Banks are responsible for maintaining a healthy cash flow in the economy, securing people’s money, and providing other money-related services. Essentially, our whole society is dependent on the fact that banks work and are secure. That is why, in recent years we have seen a rise in the implementation of RFID Technology in the Banking Industry.
So, let’s check out the applications and benefits of this technology.
What is RFID Technology?
Radio Frequency Identification (RFID) technology is a system that uses radio waves to communicate data wirelessly between two components. Such a system consists of three primary components – RFID Tags, Readers/Sensors, and Antenna. Tags consist of an antenna and a chip that can store identification information of assets. The reader uses an antenna to broadcast radio signals. If a tag comes into the radio field, it immediately starts broadcasting back a signal of its own with the information stored in it.
What is RFID Banking?
It is the implementation and integration of radio frequency identification technology with the day-to-day operation of the banking sector. With the help of this technology, banks have been able to optimize many tasks and improve their security systems. There are a lot of ways that these systems can become of use in a bank. So, let’s not waste any more time and discuss its applications in banking.
Application of RFID Technology in the Banking Sector
There are many operations inside a bank where you can successfully implement the use of RFID. Below are some of the most essential applications of this technology.
RFID Smart Card
This is by far the most common and mostly seen use of this technology by the common public. Almost all bank cards (Debit/Credit) nowadays have a contactless payment mode. This system uses an RFID inlay, inside of the card. When you touch the card on the payment machine, it communicates the information using radio signals and processes the information.
Tracking Couriers
During the transfer/transportation of important bank documents, you can use tags to keep track of the movement of each file and confirm the receiving of said documents. It provides a measure of security and automation and helps pinpoint the point of any security breach.
Securing Employee Laptops
Gone are the days of big bulky PCs, nowadays most organizations provide their employees with compact laptops, including banks. The banks usually stick an RFID tag on the laptops with the identification information of the laptop & the employee they assign it to. With this, the bank can track all the equipment and deter any thefts.
Identifying High-Value Clients
Wealthy high-value clients bring a lot of money to banks. So, whenever they visit the bank, they are also given special treatment. One of the ways the bank does this is before the client even requests a service. Banks put RFID tags on their passbooks, checkbooks, and cards. Sensors placed at the entrance of the bank can read the tags and alert the employees that a high-priority client has arrived.
Advantages of using RFID technology in Banking
These systems provide the banking industry with tremendous benefits by streamlining their functions. Here are some of the major advantages of implementing such a system.
Monetary Inventory Management
Banks hold purchasing power/value in a lot of different forms like cash, cheques, valuable items in security lockers/vaults even gold. In order for people to keep investing in these institutions, they need to provide constant performance and a measure of security. Banks use this technology to keep track of all these items and secure their operations.
Equipment Maintenance Management
Banks also implement the use of various equipment like Passbook Machines, ATMs, Cash Counting Machines, etc. With the help of RF, they can keep an accurate record of the necessary maintenance and service of this equipment.
Access Control
Ever seen a card slot at the entrance of banks and ATM booths? Those are security access control systems that use RFID technology. Banks use smart cards to provide only authorized people with access to specific areas of the bank.
Issues Faced While Using RFID Technology in Banking Systems
As we discussed above, there are significant advantages and applications of RF technology in the banking sector. So, why doesn’t every bank use it? Well, the answer is simple, like any technology there are pros& cons to this technology. So, let’s discuss those.
Signal Disruptions
These system works on the transmission of data using radio waves. But this makes them uniquely vulnerable to distortion-causing materials like metal surfaces and liquids. Metal surfaces can reflect or completely absorb radio waves, making it difficult or even impossible at times for RF systems to work.
Implementation Cost
Compared to the other most common means of AIDC in banking, i.e., barcodes, RF systems are almost 10 times more expensive. Making many small-scale banks do not prefer this technology.
Difficulty in Installation
Lastly, although it is very easy to use and provides a great degree of automation, RF systems are a bit difficult to install in an organization. It often requires professional help to set up a proper system.
Frequently Asked Questions
Q1. How is RFID used in payments?
Ans - Nowadays almost all banks use RF technology in their payment operations. Take out your debit/credit card and check for a Wi-Fi symbol on it. This indicates that your card is capable of contactless payment. This is possible due to a radio frequency identification inlay present inside the card. This technology allows for faster payments, without the need for putting in the pin.
Q2. What is RFID in ATMs?
Ans - Banks generally don’t use Rf technology in ATM operations.
Q3. What are the three types of RFID?
Ans - There are many factors that you can use to classify RF technology into different types. One such factor is the operational frequency. Based on this, you can differentiate this technology into three types, namely – Low Frequency, High Frequency, and Ultra-High Frequency.
Q4. Do ATM cards have RFID?
Ans - Yes, most ATM cards nowadays have an RFID inlay sandwiched between the PVC layers. This provides the card the ability to perform contactless transactions.
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