Modern technology in contemporary banking – Introduction

post on January 5th, 2013
Posted in Banking

Modern technology in contemporary banking – Introduction

Looking from the perspective of any business, especially businesses in the era of the global financial crisis, management is inseparably associated, on the one hand, with risk and on the other with the question of the efficient use of expenditures incurred for the development of a viable profit. Hence, technology becomes an increasingly important feature in today’s businesses This is because the gradual complication of transactions carried out by businesses necessitates the establishment of technological systems and management procedures  that allows for both improvements in the efficiency and competitiveness of their investments, as well as protection  from some of the risks associated with carrying on business operations.



This situation also applies to today’s banks. Banks are acting in a world rich in the latest scientific and technological inventions, which they utilise to maintain contact with ever more demanding customers. In this environment, banks need new organisational models that are not only flexible enough to adapt quickly to changing socio-economic circumstances,   but are also able to predict emerging changes and new trends. The abovementioned rapid and progressive changes in the organizational environment of modern banks, as well as changes in the needs of markets, are encouraging banks to move away from inflexible organizational structures, and to seek innovative products that provide much better solutions within a competitive global environment.


This paper aims to show that specific businesses are seeking to capitalise on the rapid development of information technology, with an emphasis on banks. Banking is one of the areas in which Web services are evolving from simple marketing and information functions to the provision of a full range of services that had been traditionally offered in bank branches or in telephone banking. And in doing this, banks are having to meet customers’ expectations while also facing increasing competition. This development also shows that the modern banking system not only has to ensure efficiency, but that business security services are also necessary. Hence modern banks have to offer better deals that incorporate the modern and efficient management techniques of today’s banks, and to achieve this objective, banks are required to use the the latest technological tools.

Electronic banking and Internet banking services

post on November 18th, 2012
Posted in Banking

With reference to the work of A. Janc and G. Kotliński, J.H.Górka  states that that electronic banking is a holistic expression that refers to banks using as matter of operating practice, information technology and communication systems that are designed to facilitate and improve the execution of customers’ transactions, and to accelerate the circulation of non-monetary transactions. T. Porębska-Miąc states that the essence of electronic banking is the ability to use banking services irrespective of place and time.

W. Chmielarz asserts that electronic banking also strives to create a system based on financial settlements taking place without the need for paper media. This author adds that communication between a bank and its customers, and also within a bank, is based on the efficient relay of the data stored and processed on a bank’s database systems that support banking operations. By referring to the work of B. Pilawski, W. Chmielarz notes that among the characteristics differentiating traditional banking from electronic banking services are: the lack of the need for a physical presence by a customer in a bank; the feasibility of banking operations at any time; the reduction in the need for banking staff; and the automation of decisions in respect of customer requests, with the associated reduction in the possibilities to negotiate terms and provide relevant advice.  One of the most common forms of electronic banking is undoubtedly internet banking, which exploits the widely available access to the internet by consumers. 5

According to R. Kaszubski and P. Widawski, internet services offered by banks are evolving from simple marketing and information management functions, to the full range of services that have been traditionally provided in either a bank’s branches or by telephone banking. With current technology, it is possible for banks to create complex applications which are designed specifically for use by internet customers and these exceed the traditional range of services offered by banks. This includes, for example: the provision of personalised financial information; the transmission of messages and requests using short message services (SMS); the transmission to the customer of information by e-mail; online brokerage and investment product services; and the so-called “financial supermarket” (i.e. where a bank offers a wide range of financial services such as the online management of financial accounts and tax returns).

While discussing the issue of internet banking, it should be noted that T. Porębska-Miąc recognises internet banking as an integral part of electronic commerce (Ecommerce), which essentially means doing business through electronic media, especially via the internet. The author defines electronic commerce as the “processes and activities of buying and selling goods and services over the internet, computer networks and other digital technologies” From this definition, it would seem that online banking is a more specific form of electronic commerce, as it is, in essence, encapsulated by such a definition.

G.Szwajkowska, P.Kwaśniewski, K.Leżoń and F.Woźniczka divide the internet banking systems currently available on the market (also known as remote banking), into retail and commercial banking (i.e. internet banking can be classified according to the recipient of the service). They go on to say that internet banking can be understood as those services dedicated to private individuals, and small and medium enterprises (SMEs), that permit the execution of transactions in real time, and is characterised by access to banking services using standard software in the form of an internet browser, while using a secured transmission protocol (SSL). The authors note that the internet banking systems currently available on the market, allow customers to perform all of the basic operations in their accounts. These operations would include: browsing operations in their accounts; making monetary transfers; defining recipient lists and predefined transfers; repaying credit cards in an account; opening and closing fixed term deposits; managing savings accounts; and communicating with their bank, in the form of secured e-mails, in order to, for example, access bank statements, and apply for debit or credit cards. It is also possible with internet banking for customers to purchase units in investment funds and securities via the Internet, and even for customers to “top-up” the credit available on their mobile phone numbers and to receive access to information services.

Another type of internet banking is home banking, which is a service dedicated to private individuals and small organisations, requiring installation of dedicated software on their computer(s). This service often uses a telephone connection to the bank and does not require access to an internet network. However, home banking gradually lost its popularity because of the limited functionality of the system in offline mode and the costs of accessing and maintaining internet connectivity. As G. Szwajkowska, P. Kwaśniewski, K. Leżoń and F. Woźniczka note, home banking was popular in the initial period of the development of electronic banking. As discussed above, it involved a direct, telephonic communication between a bank and its customer and normally operated in offline mode. It enabled the customer to establish, for example, payment lists for approval on their computer. The connection between the customer and the bank was established in order to send to the bank previously prepared communications. Thus, the principal function of the system was to carry out transfers and to receive historical records of customer transactions on their account(s).

2The abovementioned authors, identify another type of internet banking services, namely corporate banking, which involves the provision of banking solutions for large entities and institutions. It is characterised by complex functionality, which enables the integration and automatic exchange of data with a customer’s accounting system, and at the same time provides multilevel access and an expanded system of accepting transactions. It requires installation of dedicated software on a customer’s computer for communication with the banking service. Corporate banking servicesinclude offerings by banks that take into account the specific requirements of enterprises and institutions, and may include: enabling multiple users to access relevant systems at the same time, with hierarchical validation of transactions; automation of accounting operations and exchange of data with an organisation’s systems; settlement of accounts with counterparties, including foreign companies operating in a the multi-branch structure; and the ability to use the services of more than one bank. Expanded functional systems distinguish this type of electronic banking from that which is dedicated to individual clients.

An example of an internet portal dedicated to the financial management of large organisations, is BusinessNet offered by the BPH bank. The portal is instantaneous and has unlimited access to banking products. It allows customers to manage their finances at anytime and from anywhere in the world. It provides contact with the bank through quick and also secure communication channels. Numerous functionalities allow customers online access to: current financial information; data about accounts and orders for electronic bank statements in PDF format; search and selection operations based on selected criteria; and access to current banking information, such as current exchange rates, deposit rates, economic information, etc. Saving time through the portal allows customers to make contact with the bank anywhere in the world and at anytime. It permits access to banking products and services within a single, modern channel access. It allows the automatic exchange of information between the portal and: Enterprise Resource Planning systems, financial accounting information, Human Resources and payroll systems, as well as exported and imported data. Electronic banking for organisations is also fully secure through a secure login to the system and the use of modern information technology. In this portal, users can determine the Internet Protocol address that has accessed the system and the time of use of BusinessNet by individual users. Information security and flexible permissions management functionalities (through the “user manager”) allows: control and management of user privileges; advanced approval of transfer patterns by mapping complex signature specimen cards; authorizations; orders for qualified certificates that identify the sender that undeniably proves their identity;  and both security and technical infrastructure.


Another form of modern banking is known conceptually as the virtual bank, which operates solely through the use of Internet technology. At the virtual bank, there is no physical movement of money or documents, and the client may in theory be a resident of any country. In this system, the most important part of the traditional bank (i.e. the operating room) ceases to exist as its functions are taken over by a computer network with electronic mail. Moreover, the literature sometimes includes within the scope of Internet banking services those services that are offered to holders of mobile phones with Wireless Application Protocol (WAP) which permits the use of the Internet .

Another form of modern internet banking is the so-called “virtual bank”, which operates solely on the basis of internet technology. In such a bank, there is no physical circulation of money or documentation, and the client may theoretically be an inhabitant of any continent. In such as system, the most important element of a traditional bank, namely the front office functions, ceases to exist as such functions are taken over by computer networks and e-mail. In addition, the literature on the scope of internet banking services sometimes includes services offered to mobile phone holders with wireless application protocol (WAP) functionality (i.e. internet-enabled mobile phones)

Modern technology in banking

post on October 22nd, 2012
Posted in Banking

The requirement, noted previously  for organisations to maintain greater flexibility in carrying out their business activities in the contemporary commercial environment, has undoubtedly influenced the banking sector in the field of financial services. Banks are also increasingly implementing new technology.

T. Obala says that banks are making increasing use of electronic media in the provision of banking services. The new opportunities that this has brought to banking has allowed for the expansion and modernisation of existing deposit and credit activities, and has seen the introduction of new financial products and services. The author notes that many projections indicate that electronic banking will become the primary basis for the future development of banking systems, as well as the main instrument of competition for banks. This is because the introduction of advanced electronic technology solutions into banking will increase the operating efficiency of banks, while, simultaneously reducing the cost of retail operations, and increasing the speed and certainty of banking transactions. As a result, there is likely to be a significant expansion in the circle of potential customers for banking services since increasingly sophisticated forms of banking are likely to be become more readily available to customers who have access to the latest computer and electronic technology. The introduction of new technologies is therefore likely to expand the business of banking as new customers are attracted to new services and easier access to banking services. Such changes should result in improvements to the scope and quality of lending services offered by banks and to their liquidity. Further, the use of electronic banking and automated credit lines by customers has the potential to accelerate changes to both the structure of banking deposits as well as to the business of lending by banks.

From traditional business to e-business

post on August 17th, 2012
Posted in Banking

D. Biniasz asserts that one of most visible changes in the world economy is the rapid development of electronic commerce, which has stimulated the development of a “new economy”, providing new opportunities for businesses while also presenting them with unique challenges. Among the opportunities, the author provides examples, such as the development of new business models, new offers of goods and services, as well as new sources of competitive advantage. Contemporary organisations exploit the internet, as it is one of the most important tools for communication in the modern commercial environment, especially in catering to the needs of modern consumers. They also frequently use the latest technology and provide appropriate information technology solutions when devising strategies for improving the effectiveness of business processes. As the abovementioned author correctly identifies, these new technologies, along with the global internet network and changes to consumer awareness, present an opportunity for the design and use of innovative business solutions.6

One such solution is e-business, which enables organisations to undertake new projects. According to D. Biniasz, e-business is defined in the literature as the organisation of essential business processes using the internet. These processes include, among others things, making contacts with other parties, advertising, as well as general activities carried out on the basis of arrangements that are possible through the development and use of the Internet. This is because web technology has enabled substantial improvements to be made in creating enterprises, as well as managing them. Some of the benefits of management systems based on internet technologies include: that they allow for lower transaction costs and greater choices in suppliers to be made; shortening of delivery times; allowing for the optimisation of price deals; and ensuring greater knowledge of suppliers in the market place. The author concludes that the information improvements provided by the internet, have facilitated organisational operations and assisted them in achieving higher profits. At the same time, the author states that some of the major objectives in organisations having an online presence are: the promotion of goods and services; providing data and information about those goods and services and of the organisation itself; and allowing customers to acquire goods and services online.

As noted previously, D. Biniasz asserts that organisations that are not prepared for the increased competition generated by the Internet may be marginalised in the global market for goods and services. Therefore, organisations need to put more emphasis on the “control” of competition by using modern technologies. P. Lech adds that the simplest approach for an organisation to achieve a competitive advantage is to have a business idea that is better than its competition, as well as having the tools to achieve this idea. The transitioning of an organisation from the traditional business sphere to a business sphere that uses electronic commerce methodologies, must be adapted to that organisation’s specific characteristics. It should also be noted that in implementing new technology, changes may be made to both computerised hardware and software systems, which can have an impact on employment. It is important that such changes are implemented appropriately so that they do not adversely affect an organisation’s employees, in order to prevent, for example, production bottlenecks or manufacturing defects.

2. Management of organisations and its effectiveness – a short discussion of definitions and examples of the involvement of new technologies

post on March 25th, 2012
Posted in Banking

The relevant literature emphasises that changes to the environment in which an organisation operates undoubtedly affects its internal subsystems, and thus the entire system. As A. Peszko describes, an organisation consists of ordered and correlated sets of elements. Thanks to this order and correlation, the system’s elements can function together as an entire system.  According to the author, this system is opened by close links with the environment in which the organisation continues to exist and develop at the same time. He indicates that changes to the environment may be an opportunity for the organisation, but also a risk which could threaten its existence. Thus the organisation must observe its external environment, and consequently adapt to changes. It must therefore be an adapting system. This is because it is the effective adaptation to currently prevailing conditions that makes it possible for an organisation to achieve its planned objectives.  Such adaptation also relates to banks, which must “keep up” with the process of modernization in the technological environment and societal expectations associated with the desire to make active use of technological advancements. Changes in the organization of banks cannot be based on “occasional” activities but must instead involve strategic thinking to equip banks with modern technology.1

L. Krzyżanowski describes the objective of the organisation as a future oriented state, requiring the organisation to act by a specified date (or within a specified period) to achieve its specified action plans. The author also asserts that the most important goal of an economic organisation (such as a company) is the maximisation of profit, which exists, for example, when the value of goods sold or services performed exceeds the costs of producing those good or services, and where this excess value is maximised.  The amount of this excess is dependent upon many factors, such as: the quantity of goods sold or services performed, the cost of acquiring those goods or services, the productivity of the labour involved in production, and the amount of other expenditure incurred in production. These factors are related to another objective of an economic organisation, and that is to improve efficiency.

The term efficiency initially related to the achievement of certain results, but in time it started to be compared with achieving favourable results or favourable actions in the scientific vocabulary. O. Lange notes that a principle of rational action is to act in a manner to maximise results in accordance with organisational objectives while using minimum resources. The effective action praxeology distinguishes the constituent elements of such action: efficiency (which is the degree by which an intended results are achieved) and economy.

Striving to raise the economy is in turn economization, which relies on choosing the most effective among possible actions based on assumed objectives and also on conditions that may limit desired goals. Based on these considerations regarding the purpose, as well as the effective operation of the organization, it can therefore be said with certainty that their achievement, particularly in times of crisis, is dependent on optimal management that adapts to the conditions currently prevailing in the organisational environment. This includes the use of modern technology, which affects the level of effectiveness and the attractiveness of actions that are taken.

As A. Peszko notes, the management of an organisation is undoubtedly an extremely complex process. Although it might be regarded by some commentators as overly simplified, Perzko asserts that the process consists of management taking many mutually related decisions and actions in order to achieve the objectives pursued by an organisation. J. Trzecieniecki contends in his deliberations concerning the management of organisations, that basic managerial operations, when logically arranged, constitute specific subsystems that hold together organisational functions that govern the organisation’s actions. He lists among them: planning, organising, motivating employees to perform tasks, and monitoring activities which are designed to implement the organisation’s mission. These operations are also known as the executive functions of management, and, for the purposes of this paper, the organising function is regarded as particularly important, especially as it relates to issues concerning the operational risk management organization, which accompanies financial institutions at every stage of their functioning.

4An example of the need to engage new technologies in the management of banks, especially on the operational risk management of financial institutions is the introduction by the European Parliament in 2007 of the CRD (Capital Requirement Directive). The document stressed the need for the development of risk management methods that have lead to better protection of investors, increased confidence in financial institutions and increased financial stability and competitiveness in the economy. As S.Zawadzki notes, since the passage of the CRD, there have been a rapid development in these areas, and the new solutions have been imitated by banks in their information technology tools. In his opinion, professional operational risk management without specialized IT tools is not possible, and banks that are not investing in operational risk management are not able to properly identify areas of inefficiency and risks. A good information system helps in the process of risk management at all stages, starting with the identification of risk through to various methods of measuring risk limitation and reporting. It is evident that this is an extremely broad area of ​​activity for businesses, which, without adequate tools to support would be difficult to effectively manage, even in medium-sized banks.

The above organizing function, in addition to the management process also applies to issues related to the production process. Despite the literature referring to the organising function mainly in the context of industrial organisations, the literature is nevertheless relevant to both the implementation of new technology in organisations that is designed to assist employees in performing their duties, and also to improving the competitiveness of an the organisation through enhanced customer service. As A. Peszko notes, technology can be used to offset distortions and compensate for errors in the continuity and maintenance of production. For example, technology can be used to implement multifunctional tools, instruments, machinery, or equipment, in order to create flexible production systems. Despite the obvious reality that banks offer services and products associated with finance and that they are not conventionally regarded as entities of a purely production character, they nevertheless, just like industrial organisations, increasingly use the latest technologies in their businesses, which is another example of the increasingly active use of modern technology in the management of banks.



post on January 25th, 2012
Posted in Banking

In conclusion, it is worthwhile summarising the use of next generation management tools used by financial organisations in the form of online banking. Banks initially used the internet in order to: place basic information on their websites about their activities; to educate consumers about their financial situation and product offerings; and to enable customers to check their account balances, view a historical record of their transactions, to open or close fixed-term deposits; and to permit customers to make transfers between accounts. The development of advanced internet banking offerings by banks has seen the harnessing of the potential of the internet. For example, advanced internet banking offerings often exploit the interactivity and flexibility of the internet, and incorporate multimedia features. This has resulted in further developments in:

  • information services (e.g. the inclusion of exchange rates, stock exchange data, tax advice and other financial information in service offerings);
  • sales of products of other organisations (e.g. the sale of complementary financial products such as insurance, units in investment funds, brokerage services, as well as non-financial services, such as airline tickets);
  • internet shopping;
  • improved personalisation in the provision of services (e.g. matching the appearance and contents of a web site to a user’s preferences); and
  • on-line consulting.

This paper has outlined some of the major changes that have occurred in the functioning of banks as a result of the incorporation of modern technology in their service offerings. This has had major implications in the provision of banking services, including in the Polish market, and has resulted in the modernisation of management in banks. Developments in internet and mobile technology, and global information systems, have seen a substantial shift from traditional banking to a banking environment that is now increasingly independent of time zones and a customer’s residence. These technologies have revolutionised modern banking and underline the importance today of internet banking in the modern, competitive, market for financial services.



post on January 25th, 2010
Posted in Banking

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Łukasz Bikowski