A Data Communication Network is the infrastructure that allows computers and other devices to connect and share information with each other. For a bank, it’s the digital highway that connects its branches, ATMs, and data centers, enabling the flow of all banking data.
Types of Networks in a Bank
Banks use two primary types of networks.
1. Local Area Network (LAN)
A network that connects computers and devices within a limited geographical area, like a single bank branch or office building.
- Purpose: To allow staff within a branch to share resources like printers and access the branch server.
- Analogy: A LAN is like the intercom system within a single building.
2. Wide Area Network (WAN)
A network that connects computers and devices over a large geographical area, such as across cities, states, or even countries.
- Purpose: This is the most critical network for a bank. It connects all the individual branch LANs to the bank’s central Data Centre.
- Analogy: A WAN is like the national telephone network that connects all the individual intercom systems (LANs) across the country.
- Example: The network that connects all SBI branches and ATMs across India to their central servers in Mumbai is a WAN. This is what makes Core Banking Solution (CBS) possible.
Key Network Components
- Switch: A device that connects multiple computers within a single LAN (a branch). It directs data traffic only to the intended device within that network.
- Router: A device that connects different networks together. A router is what connects a branch’s LAN to the bank’s main WAN. It acts as the “traffic police” for data between networks.
- Firewall: A security device that monitors incoming and outgoing network traffic. It acts as a gatekeeper, blocking unauthorized access to protect the bank’s internal network from cyber threats.
The Role of Networks in Banking
The data communication network is the backbone of modern banking.
- Enables Core Banking Solution (CBS): The WAN is what allows all branches to access the central database in real-time. Without it, “anywhere banking” would be impossible.
- Supports Alternate Delivery Channels: It connects ATMs, mobile banking servers, and internet banking platforms to the core system.
- Facilitates Electronic Fund Transfers: It is the highway for all payment systems like NEFT, RTGS, and UPI.
Summary
A bank’s Data Communication Network is the essential infrastructure that enables all modern banking services. It consists of Local Area Networks (LANs) within each branch and a Wide Area Network (WAN) that connects all these branches to a central Data Centre. Key devices like routers and firewalls manage the flow of data and ensure security. This network is the foundation upon which the Core Banking Solution (CBS) and all digital banking channels operate, making it the lifeline of the bank’s IT operations.
Quick Revision Points
- Network: The digital highway for bank data.
- LAN (Local Area Network): Network within a single branch.
- WAN (Wide Area Network): Network that connects all branches to the Data Centre.
- Router: The device that connects a LAN to a WAN.
- Firewall: The security gatekeeper for the network.
- CBS: The Core Banking Solution runs on the bank’s WAN.