IT_Book.pdf

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237

Basic Computing Concepts

Learning Outcome By the end of this chapter you should be able to：

■ Define a Computer

■ Define an operating system (OS) and describe its functions

■ List and describe OS types

■ Discuss application software and list a few examples of the applications as used in banks

■ Discuss the concept of data communication

Introduction Computers are everywhere and are used in almost every aspect of human lives. There are many different types of computers, ranging from small systems integrated into toaster ovens to guidance systems on satellites. However, perhaps the most common image associated with computers is the PC, or Personal Computer.

The computer is one of the most powerful innovations in human history. With the use of computers, people are suddenly able to perform staggering amounts of computations at dazzling speeds. Information can be "crunched", organized and displayed in the blink of an eye. As technology continues to advance, the computer will no doubt become even more pervasive — and in many cases, likely even less recognizable.

Most people are familiar with what a computer is in a specific, contemporary sense. Personal computers are found in most aspects of daily life, and for some it is hard to even imagine a world without them. But the term "computer〃 means more than simply the Macs and PCs people are familiar with. A computer, at its most basic, is a machine which can take instructions and perform computations based on those instructions.

It is the ability to take instructions — often known as programs in the parlance of computers — and execute them that distinguishes a computer from a simple calculator. While both are able to make computations, a calculator responds simply to immediate input. In fact, many modern calculators are actually computers, with a number of pre-installed programs to help aid in complex tasks.

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Information Technology in Financial Services | Reference Book 2

All general-purpose computers require the following hardware components： ■ Memory: Enables a computer to store, at least temporarily, data and programs.

■ Mass storage devices: Allows a computer to permanently retain large amounts of data. Common mass storage devices include disk drives and tape drives.

■ Input devices

：

Usually a keyboard and mouse, the input device is the conduit through which data and instructions enter a computer.

■ Output devices: A display screen, printer, or other devices that allow the user to see what the computer has accomplished.

■ Central processing unit (CPU): The heart of the computer, this is the component that actually executes instructions.

In addition to these components, many other supporting components make it possible for the basic components to work together efficiently. For example, every computer requires a bus (set of wires) that transmits data from one part of the computer to another.

Computers can be generally classified by size and power as follows, though there is considerable overlap：

■ Personal computers: A small, single-user computer based on a microprocessor. A personal computer is any general-purpose computer whose size, capabilities, and price make it useful for individuals, and which is intended to be operated directly by an end-user. In addition to the microprocessor, a personal computer has a keyboard for entering data, a monitor for displaying information, and a storage device for saving data.

■ Workstations: A workstation is a high-end microcomputer designed for technical or scientific applications. Intended primarily to be used by one person at a time, they may be connected to a local area network (LAN) and run multi-user operating systems. Historically, workstations offered higher performance than desktop computers, especially with respect to CPU and graphics, memory capacity and mult卜tasking capability. They are optimized for the visualization and manipulation of different types of complex data such as 3D mechanical design, engineering simulation, animation and rendering of images, and mathematical plots.

■ Minicomputers: A multi-user computer capable of supporting from 10 to hundreds of users simultaneously. A minicomputer is a class of multi-user computers that lies in the middle range of the computing spectrum, in between the largest mult卜user systems (mainframe computers) and the smallest single-user systems (microcomputers or personal computers).

■ Mainframes: A powerful multi-user computer capable of supporting many hundreds or thousands of users simultaneously. These are powerful computers used mainly by large organizations for critical applications, typically bulk data processing such as census, industry and consumer statistics, enterprise resource planning, and financial transaction processing.

■ Supercomputers: An extremely fast computer that can perform hundreds of millions of instructions per second. A supercomputer is a computer that is at the frontline of current processing capacity, particularly speed of calculation. Supercomputers are used for highly calculation-intensive tasks such as weather forecasting, dimate research, molecular modeling, physical simulations (such as simulation of airplanes in wind tunnels).

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computers are small enough to fit into mobile devices, and can be powered by a small battery.

Interactive devices of all sorts contain their own computers. Cellular telephones, GPS units, portable organizers, ATM machines, gas pumps, and millions of other devices all make use of computers to streamline their operations, and to offer features which would be impossible without a computer.

A computer like this is often referred to as an embedded computer. An embedded computer is differentiated from a personal computer because it is essentially static in its function. While a personal computer, or some cellular telephones, or some personal organizers are able to have new software installed, and make use of a wide range of features, an embedded computer usually has only a few purposes, which are relatively fixed once the computer is manufactured.

Computer Software The term "software" is a generic term, which is used to describe a group of computer programs, procedures and documentation, which perform some task on a computer system. Software is an ordered sequence of instructions given for changing the state of the computer hardware in a certain predefined sequence. Software also refers to one or more computer programs and data held in the storage of the computer. Software may be divided into two categories： Application software and System software.

What is System System software is computer software that is designed to operate the

Software? computer hardware and to provide and maintain a platform for running the application software. One of the most important and widely used system software is the computer operating systems by which parts of a computer are able to work together. This system software performs tasks such as transferring data between memory and disks or rendering the output onto the display device.

What is Application Application software (also called end-user programs) is computer

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is actualfy a subclass of computer software, which employs the capabilities of a computer directly and thdroughly to a task which the user wishes to perform. There are different types of application software, including Enterprise Resource Planning software, accounting software, Customer Relationship Management software, graphics software, media players, word processors etc.

Off-the-shelf Application software: Commercial Off-the-shelf application programs (or "COTS", as they are sometimes referred to) are intended to be used "as is", without being significantly modified or customized by programmers for a specific customer's needs. This type of software allows users to perfoFm tasks such as word processing, sending and recefving electronic mail', and analyzing statistical data.

The cost of developing off-the-shelf software is spread over a larger number of people, thus making it relatively cheaper as compared to custom software which is onl贫 designed for one or just a small number of people. However, off-the-shelf software is designed with many users in mind and tteis may not exad% fulfill a user's needs.

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laBc ：:irtiputing Concepts

Customized Application software: These represent the second, contrasting category of application software. These are programs which have been written "from scratch" or else extensively modified to perform a customized set of tasks for a specific customer based on the premise that the user's need are specific and not generic. Custom software can be developed by an in-house software development group, or be commissioned from a software house or independent software developer.

Some popular application software being used in banks include： word processing, spreadsheet, database applications, accounting packages, customer relationship management etc.

Operating Systems Operating system is the most important (system) program that runs on a computer. Every general-purpose computer must have an operating system to run other programs. All the computers that we use need an operating system. It may be a large mainframe computer running UNIX, a desktop PC running Windows XP, or a handheld computer running Palm

OS. All these systems need an operating system to make sure all the programs run smoothly. Operating systems perform basic tasks, such as recognizing input from the keyboard, sending output to the display screen, keeping track of files and directories on the disk, and controlling peripheral devices such as disk drives and printers.

For large systems, the operating system has even greater responsibilities and powers. It is like a traffic controller - making sure that different programs and users running at the same time do not collide with each other. The operating system is also responsible for security, ensuring that unauthorized users do not access the system.

Functions of the Functions and services provided by operating systems are numerous. It is

Operating System difficult to present an exhaustive list of OS functions. However, most operating systems perform the following important functions：

Provide Interface： All operating systems need to provide an interface to communicate with the user. This could be a Command Line Interface (CLI) or a Graphical User Interface (GUI). A command line interface (CLI) is a mechanism for interacting with a computer operating system or software by typing commands to perform specific tasks. The text-only interface contrasts with the use of a mouse pointer with a graphical user interface (GUI) to click on options, or menus on a text user interface (TUI) to select options.

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execute the processes accordingly to ensure efficient operation.

Memory Management: Computer memory is arranged in a hierarchical manner with the fastest registers first, followed by the CPU cache, random access memory (RAM), and then disk storage. The operating system's memory manager coordinates the use of these various types of memory by tracking which one is available, which is to be allocated or de-allocated and how to move data between them. This activity, usually referred to as virtual memory management, increases the amount of memory available for each process by making the disk storage seem like main memory.

Input/output management: This involves co-ordination and

assignment of the different output and input devices while one or more programs are being executed. In absence of this important OS function, there may be clashes between users / running programs for the same resources, resulting in degraded computer system performance and even complete shutdown due to deadlocks caused by programs competing for the same I/O resources.

File management: A file is a logical unit of storage that hides the technicalities from the users, providing them with the facility of creating, opening, transferring and deleting files. Operating systems perform this very important function. All files can also be easily changed and modified through the use of text editors or some other file manipulation routines.

Establishment and enforcement of a priority system: Determines

and maintains the order in which jobs are to be executed in the computer system. This feature ensures that the high priority tasks that are important for efficient system performance receive priority and are allocated computing resources (processor, memory space, etc.) without waiting.

Interpretation of commands and instructions: The operating

system listens to, identifies and interprets the commands given by users (through the keyboard) and by programs to ensure that the needed resources to carry out the required operations are allocated.

Coordination and assignment of compilers, assemblers, utility programs, and other software to the various users of the computer system.

Establishes data security and integrity. Security is an issue that is very important to all computer users. The security function of the operating system is also very important to the programmers. The system will often use an allow/disallow protocol when other systems are trying to access resources on a computer. Still others will require the use of a user name and password to keep the system secure.

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Basic Computing Concepts

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Classification of Operating Systems

Operating systems are classified based on various parameters such as the number of users that can simultaneously use the system, the number of processes (or tasks that the operating system can perform at a time) etc. Most current operating systems are user, multi-process systems.

Single-user

：

In a single-user operating system only one user can be logged on to the computer at a given point in time. Windows XP and Windows Vista are examples of single-user operating systems.

Multi-user： Allows two or more users to run programs at the same time. Some operating systems permit hundreds or even thousands of concurrent users. A multi-user operating system must make sure that the requirements of the various users are balanced, and that each of the programs they are using has sufficient and separate resources so that a problem with one user doesn't affect the entire community of users. Windows Server 2003 and Unix are examples of multi-user operating systems.

Single-tasking: As the name implies, this operating system is designed to manage the computer so that one user can effectively do one thing at a time. The Palm OS for Palm handheld computers is a good example of a modern single-user, single-task operating system.

Multi-tasking: Allows more than one program to run concurrently. Multi-tasking operating systems are most commonly used on desktop and laptop computers. Microsoft's Windows and Apple's Mac OS platforms are both examples of operating systems that will let a single user have several programs in operation at the same time. For example, it's entirely possible for a Windows user to be writing a note in a word processor while downloading a file from the Internet while printing the text of an e-mail message. This is made possible either by using multiple CPUs, or timesharing, or a mix of both.

Time-sharing： A time-sharing operating system uses different algorithms to share the CPU time with more than one process. This allows a computer with only one CPU to give the illusion that it is running more than one program at the same time. By allowing a large number of users to interact concurrently with a single computer, time-sharing dramatically lowers the cost of providing computing capability, makes it possible for individuals and organizations to use a computer without owning one and promotes the interactive use of computers and the development of new interactive applications.

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Basic Computing Concepts

Channel I》(Receiver j》I Destination

Signal ▲ Perceived Message Signal

r f

Source > Transmitter > ( v--- J L J

Message

/ ---

Noise

I

Data The distance over which data moves within a computer may vary from a

Communication few thousandths of an inch, as is the case within a single 1C chip, to as much as several feet along the backplane of the main circuit board. Over such small distances, digital data may be transmitted over simple copper conductors. Except for the fastest computers, circuit designers are not very concerned about the shape of the conductor or the analog characteristics of signal transmission.

Frequently, however, data must be sent beyond the local circuitry that constitutes a computer. In many cases, the distances involved may be enormous. Unfortunately, as the distance between the source of a message and its destination increases, accurate transmission becomes increasingly difficult. This results from the electrical distortion of signals traveling through long conductors, and from noise added to the signal as it propagates through a transmission medium. Although some precautions must be taken for data exchange within a computer, the biggest problems occur when data is transferred to devices outside the computer's circuitry. In this case, distortion and noise can become so severe that information is lost.

Data communication concerns the transmission of digital messages to devices external to the message source. "External" devices are generally thought of as being independently powered circuitry that exists beyond the chassis of a computer or other digital message source. As a rule, the maximum permissible transmission rate of a message is directly proportional to signal power, and inversely proportional to channel noise. It is the aim of any communications system to provide the highest possible transmission rate at the lowest possible power and with the least possible noise.

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11

Communication The fundamental purpose of a communication system is the exchange of Model data between two parties, e.g. the exchange of data between server and a workstation over a public telephone line. Another example is the exchange of voice signals between two telephones over the same network. The key elements of a data communication model are as follows：

Source: This device generates the data to be transmitted. Examples are telephones and personal computers.

Transmitter: This device transmits the data generated by the source device. Usually, the data generated by a source system are not transmitted directly in the form in which the data were generated. Rather, a transmitter transforms and encodes the data in such a way that data can be transmitted across a transmission. A modem is an example

Transmission media (Channel): This is the path the data follows to reach the destination device. This can be a single transmission line or a complex network connecting source and destination devices. Can be wired or wireless, depending on the situation.

Receiver: The receiver accepts the signals from the transmission system and converts it into a form that can be handled by the destination device. For example, a modem will accept analog signals from the transmission line (telephone network) and will convert it into a digital bit stream so that a device such as a computer can handle it.

Destination: This device takes the incoming signals from the receiver and presents them to a user or consumes them in any other useful manner.

Noise: Noise is the unwanted signal in the transmission that may cause the original message to distort and become unreadable. Therefore, it is important to filter the noise with improved channel construction and other techniques, including the use of filters.

Data Network The benefits networking offers to its users can be separated into two main

Benefits groups, i.e. sharing and connectivity. Networks make computers and their users capable of being connected together. This facilitates sharing of resources and information between the users. Modern businesses have expanded to become worldwide, and so the uses and significance of networking have gained momentum over the last few years. The many benefits that networking offers are：

Facilitating communications: Using a network, people can communicate efficiently and easily via email, instant messaging, chat rooms, telephone, video telephone calls, and video conferencing.

Sharing hardware: In a networked environment, each computer on a network may access and use hardware resources on the network, such as printing a document on a shared network printer.

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Sharing software: Users connected to a network may run application programs on remote computers.

*

Improved security: Collection of data and software resources in a central location enhances security. Security and data protection policies can be implemented more effectively and at less cost and using fewer resources.

Data A transmission or communication medium provides a physical entity for

Communication the conveyance of signals. Transmission medium is the physical path Media between transmitter and receiver in a data transmission system. Transmission media can be classified as guided or unguided. In both cases, communication is in the form of electromagnetic waves. With guided media, the waves are guided along a solid medium, such as copper twisted pair, copper coaxial cable, and optical fiber. This form of transmission is referred to as wired transmission. The atmosphere and outer space are examples of unguided media that provide a means of transmitting electromagnetic signals but do not guide them； this form of transmission is usually referred to as wireless transmission.

Wired technologies Twisted pair wire is the most widely used medium for

telecommunication. Twisted-pair cabling consist of copper wires that are twisted into pairs. Ordinary telephone wires consist of two insulated copper wires twisted into pairs. Computer networking cabling consist of 4 pairs of copper cabling that can be utilized for both voice and data transmission. The use of two wires twisted together helps to reduce crosstalk and electromagnetic induction. The transmission speed ranges from 2 million bits per second to 100 million bits per second. Twisted pair cabling comes in two forms which are Unshielded Twisted Pair (UTP) and Shielded Twisted Pair (STP) which are rated in categories and which are manufactured in different increments for various scenarios.

Coaxial cable is widely used for cable television systems, office buildings, and other work-sites for local area networks. The cables consist of copper or aluminum wire wrapped with insulating layer typically of a flexible material with a high dielectric constant, all of which are surrounded by a conductive layer. The layers of insulation help minimize interference and distortion. Transmission speed ranges from 200 million to more than 500 million bits per second.

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13

Wireless technologies

Data Cocnm unication

Networks

Terrestrial microwave - Terrestrial microwaves use earth-based transmitter and receiver. The equipment looks similar to satellite dishes. Terrestrial microwaves use a low-gigahertz range, which limits all communications to line-of-sight. The path between relay stations is spaced approximately 30 miles apart. Microwave antennas are usually placed on the top of buildings, towers, hills, and mountain peaks.

Communications satellites - Satellites use microwave radio as their

telecommunications medium as this is not deflected by the Earth's atmosphere. The satellites are stationed in space, typically 22,000 miles (for geosynchronous satellites) above the equator. These Earth-orbiting systems are capable of receiving and relaying voice, data, and TV signals.

Wireless LANs - Wireless local area networks use a high-frequency radio technology similar to digital cellular and a low-frequency radio technology. Wireless LANs enable communication between multiple devices in a limited area.

Infrared communication can transmit signals between devices within small distances not more than 10 meters peer to peer (or face to face) without any body in the line of transmitting.

In its simplest form, data communication takes place between two devices that are directly connected by some form of point-to-point transmission medium. Often, however, it is impractical for two devices to be directly, point-to-point connected because of the following reasons：

1. The devices are very far apart. It would be very expensive, for example, to provide a dedicated link between two devices thousands of miles apart.

2. There is a set of devices, each of which may require a link to many other devices at various times. Examples are all of the telephones in the world and all of the terminals and computers owned by an organization. Except in the case of a very few devices, it is impractical to provide a dedicated link between each pair of devices. The solution to this problem is to attach each device to a communication network. Communication networks are traditionally classified into the following two major categories：

Local area networks (LAN): The scope of a local area network is small. A local area network is a number of computers and other devices connected to each other by cable in a single location, usually a single floor of a building or all the computers in a small company. The internal data rates (speed) of a local area are much greater than those of wide area networks, Therefore local area networks are more suitable for resource sharing between multiple computers.

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Stated simply, wide area networks are the set of connecting links between different local area networks geographically spread over many countries and continents. These links are made over telephone lines leased from various telephone companies. Wide area networks can also be created with satellite links, packet radio or microwave transceivers but these options are generally far more expensive than leased telephone lines, although they can be used in areas where leased lines are not available.

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In this Part

Part 2: Information Technology in

banking sector

IT Systems Overview

Evolution of IT Systems in Banks

Desktop Systems

Communication Systems

Transaction Processing Systems

IT Systems that link Bank with other Banks

Card Processing Systems

Desktop Support systems / Customer services systems

MIS Applications

VeriSys

Credit Assessment Systems

Fraud/Risk Monitoring

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17

PartTwo

_{Information Technology in banking}

sector

Learning Outcome By the end of this chapter you should be able to：

■ List the popular banking packages and software being used

■ Discuss the key modules of banking packages and their functionalities

_ Discuss the evolution of IT systems in banks over the past decade

■ List banking systems/technologies that have become obsolete

■ Explain the usage and functionality of the Word processing

■ Explain the usage and functionality of a Spreadsheet

■ Explain the usage and functionality of a Presentation software

■ Explain the usage and functionality of an e-mail

■ Define the term 'Voice-over-IP (VoIP)'

■ Explain the usage and functionality of the VoIP system

■ Discuss the concept and usage of "Video conferencing"

■ Discuss the concept and usage of "Groupware"

■ Discuss the concept and usage of "Instant Messaging"

■ Explain the concept behind transaction processing systems

■ Explain the purpose of the transaction processing system in a bank

■ Discuss the features of a core banking system

■ Explain the concept of IBFT and list the names of banks using IBFT ■ List the names of networks available in Pakistan for inter bank

operations

■ List the networks that link local banks with International financial networks

■ Define briefly the working methodology of the networks that link local banks with International financial networks

Define the concept behind the desktop support systems/customer services system

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Define the concept of management information system as applied in banks

Explain briefly the working methodology of Liability management system, ERP and CRM

Describe briefly the working methodology of 'VeriSys'

State the concept of a credit assessment system

Describe briefly the role of eClB / credit bureau check systems in loan approval process

State the concept and purpose of behavioral assessment or application scoring system as used by banks

Explain the role and importance of a risk/fraud monitoring system

Recall the S8P regulation that applies to Fraud/Risk monitoring

Describe the functions of RTGS

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1

Provider 鼸.

IT Systems Overview

After the proliferation of technology in every sector, the situation in financial sector is not too different. Over the years banks have extensively explore IT and has taken advantage of its potential to the fullest. As of now, banking operations without information and technology support are unimaginable. To remain competitive, banks must continuously innovate and invest in information technology. To support banking and financial operations numerous off-the-shelf packages and solutions are available to banks and financial institutions. In some situations banks prefer to develop (in-house or through outsourcing) their own banking packages/solutions to meet their specific needs. Banking packages consists of different modules each related and catering to a basic function of banking. These modules include but not limited to Core banking, Treasury, Customer relationship management (CRM), Credit, Loans etc.

Oracle Financial Services Software Limited (formerly called i-flex Solutions Limited) is an IT solution provider to the banking industry. Oracle Financial Services is majority owned by Oracle Corporation. It claims to have more than 900 customers in over 135 countries.

A bank may select a suitable package out of the available solutions while keeping following factors in mind：

■ Ease of use by end-users

■ Training requirements & costs involved

■ Alignment with business goals and objectives

■ Budget constraints

■ Compatibility with existing systems/hardware

■ Availability of consultants, skilled staff and support

■ Other political/social reasons

A non exhaustive list of core banking packages and their providers is：

_ー

圖瞧

1

TEMENOS T24 Temenos Group

.-' . . . . " ' . . .

Misys Natech Misys

叙.

Misys

..1

i-i

BankFusion Universal Banking CSB

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Dc~<ing sector

While there are many popular banking packages and software being used by banks in Pakistan and around the world (some mentioned above), here we focus on TMENOS T24, a popular banking system and look at some of its features and capabilities. Other banking systems have near about similar core functionalities.

TEMENOS T24 is the most technically advanced banking system available today. It pairs the most comprehensive and most powerfull flexible business functionality with the most advanced and scalable architecture. This gives it unprecedented power and opportunity to meet the challenges of today and the opportunities of tomorrow.

T24 is built on open architecture, offers low cost of ownership and uses established standards such as HTTP, XML and J2EE. The design of T24 offers multiple application server support offering horizontal scalability and supporting huge numbers of users with true non-stop resilience. Probably the most innovative aspect of T24, however, is that it totally eliminates the need to run End Of Day (EOD) processing.

M

Package Provider

Finacle Infosys

CFT-Bank Center of Financial Technologies (CFT) AlpineGate Financial Solutions AlpineGate / AlpineGate CoreBanking

Alnova Financial Solutions Accenture / Alnova

TCSBaNCS _{Tata Consultancy Services (TCS)}

Bankway Fidelity National Information Services -て

-★择^鐵每《■輪微士,擊奪喊if电禮ぞtSせ!_氣空

--ゾ'

Corebank

Fidelity National Information Services (FIS)

SAP Banking Services SAP AG

FLEXCUBE Oracle Financial Services Software DIGIBANK Oracle Financial Services Software Hoaan Computer Sciences Corporation Insite Banking System Automated Systems, Inc.

SAB / SAMIC SAB

SFB / SCB UNISYS

Signature (software) Fiserv

縣舊癸•ぜ^淳^®'寥:4

TEMENOS T24 Temenos Group

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T24 Technology T24 is based on established industry standards as promoted by _{independent bodies and not on the particular interpretation of these} standards by specific vendors. T24 is provided in C or Java. T24 runs on：

_ Open hardware

■ Open database

■ Open J2EE application server

■ Open Ul through browser, HTML and XSLT

■ Open connectivity through XML and Web Services

■ Open C or Java language code

■ Open Java development environment

T24 also supports the full Microsoft stack and can support any size of financial organization from the smallest to the largest. T24 achieves its high scalability feature through an efficient and scalable architecture based on multiple TEMENOS T24 servers. This means that as volumes expand further, servers can easily be added improving performance and also improving availability. T24 is claimed (by TEMENOS) to be the world's only true 24 by 7 banking system. It eliminates the need for traditional end of day processing, enabling users and customers full access to the system at all times.

T24 permits the use of local programming to further extend the functionality and flexibility of the system. Local programs are written in Java and may be inserted in the T24 business logic at over 12,000 different exit points or APIs (application program interfaces). This capability greatly extends the local flexibility of the system without compromising the ability to upgrade to later versions of T24 when required.

T24 provides a solid foundation for banks to manage customers, processes, risks and monitor ongoing activities as well as specialized line of business functionality, which provides the full range of banking services such as：

Retail Banking

■ CRM

■ Cash transactions

■ Payments

■ Credit

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麵 banking sector 22

Corporate Banking

■ Payments

■ Cash management

■ Commercial Lending and Syndicated Lending

■ Trade finance

■ Internet banking

Treasury Operations

■ FOREX

■ Money market

■ Securities and repos

■ FRAs and swaps

■ Futures and

options Front Office

ARC - Acquire Retain and Cross-sell provides the front office capabilities for T24, based on its multi-channel architecture and focusing on technologies which support client-facing staff in delivering a differentiated customer experience, whilst also providing a consistent level of service across different electronic distribution channels.

■ ARC Branch - In the branch ARC offers specialized teller functionality and device support including off-line processing to ensure reliable customer service and access for branch staff to all client information through a 'single customer view'.

■ ARC Internet - On the internet ARC provides the widest possible access to banking functions across retail, corporate and private banking, supported by a scalable and extremely secure internet banking infrastructure.

■ ARC Mobile - On mobile devices ARC enables banks to offer a combination of highly flexible banking and payments solutions on the widest range of devices and in different channel modes, including SMS, browser and downloadable applications.

■ ARC Call Centre - In the call centre ARC has an open architecture which enables the single customer view to be combined with third party interactive voice response (IVR) and computer telephony integration (CTI) technologies.

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23 Information Technology in Financial Services | Reference Book 2

Islamic Banking

■ ARC CRM - ARC provides fully integrated support for identifying opportunities and managing prospects, by combining a combination of operational and analytical CRM with marketing campaign management capabilities.

Following the popularity of Islamic banking, particularly in the Middle East and South East Asia, TEMENOS responded by creating a best-of-breed Islamic banking system.

Designed for the Islamic banking sector, 'T24 for Islamic banking' is both Sharia-compliant and commercially flexible enabling banks to offer a competitive range of Islamic financial products.

Products support banks which operate solely on Islamic principles and it also allows conventional banks to employ Islamic financial techniques in their banking, for example by giving a profit-sharing framework as an alternative to interest rate mechanism. T24 for Islamic banking is well-suited to most Retail and Corporate banking operations as a readily available solution.

Banks using T24 for Islamic banking benefit from adopting one core system to cover all aspects of conventional and Islamic banking. This ensures that a bank can maintain a tight control over its operational costs and can remain focused on serving its customers in the most appropriate and effective manner.

T24 for Islamic Banking functionality comprises：

■ Murabaha

■ Musharaka

■ Bei Bithaman Ajil

■ Ijara

■ Bei Salam

■ Istisnaa

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Evolution of IT Systems

in Banks

About 2.5 decades ago the concept of automation and computerization was almost non-existent in Pakistani banks. The first commercial bank to adopt technology as a policy was MCB (Muslim commercial Bank) and launched numerous aggressive technology projects including the Mnet before 1990.

Around 1996 United Bank Limited (UBL) in collaboration with other banks including Allied Bank developed a comprehensive banking package called Unibank. This package was adopted by many leading banks and it received reasonable popularity.

Between 2001 and 2005 State Bank of Pakistan also aggressively invested in computerization and started projects focusing on increasing internal efficiency, external linkages with commercial banks and Data warehousing. SBP's initiatives in this regard created motivation and confidence in other commercial banks to reserve budgets for computerization.

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Word-processing

23

Desktop Systems

Word processing is one of the earliest applications for the personal computer in office productivity. Using a computer to create, edit, and print documents. Of all computer applications, word processing is the most common. Word processing need a computer, a special program called a word processor and optionally a printer. A word processor enables people to create a document, store it electronically on a disk, display it on a screen, modify it by entering commands and characters from the keyboard and/or mouse and print it via a printer.

In word processing electronic text can be moved around at will, misspelled terms can be corrected throughout the document by means of a single command, spelling and grammar checkers can automatically alert the user to apparent errors of spelling, punctuation and syntax. The document's format, layout and type fonts and sizes can be changed repeatedly until a satisfactory design is achieved. Since all editing ideally occurs on-screen, word processing can result in decreased paper usage and simplified editing. When the final draft is ready, the document can be printed out (in multiple copies if necessary), sent as an e-mail attachment, shared on a computer network, or simply stored as an electronic file.

Although early word processors used tag-based markup for document formatting, most modern word processors take advantage of a graphical user interface providing some form of what-you-see-is-what-you-get (WYSIWYG) editing. Most are powerful systems consisting of one or more programs that can produce any arbitrary combination of images, graphics and text, the latter handled with type-setting capability.

Microsoft Word is the most widely used word processing software. Microsoft estimates that over 500,000,000 people use the Microsoft Office suite, which includes Word. Many other word processing applications exist or existed, including WordPerfect and WordStar.

Word processors vary considerably but all word processors support the following basic features：

■ Insert text: Allows users to insert text anywhere in the document.

■ Delete text: Allows erasing characters, words, lines, or pages.

■ Cut and paste: Allows to remove (cut) a section of text from one place in a document and insert (paste) it somewhere else.

_ Copy: Allows duplicating a section of text.

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so that it fits.

■ Search and replace: Allows directing the word processor to search for a particular word or phrase. Can also direct the word processor to replace one group of characters with another everywhere that the first group appears.

■ Word wrap: The word processor automatically moves to the next line at the end of current line and readjusts text if user changes the margins.

_ Print: Allows sending a document to a printer to get hardcopy.

Word processors that support only these features (and maybe a few others) are called text editors.

Most word processors, however, support additional features that enable users to manipulate and format documents in more sophisticated ways. These more advanced word processors are sometimes called full-featured word processors. Full-featured word processors usually support the following features：

■ File management: Many word processors contain file management capabilities that allow users to create, delete, move, and search for files.

■ Font specifications: Allows changing fonts within a document. For example, users can specify bold, italics, and underlining etc. Most word processors also let users change the font size.

■ Footnotes and cross-references: Automates the numbering and placement of footnotes and enables easy cross-referencing other sections of the document.

■ Graphics: Allows embedding illustrations and graphs into a document. Some word processors let users create the illustrations within the word processor, others let insertion of an illustration produced by a different program.

■ Headers, footers, and page numbering: Allows specifying

customized headers and footers that the word processor will put at the top and bottom of every page. The word processor automatically keeps track of page numbers so that the correct number appears on each page.

■ Layout： Allows specifying different margins within a single document and to specify various methods for indenting paragraphs.

■ Macros： A macro is a character or word that represents a series of keystrokes. The keystrokes can represent text or commands. The ability to define macros allows users to save a lot of time by replacing common combinations of keystrokes.

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■ Spell checker: A utility that allows checking of the spelling. It will highlight any words that it does not recognize.

■ Tables of contents and indexes: Allows automatic creation of a table of contents and index based on special codes that are inserted in the document.

■ Thesaurus: A built-in thesaurus that allows users to search for synonyms without leaving the word processor.

■ Windows: Allows editing of two or more documents at the same time. Each document appears in a separate window. This is particularly valuable when working on a large project that consists of several different files.

■ WYSIWYG (what you see is what you get): With WYSIWYG, a document appears on the display screen exactly as it will look when printed.

Spread sheets The invention of electronic spreadsheets along with word processing software and databases unquestionably was a major factor in convincing people of the worth of microcomputers in the early years of personal computers. Since that time, the constantly increasing versatility and wider applications of spreadsheet software have made it into a product that seems almost indispensable to business and personal users. Spreadsheets are now a standard part of office suite packages.

A spreadsheet is a computer application that simulates a paper accounting worksheet. It displays multiple cells usually in a two-dimensional matrix or grid consisting of rows and columns. Each cell contains alphanumeric text, numeric values or formulas. A formula defines how the content of that cell is to be calculated from the contents of any other cell (or combination of cells) each time any cell is updated. Spreadsheets are frequently used for financial information because of their ability to re-calculate the entire sheet automatically after a change to a single cell is made.

VisiCalc was the first electronic spreadsheet on a microcomputer and it helped turn the Apple computer into a success and greatly assisted in their widespread application. Lotus 1-2-3 was the leading spreadsheet when DOS was the dominant operating system. Excel now has the largest market share on the Windows and Macintosh platforms.

When spreadsheet software first became available for computers in the early 1980s, it was known as a "killer application" because people began to buy computers just so they could work with spreadsheets. Today, as already mentioned before, spreadsheet software is practically a required

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1. Visual Design

Most people process data most easily when it is presented visually rather than simply existing as a set of hypothetical numbers in the mind. Spreadsheets allows to lay figures out on a grid, calculating and manipulating them visually. Often, this may result in processing the information more quickly. On a spreadsheet errors or omissions are noted easily than otherwise.

2.Automatic Calculations

Spreadsheet software gives the ability to enter mathematical formulas ranging from simple arithmetic to complex statistics. This is done in a simple and intuitive manner.

3. Dynamic Updates

In addition to the standard method of entering data in a spreadsheet

i. e typing numbers in cells, users can also create a cell with a value generated dynamically based on other cells. Because the value displayed in the cell is based on the values in other cells, the cell dynamically updates when user change any of the referenced cells. This allows testing different scenarios by changing the cell values.

4. Data Sorting

Spreadsheets come with a function that allows the user to re-group the data based on a single column of information. For example if user wants to see all the information sorted by annua! sales revenue (in a relevant column), then he can initiate the sort function and the data is in the required format and ail of the associated information stays intact as well.

5. Data Analysis

Spreadsheet software gives the ability to analyze data in ways other than simply looking at grids and lines. Most spreadsheet software can automatically create graphs and charts from data, giving different ways of comparing and analyzing information. These visual representations can aiso be printed and emailed, or exported into slide shows for presentations.

6.Warnings

Because of the complexity of how a spreadsheet works and the potential to develop complicated and interrelated calculations, the potential for error increases exponentially with the size of the spreadsheet. Audit controls are limited and often what is possible in this area is under-utilized. All too often not enough planning goes into the development of spreadsheets, particularly when designed for other users. Because it is so easy to change values in the spreadsheet, easy mistakes have unintended consequences.

Spreadsheet applications can appear somewhat intimidating to ne.oerienced users and this overwhelming initial appearance can lead •isefs to use the applications for unintended purposes. Users should

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Presentation Before computers were commonplace, presenters usually had an easel software with posters or drawings to show any necessary graphics to the audience. In some cases the speaker would have a slide projector with a carousel of individual slides to show photographs on a screen.

Today, many software package suites contain a program designed to accompany the speaker when he makes a presentation. The specific presentation program in this suite of programs is mostly (but not always) in the form of a slide show.

These presentation software programs make it simple and often fun to create a presentation for the audience. They contain a text editor to add written content, and abilities within the program to add charts and graphic images such as photographs, clip art or other objects to liven up the slide show and get the point across effectively.

Presentation software programs include -

_ PowerPoint (many versions) - the leader on the Windows platform created by Microsoft corporation. PowerPoint can be bought separately or is included in the Microsoft Office suite of programs

■ OpenOffice.org Impress - created by Sun Microsystems Inc. OpenOffice Impress (as it is more commonly known), is part of a suite of programs offered as a free download. This suite also contains a word processor, a spreadsheet program and a drawing program.

■ Windows Movie Maker - a desktop video program, created by Microsoft installed on every Windows computer. Windows Movie Maker allows creating and editing movies to use to accompany presentation, although users can also add still photos or graphics and create a slide show, just as in PowerPoint and OpenOffice Impress.

■ Keynote - created by Apple Computer is the leader in presentation software on a Mac platform. It is part of a suite of programs called iWork.

Users of Presentation Software:

Many people make use of presentation software to support them when they have to give a presentation to others, for example：

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_ Most medium to large sized companies have a human resource department that will be involved in training new employees or providing training schemes for existing employees. Presentation software is regularly used as a training tool.

■ Teachers often use presentations so that students have a concise set of notes to copy from the board.

■ Students are also regularly asked to create presentations about a topic they have been studying. They may be asked to show their presentations to the rest of the class.

■ Presentation software is regularly used during conferences. Speakers will project their key points onto a large screen whilst they talk about the subject.

Presentation software is used to display information, normally in the form of a slide show. It typically includes three major functions (as already stated above)：

1. A n Editor - Allows text to be inserted and formatted

2. Method for inserting and manipulating graphic images, or animations with these objects

3. Slide show system (Slide Show Engine) to display the designed slide content

Sasic Presentation Software features are：

■ Insert Slide Feature： Allows insetting slide anywhere in the presentation.

■ Deletion of Inserted slides： Any slide of the presentation can be removed.

■ Allows cut and paste, move, copy slides in any order.

_ AJIows displaying the presentation designed in a slide show system. View Slide Feature)

■ Mkms animations and/or sounds manipulations on objects in the side.

_ Simple Find and Replace, and text editor features.

■ :ニers different design/backgrounds/layouts to make presentations attractive.

麵 Matured Presentation software offers more features than mentioned

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_ font specifications - Allows to change and use different font "aces styles and effects

■ Additional features for slide： footnotes, cross references, advanced navigation system, headers, footers

* Good layout management system： Presets or customized layout designing

■ Macros - for add interactive features ■ Spell checkers and dictionary support

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■ Automatic timings

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Allows slides to advance according to preset timings

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Other than Microsoft Power Point； Corel Presentations, ((Presenter, OpenOffice.org impress are full-featured presentation software.

Communication Systems

Electronic mail is one of the most commonly used services on the Internet allowing people to send messages to one or more recipients. Email was invented by Ray Tomlinson in 1972. Prior to this, messages could only be sent to users on a single machine. Tomlinson's breakthrough was the ability to send messages to other machines on the Internet, using the @ sign to designate the receiving machine.

Since then e-mail has established itself as one of the primary lines of communication worldwide at personal and organizational levels. Email access provides easy communication and responses that can be quickly organized and filed away.

An e-mail message has always been nothing more than a simple text message - a piece of text sent to a recipient. In the beginning and even today, e-mail messages tend to be short pieces of text, although the ability to add attachments now makes many messages quite long. Even with attachments, however, e-mail messages continue to be text messages.

Modern email operates across the Internet or other computer networks. Some early email systems required that the author and the recipient both be online at the same time, in common with instant messaging. Today's email systems are based on a store-and-forward model. Email servers accept, forward, deliver and store messages. Neither the users nor their computers are required to be online simultaneously； they need connect only briefly, typically to an email server, for as long as it takes to send or receive messages.

An email message consists of three components, the message envelope, the message header, and the message body. The message header contains control information, including, minimally, an originator's email address and one or more recipient addresses. Usually descriptive ■formation is also added, such as a subject header field and a message suomission date/time stamp. The body consists of the main message text. When email is being sent, the e-mail program connects to the outgoing mail server, and tells it source e-mail address (the "Sender"), and the address(es) of the recipient(s). This is called the envelope. Then :sends the message. The envelope and the message arrive at the recipient's mail server. Usually at this point the envelope is thrown away, ：nd the message is placed into the recipient's mailbox. Thus the recipient jcijy gets the message and never gets to see the envelope.

To work with emails, some sort of e-mail client is needed. Many people :se well-known, stand-alone clients like Microsoft Outlook or Outlook Express. Some people subscribe to free e-mail services like Hotmail or

?_{ahoo and use an e-mail client that appears in a Web page. No matter}

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34 Features of email

■ Shows a list of all of the messages in the mailbox by displaying the message headers. The header shows who has sent the mail, the subject of the mail, may also show the time and date of the message and the message size.

_ Allows to select a message header and read the body of the e-mail message.

■ Allows to create new messages and send them.

■ Allows to add attachments to messages sent and save the attachments from messages received.

Sophisticated e-mail clients may have all sorts of features, but at the core, this is all that an e-mail client does.

Almost instantaneous

Email messages are transferred almost instantly. They move as fast as current in copper wires or light in optical cables. When an email leaves sender's computer it arrives at the recipient's inbox almost immediately. Consequently, two people can potentially have a conversation over email.

Cost of sending an email is zero or negligible

For people and businesses who have 24 hours Internet (cable or broadband), the cost of sending an email is zero or very small. For dialup users, the maximum cost of sending an email will be that of a phone call plus some fixed charges.

Emails can be sent in bulk

One email message can be sent to multiple recipients almost at the cost of a single email. When compared to conventional postal service this is indeed a huge saving.

Email attachments - any digital document can be sent over email

As long as a document can be converted into digital format, it can be sent over email. Again, the cost and time aspects are important. In addition to text documents photographs, music and audio files and even video can be attached along with an email message. Though many email services put a limit to the email attachment size or number of files attached, there are workarounds like compressing and zipping files to reduce their sizes.

Delivery is almost guaranteed

The delivery of email messages in almost guaranteed. However sometimes for technical reasons that are beyond the scope of this book, email can get lost in cyberspace but this is very rare.

Request return receipt

Just like with postal and courier services, sender can request a return receipt which simply involves a click of a mouse button by the recipient.

Email is accessible from anywhere

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anywhere, anytime and through a multitude of devices - computers, laptops, palmtops and even cell phones.

Built in spell checking

Most email programs (or email clients) have built in spell check dictionaries.

Notification of new arrivals

Email programs or devices can also be set up to get a notification through sound or a flash of light when new messages arrive in the inbox.

Can be formal as well as informal

Email messages do not signify informality. Just because email is easy to compose and send does not mean it cannot be used in formal and official correspondences.

Email storage and management

Storing and managing emails is very easy. Segregating messages into folders and organizing them properly is just like cleaning the desk and filing work. Moreover, email storage does not consume space on computer's hard disk.

Email security

The best way to secure email messages is to use the PGP (Pretty Good Privacy) technology. However, most people are unaware of it. Pretty Good Privacy (PGP) is a popular program used to encrypt and decrypt e*mail over the Internet. It can also be used to send an encrypted digital signature that lets the receiver verify the sender's identity and know that the message was not changed en route. Available both as freeware and :n a low-cost commercial version, PGP is the most widely used privacy-ensuring program by individuals and is also used by many cocporations. Developed by Philip R. Zimmermann in 1991, PGP has become a de facto standard for e-mail security. PGP can also be used to encrypt files being stored so that they are unreadable by other users or intnjders.

___ tntrast to the popular notion, according to few, email actually creates ~we work. The ease of sending and receiving email has transformed businesses throughout the world and some claim that the stress levels ~cve increased as reaction times have decreased.

People expect immediate replies

Most people know that emails are delivered instantaneously and hence ioect replies immediately. In situations when quick reply is not received, -ad feeling and suspicions may arise.

Most email messages are not secure

mentioned above, though a good secure technology exists for email it 5 lardly used by masses. Hence transferring sensitive information over n, such as credit card numbers or bank details is not advisable.

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Voice over Internet Protocol (VoIP)

Telephony is a term denoting the technology that allows people to have long distance voice communication. It comes from the word 'telephone' which, in turn, is derived from the two Greek words 'tele' which means far and 'phone' which means speak. The term's scope has been broadened with the advent of the different new communication technologies. In its broadest sense, the terms encompasses phone communication, Internet calling, mobile communication, faxing, voicemail and even video conferencing.

The initial idea that telephony returns to is the POTS (plain old telephone system), technically called the PSTN (public-switched telephone network). This system is being fiercely challenged by and to a great extent yielding to Voice over IP (VoIP) technology.

Voice over Internet Protocol (VoIP) is an emerging set of applications which allows people to make telephone calls over the Internet. It is already starting to replace existing telephone networks, with some people and businesses opting to cancel their traditional phone line and use VoIP instead. Other terms frequently encountered and often used synonymously with VoIP are IP telephony, Internet telephony, voice over broadband (VoBB), broadband telephony, and broadband phone. They all refer to the channeling of voice calls and voice data through IP networks, namely LANs and the Internet. This way, existing facilities and resources that are already used for data transmission are harnessed, thereby eliminating the cost of expensive line dedication as is the case with the PSTN. The main advantage that VoIP brings to users is considerable cost cutting.

VoIP was originally developed to provide voice communication between computer users in different locations. Although it still has this application, it has been further developed into a telephone network in its own right. People using VoIP can call any telephone anywhere in the world and can receive calls on telephone sets connected to the Internet or Local Area Network (LAN).

The first step in using VoIP is converting voice into digital data. This is done by 'sampling' the voice i.e. dividing the analog sound signal into discrete steps that can be assigned a number value. Once the voice is digitized, the data can be compressed.

This compressed digital data is split up into 'packets' of about 1500 bytes that can be transferred over the Internet. As well as the voice data, the packets contain information about their origin, their destination and a timestamp that allows them to be reconstructed in the correct order. Once they arrive at their destination, they are reassembled and converted from digital back into analog so that the receiving party can hear the voice on their speakers.

In order for voice data to be transmitted without noticeable delays, a broadband Internet connection is necessary.

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system. As standards are being developed it is becoming more reliable and moving towards greater acceptability. It is inevitable that VoIP will eventually replace traditional phone service - in fact, phone companies are already taking advantage of the technology to offer cheaper long distance rates.

In relation to VoIP a popular term used is softphone. A softphone is a software program for making telephone calls over the Internet using a general purpose computer, rather than using dedicated hardware. Often a softphone is designed to behave like a traditional telephone, sometimes appearing as an image of a phone, with a display panel and buttons with which the user can interact. A softphone is usually used with a headset connected to the sound card of the PC, or with a USB phone. A USB phone looks like a traditional telephone, but it has a USB connector instead of an RJ-11.It may be used with most softphones and services like Skype, Net2Phone, MSN Messenger, NetMeeting etc.

Advantages

Low cost - One of the main advantages of VoIP is its low cost. If a fast Internet connection (DSL or cable) is available, PC-to-PC phone calls can be made anywhere in the world for free. In case of a PC-to-phone connection, there's usually a charge but probably much cheaper than the regular phone service.

Portability - Another advantage of VoIP is portability. Phone calls can be made and received from anywhere where there is a broadband connection available simply by signing into VoIP account. This makes VoIP as convenient as e-mail.

Features - There are many other features that make VoIP attractive. Call •wwarding, call waiting, voicemail, caller ID and three-way calling are 5ome of the many services included with Internet telephone at no extra

charge.

Disadvantages

Heeds Electric Power - During power-off durations a regular phone is «.£pt in service by the current supplied through the phone line. This is not :*:ssible with Internet phones, so when the power goes out, there is no phone service. One solution to this problem is to use battery backups power generators to provide electricity. This shortcoming is being iOGressed in other more technical ways also.

Soand Quality And Reliability - Some VoIP services have problems with sojrxi quality and reliability. Data sent across the Internet usually arrives i' *-； destination in a scrambled order. This is not a problem for e-mail or icc^ments because the data can be reassembled in the correct order '：t has all arrived.

lace data can also arrive in a scrambled order but this is more of a .こc«en because of the rea卜time nature of VoIP. In order to make voice anrecSons with the least amount of delay, some packets may have to be

dropped if they don't arrive in time. This can cause short periods of silence in the audio stream.

IT_Book.pdf

table of Contents

Basic Computing Concepts

：

：

Part 2: Information Technology in

banking sector

PartTwo

Information Technology in banking

sector

1

IT Systems Overview

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圖瞧

Evolution of IT Systems

in Banks

Desktop Systems

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二

：

Communication Systems

_{Information Technology in banking}