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Abstract
This paper is dedicated to explain the use of technology in the banking industry and how it has help banks evolved into a profitable markets. This paper will explore several aspects of technology used in the banking industry that have helped banks secure a great market share and simplify customer’s everyday life. The results indicate that more and more consumers are now turning to technologies and time saving options for their banking decisions …..

Introduction
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 ….

Growth in Online Banking with Technology
The American Banking Association estimated in 1996 that online transaction costs $.01, ATM transaction costs of $.27 telephone transaction costs $.54 and a branch transaction costs $1.07. New online technology would yield market control by:

• Enhancing customers’ satisfaction and improve customers retention;
• Gaining advantages through Intranets and Extranets
• Fundamental shift of power to consumers through information accessibility
• Traditional branch network can be reduced and smaller staff strength expected

Figure 1 below shows how banks rank in their efficiency in providing online customer service. SunTrust customers exert little effort choosing a checking account due to up-front, detailed information. Currently, twenty-eight million households in the United States bank online. Recent forecasts indicate that by 2010 over fifty million U.S. homes will be banking online. Exponential growth of Internet users since the middle of 1990s is an unequal business phenomenon not witnessed or encountered ….

• USA has the highest user ratio of 32%, followed by 28% for Singapore, 23% for Australia and 19% for Hong Kong
• The fastest growth of internet users are found in East Asia: with China at 51%, Hong Kong at 44% and Malaysia at 41%
• E-Banking has filtered fast in to commercial banks such as Wells Fargo Banks in 1995,
• First Union Bank and Bank of America in 1996 and Citicorp and Banc One in 1997. Not until 1998, major houses such as JP Morgan, Bankers Trust, Chase and Fist Chicago are yet to move into this new medium of financial services (VNU Business Publications 2004).

Growth in Mortgage Banking/Loan and Technology
Mortgage banking is one of the last areas of consumer credit to be affected by the Internet. Electronic commerce has been slow to gain momentum in mortgage banking, but this is changing rapidly. Numerous barriers to true on-line mortgage lending remain, but they are toppling, and online originations can be expected to grow to more than 10% of the total market by 2005. TowerGroup estimates that in 1998 consumers completed nearly 65,000 mortgage loan applications on-line, which amounted to US$8 billion in mortgages.

While large, these numbers represent only about 0.55% of the estimated 12 million mortgage applications and US$1.45 trillion in mortgages originated in 1998 (TowerGroup 1999).

On-line lending has garnered considerable attention over the last few years. Already, products such as credit cards and second mortgages are commonly originated via on-line channels. On-line lending began in earnest in 1996, and originally this channel was widely dismissed by the financial services community. On-line lending has given rise, however, to both a new industry and a new way of conducting business. Beginning in 1996, loan aggregators and Web banks began to emerge. As traditional banks have seen margin erode in their liability businesses (checking, savings, money market, etc.), they have sought to expand their product offerings and customer base on the asset side (loan products, like credit cards, overdraft, mortgages, auto loans, etc.). Loan aggregators and Web banks pose a potential threat to the asset product strategy of many financial services institutions …..

Effect of Technology on Bill Payment
Free bill payment is a service that runs circles around the paper equivalent. Users can save time, save money (postage, late fees, and check printing fees), can improve bill tracking and budgeting, and make their financial life easier. And, if the electronic payment doesn’t post at the biller on time, the bank and/or processor will go to bat for them to resolve the problem. Banks insist on providing this beneficial and costly service free of charge because they are doing it for the “relationship” value.

Customers love getting something for nothing. The technology makes it simple to pay any bill to anyone from anywhere. It saves time, money, and it’s safe. That’s the main reason online bill payment is starting to take off. By 2005, an estimated 40 million American households will pay bills online ….

Growth in Customer Service with Technology
As financial institutions expand the variety of services they offer, they rely on technology to provide them a total and accurate customer view. Having consolidated information can assist in such areas as product marketing, making decisions on check acceptance or defining the more elite customers.

Improving customer service and retention by adding or upgrading customer relationship type solutions is a typical activity found in banks. According to Roy, a bank COO, technology can provide banks with the architecture for giving better, more targeted and more effective customer service. Roy explained: ‘A uniform and integrated retail delivery strategy is the key to success, and offers the maximum opportunity for differentiation, value addition, higher customer loyalty and branding …..

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Source : http://www.eurojournalsn.com

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