One way to keep information on a computer is to store it in permanent files. A company system has a number of application programs; each of them is defined to manipulate data files. These application programs have been written on request of the users in the organization. New application will be added to the system as the need arises. The system just described is called the file-based system.
Consider a traditional banking system which uses the file-based system to manage the organization’s data in the picture below. As we can see, there are different departments in the Bank, each of them has their own applications that manage and manipulate different data files. For banking systems, the programs can be the ones to debit or credit an account , find the balance of an account, add a new mortgage loan or generate monthly statements, etc.