Bank Management System (The Origin, Evolution & How It Works)

What Is Bank Management System?

Bank management system is a set of software tools and processes that banks use to manage their cash flows, customer relationships, risk-taking, and technology.

Banks use management systems for different reasons, but they all have one common goal. They are to ensure that the bank manages itself in order to improve efficiencies and make better decisions on a large scale.

Bank management systems are made up of various tools that can be customized based on the specific needs of the bank. One such tool is a core system that manages both day-to-day operations as well as portfolio monitoring and producing reports on key performance indicators as well as automates the functions of back-office departments, such as payments, reconciliation, and compliance.

Accepting deposits, clearing checks, paying interest on pre-defined rates and making loans; a bank can be defined by such activities. Besides being an intermediary in financial transactions, a bank can provide other financial services to its customers. All these tasks and services are coordinated by a system called Banking Management System.

Yes, banking management system governs a variety of concerns associated with a bank’s efforts to render services and maximize profits.

Article at a Glance

  • The Origin of Banking Management System
  • Evolution of Banking Management System
  • The Major Changes a Banking Management System of Today Faced
  • How Banking Management System Is Shaping the Banking Industry
  • What Does a Bank Management System Team Do?
  • How Banking Management System Works

The Origin of Banking Management System

The need for a system, which could ensure quality services to customers had always been there. The need for such system becomes really indispensable when many banking activities are monitored by the government. Banks that deal with banking activities on a larger scale are the ones usually have to comply with the rules set by the government.

And, this requires a bank management system. The system has proved effective in coordinating among the customers, the government and the banks.

It gives us a system in which the government is allowed to play an important role with its control over the banking system. And, the bank can also offer quality services to the customers.

Evolution of Banking Management System

Modern banking system caters to a wide range of financial services. Banking management system can be traced back to the Roman Empire where banking management system was practiced. But, the system wasn’t systematic. And, it didn’t have a framework as modern banking system does.

So, banking management system evolved gradually in each and every sector of the banking sector.

The Major Changes a Banking Management System of Today Faced:

Some of the major changes that occurred regarding modern banking system are as follows:

  • Money replaced barter system, which produced transaction uniform
  • To increase public trust, uniform laws were established
  • Centralized banks were setup to manage other banks
  • Book keeping transformed from papers to digital with the advent of computers
  • ATM booths were established for easier withdrawal of money
  • Internet banking system emerged with the introduction of Internet

How Banking Management System Is Shaping the Banking Industry

The banking industry has witnessed extreme growth over the last couple of centuries and it will continue to undergo it in the future. And, such overwhelming growth can be attributed to effective banking management systems.

The scale and the extent of banking sector need to be global to be functional. A banking management system can play a significant role in assessing risk management (interest rate, credit and currency risks).

What Does a Bank Management System Team Do?

Bank Management System

Within every bank lies a team that monitors, manages and handles all the financial tasks related to the bank. And, the team is called a Bank Management Team. They have several tasks to accomplish. And, they are:

  • A bank management team assess management expertise in planning, policy development, strategic analysis and management functions.
  • The team will manage the quality of planning.
  • The team will ensure customer satisfaction and resolve any problems or complaints.
  • A bank management system team will meet the highest level of customer services.
  • The management team will supervise human resources of the bank.
  • A Bank Management System Team will manage control systems, such as auditing and internal auditing, risks liquidity and monitoring of profitability.

How Banking Management System Works

Banking management system performs several different functions. However, the functions could differ based on the network of institutions.

#For example: commercial banks offer payment and loan functions, which help us deposit funds and use our checking accounts. This allows us to pay our bills or make purchases. They can also help us purchase homes or cars.

Central banking management system is tasked with distributing currency and set up money-related policies. Investment banks or systems allow us to deal with capital markets.

Bottom Line – banking management system has revolutionized our ways of financing, transacting and maximizing profits. The success of a bank largely depends on how well its management team performs.

Last Updated on June 19, 2021 by Magalie D.

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