CHAPTER 3 TECHNOLOGY IN BANKING: E-MONEY, E-BANKING, AND E-COMMERCE LEARNING OBJECTIVES To understand … Bank technology in term of e-money, e-banking, and e-commerce How e-commerce affects the set-of-contracts theory of the firm and the similarities between banks and communications firms
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TECHNOLOGY IN BANKING:
“Technology in the Workplace” Study Criteria
Banking’s Grade = C-
Society E-infoE-commerce uses IT to enhance communications and transactions among mangers and stakeholders
(animals, hides, trinkets, gold)
WAYS TO BE USED
Real-time gross settlement system
Custodial and Transfer Services
1. Safekeeping Function
2. Transfer-and-Settlement FunctionFEDWIRE
Clearing House Interbank Payment System
Society of World Interbank Financial
--Andy Grove, CEO of Intel
Do We Perform Computer Operations In House or Contract with a Third Party?
Outsourcing varies inversely with bank size as only 21% of banks with assets over $10 billion prefer to outsource compared to 40% for banks with total assets under $500 million
Factors Contributing to the Decline of Community Banks
How can Community Banks Compete?
View in terms of the ROE model: