|
|
Most of us use computers to do our homework, to access the Internet, send emails and play games.
Computers and technology have hundreds of uses in the modern world from space missions to microwave ovens. One industry that uses computers and technology all the time is finance and banking! |
 |
 |
WHY USE COMPUTERS?
For information and efficiency. With reliable information, banks are better able to make the decisions that allow them to do their job – making good investments.
|
Computers play a huge part in getting and sharing information, which is why the computer industry is often referred to as the Information Technology, or the I.T. industry.
Computers can make fast calculations and carry out instructions efficiently and more quickly than people - so transactions that would have once taken several minutes or longer, are now done in seconds.
AND TIME MEANS MONEY!! Heard that before?
|
 |
|
...SO, WHAT SORT OF INFORMATION?
One of the main activities of financial firms is buying and selling shares. In today’s market computers and technology are essential to the activity of trading shares. An average daily value of shares traded across the London Stock Exchange (LSE) during November 2004 was £20.7 billion, with close to 300,000
trades daily!
Keeping track of all of these shares and their prices and then trying to buy and sell these shares is not an easy task without help. |
NEW BANKING SYSTEMS!
I.T. experts have developed systems that can display many share prices in real time, showing share traders whether prices are going up or down, helping them to make a decision whether to buy or sell a share. These systems are also used to actually buy and sell the shares, in a few seconds at the click of a button, allowing traders to react quickly to changes in price and therefore, maximise their profits.
Also, because computers can calculate and analyse figures very quickly, they can show traders other useful information, instantly, such as how much money they may have made, and what sort of risks they may be taking when they are trading.
To give you an idea of how important technology is in banking, European financial services companies spent £16.3 billion on it in 2003!
|
WHAT HAPPENED BEFORE COMPUTERS?
Trading was done mainly face-to-face in what were known as ‘open-outcry’ markets or pits or over the telephone. Doing business in this way was noisy, frantic, inefficient and prone to errors as traders and brokers made numerous deals verbally. As you can imagine, talking with several people, buying and selling shares and watching prices - all at the same time - could prove to be very tricky, but this is exactly the sort of thing computers can do with ease. |
 |
| ALL CHANGE!!!
But all this changed in October 1986. The London Stock Exchange converted from an open-outcry market to an electronic exchange. This event was commonly known as the ‘Big Bang’ and meant fully automated electronic trading, increasing the speed and the volume of trading in London, and ensuring that London remained the world’s leading financial centre.
SO WHAT’S THE DIFFERENCE?
Why should we care if big banks and institutions become more efficient and make more money? Well, every time we put our savings into a bank account, these banks hold our money for us, and try to make more of it by trading shares and other financial instruments. We get some of this profit back in the form of interest! So the next time you put your money away for safe-keeping in a bank or building society, and you see you’ve been paid interest, just remember, a computer very much like the one you might have at home played a big part in making that money for you!
By Matt George
Matt is an I.T. Specialist at UBS Investment Bank
back
|
|
|
|
|
|
 top
|
