Traditional Banking --->E-banking: Variation in technological knowledge

New information technologies and emerging business forces have triggered a new wave of financial innovation in the banking industry in the form of electronic banking. To explore the nature and real impact of IT on the banking sector, it is imperative to know how technological knowledge has changed from traditional banking to e-banking.The key differences between the traditional bricks-and-mortar banking and e-banking in the IT-infrastructure can be summarized in the Table format shown above.

Before the emergence of e-banking, the IT-infrastructure in banking shifted from mainframe to PCs, to client/server. The traditional IT-architectures were embodied in desktop computing and wired networking architecture, which was supported by proprietary electronic network like wide area network (WAN) and value-added network (VAN). The electronic data interchange (EDI) provided computer-to-computer exchange of standardized electronic transaction documents and data. The value added networks provided higher security features and quarantined bandwidth. The traditional IT architecture was meant to support transaction functions within banks and did not provide much information because of limited bandwidth, platform dependency, and multiple software licenses. On the other hand, e-banking is embodied in Internet-based computing and wired or wireless networking, which is supported by a standard protocol. By relying on the open infrastructure and standardized protocol, the Internet provides an interoperable and worldwide networking model. Contrary to the limited bandwidth of the private network, the capacity of public Internet is abundant and nearly free. Moreover, the World Wide Web (WWW) can support the transmission of multimedia data.

The application platform of traditional banking is also different from e-banking. Based on the application platform, the web-based e-banking applications can be characterized as intense hypermedia systems. The e-banking applications are frequently multifunctional systems that integrates with existing front office, back office, and legacy information systems within the bank and often need to connect with trading partners and external stakeholders. To develop an e-banking application we require a combination of web site development techniques such as content and user interface design together with object-oriented Information systems development techniques.

Thus, internet technology has overturned the IT-infrastructure of branch-based networking and triggered changes in the knowledge about networking, data transmission, computing platform, interoperability, and system design. These novel online services are likely to be significant in differentiating e-banking from traditional retail banking. Today, the technological knowledge of traditional banking is becoming obsolete and banking industry is embracing new and advanced technology.