Management Information System in

Banking Software

Sec BGroup 4

Biswaranjan RathAvinas Mohanty

Ipsita PadhiAbhishek Jain

Tuhin Subhra Roy

Content:-IntroductionNeed for MIS in Banking SoftwareBenefits of MIS in Banking SoftwareApplication OF MIS in Banking SoftwareRelevant of Data warehousing & data mining for Bank in IndiaApplication of Data warehousing & data mining techniquesTransaction processing system in Banking

1) Batch Processing2) OLTP3) On line entry with delayed processing

MIS Reporting toolsDSSESSConclusion

INTRODUCTION

Banking is generally understood as a place where the financial services are offered, viz checking, savings, & providing credit to the customers.

Banking software is that Software that enables financial institutions to automate banking processes or functionsThe customers choose the bank mainly on the following 3 factors;

1. The ease of doing business2. The quality of personnel & service3. The range of the financial service

The MIS in banking industry revolves around this aspect. The customer of the bank would like to know the status of the A/C very fast to make decision on withdrawals or payments. Hence the MIS is to be designed to identify, decide & design a service strategy for offering a distinctive service to the wide range of customers seeking a variety of service demand. Banking being an information intensive industry, building a Management Information System within a bank is a gigantic task. Banks generate MIS reports from periodic paper reports/ statements submitted by the branches and regional/zonal offices.MIS in the present context is high availability of voluminous data on electronic media at diverse locations and on diverse platforms, which has become more pertinent to the banks’ decision-making process. Banks use MIS for generating various reports and analysis at the Corporate/Head offices for their decision making for own use as well as for conveyance to authorities in charge of regulation.

The term MIS is not new to the banking sector. Since the early 80s, banks havebeen using this terminology to refer to the process of generating variousreports and analyses at the Corporate/Head offices for their decisionmaking for own use as well as for conveyance to authorities in charge ofregulation

MIS in the present context of high availability of voluminous data on Electronic media at diverse locations and on diverse platforms, has becomemore pertinent to banks’ decision-making process, thanks to the availabilityof new tools of technology such as data warehousing, data mining Management Information System would thus be the end product of both The processes - data warehousing and data mining

NEED FOR MIS in Banking Software

The need for building MIS at the corporate level in banks has increased considerably during the last few years because of the following reasons

Regulatory requirements indicated by the RBI for preparation of Off-site Monitoring Surveillance (OSMOS)Reports on a regular basis in electronic format

Regulatory requirement of filing of statutory returns such as the one under Section 42 of the Reserve Bank of India Act, 1934 for working out Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR) obligations in electronic format

Asset Liability Management (ALM) guidelines for banks being implemented by the RBI w.e.f. April 1, 1999 with the stipulation that the banks should capture 100 percent of their business through the ALM system by April 1,2000

Need for timely submission of Balance Sheets and Profit & Loss Accounts Focus on transaction costing and a need for relating the service charges

levied on the customers to be based on cost of servicing Need for Inter-Branch Reconciliation of Accounts within a definite

time frame Need to meet the stipulations made by the Central Vigilance Commission

(CVC) to computerize at least 70percent of banking business by January 1, 2001.

Need to undertake risk management strategies and for this purpose build appropriate sets of data and market intelligence reports.

Benefits for using MIS in Banking Software

Significant cost benefits, time savings, productivity gains and process re- engineering opportunities are associated with the use of data warehouse for information processing.

• Data can easily be accessed and analyzed without time consuming Manipulation and processing. • Decisions can be made more quickly and with confidence that the data are both time-relevant and accurate. • Integrated information can be also kept in categories that are meaningful to profitable operation

Application Of Banking Software

Banking Software universal banking products are designed to address the core banking, e-banking, treasury, wealth management and CRM requirements of retail, corporate and universal banks.

Relevant of Data warehousing & data mining for Bank in India

Banking being an information intensive industry, building a Management Information System within a bank or an industry is a gigantic task. It is more so for the public sector banks which have a wide network of bank branches spread all over the country

•At present, banks generate MIS reports largely from periodic paperreports/ statements submitted by the branches and regional/zonal offices.Except for a few banks which have been using technology in a big way, MIS reports are available with a substantial time lag. Reports so generated have also a high margin of error due to data entry being done at various levels and the likelihood of varying interpretations at different levels

•Though computerization of bank branches has been going on at a good pace, MIS requirements have not been fully addressed to. It is on account of the fact that most of the Total Branch Computerization (TBC) software packages are transaction processing oriented. They have been designed primarily for day-to-day operations at the branch level and day-end balancing of books

Application of Data warehousing & data mining techniques

Implication of adopting such technology in a bank would be as under

1. All transactions captured at the branch level would get consolidated at a central location. Such a central location could be called the Data Warehouse of the concerned bank

2. For banks with large number of branches, it may not be desirable to consolidate the transaction details at one place only. It can be decentralized by locating the services on regional basis.

3. By way of data mining techniques, data available at various computer systems can be accessed and by a combination of techniques like classification, clustering, segmentation, association rules, sequencing, decision tree various ALM reports such as Statement of Structural Liquidity, Statement of Interest Rate Sensitivity etc. or accounting reports like Balance Sheet and Profit & Loss Account can be generated instantaneously for any desired period/date.

Transaction processing system in Banking

Web Commerce or Ecommerce has witnessed a significant increase in revenue year on year and can now be integrated to any website in the various Secured Payment Gateway Options the bank has to offer.

Step 1: Customer select and adds item in the shopping cart And places the order on your (merchant) website.Step 2: Customer selects to pay via credit card .Step 3: Customer is redirected through EBS Payment Gateway to Transaction Processing Bank.Step 4: Customer enters credit card details on Secured Payment page.Step 5: Credit card information is transmitted securely to the corresponding bank for approval.Step 6: Corresponding bank sends appropriate information to the transaction Processing bank.Step 7: The result is forwarded to EBS (via the Transaction Processing Bank).Step 8: Customer receives a confirmation and is redirected to your (merchant) website.

There are three types of TPS – i) Batch Processingii) OLTPiii) On line entry with delayed processing

Batch Processing:-

First transaction processing system to be developedAll transactions for a period of time would be collected in a group (called a batch), input & processed as a unitProcessing done at set intervals, determined by the business processE.g.: processing invoices - daily, Payroll processing - monthly.

On-line Transaction Processing (OLTP):-

Online transaction processing, or OLTP, refers to a class of systems that facilitate and manage transaction-oriented applications, typically for data entry and retrieval transaction processing. The term is somewhat ambiguous; some understand a "transaction" in the context of computer or database transactions, while others (such as the Transaction Processing Performance Council) define it in terms of business or commercial transactions. OLTP has also been used to refer to processing in which the system responds immediately to user requests. An automatic teller machine (ATM) for a bank is an example of a commercial transaction processing applicationReal-time update and information is available

Data gives the latest updated statusE.g.: airline reservation, ATM’s

On-line entry with delayed processing:-Transactions are entered as they occur• Processing occurs at regular intervals• Placing an order using a toll free number• Order is entered online Transaction Processing Systems• Processing occurs at the end of the business hours

MIS Reporting tools

a) Schedule reportb) Key indicator reportc) Exception reportd) Demand reporte) Drill down report

Schedule Report:-

Creates periodic reports, as per a schedule.• Help Bank managers to make routine business decisions• Weekly summary report listing the total payroll costs to monitor and control labor and job costs.• Scheduled reports help Bank managers control customer credit, performance of sales reps etc

Key Indicator Report:-

• Summarizes the previous day’s critical activities and typically available at the beginning of each day.• Report summarizing inventory levels.• These report help Bank managers take quick, corrective action on significant aspects of business.

Exception Report:-

Automatically produced when a situation is unusual or requires management action.• Bank Manager sets a search parameter to view the list of inventory items with fewer than 5 days of sales on hand• Help monitor aspects important to an organization's success or arrest problem areas

• Help guide proper actions based on the report• Therefore the search parameter/ trigger points should be critically set.

Demand Report:-

Gives certain information at a Bank manager’s request.• Produced on demand.• Report summarizing inventory levels, production activity, sales volume• These report help managers take quick, corrective action on significant aspects of business• Can be used by suppliers and customers• Fedex uses web based demand report allowing its customers to track packages from their source to final destination

Drill Down Report:-Provide a detail data about the situations.

Decision Support System (DSS):-

A decision support system (DSS) is a computer-based information system that supports business or organizational decision making activities. DSSs serve the management, operations, and planning levels of an organization and help to make decisions, which may be rapidly changing and not easily specified in advance.

DSSs include Knowledge based system. A properly designed DSS is an interactive software-based system intended to help decision makers compile useful information from a combination of raw data, documents, personal knowledge, or business models to identify and solve problems and make decisions.

Typical information that a decision support application might gather and present are:

inventories of information assets (including legacy and relational data sources, cubes, data warehousing),

comparative sales figures between one period and the next, Projected revenue figures based on product sales assumptions.

Executive Support System (ESS):-

Executive Support System (ESS) is a reporting tool (software) that allows you to turn your organization's data into useful summarized reports. These reports are generally used by executive level managers for quick access to reports coming from all company levels and departments such as billing, cost accounting, staffing, scheduling, and more. In addition to providing quick access to organized data from departments, some Executive Support System tools also provide an analysis tool that predicts a series of performance outcomes over time using the input data. This type of ESS is useful to executives as it provides possible outcomes and quick reference to statistics and numbers needed for decision-making. The exact reporting tools and outcome of an Executive Support System completely depends on the ESS developer and it's intended industry use. For example, Cambridge Systematic has ESS to support the investment planning process for the Ministry of Transportation. The features and functions of this Executive Support System are entirely different from the Executive Support System developed by Meditech, which is useful to health care organizations.

Several companies offer pre-designed Executive Support System packages, while others offer packages which can be customized your organization's needs.

Conclusion