Technological_innovation_and_its_impact.docx

TECHNOLOGICAL INNOVATION AND ITS IMPACT ON FIRM’S PERFORMANCE IN THE FINANCIAL SECTOR OF PAKISTAN

Submitted To: Dr. Shoukat Malik (Director AIBF)

Submitted By: Muhammad Assad-ul-Mujtaba MS-BA-026 (2nd Semester Afternoon)

Al-Falah Institute of Banking & Finance BZ University Multan

TECHNOLOGICAL INNOVATION AND ITS IMPACT ON FIRM’S PERFORMANCE IN THE FINANCIAL SECTOR OF PAKISTAN Muhammad Assad-ul-Mujtaba MS-BA-26 Dr. Shoukat Malik (Director ) Al-Falah Institute of banking and Finance BZ University Multan Abstract: Technological innovations play an important role to make strengthen and enhance the organization/firm’s performance. Innovation may be defined as introducing new ideas and techniques in an organization. Today innovation is the basic requirement of every firm due to the fast improvement or development of technology and huge competition in domestic market. We can measure the performance of any firms in different things, as like their financial position, market position and its product performance. The main objective of this study to find the relationship between the technological innovations and firm’s performance. The scope of study is to highlight the effects of technological innovation on firm’s performance especially in financial sector of Pakistan. Key Words: Technological Innovation, Financial sector of Pakistan. Introduction Technological Innovation Technology innovation may be explained as the introducing and use of new technology. Technology innovation is the process through which new (or improved) technologies are developed and brought into widespread use. An Employee needs to train for proper use of modern technology, which leads to increase the individual performance and as well as organizational performance. ( Abbas, et al, 2014)

The innovation related to technology or non-technology has positive relation with employee performance. Internet based firms grow faster than non- internet base firms. The technology has direct impact on performance of the firm. Koellinger, P. (2008). Advance Technology is the sign of economic power and it also increases the employee performance which is leads to enhance the firm performance. Zahra (1996) described that there are a positive relationship between technology and firm performance. Firm Performance. The performance of any firm can be determined in different ways, first through its financial position, where we measured its profitability and return on investment to compare with its competitors. Second on the base of its product performance where we checked its reliability and its unique features due to which company create a difference in market. Third its market position shows its performance according to its number of customers, market share and customer satisfaction. (Jones, Lanctot & Teegen, 2000: 263). The main object of the business organization is to earn the profit. In this point of view many researcher measured the firm‘s performance on the bases of its profit and its capital. Furthermore increasing of its customer strength also shows the firm performance. (Li and Ye, 1999: 45). Today the world is a global village and also it is the era of technology. Information technology i.e computers, fax, internet, social networking is the basic need of any firm. With the help of these accessories, you can enhance the productivity and efficiency in your work. Information technology increases the firm performance. (Croteau & Bergeron, 2001: 81). Uses of technology in financial sector The use of technology in financial sector of Pakistan is not new. In 1987 first ATM was installed. In 2002 SBP issued a circular mandating the banks to issue cards to their accountholders and connect to either of the 2 switches (1Link and MNET).The E-Banking industry is much different from what it was a decade ago. Kaleem, A., & Ahmad, S. (2008)

According to State Bank of Pakistan's quarterly review of fiscal year 2013. Sr. No

Description

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6,232 ATMs all over Pakistan

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9,896 Real-Time Online Branches (RTOBs) out of 10,523 i.e 94%

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20.72 million plastic cards issued in the country

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79.45 million overall E-Banking transactions

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Rs 7.6 trillion value of transactions

Impact of Technology on Financial Sector in Pakistan. Technology has positive impact on firm‘s performance especially in financial sector of Pakistan. ( Sumra, S. et al. 2011)  With the help of technology minimizes the cost of transactions.  With the help of technology saves time.  With the help of technology minimizes inconvenience.  With the help of technology provides up-to-date information.  With the help of technology increases operational efficiency.  With the help of technology reduces HR requirements.  With the help of technology facilitates quick responses.  With the help of technology improves service quality.  With the help of technology minimizes the risk of carrying cash. Conclusion At the end, it comes to our notice that due to technological innovation the financial sector of Pakistan making a progress by leaps and bound. It provides cost-effective, rapid and systematic provision of Services to the customers. Applications of IT in banks enables sophisticated product development, reliable techniques for risk management, brings transparency to the system and helps banking sector reach geographically distant and diversified markets. IT and communication networking system have crucial impact on money, capital and foreign exchange market. To avoid the probability of failure regularly monitoring of its functions regular security trials are

also required. Banks must ensure proper back-up and recovery plans so as to ensure full faith in technology References; Abbas, J., Muzaffar, A., Mahmood, H. K., Ramzan, M. A., & Rizvi, S. S. U. H. (2014). Impact of Technology on Performance of Employees (A Case Study on Allied Bank Ltd, Pakistan). World Applied Sciences Journal, 29(2), 271-276. Atalay, M., Anafarta, N., & Sarvan, F. (2013). The relationship between innovation and firm performance: An empirical evidence from Turkish automotive supplier industry. Procedia-Social and Behavioral Sciences, 75, 226-235. Croteau, A. M. and Bergeron, F. (2001), An information technology trilogy: business strategy, technological deployment and organizational performance, The Journal of Strategic Information Systems, 10(2), pp.77-99. Jones, G. K., Lanctot Jr, A. and Teegen, H. J. (2001), Determinants and performance impacts of external technology acquisition. Journal of Business venturing, 16(3), pp.255-283. Koellinger, P. (2008). The relationship between technology, innovation, and firm performance— Empirical evidence from e-business in Europe. Research policy,37(8), 1317-1328. Kaleem, A., & Ahmad, S. (2008). Bankers' perceptions of electronic banking in Pakistan. Journal of Internet Banking and Commerce, 13(1), 1-16. Li, M. and Richard Ye, L. (1999). Information technology and firm performance: linking with environmental, strategic and managerial contexts. Information & Management, 35(1), pp. 43-51. Sumra, S. H., Manzoor, M. K., Sumra, H. H., & Abbas, M. (2011). The Impact of E-Banking on the Profitability of Banks: A Study of Pakistani Banks. Journal of Public Administration and Governance, 1(1), Pages-31. Sharma, N. (2011). Applications of Information Technology in Banking Sector. International Journal of Information Dissemination and Technology, 1(2), 92-95. Zahra, S. A. (1996), Technology strategy and financial performance: examining the moderating role of the firm's competitive environment, Journal of Business Venturing, 11(3), pp.189-219.