Data security is a major concern in the banking industry where over the years technology has been used to implement various standards to facilitate the implementation of security in the various transactions and internal processes in the industry. Post 1996, banks started implementing data security in transactions using EDI or Electronic data Interchange standards. Financial EDI standards were developed to cater to the requirements of financial institutions like banks.
Problems inherent in using the traditional paper check as payment which affect the payee include the regular occurrence of lost and mutilated checks, delayed mail delivery resulting in late payments, limited remittance information on check stubs, intensive labor required for receipting and depositing checks, keying payments to accounts receivable systems, and the potential for fraudulent check cashing. Problems affecting the financial institutions include the high cost of producing and distributing paper checks due to labor, material and equipment costs. Surprisingly these shortcomings were accepted for many years even after few electronic payment alternatives existed.
By improving accuracy and speed of accounting operations, financial electronic data interchange (EDI) can enhance a healthcare organization’s cash flow. Banks play a key role in implementing EDI for accounts receivable. Financial electronic data interchange (EDI) is poised to make significant advances in banking accounting operations. EDI offers significant improvements in speed and accuracy. Using EDI, transactions that originally requires hours, even days, can be processed instantly. In addition, EDI’s potential error rate is under 2 percent, compared to the previous accepted error rate of 12 percent in the financial industry. EDI also offers the potential for increased payment speed, reduced risk of data loss, and simplified reports that combine customer addenda and billing information. EDI even can be used to verify customers’ insurance eligibility.
Today electronic payments have now taken off and banks are gearing up to meet increasing corporate and government demands by implementing EDI technology.
Dr. Kar works in the interface of digital transformation and data science. Professionally a professor in one of the top B-Schools of Asia and an alumni of XLRI, he has extensive experience in teaching, training, consultancy and research in reputed institutes. He is a regular contributor of Business Fundas and a frequent author in research platforms. He is widely cited as a researcher.
Note: The articles authored in this blog are his personal views and does not reflect that of his affiliations.