Technology and Accounting Practice in Online Banking

Technology and Accounting Practice

The change in technology has significantly changed and modernised accounting information. As technology has advanced the speed and proficiency of the accountant’s job did too. But even with calculators, the accountant still had to keep track of the businesses’ functions on paper (calculate trial balances, journalize transactions, prepare financial statement reports ect). This has changed significantly with new software such as “Xero” now available and the majority of accounting online. This report defines the transition to online banking, some of the benefits and challenges and makes recommendations to ensure further uptake of online banking solutions will not disadvantage some parts of the community.

Online banking, also known as internet banking, is an electronic banking solution that enables bank customers to perform financial transactions on the internet using a personal computer or smart phone. Online banking is used for commercial as well as personal banking and allows for a range of accounting transactions, including transfer of money to other customers, saving, payments of invoices, commencement or cancelling of automatic transfers or bill payments and viewing of transaction history.

Prior to online banking, these accounting transactions were performed on paper, via telephone or directly in the banks. This report defined the impact of the changes to online banking with the advantages and disadvantages and advice to address the issues experienced.

The diagram below demonstrates the technology (Online Banking) used and transfers between the customer and administrator. Online banking has become standard practice due to the ease of use and simplicity.

Get quality help now

WriterBelle

Verified

Proficient in: Online Banking

4.7 (657)

“ Really polite, and a great writer! Task done as described and better, responded to all my questions promptly too! ”

+84 relevant experts are online

Hire writer

It is a significant change from the way banking was performed 15 years ago when online banking began to gain popularity. Customers now have access to their bank accounts, financial information and bank services wherever there’s internet on your computer or mobile device. This allows for faster and possibly improved financial management for customers. It also benefits financial institutions in that it is more efficient, is immediate and reduces the error rates as it automates work that was previously done manually. Online financial services and banking does however also have significant risks and disadvantages. The table below shows the benefits and disadvantages of online banking.

The changes to technology and innovative use of technology is predicted to further transform all aspects of our lives, including financial transactions and banking. One of the next changes will be the use of smart phones instead of credit cards for payment. Although the majority of people have access to computers, there are still significant part of the population without. This can be due to the areas where they live, ie very remove, or an inability to use digital solutions due to mental disabilities or age. To avoid the growing digital divide and reduce future cost of banking, I suggest that banks invest in low bandwidth and mobile phone solutions to ensure everyone has access. There should also be a solution that is easy for elderly people to use and provides confidence that online transactions are equally as safe as physical transactions.

References

1. Anon, (2010). online Available at:https://www.researchgate.net/figure/Architecture-of-Internet-Banking-Application_fig7_45919149 [Accessed 1 Apr. 2019].
2. Beers, B. (2019). Internet Banks: Pros and Cons. (online] Investopedia. Available at:https://www.investopedia.com/articles/pf/11/benefits-and-drawbacks-of-internet-banks.asp [Accessed 1 Apr. 2019.
3. C, V. (2017). Manual Accounting Versus Computerized Accounting | Experience.[online] Experience. Available at:https://www.experience.com/advice/professional-development/manual-accounting-versus-computerized-accounting/[Accessed 2 Apr. 2019].
4. Murakami-Fester, A. (2018). What Are Online Banks? The Pros and Cons. [online]
5. NerdWallet. Available at: https://www.nerdwallet.com/blog/banking/pros-cons-online-only-banking/ [Accessed 1 Apr. 2019].
6. Pepe, A. (2011). The Evolution of Technology for the Accounting Profession. [online] www.CPAPracticeAdvisor.com. Available at:https://www.capracticeadvisor.com/home/article/10263076/the-evolution-of-
   technology-for-the-accounting-profession [Accessed 2 Apr. 2019].