve superior interactions with
their public base if they accommodate all  their customer needs.  They have a
unique challenge to keep their customer alliances and keeping up with the new
technologies, and competitive strategies that other banks also have to offer the
public. Conveniences of services plus outside locations like ATMS are crucial to
every banks success. Meeting all challenges including safety and security are
perfect examples of good banking strategies. In order for the financial institutions
to effectively grow they must embrace the new technologies and customize them to
suit their economic success and the public’s success. Online banking is certainly
here to stay. Online banking is a necessity for the bank's that we studied and others
in order for them to stay in business. As a tool of modern living and as a lifestyle
aid, it is absolutely indispensable. The fact is that many services that are now being
offered with online banking are almost impossible to do conveniently with regular
banking. 

As we venture into the future, the internet will undoubtedly continue to change the
banking industry. 

REFERENCE
https://www.economicsdiscussion.net/

https://www.investopedia.com/

https://www.financeinfo.com

https://en.wikipedia.org/

https://www.automationanywhere.com
ANNEXURE