IT

1. Contents
No Topic Page No.
1 Introduction to Information Technology 1
2
Information Technology Supplements Business
Environment
2
3 Banking Sector 5
4 Insurance Sector 8
5 Stock Exchange 9
6 Corporate Sector 13
7 Use of Internet & Social Media in Financial Sector 15
8 Adapting to the New Regulatory Environment 16
9 The Positive Effects of Information Technology 18
10 The Negative Effects of Information Technology 19
11 Technology with a Purpose: The Next Generation Today 20
12 Conclusion 21

2. 1
Introduction to Information Technology
Our society is being reshaped by rapid advances in Information Technology, computers,
telecommunications networks and other digital systems. It has vastly increased our capacity
to know, achieve and collaborate. These technologies allow people to transmit information
quickly and widely, linking distant places and to create communities that just a decade ago
were unimaginable.
It is difficult to appreciate how quickly Information Technology is evolving. Five decades
ago ENIAC, one of the earliest computers, stood 10 feet tall and stretched 80 feet wide; while
today, one can buy a musical greeting card with a silicon chip that is 100 times faster than
ENIAC. This extraordinary pace of Information Technology evolution is bringing people and
cultures together and creating new social dynamics in the process.
There is a long-standing trend in the computer industry in which the number of transistors
that can be placed on an integrated circuit doubles every two years. This trend, which has
continued for more than half a century, tells us that future advances in processing power and
capacity will not be linear, but exponential. For the financial services industry, this translates
into nearly limitless opportunities to put this emerging wealth of computing power to work.
The advancement of technology has had an enormous impact on the world. Communication
technology in particular has drastically changed the way society operates. With new advances
in communication being developed constantly, people are becoming more and more reliant
on the benefits they provide. Communication technology has become significantly important
in the realms of education, business, politics, interpersonal interactions and crisis responses.

3. 2
Information Technology Supplements Business Environment
Technological advances in the past few decades have greatly increased the competitive nature
of the economic business world. Companies have used software, computers and the Internet
to transform their businesses from local places of business to national and global market
competitors. Many companies have responded to these changes by automating their business
processes and capturing industry-related information and using it to their advantage.
Technology has also forced businesses to remain flexible, adapting their operations to newer
and better technological advances.
Better Reporting Functions
Companies that have multiple locations, whether
nationally or globally, have used technology to
implement better communication services and
software modules that communicate to a home
base via the Internet. This allows companies to
penetrate new economic markets without
sacrificing the needs of communication or
financial and operational reporting. Additionally,
companies can improve their management
information system (MIS) to capture information
for specific locations when making business
decisions.
Financial reporting has also benefited greatly from technology; rather than sending external
auditors to multiple locations, it is possible to create a centralized accounting office to record
and report financial transactions. This improves financial reporting and lessens the expense
related to external audits.

4. 3
Increased Employee Productivity
Computers and business software packages have
exponentially increased employees' productivity
by allowing them to provide data entry functions
or review automated reports. Companies have
automated several traditional manufacturing
processes; instead of using manpower to manually
create and assemble goods, machines and/or
robots now complete these functions. While these
improvements may increase capital expenditures,
they lessen the impact of consistent labour
expenses related to productions. Fewer employees
are needed to monitor the machines and ensure
they are working properly.
Other areas, such as customer service, accounting and administrative support, have also seen
an increase in employee productivity. Employees now review and report electronically
collected data to ensure they are accurate and timely, rather than manually gathering
information.
Improved Business Mobility
Technology has also improved companies' sales
and service departments by allowing employees to
use personal electronic devices to create sales
displays and transmit orders and customer
information to the home office. These electronic
devices shorten the lead time companies spend on
receiving and delivering goods or services,
creating an instant competitive advantage in the
industry. Companies can also send sales
representatives to multiple markets at the same
time, allowing them to penetrate multiple markets
with few overhead costs. Companies may allow
their internal employees to work from home using a company Internet connection, reducing
the fixed overhead expenses from a large corporate office.
Reduction in Storage Space
Prior to the advent of Information Technology,
corporate had to invest in large storage spaces and lot of
paper work was involved. Searching of old records was
a nightmare. The present digital age allows us to store
huge amounts of data / information on tiny storage
devices with large capacities. The financial books for
years can be stored in a small digital device.

5. 4
Reduction in Communication Costs
The cost of communications which used to be very
expensive has drastically reduced with today’s
electronic devices and emails. Sharing of large amounts
of information across the globe has been a boon with the
internet and the world-wide-web.
Financial Data Analysis
Financial data analysis and generation of matrices
have helped users and organisations perform their
decision making activities more efficient and accurate.
Information has become more accessible, reachable,
portable, and editable across mediums and devices
and across users as well.

6. 5
Banking Sector
Information and communication technology is playing a vital role across many industries and
sectors, resulting in a positive impact on economic development cutting across the
geographical barriers. It is important to note that the financial sector and more particularly
banking industry was one of the very first to utilize information technology way back in the
1960s, and has thus the record of influencing the development process through the
technology. The banking sector is an example in which information technology
infrastructures have had implications on the economic development of many nations across
jurisdictions. Studies show that information technology coupled with knowledge management
hold much potential for propelling the development process.
Since the 1990s, the banking sector in India has seen greater emphasis being placed on
technology and innovation. Banks began to use technology initially with a view to take care
of their internal requirements pertaining to book keeping, balancing and for transactions
processing; the all-pervasive face of Information Technology soon enabled banks to provide
better quality of services at greater speed. Internet banking and mobile banking have made it
possible for customers to access banking services literally and virtually from anywhere and
anytime. The biggest barriers, time and distance, to access banking services were crossed by
leveraging technology. The sector has also moved rapidly towards universal banking and
electronic transactions, which changed the way banking is done, during the last decade or so.
Take the case of payment systems where technology has brought in a sea-change. Till 1990s,
one could make payments in this country through two predominant means - cash and cheque.
Today, a tech-savvy customer is empowered to choose a desired service from slew of
products- card payments, NEFT transfer, RTGS transfer, ECS/NECS payments, mobile
payments etc. Further, after using any of these payment methods, the first instrument he turns
to is his mobile phone for confirmatory messages, a feature unique to India. The most
frictionless solution is not a smart phone but a collection of sensor networks that
automatically identify the buyer, scan the items to be purchased, and process payments
without human intervention. No lines, no taps, no swipes, no associates, no cash registers.
Just wireless sensors and networks that automatically process transactions, manage inventory,
etc. Biometric factoring is not that far away, fingerprinting and retina scans.
Information technology has changed the way companies conduct business domestically and
internationally. The banking and finance industry has made great strides in implementing
current technology in their business operations. The banking industry has used business
technology to create several new options for consumers, including online banking, instant
access to retirement accounts, electronic application processes and electronic wire transfer
capabilities.
IT can reduce banks’ operational costs For example, internet helps banks to conduct
standardized, low value-added transactions (e.g. bill payments, balance inquiries, account
transfer) through the online channel, while focusing their resources into specialized, high-
value added transactions (e.g. small business lending, personal trust services, investment
banking) through branches.
IT can facilitate transactions among customers within the same network (e.g. automated teller
machines (ATMs) by banks)

7. 6
The Facts
Consumers typically prefer to do business with banks that offer a wide variety of services.
The ability to access their information quickly and securely through the Internet allows banks
to increase their customer base, increasing overall profitability.
Considerations
Security is always a concern when individuals use the Internet to access personal information.
Banks must be able to use technology to protect consumers while allowing them virtual
access to their information.
Benefits
Banks can improve the transaction time it takes to transfer money and move financial
information between accounts or other banks using technology. This improvement allows
banks to collect funds from consumers and businesses quicker, earning the bank higher
interest rates on their funds.
Geography
Banks can operate multiple locations in several states or countries using business technology.
Information can be quickly transmitted to other branch locations regarding funds and
financing paperwork, allowing managers to make better business decisions.
MICR Encoding
In 1952 the banking industry was drowning in paper and rapidly losing functionality. Forty-
seven million accounts generated 8 billion checks that year. Each one was manually
processed and physically touched 2.3 banks on average. The Technical Committee on
Mechanization of Check Handling was formed by the American Bankers Association and
charged with creating an automated system for processing checks. Their solution was to
encode checks with magnetic ink in a language that could be read by machines, known as
magnetic ink character recognition (MICR). Machine makers, the print industry and the
Federal Reserve adopted the committee's solution, and it is has been in use for well over half
a century.
The Asynchronous Transfer Mode (ATM)
The patent for asynchronous transfer mode (ATM) went to Docutel, for its Docuteller
machine, first installed in Chemical Bank. The bank ran an ad saying, "On September 3,
1969, our branch will open its doors at 9:00 a.m. and we'll never close again!" Twenty-four
hour banking was born on that September morning.
Automated Clearing House (ACH)
In 1970 the Federal Reserve acquired the necessary computer processors and established the
Clearing House Interbank Payments System to process automated international banking
transactions. The federal government and large businesses quickly saw the merit of the new
technology. They negotiated agreements to use the equipment, facilities and staff of the

8. 7
Federal Reserve to process high-volume recurring payments like Social Security checks and
government payrolls. By 1978 a nationwide Automated Clearing House (ACH) network was
in place and direct deposit payroll checks were rapidly becoming commonplace.
Online Banking
ACH capabilities, the emergence of strong security systems and the prevalence of home
computers, combined with a busy society hungry for conveniences, created ideal
circumstances for online banking to flourish. Banks began offering online banking in the
1990s, allowing customers to view their accounts in real time, pay bills without writing
checks and schedule recurring transactions.

9. 8
Insurance Sector
The impact of Information Technology in Insurance business is being felt at an accelerating
pace. In the initial years IT was used more to execute back office functions like maintenance
of accounts, reconciling broker accounts, client processing etc. With the advent of "database
concepts", these functions are better integrated in an administrative efficiency.
The real evolution is however emerged out of Internet boom. The Internet has provided brand
new distribution channels to the Insurers. The technology has enabled the Insurer to innovate
new products, provide better customer service and deeper and wider insurance coverage to
them.
At present, Insurance companies are giving customers a distinct claim id – to track claims on-
line, entertaining on-line enrolment, eligibility review, financial reporting, and billing and
electronic fund transfer to its benefit clan customers. Also calculating the EMI’s amount &
related calculations are done online.

10. 9
Stock Exchange
The National Stock Exchange (NSE) changed the way the Indian markets functioned, in the
early nineties, by replacing floor based trading with nationwide screen based electronic
trading, which took trading to the doorstep of the investor.
Information technology enhances investor growth. The Internet has created global
availability of information. Although there are the ‘Have’s and the Have Not’s’ regarding
technology and technical know-how, the Internet and the World Wide Web, the global open
market and pop culture, and the Information Age economy is quickly spreading throughout
the world. Also the financial statements for most corporations have been published for public
use on the World Wide Web. The access of this public information makes it easier for more
investors to have the information they need to make smart, well-educated decisions for
investing. Since investors are able to be better educated about investing, more investors have
entered the market. Participating in the market is not only easier, but also cheaper. Since the
information is out there for everyone to see, more and more people are becoming their own
investors, cutting out the middleman, which is the broker. Cutting out the middleman allows
the investor to keep the percentage of money he used to pay the broker.
Key developments can be received through new communication networks. Through the
Internet an investor can find large amounts of information on the Stock Market and many
corporations. New technology also allows investors to be able to buy and sell stock and
bonds on-line. The investor can maintain on-line brokerage accounts. An investor can do
this either by keeping up with their accounts daily of by putting a low or high cap one each
stock. An investor can also get information on particular stocks and the history of these
stocks. In some cases an investor can receive on-line advice from a broker if they need help.
However, easy as it is for individual investors to get on-line and invest for themselves, there
are negative aspects of the information technology age for investors. Distorted facts are
possible with such a plethora of information. Investors looking for information may find the
wrong information or information that has been cooked, changed, or distorted in the
corporations’ favour. Also, the more information there is out there, the harder it is to find the
information you need because you have to trudge through all the excessive information.
When a broker makes a decision to invest, the decision is based on many different things
such as the buying and selling price for the past couple years, the stock’s beta, etc… With
ease and inexpensive access brings unsophisticated investors. The unsophisticated investor
thinks to themselves, “how hard could it be?” They do not know what they are doing and
lose their money.
Investment professionals historically relied on the use of shouting and hand signals known as
open outcry as a method for communicating buy and sell orders on stock and futures
exchanges. The system is used at financial exchanges such as the Chicago Mercantile
Exchange and the American Stock Exchange (AMEX). Using the system, traders typically
make quick gestures across the trading floor to indicate a buy or sell order. A trader who
holds his hands up with his palms facing in is gesturing that he would like to buy. When the
trader’s palms are facing out, it indicates a desire to sell. The numbers one through five can
be gestured on one hand with the fingers pointing directly upwards. For six through ten, the
hand is held sideways, parallel to the ground. Counting starts from six when the hand is held
in this way. To achieve blocks of ten, numbers are gestured from the forehead, while

11. 10
repeatedly touching the forehead with a closed fist indicates blocks of hundreds and
thousands. Signals can also be used to indicate months, specific trade option combinations
and additional market information. Although rules vary significantly among exchanges, the
purpose of the gestures remains the same.
Ever since the advent of Modern Portfolio Theory, asset managers have used computation
and mathematics to model portfolio risk and return. Being able to effectively quantify
portfolios and markets has allowed managers to address the daily challenges of money
management with objective information and analysis, both of which have steadily increased
in volume, quality and granularity with the advance of computing power. While the
application of technology to portfolio management and asset allocation has helped drive the
greatest accumulation of investment assets in history, it has also had unintended
consequences, effectively creating a kind of self-perpetuating technological arms race that
has been blamed for exacerbating the financial crisis.
In quantitative finance, back-testing refers to the use of historical data to simulate outcomes
of a hypothetical investment strategy. For example, a researcher who wants to test the
efficacy of a particular rebalancing rule could evaluate how it would have performed over
any given time period and set of assets for which he or she has data. While the adage “past
performance is no guarantee of future results” is especially applicable to back tests, they do
provide insight into the relative merits of alternative strategies and are a key component of
the quantitative research toolkit. The modelling of entire markets in this way would not be
possible without high-performance computers that can accommodate massive volumes of
transaction and pricing data. As every new threshold of quantitative analysis is reached,
investors raise the bar and develop expectations of market insight that is both broader,
accommodating more investment scenarios, and deeper, with more precise factual
information about investor behaviour and its impact on securities prices. These expectations
also extend to associated derivatives markets, in which data volumes are substantially larger
and perhaps more indicative of investor sentiment and trends.
As the global pool of investments under management continues to expand, and as the
proportion of these assets that move across borders increases, asset owners and managers
must cast an ever wider net, incorporating into their strategies more markets, assets classes
and securities types. It is a truism of risk management that investors cannot manage what they
can’t measure. And measurement of globally distributed portfolios demands ever-larger
models composed of ever-more numerous and varied securities.
While this challenge may be daunting, it cannot be ignored because all market participants,
dealers, buyers and electronic markets are similarly committing to the new technologies that
define markets. Asset owners and managers have little choice but to continue investing in
Information Technology systems and raw computational power for building intelligent,
networked models that seek to map risk and dynamically evolve both in service to alpha
acquisition and to enhance risk management.
But technology alone cannot resolve critical investment challenges. A state-of-the-art
operating room and arrays of diagnostic technology, by themselves, do not necessarily
foretell a successful medical procedure any more than super-computer databases and
networked workstations alone can manage a globally allocated investment portfolio. The
human factor experienced financial practitioners expert in both the theory and application of
financial practice is an important determinant of successful financial outcomes. In the

12. 11
complex partnership between expertise and technology, the arms race of ever-more powerful
systems engaging ever larger and more complex markets shows few signs of abating.
Technology has dramatically advanced the trading of financial instruments over the past two
decades. In that time, the practice of “open outcry” trading has been replaced by electronic
trading platforms for equity, bond and currency markets, among other areas. This shift has
fundamentally changed the way these markets behave and has led to higher trading volumes.
Technology is the best tool for adapting to new regulatory conventions. To ensure
compliance with new rules, derivatives market players will need to take a hard look at current
technology platforms and retrofit them to the new market realities. The bar is much higher
than it was before and demonstrating regulatory compliance will be challenging.
Regulatory reform is an expanding and changing variable around the world. Perhaps the
biggest challenge is the uncertainty about the shape of future regulations. Yet, while no one
knows exactly how far regulators will go, new rules stand to make the markets a better, safer
place for everyone.
Technology is the only solution to effectively meet the challenges inherent in new trading
regulations. It has already turbo-charged the process of switching from a relationship model
to the tried-and-true Chicago market model — a model that has ensured the safety of
customer risk positions and margin money over the past 100 years which will democratize the
markets and level the playing field for all. Further, success in eliminating credit risk hinges
on the ability to harness technology to assess and analyze valuations and risks in real time. To
do this, market transparency through electronic execution platforms is required.

13. 12
Technology is the great equalizer. When equally distributed, it trends toward transparency
and open competition. Advancing and improving upon technology protects the best interests
of the world’s economies and ultimately will help all market participants grow their
businesses.

14. 13
Corporate Sector
Technology affects almost every aspect of our lives. Just look around you and you'll see how
wired we are. Thanks to the Internet, virtually anything you desire can be delivered to your
door in a matter of days. Technology and the advances in communication and information
technology, has changed the face and the pace of business
The Internet enables airlines to provide online flight booking, banks to offer online account
management and bill pay and allows any company to sell any product online. In general, the
Internet has proven to be an inexpensive way to reach more customers. Nowadays, if you
can't find a business online, or if it has an outdated, ugly Web site, it looks downright
unprofessional.
The finance department in a corporation is in charge of taking accounting data and creating
reports that the managers within the company, all the way up to the CEO, need for decision
making purposes. Information Technology refers to the software tools and computer systems
the company uses to automate these functions and organize the data flow to improve the
management team's decision making capabilities.
Enterprise Resource Planning
Even very small companies use accounting software packages like Tally, that generate
financial reports such as income statements and cash flow statements. This simple form of
Information Technology allows a small business owner to save accounting time and have
management reports available on timely basis. Today balance sheets and other financial
records can easily be created and maintained and distributed online to stakeholders.
Mid size and larger companies use more sophisticated Information Technology systems
called enterprise resource planning or ERP, which are groups of software modules that serve
the needs of all functional areas of the company. As its name suggests, ERP helps the
company plan the use of its resources, a process that the finance department oversees.
Faster Flow of Information
Information Technology systems allow a company to link up every department within the
organization. Information generated by the manufacturing, marketing and finance divisions
can be shared for example. This information is available real-time, meaning as soon as it is
created on the system. Accessing it does not require a great deal of research or manual effort.
The time finance staff used to devote to "digging" for the numbers they needed can now be
devoted to analyzing and interpreting the information -- finance's primary role in the
organization.
Customized Reporting
The Information Technology systems used by the finance department have a report
generating functionality that speeds up the process of producing management reports. The
system provides a certain degree of customization -- the reports can be configured based on
the specific needs of the management team. Automation of these reporting systems means
that routinely generated reports, such as those produced at the end of each month, can be

15. 14
created quickly. With many of the decisions management has to make, time is of the essence.
Information Technology systems address this need for rapid, customized reporting capability.
Collaboration
Many organizations take advantage of collaborative effort across departments, the concept of
each department benefiting from other departments' expertise. The finance team acts as in-
house consultants to other departments within the organization. When all departments use a
centralized Information Technology system, it drops the barriers that formerly blocked the
flow of information. The company now has a centralized database that all team members can
access -- subject to certain security rules. In the case of a company with multiple offices or
international divisions, this ability to access the same information from around the globe
saves time and improves efficiency. If finance requires manufacturing cost data to create a
report for an upcoming board meeting, operations personnel can quickly transmit the data in
the format the finance department requires and understands.
Better Forecasting
Better forecasting means producing a forecast that is a more accurate prediction of what the
company's financial results are likely to be. Finance staff members need access to in-depth
information to create forecasting models that depict how the organization actually works.
Having access to information from all segments of the company makes accurate forecasting
much easier. Finance has real information and does not have to rely on guesswork when
creating assumptions for the forecast.

16. 15
Use of Internet & Social Media in Financial Sector
The open, public nature of the Internet threatens the closed information networks developed
by the financial industry in the late 20th century. As a result of this conflict, banks are at the
forefront of both information sharing and information security technology. Online
commercial transactions began in 1995, and by 1998 the Internet was processing more than
$50 billion worth of transactions. In the 21st century, the annual worth of Internet
transactions is higher and requires more networks, more computers and more security
programs. Financial institutions cannot compete without a broad but secure information
network, so information technology is essential to their success.
The information technology that runs social media on the Internet provides financial
institutions with valuable information on their customers. By encouraging online
communities associated with their products, finance companies not only acquire information
but also encourage brand loyalty. For example, websites such as TradeKing allow online
stock traders to discuss their picks and advise newcomers. Socially driven information
technology allows finance companies to contact the younger demographics that will be their
future customers.

17. 16
Adapting to the New Regulatory Environment
In the last few years, there have been new laws targeting financial services entities, making
financial services the most highly regulated sector. More specifically, much of this legislation
is concerned with the protection of non-public information (NPI) and personally identifiable
information (PII). With major customer data breaches reported by the media on a daily basis,
and with identity theft as the fastest growing financial crime, it is not surprising that
regulators are focusing their attention on this growing issue. Even more legislation is on the
horizon.
Non-Public Information (NPI) and Personally Identifiable Information (PII)
Non-public information (NPI) is an encompassing term that refers to all information
appearing on applications for obtaining financial services (credit card or loan applications), or
on account histories (bank or credit card). It also includes the customer’s status with the
organization: either a current or previous customer. NPI can include: names, addresses,
telephone numbers, Social Security numbers, PINs, passwords, account numbers, salaries,
medical information, and account balances. In general, NPI is broader than its counterpart,
personally identifiable information (PII).
PII is typically regarded in the information security and privacy fields as any piece of
information which can potentially be used to uniquely identify, contact, or locate a single
person. PII can include: national identification numbers, street addresses, driver’s licenses,
telephone numbers, IP addresses, email addresses, vehicle registrations, and ages.
While identity theft is the number one financial crime, the theft of intellectual corporate data
is also on the rise. Laws are enacted specifically with a mandate to the financial services
entities to protect customer personal information and to combat identity theft. In addition
there are a number of data protection laws, which also apply to financial services
organizations. The remaining laws relate to protecting intellectual corporate data and
information assets, but the same security safeguards apply to all.
The Reserve Bank of India runs a Department of Information Technology (DIT), the primary
function of which is Computerisation in RBI (Regional Offices and Central Office
Departments), Design and development of projects for use of banks and financial institutions
and Monitoring progress of technology in banks.
The Information Technology Act 2000 created legal procedures for electronic transactions
and e-commerce. It addressed the following issues:
 Legal Recognition of Electronic Documents
 Legal Recognition of Digital Signatures
 Offenses and Contraventions
 Justice Dispensation Systems for Cybercrimes
The Amendments to the Act has provided additional focus on Information Security. It has
added several new sections on offences including Cyber Terrorism and Data Protection. A set
of Rules relating to Sensitive Personal Information and Reasonable Security Practices
(mentioned in section 43A of the ITAA, 2008)

18. 17
Some of the cyber law observers have criticized the amendments on the ground of lack of
legal and procedural safeguards to prevent violation of civil liberties of Indians. There has
also been appreciation about the amendments from many observers because it addresses the
issue of Cyber Security.
It empowers the Government to intercept, monitor or decrypt any information generated,
transmitted, received or stored in any computer resource, in the interest of the sovereignty or
integrity of India or for investigation of any offence. They can also secure assistance from
computer personnel in decrypting data under penalty of imprisonment.
This is widely criticized and has also led to numerous abuses reported by the press and even
challenged in Lucknow and Chennai High Courts for its constitutional validity. The Bombay
High Court has held that creating a website and storing false information on it can entail
cyber crime.

19. 18
The Positive Effects of Information Technology
Technology has changed much of the
world, but the effects are rarely more
pronounced than in the area of business.
Businesses today use technology in
almost every facet of operation. They
communicate with advanced network
systems; they analyze data and plot
forecasts using complicated programs;
they utilize all types of digital media for
marketing campaigns; and they
streamline operations with new
inventory and check-out systems.
Technology is not without its downsides,
but business cannot deny the impact it
has had on every level.
Speed
Technology allows businesses to do everything faster. Many
processes that once required ledgers, check-books and journal
notations have now moved onto computer systems. Logging
in and out, updating inventory information and
communicating can now happen much more swiftly. This
allows businesses to react immediately to any changes.
As communication and information travels faster and faster,
the world seems smaller and smaller, and this has large
implications for the way we conduct business. Storing
important in files on a computer rather than in drawers, for instance, has made information
easily accessible. Using e-mail allows businesses to communicate and send these files
quickly to remote locations outside of an office.
Accuracy
A properly designed computer program does not make any
mistakes, and its computations (not its inputs) are free from
human error. This means that a calculation done by a
computer program (like Excel) will always be accurate and
trustworthy. Finance Packages like Tally give you up-to-date
tallied Balance Sheet at any point in time.
Unless the coding or the inputs are wrong, there is no chance
a program can produce inaccurate data.

20. 19
The Negative Effects of Information Technology
Competition
Technology moves very quickly, constantly evolving and
creating new devices and faster systems. Businesses note
these changes and attempt to move with technology,
adapting it to their present and future needs while also
keeping a wary eye on the technology competitors are using.
The end result is an increase in the evolution of technology
and its application to business, a process by which everyone
benefits.
Expensive to buy Software Licenses & Out of life hardware
no AMC within a short period of time. Training employees
cost on new modules prove expensive.
Confusion
While technology is useful, its fast pace and complex systems
can be confusing. If companies want to update their systems or
change the type of technology they use, they have to retrain
not only employees, but often customers. New employees
must also be trained in using business systems, which can
create confusion.
Distorted facts are possible with such a plethora of
information. Investors looking for information may find the
wrong information or information that has been cooked,
changed, or distorted in the corporations’ favor. Also, the
more information there is out there, the harder it is to find the
information you need because you have to trudge through all the excessive information.
Customised financial software packages that generate various reports and financial ratios
with in-depth analysis and jargon, can sometimes be quite confusing.
Availability
Technology is very available, meaning that it is easy for
competitors of all sizes to use and learn. This makes it
difficult for businesses to keep up with technological changes
and vastly increases the number of competitors in their
market as smaller business can use technology to offer value
to a wider range of consumers.
Crime
Technology also increases the possibility of crime. A tech-
savvy employee can embezzle funds and make it difficult for
the company to trace. Hackers can access personal and
financial data of customers who trust the company to keep
their information safe. Businesses must spend time and money
developing safeguards against these events.

21. 20
Technology with a Purpose: The Next Generation Today
Technology has long been an essential behind-the-scenes partner in the financial services
industry, providing the innovative incremental advances necessary for the industry to upgrade
and expand its services. Improvements in storage capacity and processing speed, for example,
have had a profound impact on data management and transactional capabilities, with
accompanying reductions in cost. Yet despite these and other advances, the industry has
struggled to fully leverage the power and promise of technology, with market participants
eager for solutions that are not only faster and cheaper, but that also offer greater security and
efficiency.
With the critical technology and related business challenges facing the financial services
industry, a solution is at hand for those able to meet it. The idea of a seamlessly integrated
approach to processing, managing, delivering and correlating data has the potential to change
not only the technology landscape but, more importantly, the business landscape as well.
Tools available today, coupled with emerging new business approaches geared to address
current organizational challenges, can shift this idea from a future possibility to an actual
solution for today. Third-party providers, with their experience, expertise and deep resources,
can help realize the vision now. At the same time, although the stakes are high for providers,
the opportunities are enormous. Firms that excel at execution in achieving optimal computing
power and that have the capability to leverage it will be best-positioned to reap the benefits.
As technology innovation is increasingly viewed as a strategic imperative, rather than a
support function, a game-changing chapter will begin to unfold across the financial services
industry.

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Conclusion
The stage is set for an exciting era of innovation as increasingly powerful and sophisticated
technology becomes intertwined in the DNA of the financial services industry. It is this
continuing convergence of advanced business processes and technology that is steadily
moving us closer to achieving the true, seamless integration of information, tools and front-
office capabilities. This phenomenon has the potential for significant impact in the financial
services industry. Not only will it help facilitate the full spectrum of risk and return
management, but it promises to fundamentally change the way investment decisions are
considered and made.
Indeed, we are nearing the day when this increasingly powerful technology, properly and
efficiently deployed, will be able to provide institutional investors with an unprecedented
level of awareness of their business environments, helping to better inform their decision-
making processes and empower them to manage risks and optimize returns in ways simply
not possible in the past.
The role of technology and innovation in the financial services industry is evolving more
quickly and with greater potential impact than ever before. For service providers and the
clients they serve, the potential benefits are numerous, and include the promises of more
informed, holistic decision-making, more powerful predictive capabilities and enhanced risk
and compliance frameworks in which to operate.
As our industry continues to embrace and incorporate these amazing technological advances,
we are able to extract more intelligence and potential value from raw data today than ever
before. This trend is certain to continue going forward. And, in addition to helping market
participants to grow their respective businesses and portfolios, this evolution of technology in
the financial services industry will help lead to increased transparency and openness,
protecting the best interests of the respective market players, their clients and the economies
from which they operate.
While there are clearly some compelling business advantages associated with this enhanced
role of technology and innovation in the financial services industry, there are also a number
of obligations. Going forward, industry participants will need to respond to the numerous
challenges presented by the rapidly changing regulatory environment we’ve witnessed since
the global financial crisis. The regulatory landscape continues to evolve and the number of
parties interacting with one another continues to increase. All the while, providers are
expected to react more quickly, continue to create new functions and features, and seamlessly
integrate those new features with the rest of their service offerings.
To ensure ongoing compliance with this new and constantly evolving set of rules, providers
will need to be able to quickly and efficiently retrofit their technology platforms to suit these
newly introduced regulatory conventions. Coping with the challenges associated with a
regulatory landscape in a state of constant flux will be a key challenge facing the financial
services industry going forward, but it, too, is a challenge that can be overcome through the
strategic application of technology.
As for the institutional investors themselves, they continue to clamour for newer, more
complex and more flexible ways to manipulate, enrich, adapt and view their business data.

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Portfolio managers who were once content to revisit risk models quarterly or monthly are
now demanding access to information on a much more granular and timely basis. And now,
the bar is being raised even higher, as institutions search for ways to use this data not only as
a detailed reflection of the recent past, but also as a telltale window into the future. Realizing
the benefits of private cloud computing will be critical going forward.
As we’ve seen, for the most part, the technology required to achieve these goals already
exists. One of the primary challenges in implementing it, of course, is that many financial
organizations are still reluctant to make the sizable and ongoing technology investments
required to meet their increasingly complex business needs in this fast-changing
business/technology paradigm.
Going forward, those organizations with the foresight to make wise, strategic investments in
technology will lead the industry. Those organizations bold enough to embrace innovation
and embed leading-edge technologies into every aspect of their operations will be well-
positioned to thrive, while those that fail to capitalize on the opportunities presented by this
new business/technology paradigm risk being left behind altogether.

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