DEFINITION
Database Management System (DBMS)
A Database Management System (DBMS) is a specialized software that enables banks to store, manage, and retrieve a large amount of financial data efficiently and securely. This in turn supports key banking operations such as transaction processing, customer relationship management, and fraud detection.
A DBMS will also typically offer a way to backup and restore data for added security. Database Management Systems are used across many different industries but are especially important for finance due to the amount of and the sensitivity of the data processed.
Synonyms
Banking database system
Acronyms
DBMS
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Synonyms
Banking database system
Acronyms
DBMS
Examples
A bank uses a relational DBMS to store customer data. When a user logs into their account online, the DBMS retrieves their account balance, recent transactions, and loan details from the bank’s central database in real time. When said user performs a transaction, the DMBS also logs the transaction, deducts the amount from the sender’s account, and updates the recipient’s balance instantly.
FAQ
What types of DMBS are commonly used in banking?
The main distinguishing factor for DBSM is the type of data they handle. A relational DBMS handles structured data, such as transactions and account details. The second type handles unstructured data, such as customer interactions. In recent years, hybrid DMBS have also been implemented, which can handle both structured and unstructured data.
How does a DBMS improve banking operations?
A DBMS enables real-time data access, ensures transactional integrity and supports fraud detection through data analysis.
What security measures does a DBMS use?
A DBMS will typically use encryption, user authentication, role-based access control, and create an audit trail to ensure compliance with relevant regulations and protect sensitive financial data.
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