This system has not only speeded up debt market transactions, but also reduced risks involved in paper-based government securities. 4.2 The Central Bank has taken the lead to provide and facilitate the clearance of retail payments, such as cheques, bank drafts and off-line fund transfers. In 2002, the Central Bank authorized LankaClear (Pvt) Ltd to provide cheque clearing facilities as the agent of the Central Bank. In May 2006, the Central Bank and LankaClear jointly launched the Cheque Imaging and Truncation (CIT) system, which facilitates electronic presentment of cheque images, instead of the physical cheques being transported to Colombo for clearing. The CIT system introduced a uniform cheque clearing time schedule of T+1 & T+2 throughout the country, enabling commercial banks, in most instances to credit cheque proceeds to their customers' accounts on the following or next business day. The island-wide CIT system has also changed the technology-related landscape of the retail segment of payments and clearing. These state-of-the-art systems have facilitated the banking industry to perform three major functions, i.e. access to and management of liquidity; provision of speedy payment services; and mitigation of risks relating to payments and clearing. These new technologies have not only reduced the use of manual processes, but also brought in a number of benefits to the banking industry in finalizing their settlements on an on-line and real time basis. 5.  Business continuity plans and operational risk mitigation  5.1 IT advancements call for operational risk mitigation by banks.

Rapid advancement and gains to the banking sector  1.1 Overall, technological innovation has brought about the speedy processing and transmission of information, easy marketing of banking products, enhancement of customer access and awareness, wider networking and, regional and global links on an unprecedented scale. IT development has thus changed the product range, product development, service channels and type of banking services, as well as the packaging of such services, with significant efficiencies not only in the banks, but also the ancillary and feeder services to banks. The financial services industry has thus become virtually dependent on IT development. Most banks make visible efforts to keep up with new systems and processes. 1.2 The development in ICT has enabled banks to provide more diversified and convenient financial services, even without adding physical branches. The present day ATMs are more sophisticated machines that can scan the customer and a bank teller, accept cash or cheques, facilitate customer application for loans and allow for face-to-face discussion with a service representative via video. 1.3 The development of Internet services, which is an extensive, low-cost and convenient financial network, has facilitated banking services to customers, anywhere and anytime. Along with Internet and Web-based services, a need for changing core banking architecture has emerged. The introduction of new core banking systems by some banks and their links with the improved telecommunication network has enabled banking transactions to be done on-line, in contrast to the batch-processing mode used earlier.