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To assess the Role of Information Technology in the Public Sector Banks, Private Sector Banks and Foreign Banks 2. To Assess the Perception of the Bank Employees towards the Implementation of Information Technology in the Banks 3. To Assess the Perception and Satisfaction of the Customers with the banks. Hypothesis:
Technology has opened up new markets, new products, new services and efficient delivery channels for the banking industry. Online electronics banking, mobile banking and internet banking are just a few examples. 2). Information Technology has also provided banking industry with the wherewithal to deal with the challenges the new economy poses. Information technology has been the cornerstone of recent financial sector reforms aimed at increasing the speed and reliability of financial operations and of initiatives to strengthen the banking sector. 3). The IT revolution has set the stage for unprecedented increase in financial activity across the globe. The progress of technology and the development of world wide networks have significantly reduced the cost of global funds transfer. 4). It is information technology which enables banks in meeting such high expectations of the customers who are more demanding and are also more techno-savvy compared to their counterparts of the yester years. They demand instant, anytime and anywhere banking facilities. 5). IT has been providing solutions to banks to take care of their accounting and back office requirements. This has, however, now given way to large scale usage in services aimed at the customer of the banks. IT also facilitates the introduction of new delivery channels--in the form of Automated Teller Machines, Net Banking, Mobile Banking and the like. Further, IT deployment has assumed such high levels that it is no longer possible for banks to manage their IT implementations on a stand alone basis with IT revolution, banks are increasingly interconnecting their computer systems not only across branches in a city but also to other geographic locations with high-speed network infrastructure, and setting up local area and wide area networks and connecting them to the Internet. As a result, information systems and networks are now exposed to a growing number.
Technology Products: (1). Net Banking (2). Credit Card Online (3). One View (4). InstaAlerts (5). Mobile Banking (6). NetSafe (7). e-Monies Electronic Fund Transfer (8). Online Payment of Excise & Service Tax (9). Phone Banking (10). Bill Payment (11). Shopping (12). Ticket Booking (13). Railway Ticket Booking through SMS (14). Prepaid Mobile Recharge (15). Smart Money Order (16). Card to Card Funds Transfer (17). Funds Transfer (eCheques) (18). Anywhere Banking (19). Internet Banking (20). Mobile Banking
(21). Bank@Home (i) Express Delivery (22). Cash on Tap: (ii) Normal Delivery METHODOLOGY: Scope of the Study: The study confines to the examining the Role of IT in the Study Banks, particularly, 1. The Perception of Employees towards the Implementation of Information Technology in the Banks 2. To assess the Customers' Satisfaction Level towards the Use of Information Technology related Services in the Banks RESEARCH DESIGN: 1. Both Exploratory Research and Descriptive Research were used in accomplishing the Objective of the study. 2. The research design use in this study is descriptive research design--apart of conclusive research. 3. Exploratory Research was used to gain insight into the Impact of IT in the Indian Banking Industry. 4. Descriptive Research was used to gain insight into the Role of Information Technology in the Indian Banking Industry. OBJECTIVES OF THE STUDY: The objectives of the Study are as follows: 1. To assess the Role of Information Technology in the Public Sector Banks, Private Sector Banks and Foreign Banks 2. To Assess the Perception of the Bank Employees towards the Implementation of Information Technology in the Banks 3. To Assess the Perception and Satisfaction of the Customers with the banks.
Hypothesis: 1). Information Technology facilitate wide and speedy services to banking sectors. 2). Private and Foreign banks use more Information Technology related banking services then public sector banks. 3). Reliable infra-structure of technology is the major constraint in implementing Information Technology in banks. 4). Impact of technology on efficient low cost data communications is same across all banks. 5). There is a strong association between competition pressure and implementation of IT in banking sector. 6). There is a strong association between more IT related services and customer preferring a bank. 7). Security concerns are the basic hindrance in using Technology related to banking services. LITERATURE REVIEW: Brynjolfsson and Hitt conclude that "Information Technology contribute significantly to firm level output." In fact, they find that I.T. capital contributes an 81% marginal increase in output, whereas non-IT capital contributes 6%. Similarly they show that IS-labor is more than twice as productive as non-IS labor. Lichtenberg (1995), on the other hand, concludes that there is significant benefit from investment in Information Technology specially in the Banking Industry.Mario Castelino (2006) suggests that Indian banking industry has provided the leading edge to what is happening to the Indian economy. Banks have equipped themselves with the latest of technology--core Banking. Business Process Reengineering has been introduced to enhance spleen and efficiency of delivery. According to VP Shetty (2006), globalization in banking is based on four important pillars viz. 1) trade in goods and services; 2) flow of capital and movement of human beings across boundaries; 3) harmonization of regulatory framework in different countries; and 4) developments in technology, particularly those in information technology. Morrison and Berndt (1990) concluded that additional IT investments contributed negatively to productivity, arguing that "estimated marginal benefits of investment [in IT] are less than the estimated marginal costs".
Loveman (1994) and Barua et al. (1991), posit that there is no conclusive evidence to refute the hypothesis that IT investment in inconsequential to productivity. DATA COLLECTION METHODS: Data Source: The study made use of both Primary and Secondary Source of data: For the purpose of the study, both primary and secondary data has been collected. The secondary data has been collected from magazines, journals, Internet searches, libraries etc., The data from the Primary sources have been collected with the help Employees of the Bank and customers. DATA ANALYSIS: Using SPSS package, the data was analyzed with the help of Chi-Square, ANOVA and Regression Analysis statistical tools. Statistical Tools Used: 1). CHI-SQUARE TestA detailed analysis with the help of Chi-Square was applied to understand whether the differences are significant or not. 2). Regression Analysis :- Assessing the factors driving the Implementation of Technology in the Private Sector Banks, all the descriptors except Implementation of Technology have been considered as Independent. SUMMARY AND FINDINGS: Employees Perception 1). The study proved that there is a positive relation between implementation of IT and delivery of service. In other words, Banks are moving towards implementing IT enabled services to deliver better service, improve competitive position and also geographical reach. 2). Over 65% of the foreign banks, 20% Private Banks and 9% Public Sector Banks are all through with the implementation of IT enable services in their banks. However, 45% of the Private Banks and 36% of the Public Sector Banks are in the implementation stage of I.T. 3). Almost 57% of the Respondents Strongly Agree that Competitive Pressure is one of the Lead Factor Driving towards the implementation of Technology. 45% of the Bank Respondents Strongly
Agree that Operational Efficiency and Business Process Reengineering are the Factors that drives the Implementation of Technology in the Banks. 37% of the Respondents remain neutral when asked if the drive towards Implementation of Technology is due to Organizational Restructuring. 4). On criteria "Impact of Technology is Reducing Physical Infrastructure Cost of Bank"--The Impact of Technology on Reduced Physical Infrastructure Cost of Bank is same across all the Banks SUMMARY AND FINDINGS: 1. Significant number of customers (45%) prefer private banks followed by public sector banks (35%) to do their banking operations. Interestingly very few customers (20%) prefers foreign banks. Reasons for preferring a particular bank are Trust in the bank, sense of security and network facilities provided by the banks including flexibility in carrying out transaction. The study proved regression analysis that these is a positive relationship between networking (+2.2), sense of security (+1.62), Trust in Bank (+2.3) and flexibility in carrying out transactions. 2. Majority of the Customers perceive that Technology in Banking Industry has a positive impact on the way the services are rendered to the customers. 57% of the Customers Strongly Agree that it is necessary for banks to implement IT in their operations. 60% of the Respondents Strongly Agree that Technology improves customer services in banks. 3. Nearly 87% of the Private Sector Banks have Respondent that Technology Implementation has resulted in Achieving Economies of Scale of Bank. 57% of the Public Sector Banks have agreed that the Technology has resulted in Achieving Economies of Scale of Bank. On other hand, 90% of the Foreign Banks have said that by Implementing Technology in the Bank, they are able to achieve Data Communication in Achieving Economies of Scale of Bank. 4. Nearly 89% of the Private Sector Banks have Respondent that Technology Implementation has resulted in Efficient Low Cost Data Communication. 78% of the Public Sector Banks have agreed that the Technology has resulted in Efficient Low Cost Data Communication. On other hand, 93% of the Foreign Banks have said that by Implementing Technology in the Bank, they are able to achieve Data Communication in Low Cost and Efficient way. 5. In case of Private Sector Bank, there is a strong association between the drive to implement Technology in the Banks and Impact on Profitability, Competitive Pressure, and Customer Needs. Ilyas-Ur Rahman, Osmania University, Hyderabad, INDIA
Sampling : Simple Random Sampling Technique was used to select the Employees and Customers of the Banks into the Sample Size. Sample
Composition of Employees and Customers Private Sector Banks Employees Customers
Public Sector Banks
100 135
Foreign Sector Banks
100 105
Total
100 60
300 300
Students
Total
Sample Composition of Banks & Employees Public Sector Bank
Employees
State Bank of India Andhra Bank Bank of Baroda Punjab National Bank Oriental Bank of Commerce Total
20 20 20 20 20 100
Private Sector Bank
Employees
ICICI HDFC Kotak Bank ING Vysya Bank Ltd. Karur Vysya Bank Ltd. Total
20 20 20 20 20 100
Foreign Banks
Employees
HSBC Citi Bank ABN- AMRO Standard Chartered Bank American Express Bank Total
20 20 20 20 20 100
Sample Composition of Customers Customers
Self Employee
Government Employees
105
25
Private Employees 135
35
300
COPYRIGHT 2007 International Academy of Business and Economics COPYRIGHT 2008 Gale, Cengage Learning Ilyas-Ur Rahman "Role of information technology in banking industry". Review of Business Research. . FindArticles.com. 18 Dec. 2008. http://findarticles.com/p/articles/mi_6776/is_6_7/ai_n28514260
Technology has opened up new markets, new products, new services and efficient delivery channels for the banking industry. Online electronics banking, mobile banking and internet banking are just a few examples. 2). Information Technology has also provided banking industry with the wherewithal to deal with the challenges the new economy poses. Information technology has been the cornerstone of recent financial sector reforms aimed at increasing the speed and reliability of financial operations and of initiatives to strengthen the banking sector. 3). The IT revolution has set the stage for unprecedented increase in financial activity across the globe. The progress of technology and the development of world wide networks have significantly reduced the cost of global funds transfer. 4). It is information technology which enables banks in meeting such high expectations of the customers who are more demanding and are also more techno-savvy compared to their counterparts of the yester years. They demand instant, anytime and anywhere banking facilities. 5). IT has been providing solutions to banks to take care of their accounting and back office requirements. This has, however, now given way to large scale usage in services aimed at the customer of the banks. IT also facilitates the introduction of new delivery channels--in the form of Automated Teller Machines, Net Banking, Mobile Banking and the like. Further, IT deployment has assumed such high levels that it is no longer possible for banks to manage their IT implementations on a stand alone basis with IT revolution, banks are increasingly interconnecting their computer systems not only across branches in a city but also to other geographic locations with high-speed network infrastructure, and setting up local area and wide area networks and connecting them to the Internet. As a result, information systems and networks are now exposed to a growing number.
Technology Products: (1). Net Banking (2). Credit Card Online (3). One View (4). InstaAlerts (5). Mobile Banking (6). NetSafe (7). e-Monies Electronic Fund Transfer (8). Online Payment of Excise & Service Tax (9). Phone Banking (10). Bill Payment (11). Shopping (12). Ticket Booking (13). Railway Ticket Booking through SMS (14). Prepaid Mobile Recharge (15). Smart Money Order (16). Card to Card Funds Transfer (17). Funds Transfer (eCheques) (18). Anywhere Banking (19). Internet Banking (20). Mobile Banking
(21). Bank@Home (i) Express Delivery (22). Cash on Tap: (ii) Normal Delivery METHODOLOGY: Scope of the Study: The study confines to the examining the Role of IT in the Study Banks, particularly, 1. The Perception of Employees towards the Implementation of Information Technology in the Banks 2. To assess the Customers' Satisfaction Level towards the Use of Information Technology related Services in the Banks RESEARCH DESIGN: 1. Both Exploratory Research and Descriptive Research were used in accomplishing the Objective of the study. 2. The research design use in this study is descriptive research design--apart of conclusive research. 3. Exploratory Research was used to gain insight into the Impact of IT in the Indian Banking Industry. 4. Descriptive Research was used to gain insight into the Role of Information Technology in the Indian Banking Industry. OBJECTIVES OF THE STUDY: The objectives of the Study are as follows: 1. To assess the Role of Information Technology in the Public Sector Banks, Private Sector Banks and Foreign Banks 2. To Assess the Perception of the Bank Employees towards the Implementation of Information Technology in the Banks 3. To Assess the Perception and Satisfaction of the Customers with the banks.
Hypothesis: 1). Information Technology facilitate wide and speedy services to banking sectors. 2). Private and Foreign banks use more Information Technology related banking services then public sector banks. 3). Reliable infra-structure of technology is the major constraint in implementing Information Technology in banks. 4). Impact of technology on efficient low cost data communications is same across all banks. 5). There is a strong association between competition pressure and implementation of IT in banking sector. 6). There is a strong association between more IT related services and customer preferring a bank. 7). Security concerns are the basic hindrance in using Technology related to banking services. LITERATURE REVIEW: Brynjolfsson and Hitt conclude that "Information Technology contribute significantly to firm level output." In fact, they find that I.T. capital contributes an 81% marginal increase in output, whereas non-IT capital contributes 6%. Similarly they show that IS-labor is more than twice as productive as non-IS labor. Lichtenberg (1995), on the other hand, concludes that there is significant benefit from investment in Information Technology specially in the Banking Industry.Mario Castelino (2006) suggests that Indian banking industry has provided the leading edge to what is happening to the Indian economy. Banks have equipped themselves with the latest of technology--core Banking. Business Process Reengineering has been introduced to enhance spleen and efficiency of delivery. According to VP Shetty (2006), globalization in banking is based on four important pillars viz. 1) trade in goods and services; 2) flow of capital and movement of human beings across boundaries; 3) harmonization of regulatory framework in different countries; and 4) developments in technology, particularly those in information technology. Morrison and Berndt (1990) concluded that additional IT investments contributed negatively to productivity, arguing that "estimated marginal benefits of investment [in IT] are less than the estimated marginal costs".
Loveman (1994) and Barua et al. (1991), posit that there is no conclusive evidence to refute the hypothesis that IT investment in inconsequential to productivity. DATA COLLECTION METHODS: Data Source: The study made use of both Primary and Secondary Source of data: For the purpose of the study, both primary and secondary data has been collected. The secondary data has been collected from magazines, journals, Internet searches, libraries etc., The data from the Primary sources have been collected with the help Employees of the Bank and customers. DATA ANALYSIS: Using SPSS package, the data was analyzed with the help of Chi-Square, ANOVA and Regression Analysis statistical tools. Statistical Tools Used: 1). CHI-SQUARE TestA detailed analysis with the help of Chi-Square was applied to understand whether the differences are significant or not. 2). Regression Analysis :- Assessing the factors driving the Implementation of Technology in the Private Sector Banks, all the descriptors except Implementation of Technology have been considered as Independent. SUMMARY AND FINDINGS: Employees Perception 1). The study proved that there is a positive relation between implementation of IT and delivery of service. In other words, Banks are moving towards implementing IT enabled services to deliver better service, improve competitive position and also geographical reach. 2). Over 65% of the foreign banks, 20% Private Banks and 9% Public Sector Banks are all through with the implementation of IT enable services in their banks. However, 45% of the Private Banks and 36% of the Public Sector Banks are in the implementation stage of I.T. 3). Almost 57% of the Respondents Strongly Agree that Competitive Pressure is one of the Lead Factor Driving towards the implementation of Technology. 45% of the Bank Respondents Strongly
Agree that Operational Efficiency and Business Process Reengineering are the Factors that drives the Implementation of Technology in the Banks. 37% of the Respondents remain neutral when asked if the drive towards Implementation of Technology is due to Organizational Restructuring. 4). On criteria "Impact of Technology is Reducing Physical Infrastructure Cost of Bank"--The Impact of Technology on Reduced Physical Infrastructure Cost of Bank is same across all the Banks SUMMARY AND FINDINGS: 1. Significant number of customers (45%) prefer private banks followed by public sector banks (35%) to do their banking operations. Interestingly very few customers (20%) prefers foreign banks. Reasons for preferring a particular bank are Trust in the bank, sense of security and network facilities provided by the banks including flexibility in carrying out transaction. The study proved regression analysis that these is a positive relationship between networking (+2.2), sense of security (+1.62), Trust in Bank (+2.3) and flexibility in carrying out transactions. 2. Majority of the Customers perceive that Technology in Banking Industry has a positive impact on the way the services are rendered to the customers. 57% of the Customers Strongly Agree that it is necessary for banks to implement IT in their operations. 60% of the Respondents Strongly Agree that Technology improves customer services in banks. 3. Nearly 87% of the Private Sector Banks have Respondent that Technology Implementation has resulted in Achieving Economies of Scale of Bank. 57% of the Public Sector Banks have agreed that the Technology has resulted in Achieving Economies of Scale of Bank. On other hand, 90% of the Foreign Banks have said that by Implementing Technology in the Bank, they are able to achieve Data Communication in Achieving Economies of Scale of Bank. 4. Nearly 89% of the Private Sector Banks have Respondent that Technology Implementation has resulted in Efficient Low Cost Data Communication. 78% of the Public Sector Banks have agreed that the Technology has resulted in Efficient Low Cost Data Communication. On other hand, 93% of the Foreign Banks have said that by Implementing Technology in the Bank, they are able to achieve Data Communication in Low Cost and Efficient way. 5. In case of Private Sector Bank, there is a strong association between the drive to implement Technology in the Banks and Impact on Profitability, Competitive Pressure, and Customer Needs. Ilyas-Ur Rahman, Osmania University, Hyderabad, INDIA
Sampling : Simple Random Sampling Technique was used to select the Employees and Customers of the Banks into the Sample Size. Sample
Composition of Employees and Customers Private Sector Banks Employees Customers
Public Sector Banks
100 135
Foreign Sector Banks
100 105
Total
100 60
300 300
Students
Total
Sample Composition of Banks & Employees Public Sector Bank
Employees
State Bank of India Andhra Bank Bank of Baroda Punjab National Bank Oriental Bank of Commerce Total
20 20 20 20 20 100
Private Sector Bank
Employees
ICICI HDFC Kotak Bank ING Vysya Bank Ltd. Karur Vysya Bank Ltd. Total
20 20 20 20 20 100
Foreign Banks
Employees
HSBC Citi Bank ABN- AMRO Standard Chartered Bank American Express Bank Total
20 20 20 20 20 100
Sample Composition of Customers Customers
Self Employee
Government Employees
105
25
Private Employees 135
35
300
COPYRIGHT 2007 International Academy of Business and Economics COPYRIGHT 2008 Gale, Cengage Learning Ilyas-Ur Rahman "Role of information technology in banking industry". Review of Business Research. . FindArticles.com. 18 Dec. 2008. http://findarticles.com/p/articles/mi_6776/is_6_7/ai_n28514260
