MODULE I Branch Operation and Core Banking

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MODULE INTRODUCTION
Introduction and evolution of bank management Technological impact in banking operations Total branch computerization Centralized banking Concept: opportunities, challenges & implementation

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INTRODUCTION AND EVOLUTION OF BANK MANAGEMENT

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INTRODUCTION AND EVOLUTION OF BANK MANAGEMENT (CONT.)

1. Finance & Risk Management
a) credit risk, b) market risk (Equity risk, Interest rate risk, currency risk, commodity risk) and c) operational risk.

2. Information Technology
a) ATM b) Credit cards c) Debit cards

3. Marketing Science
a) Customer segmentation, b) Customer scoring,
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INTRODUCTION AND EVOLUTION OF BANK MANAGEMENT (CONT.)

c) Target marketing, d) Market-basket analysis, and f) customer retention

4. Computer Science
Security

5. Communication Technology
a) Internet banking, b) Tele-banking and c) Mobile banking
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IMPORTANCE OF BANKING
Reduced error Large coverage (customers, cities) 24 by 7 Time saving (in many aspects) Other services
Mobile recharge Transactions Portfolio creation Loan info.
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Etc.
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TREND IN TECHNOLOGY DEVELOPMENT

1. Data warehousing 2. Data mining

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DATA WAREHOUSING
A data warehouse is a relational database that is designed for query and analysis rather than for transaction processing. Data is collected from different resources about different things (customers, lenders, transactions) Characteristics: 1. It is subject oriented (e.g.) banking environment. 2. It is integrated, no inconsistencies.
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DATA WAREHOUSING (cont.)

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DATA MINING
It is the technique to reveal the strategic information hidden in the data warehouse. For example we want to know banks performance, we will look for: 1. Credit risk 2. Loan risk 3. Stock portfolio creation and analysis 4. Demographic analysis 5. Risk analysis
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ROLE OF TECHNOLOGY
1. ATM 2. Credit cards and debit cards 3. Internet banking Transfer funds Payments Loan/ investment proposals Portfolio creation Know about your a/c
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ROLE OF TECHNOLOGY (CONT.)

4. Mobile banking 5. Tele-banking

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IMPACT OF IT ON BANKS
Change in organizational structure and orientation Impact on service quality Impact on human resources Impact on privacy and confidentiality of data

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CENTRALIZED BANKING
How a central bank reacts towards: 1. Inflation 2. Economic Condition 3. To check creditworthiness

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HOW CENTRAL BANKS CONTROL THE MONEY SUPPLY

Reserve requirements (CRR, SLR) Interest rates Open market operations

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TYPES OF RISKS
1. 2. 3. 4. 5. 6. 7. 8. 9. Operational risk Security risk Reputational risk Legal risk Money laundering risk Cross border risks Strategic Risk Credit risk Interest rate risk
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