Technology and Banking Banking and Financial Services 1

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THE NEED FOR TECHNOLOGY AND INNOVATION IN BANKING Increased demand for efficiency from Consumers Government Corporations Global competition Increased complexity of banking Increased demand for “green” processes in banking Copyright © Texas Education Agency, All rights reserved. 3

BENEFITS OF DATA MINING IN MARKETING Technology in banking can create more effective data mining of banking customers Leads to increased number of customers and increased profits More personalized service through: Demographic data – statistical data relating to different groups of people Psychographic data – data regarding attitudes, values, and interests Identification of target markets Also referred to as “data mining” – uncovering patterns in data and making meaning out of that data Copyright © Texas Education Agency, All rights reserved. 4

TIMELINE OF MAJOR BANKING TECHNOLOGY MICR- 1950s ATM- 1960s EFT- 1970s ONLINE BANKING Copyright © Texas Education Agency, All rights reserved. 5

MICR Magnetic Ink Character Recognition Aids in processing checks Aids in sorting checks MICR readers can scan the numbers at the bottom of a check and process them more quickly Copyright © Texas Education Agency, All rights reserved. 6

ATM Automated Teller Machine An electronic machine that allows banking customers to access their accounts and perform many basic banking functions Earlier versions were in limited use as early as the 1930s, but the one most like what is used today was released in Services Cash withdrawals Deposits balances Copyright © Texas Education Agency, All rights reserved. 7

EFT Electronic Funds Transfer A transfer of funds from one account to another through electronic means Electronic Funds Transfer Act Protects individuals who transfer money electronically, whether it is through ATMs Telephone payment systems Point-of-sale terminals And other electronic transfers Copyright © Texas Education Agency, All rights reserved. 8

ONLINE BANKING Conducting transactions Viewing information Copyright © Texas Education Agency, All rights reserved. 9

CONSUMER TOOLS Mobile deposit app Photo bill payment app Credit card scanner Teleconferencing Mobile payment app What is an “App”? – a software application that can be installed on a Smartphone Copyright © Texas Education Agency, All rights reserved. 10

MOBILE DEPOSIT APP Check use on the decline in the last decade If you do get a check, it can be scanned with the mobile deposit app and deposited without any paper Banks reducing the size and number of new branches due to less face-to-face transactions Copyright © Texas Education Agency, All rights reserved. 11

PHOTO BILL PAYMENT APP Uses Smartphone to take a picture of a bill or invoice Information is sent to the bank from the app Bank can generate a payment for that bill electronically from your account Copyright © Texas Education Agency, All rights reserved. 12

CREDIT CARD SCANNER More spent with credit cards than with cash Scanner attaches to mobile device Card is swiped and payment is made electronically Lower cost to the vendor than traditional credit card acceptance methods Copyright © Texas Education Agency, All rights reserved. 13

TELECONFERENCING Teleconferencing has been done for a while, but is on the increase in the financial industry Typically done through conference calling with more than two individuals Now video-conferencing is a very popular way to conduct meetings through phone lines and a monitor Reduces costs and time Copyright © Texas Education Agency, All rights reserved. 14

MOBILE PAYMENT APP Stores debit and credit card information right on the phone No need for the actual card At the point of sale, customer opens the app, locates the appropriate card, and a reader that a store has reads the information Copyright © Texas Education Agency, All rights reserved. 15

MOBILE BANKING Text Messaging Online Bill Payments P2P and A2A Copyright © Texas Education Agency, All rights reserved. 16

TEXT MESSAGING Checking balances on accounts Receive text message alerts for notices such as: –Payment reminders –Low balance Copyright © Texas Education Agency, All rights reserved. 17

ONLINE BILL PAYMENT Pay bills online Do not have to go to a bank lobby Do not have to use the bank’s drive-through service Can use the bank’s website Copyright © Texas Education Agency, All rights reserved. 18

P2P AND A2A P2P – peer-to-peer; online payments to another person, usually through using the same bank or electronic funds transfer A2A – account-to-account; usually a customer’s account number must be known for this kind of transaction Copyright © Texas Education Agency, All rights reserved. 19

TRENDS IN BANKING What does “trend” mean in banking? –Changes over time that are directed by the needs of a bank’s customers and businesses Using social media to aid in marketing Changes in fee structures due to changes in processing of bank services –The Durbin Amendment calls for lower fees for debit card purchases but keeps fees for credit card purchases the same Copyright © Texas Education Agency, All rights reserved. 20

OUTCOMES OF BANKING TRENDS Increases number of customers Decreases processing time of transactions Increased variety of services Increased amount of information that can be processed Copyright © Texas Education Agency, All rights reserved. 21

Independent Practice Assignments Banking Technology Timeline Assignment #1 – Students will create a timeline of at least 10 events in banking technology. They will include dates and inventors. They may use a computer-created timeline (where they locate a site that can make a timeline but the student types in all of the information) or they may design their own. Include appropriate graphics. Banking App Assignment #2 – Students will research the different banking apps that are available at several different banks. They will create a professional-looking brochure that shows the different apps that are available and what services can be conducted with these apps. Banking PSA Assignment #3 – Students will get into groups of three to four and create their own Public Service Announcement video. They are to create the name of a bank, decide what current or futuristic technologically-advanced services that their bank will offer, and create a “commercial” advertising their services. They must include at least five different services, provide appropriate graphics or visuals, and keep their video less than one minute. Copyright © Texas Education Agency, All rights reserved. 22