by Modern technology in banking refers to the use of computers, telecommunications, and digital systems to perform banking activities quickly, accurately, and securely. Banks now use electronic devices and internet-based platforms to provide services instead of relying only on manual records and physical visits. Technology has transformed traditional banking into convenient and customer-friendly banking. Customers can access their accounts, transfer money, and make payments anytime and anywhere. Thus, modern technology has made banking faster, paperless, and more efficient.
Modern Technology in Banking
1. Core Banking System (CBS)
Core Banking System (CBS) is a centralized banking arrangement in which all branches of a bank are connected to a common server and database through a secure network. Under this system, customer information, account details, and transaction records are stored at a central location rather than at individual branches. Because of CBS, a customer can operate his account from any branch of the bank, irrespective of where the account was originally opened. This facility is popularly known as “Anywhere Banking.” Deposits, withdrawals, balance enquiry, and fund transfers can be done from any connected branch, ATM, or digital platform.
CBS updates transactions in real time, which means every transaction is immediately reflected in the account balance. It improves operational efficiency, reduces paperwork, and minimizes errors caused by manual record-keeping. The system also supports ATM networks, internet banking, mobile banking, and online fund transfers. It helps banks provide faster service, better customer support, and accurate record maintenance. For banks, CBS improves monitoring and control, while for customers it ensures convenience, transparency, and reliability. Therefore, CBS forms the technological backbone of modern banking operations.
2. Automated Teller Machine (ATM)
An Automated Teller Machine (ATM) is an electronic self-service banking outlet that allows customers to conduct financial transactions without visiting the bank branch. By inserting an ATM or debit card and entering a Personal Identification Number (PIN), a customer can withdraw cash at any time. In addition to cash withdrawal, ATMs provide services such as balance enquiry, mini statements, fund transfer between accounts, and PIN change. Some advanced ATMs also allow cash deposits and cheque deposits.
ATMs operate 24 hours a day, seven days a week, providing continuous banking service even on holidays. They reduce long queues at bank counters and save valuable time for customers. ATMs are especially useful during emergencies when immediate cash is required. Banks install ATMs in public places such as markets, railway stations, shopping malls, and hospitals to provide easy access to customers. The ATM network is linked with CBS, so the transaction is instantly recorded in the account. Overall, ATMs enhance customer convenience, improve banking efficiency, and promote modern banking practices.
3. RTGS (Real Time Gross Settlement)
RTGS stands for Real Time Gross Settlement. It is an electronic fund transfer system used for transferring large amounts of money from one bank to another instantly. “Real Time” means the transaction is processed immediately as soon as the instruction is given, and “Gross Settlement” means each transaction is settled individually, not combined with others. RTGS is mainly used for high-value transactions where immediate transfer is required.
In India, RTGS transactions are processed directly between banks under the supervision of the Reserve Bank of India (RBI). Once the transfer is completed, it is final and cannot be reversed easily. The minimum amount for RTGS is generally ₹2,00,000 and there is no maximum limit (subject to bank rules). RTGS is highly secure and reliable because it operates through a controlled banking network. Businesses, companies, and individuals use RTGS for property payments, large business deals, and urgent financial obligations. It ensures quick settlement and reduces the risk associated with carrying cash or cheques.
4. NEFT (National Electronic Funds Transfer)
NEFT stands for National Electronic Funds Transfer. It is a nationwide electronic payment system that allows individuals and businesses to transfer funds from one bank account to another across India. Unlike RTGS, NEFT transactions are not settled instantly; they are processed in batches at regular intervals. However, modern banking systems now process NEFT transactions frequently, making the transfer relatively quick.
There is no minimum transfer limit in NEFT, making it suitable for small and medium payments such as sending money to family members, paying fees, or settling bills. The system works through bank branches as well as internet and mobile banking. Each transaction requires details such as beneficiary name, account number, bank name, and IFSC code. NEFT is safe, economical, and widely used by customers due to its convenience and accessibility. It reduces the dependence on cash and cheques and supports digital banking in the country.
5. SWIFT (Society for Worldwide Interbank Financial Telecommunication)
SWIFT stands for Society for Worldwide Interbank Financial Telecommunication. It is an international financial messaging network used by banks worldwide to securely exchange information and instructions related to financial transactions. SWIFT does not transfer money directly; instead, it sends standardized payment messages between banks, which then complete the transfer through their respective accounts.
Each bank participating in SWIFT has a unique SWIFT code (also called BIC – Bank Identifier Code) used to identify the bank internationally. SWIFT is mainly used for international fund transfers, foreign trade payments, remittances, and letters of credit. It ensures high security, accuracy, and reliability in global banking communication. Importers, exporters, multinational companies, and individuals sending money abroad depend on SWIFT services. It plays a vital role in facilitating international trade and cross-border banking transactions.
6. Electronic Funds Transfer (EFT)
Electronic Funds Transfer (EFT) is a system that enables the transfer of money electronically from one bank account to another without using physical cash or cheques. It includes services such as NEFT (National Electronic Funds Transfer), RTGS (Real Time Gross Settlement), and IMPS (Immediate Payment Service). Through EFT, funds can be transferred quickly between accounts within the same bank or different banks.
EFT reduces the need for paper instruments and manual handling of cash. It saves time, lowers transaction cost, and provides safe transfer of funds across cities and states. Businesses widely use EFT for making payments to suppliers and employees, while individuals use it for sending money to family members and paying bills. Transactions are recorded electronically, ensuring transparency and proper documentation. The system works under secure banking networks and authentication procedures. EFT has improved the speed and efficiency of financial transactions and is a major component of modern banking systems.
7. Electronic Clearing Service (ECS)
Electronic Clearing Service (ECS) is a system used for bulk electronic transfer of funds, especially for repetitive and periodic payments. It is commonly used for salary payments, pension distribution, loan instalments, insurance premiums, and utility bill collections. Under ECS, a single instruction from the payer allows automatic transfer of funds from one account to multiple accounts or from multiple accounts to one account on scheduled dates.
This system ensures timely payment without manual effort and reduces the risk of delay or default. It minimizes paperwork and operational costs for banks and organizations. ECS is reliable and efficient because transactions are processed electronically through banking networks. Customers benefit from automatic bill payments and do not need to remember due dates. Banks also benefit from faster processing and reduced workload. Thus, ECS improves accuracy, efficiency, and convenience in regular financial transactions.
8. Internet Banking
Internet banking refers to the facility provided by banks that enables customers to perform banking transactions through the bank’s official website using a computer or laptop connected to the internet. After registration, the customer receives a user ID and password to securely access the account online. Through internet banking, customers can check account balances, transfer funds, pay electricity and telephone bills, request cheque books, open fixed deposits, and download account statements.
This service eliminates the need to physically visit the bank for routine activities. It saves time, reduces paperwork, and allows customers to manage finances from home or office. Banks provide security measures such as passwords, OTP verification, and encryption technology to protect customer data from unauthorized access. Internet banking also helps businesses conduct transactions quickly and efficiently. It improves customer satisfaction by providing fast, convenient, and reliable service. Thus, internet banking has become an important feature of modern electronic banking.
9. Mobile Banking
Mobile banking is a banking service that allows customers to perform financial transactions using smartphones or tablets through a bank’s mobile application. Customers can download the official banking app, register their account, and securely access banking services anytime and anywhere. Using mobile banking, customers can transfer funds, pay utility bills, recharge mobile phones, check account balance, and receive instant transaction alerts.
Mobile banking is more convenient than internet banking because it does not require a computer. It promotes digital payments and supports a cashless economy. Banks provide strong security measures such as OTP authentication, MPIN, fingerprint recognition, and facial recognition to ensure safe transactions. Customers receive instant SMS or app notifications for every transaction, helping them monitor their accounts. Mobile banking is widely used today due to the increasing use of smartphones. It has significantly improved banking accessibility and customer convenience, especially in rural and semi-urban areas.
10. Debit and Credit Cards
Debit and credit cards are electronic payment cards issued by banks to facilitate cashless transactions. A debit card allows the cardholder to spend money directly from his bank account. Whenever a purchase is made, the amount is immediately deducted from the account balance. A credit card, on the other hand, allows the cardholder to borrow money from the bank up to a pre-approved limit and repay it later, usually within a billing cycle.
These cards are used for shopping at stores, online purchases, and ATM withdrawals. They eliminate the need to carry large amounts of cash and make payments quick and convenient. Cards are protected by PIN numbers, OTP verification, and chip technology for security. Many cards also provide reward points, cashback offers, and purchase protection. Debit and credit cards are widely accepted worldwide and are an important tool in promoting digital and cashless transactions in modern banking.
