The Impact Of Modern Technology On Banking

Introduction

The evolution of the Internet and other forms of information technology are changing dramatically the way the brokerage industry does business (Jud et al. 2002). Interestingly? online technology influenced primarily the banking industry? which enjoyed the lion share of the stake of this windfall. Lots of studies exemplified this fact. This paper discusses how technology effects banking in relation with the stock market to ATMS to personal banking.

Discussion

Modern Banks are important users of technologies such as Internet banking, electronic payments technologies, and information exchanges that make use of numerical and economic models to generate and value new securities, estimate return distributions, and construct portfolio decisions derived from fiscal data. Hutzschenreuter (2001) shows how the structure of the bank is changed fundamentally. This development is affected by a variety of trends such as customer loyalty is dropping; banking is becoming a commodity and as a whole technology dominates the business. With these trends? the bank industry is evidencing typical features of the financial sector whose structure is involved in a process of change. In addition? completely new forms of financial services are coming into being.

Wilhelm (1999) offers both historical and economic perspective on technological innovations in investment banking along with the discussion of advances of information technology particularly Internet and its impact on financial markets. Colvin (2000) unfolds some striking facts of the "Net"-corporate how they hide profits with the accounting math. If new-companies could apply the same common sense to their accounting that old-economy firms do? they would see some surprisingly healthy profits. Fact is many of these companies reporting losses actually make money in lots of cases. This study? in fact? shows the paramount importance of Internet business (E-commerce) having emphasized the opportunity of profit margin. Kurz et al. (2003) shows the dynamics of diverse rational beliefs is the primary propagation mechanism of volatility in asset market. The model also predicts and explains the presence of stochastic volatility in equilibrium asset prices and returns. Coward (1997) puts forward that the growth of online trading has exploded in the past few years with a surge in the number of start-ups. As business has grown online? so have the number of traditional brokers who have jumped on the bandwagon.

As a valuable and controversial tool in our economy today? technology can only help improve our lives when used properly. With technology at the heart of most successful businesses? and greatly contributing to our nation's gross domestic product? we cannot ignore the power and advantages it has on the United States economy. Banking is known worldwide for predictable business practices and measurable evolution. However? banking as any other type of business relies on technology to be successful. Over the past few years? various studies have shown that there is a correlation between banking sector productivity and technology. At the same time? the industry is facing sweeping and unprecedented change. The lines between financial service segments are blurring? creating new opportunities while exposing institutions to new ...