Transcript IT in Finance

The Impact of
Information
Technology on Finance
Dr. Eskandar Tooma
Knowledge Based Economy

Advancement in IT has contributed to the
global integration and mass market reach
creating what we now call a “knowledge
Based Economy”
1.
2.
Databases
More efficient and symmetric information
Potential Difficulties of a
Knowledge based Economy
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Income disparity within a country between dissimilar
social groups both by earning and by education
level.
Costs of building the physical information
infrastructure can be extremely high for developing
countries.
Costs for setting the national platform for human
software development can be colossal.
Security is a major issue
 difficulties to manage access control and other
security policies when tens of thousands of users
may be permitted to log in to a computer system .
Areas of Finance affected by
Technology

Investments
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Corporate
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Banking
Investments
IT provided a more efficient market structure and better decisions
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Streamline data
Modern clearing and settlement systems using the latest computer and
telecommunications technology.
Online stock trading through discount brokerage firms
Computer Software
Using simulations packages: Neural Network Artificial Stock Markets
Reallocation of risk.
In summary
IT has made possible the creation, valuation, and exchange of the complex
financial products on a global basis.
Corporate
IT proved to be very helpful in Mergers & Acquisitions and Capital Budgeting
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Expansion of knowledge and reduction in uncertainty.
Information has become vastly more available in real time Better
decisions.
Development of Financial markets and expansion trading activities

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Information from Paper to Electronic form  large amounts of financial
information as well as value could be processed and transferred across
markets.
Global Market linking local markets through networks
In summary
Empower the firm’s decision making by increasing
 access to information,
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capacity to process that information
capacity to reach out directly to other stakeholders without restraint
Banking
IT contributed to banking systems in general as well as banking products
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Real Time Gross Settlement (RTGS) inter-bank payment systems as
the cornerstone of a modern electronic financial system
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Monetary Network-a "system of systems" that links market participants
internationally
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Internet-based banking
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Smart Cards
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Online Credit Check
Concluding Remarks
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Investments:
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arabfinance.com
Automation of floor trading
• CASE faster clearing and settlement dates
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Corporate:
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British Petroleum (formerly AMOCO) Real options.
Banking:
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AAIB  smart cards