Banking Software: Do You Need It?
Banks have been in the news recently for having users’ passwords hacked. Here's a look at what you need to know about banking software.
Many banks allow for online banking, and one of the more popular features of these services is the ability to manage funds by transferring them between accounts, or "sweeping" them into other accounts. To do this, banks must record who owns what account and when it was purchased with an explanation of how it was acquired. These records are usually kept on a software platform that tracks these transactions and stores them in databases—you can think of these platforms as bank statements that show your purchases in chronological order (a history), making it easier to reconcile your income with your expenses. These platforms also receive information from banks and other financial institutions, and update the database accordingly.
Traditionally, these software platforms have been used to manage payment systems, but over the last decade or so they have grown considerably in their capabilities, becoming de facto bank management systems that can even replace some of the common tasks done by bank tellers. In most branches of a large bank these days, you can see a row of computer monitors behind the tellers, each with an operator monitoring some of these functions. You might wonder what exactly these banks are using to run their operations. Most likely they are using proprietary banking software called ACD/Labs , which is used by banks around the world. These systems are expensive to build and maintain, but for major banks they are a necessary cost of doing business.
A software platform that allows users to connect their bank accounts and carry out transactions on a set schedule called an Automated Clearing House (ACH) is also used by banks. ACD/Labs provides this functionality, allowing individual users to make low-value payments (usually less than $10) directly from one account to another when scheduled. Another function of this type of software is sending large batches of payments at once, which can be useful for sending out recurring bills and salaries.
The term "banking software" encompasses much more than just these ACHs and ACD/Labs. For example, banks often use software platforms to run their automated teller services (ATMs), handle customer service, allow customers to make deposits, and so on. Most of these are now built into the same software platforms as the ACHs and ACD/Labs mentioned above.
So that's about all you need to know about banking software; for a more detailed look at what your bank is using, read our article on the subject here .
Reader comments:
One thing I have noticed recently is that there appears to be a new wave of virus attacks on firms that sell banking software. These are being sent out in phishing emails. As banks run their software on either OS or Unix, it will not be the standard Windows Operating Systems that users see in the average office that is vulnerable to viruses. It might be worth a mention about this somewhere in your article..?
Thanks for the comment. We have now added a section entitled "Bank security" at the end of our article on banking software.
Posted by: April from New York at July 5, 2006 7:56 AM
from New York at July 5, 2006 7:56 AM Posted by: John from London at July 10, 2009 5:55 PM
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Conclusion
Banking software is an important part of a bank's infrastructure, providing customers with the tools they need to use the various services a modern bank offers. These can include money transfers and bill payments, as well as checking and savings accounts.
If your business relies on banking software and you have a particular concern regarding how it works, take a look at our article on banking software . It provides information on how these types of systems operate, why banks invest in them, the different types of software used by banks today and what information is exchanged between the two sides that make up the banking system.