Financial Instruments and Institutions: Technological Advancements

This essay discusses the impact of technological advancements on financial instruments and institutions, focusing on the adoption of new technologies in commercial banking in the US and Australia. It highlights the benefits of cloud computing, improved online services, and mobile banking, while also addressing ethical concerns related to privacy, security, and potential for fraudulent activities. The analysis emphasizes the importance of safeguarding customer information and ensuring secure transactions to maintain economic stability and growth. The essay concludes that continuous efforts to resolve ethical issues are crucial for the sustained progress of the banking system and the protection of people's wealth. Desklib provides access to this and other solved assignments for students.

FINANCIAL INSTRUMENT AND
INSTITUTIONS

Introduction
Commercial banking was not vulnerable to disturbances until recently. The growth of
expectations of the corporate users and with the growing technological trends there has been
great changes. With the help of digitalization the banks are improving their bank end
processes which are assisting them to streamline the basic operations. The technological
growth is helping in faster settlements and is taking over the paper based transactions.
Commercial banking has already evolved and is expected to grow at a faster rate in the
coming years. In our discussion below we will discuss such technological advancements and
the ethical issues involved if any (Adelaja, 2015).
Commercial bank technological innovations in US
In order to make a significant progress, the banking system decided to adopt modern
technology for making the system run smoothly and efficiently. The banking system in US in
the recent times has shown its concern for technological advancement in the country. There
was a huge investment of $30 billion made by this sector to improve in the technological
fields (Bierman & Smidt, 2010). Earlier, there was a retraction on interstate banking and
branches but in the recent times of the developing banking era it was observed that there were
additions in this also. It was not easy to procure a new technology without a proper
knowledge and experiences. It was also difficult for the people working in this sector to adapt
to these immediate changes. Not all banks have been able to adapt new technologies; some
are still making an effort to do so. Some banking institutions are making continuous efforts to
adopt and learn about the new technologies such as Base II and Check 21. The small financial
institutions mainly adopt the technologies that are tested and try to make advancement with
the help of it whereas the large financial institutions are concerned more with the security. In
order to match the high standards of large financial institutions and the high quality services
provided by them, the small banks use the tested technology. It is necessary to provide a good
quality service to retain the existing customers as well as to invite new customers.
The most widely and commonly banking system that has been adopted by most of the
financial institutions is known as cloud computing system. This system has helped the
banking system to reduce the cost, improve online systems and has also helped in providing
mobile banking services to the customers. The facilities that are provides by financial
institutions with the help of this technology are as follows:

1. It has helped in improving the service provided to the customers.
2. Improvement in the risk management.
3. Increased speed of transactions.
4. The operations and strategies have become strengthened.
5. Improving the stability and economic growth by transforming the cost structure.
Earlier it was observed that the banks were encouraged by the regulatory authorities to make
technological advancements which will result into capitalisation and operational efficiency
(Dayananda, Irons, Harrison, Herbohn, & Rowland, 2008).
Australian financial institution
The financial system is laying great importance in bringing certain significant changes. These
changes relate to adoption of new technologies that has been invented, the ways that can
prevent failure in the banking systems, reduction of manual work, and expansion in the online
system. Such changes clearly shows that there will be a complete different banking system in
the future which will be more improved and advanced when compared with the present
(Menifield, 2014) .
It has been observed that there is a huge capital generation because of high profits earned, the
strong performance by the assets and stability in the non performing assets over the months.
There has been a great transformation in the services provided. These advancements have
reduced the cost of services, transfers and storage of information etc. There has been a more
complex but well functioned and well managed systems that is managed by highly qualified
and intellectual people (Peterson & Fabozzi, 2012) . The improved web services, wireless
networking and the internet approach has shown a significant improvement in the banking
services. . The banks are not only concerned with the adoption of new technology but at the
same time it is also trying to get the benefits at the lowest cost possible and also
strengthening the systems that it has set up
Ethical issues and common good analysis on technological improvements.
The online banking system has made the life of the customers easier. It saves their time and
helps them to carry transactions from anywhere at any time with maximum security. The
facilities provided by them are bill payments, online payments, online fund transfer, checking

their account balances and also solving the queries of the customers (Rivenbark, Vogt, &
Marlowe, 2009). There is also a facility of mobile banking in which the customers are
provided with the details of their balance and the transactions carried out through messages.
If there is any transaction made from their account, they immediately get a notification on
their phone. There is a huge security provided to customers while making any transactions
online, hence the banks have introduced a system of one time password without which the
transaction cannot be completed.
Several ethical perspectives in relation to online banking and electronic cards facilities can be
divided into the following categories (Seitz & Ellison, 2009):
Privacy: the banks should keep all the details of the customers stored safely and carefully.
Such information should be encrypted properly so the no one can carry out any kind of
fraudulent activities with the help of such information.
Ownership: The banks should see that no other person other than the account holder is
carrying out any kind of online transaction with that particular account. It should keep a
proper check on the IP address as well as the security password before permitting any
transaction.
Ethical social issues
Although, online banking has been greatly encouraged by the people but there still a lies a
threat of securities in the minds of the customers (Fridson & Alvarez, 2012). Banks has
provided various banking services that have made the life of customers more easier but still
there is a scope of improvement by the banking system in regards to keeping the information
of the customers safe and secure.
The issues can be both of legal as well as morale. In the recent times, there has been
improvement in the technology as well as their has been new methods found by people of
exploiting them. So, in order to provide a hassle free service the banks should try to eliminate
the vulnerability that is present. There should be a legal requirement and also a declaration
that would state that the bank will keep a check that the customer’s information is not leaked
to anyone, not even to the government. It is the duty of the bank to keep the money safe and
if there is any loss to the customer because of such activity then it should be reimbursed
(Ittelson, 2009). Thus, we can conclude that it is the duty of government and people to
safeguard the wealth of the people.

Conclusion
The growing advancement in the banking system has not only made the life of people easier
it has also helped in the economic stability and economic growth of the country. However,
this will continue only when the services provided by the banking institutions are free from
ethical issues. It is core responsibility of the government as well as banks to keep the wealth
of the people secured and protect them from getting exploited. If such issues are resolved
then there will be definitely a huge progress in the country (McLaney & Adril, 2016)
.

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