Role of Information Technology in the Banking Service Industry - Example

ROLE OF INFORMATION TECHNOLOGY IN THE BANKING SERVICE INDUSTRY (COMMONWEALTH BANK OF AUSTRALIA) By (Student Name) Course Tutor University City/State Due Date INTRODUCTION The Commonwealth Bank of Australia was formulated under the Commonwealth Bank act of 1911 giving the bank power to deal in deposit savings and general bank transactions with a national government guarantee. The bank started business on 15th July, 1912 and growing in customer base and infrastructure after its merger with state banks in Tasmania and Queensland. The Commonwealth Bank enlarged its operations with further amalgamation with State Bank of Western Australia and State Bank of New South Wales but so it division from dual operation as a central bank and general trading banking services by the bank acts of 1959 where the Reserve Bank of Australia was formulated to take over the central banking activities. The restructuring bank act of 1990 so the conversion of Commonwealth Bank from a statutory authority to a public company with part government ownership after which the bank was fully privatized by July 1996. The bank opened customer care centres in Australia with focus mainly on retail customer service where a customer relationship management model was introduced which brought about new ways of customer interaction. The bank also developed a relationship management system that led to a personalized way of handling high end clientele through relationship managers. The Commonwealth Bank of Australia prides itself of being the leading financial services provider with strategic strengths in its brand, scale of business and diversity in product mix. The bank has successfully developed brands such as colonial first state, CommSec and bankwest. The Commonwealth Bank of Australia boasts of being the leading bank in provision of online financial services with facilities such Netbank, the bank’s internet banking site and CommSec, the bank’s online broker site which is the most accepted in Australia. Development of information technology Ige (1995) describes information technology as the use of electronic means to handle information, which includes its retrieval, storing, processing, transfer and delivery. Langdon and Langdon (2006) explain information technology as a set of interconnected components that gather, process, store and share out information to guide decision making, coordination and control. The information system function of an organization comprises of three components the information technology department, information technology specialist and information technology hardware and software. Information technology systems are mainly used for service and management purposes – enterprise resource planning, customer relationship management and accounting systems. In the recent past information technology function has became an important part of any organizations operations and performs a major role in the following business functions; Communication In many business organizations use emails form a critical part of communication channels between employees, suppliers and customers. Information technology has brought about communication innovations such as online meeting tools, video conferencing tools and live chat system through the internet which enhances the customer interactions experience. Inventory management Information technology has reduced the costs of maintaining inventory managements and improved efficiencies in monitoring stocks in organizations. The invention of point of sale systems has made tracking of stocks easier and allows organized information amongst sections since once items a sold it’s automatically deducted from the stock. Data management The old way of data storage through large file cabinets in filing rooms is slowly fading away with the invention of new filing systems where companies use digital version of documents which are stored in severs and small storage devices. The new information technology inventions on data management make the documents easily accessible both within and outside an organization. Innovations on data management has been beneficial to employees as their can easily retrieve data and to organizations it’s economically viable to digital data management systems. Management information systems help in analysis of data stored which allows the information to be used effectively. Advanced companies use management information systems to analysis the data stored to retrieve information on sales revenue, productivity levels and expenses so as to form a basis of their strategic plans. Customer relationship management The importance of relationship building and management has increased in the recent past in business organizations which is linked to the change in competition and technological trends. If an organization wants to build strong customer relationships, customer data must be used and analyzed and that can only be achieved through use of information technology innovations. Progressive companies are using information technology to improve how they manage their relationships with customers. The use of customer relationship management systems allows an organization to capture all details of interactions with its customers thus improving the customer experience. Customer relationship management systems make it easier for customer care representatives to retrieve information in regards to customer product purchase; product manual in cases of product information enquires thus improving on productivity. Discussion of role of information technology in the banking industries Technology banking is described as the computerized delivery of new and conventional banking products and services directly to customers through electronic, interactive communication channels (Sathye, 1999). Information technology development plays a major role in the banking service industry especially in the current global market trends where it improve front and back office operations by improving the service delivery and reducing customer transaction cost. In order to maintain competitive edge in the current business world especially the service industry organization must put in the consideration use information technology innovation. The banking system being found in the service industries is hit hard by technological changes as it tries to keep up with new customer trends so as to increase their satisfaction. Banking has been transform by technology innovations, technology has changed the way people work, socialize, live and do business in the past few years with customer demand changing to requirements such as instant, fast and flexible bank transactions. Commonwealth bank undertook a modernization project with aim of enabling the bank to offer customers outstanding platforms and innovation solutions, transforming the bank to a real-time bank. In a visionary way with an aim to maintain competitive edge Commonwealth Bank started computerizing its banking system in order to enable their banking products to be more accessible to their customers, more efficient in terms of reduced lead time and convenient to different customer categories. By introduction of the various bank products such as internet banking, automated teller machines, the bank has prides itself of being the leading financial institution in Australia, being the first in most cases to provide innovation of information technology and as result it has a large customer base. Commonwealth Bank has realized New markets, products, services and efficient delivery channels through the growth of information technology as follows; Introduction of electronic clearing services, Electronic fund transfer, real time gross settlement Commonwealth bank began online transactions to allow customers to check account balances, checking transaction histories and transferring money between accounts at their convenience with research indicating that 92% of online banking customers use the services at home. It was the first bank in Australia to offer real time banking and real-time settlement to customers. Introduction of telephone or mobile banking Commonwealth Bank of Australia launched next generation mobile banking in the year 2009 available on any internet enable mobile phone. Customers are able to login into their Netbank accounts through www.netbank.com. au/mobile and are to access services such check account balances, transfer funds, pay bills and locate Commonwealth Bank nearest branch or ATM if the customers are iPhone users. Commonwealth bank released their mobile banking application under the brand name CommKaching. Introduction of automated teller machines and card based payment systems In the year 1981 Commonwealth bank launch its automated teller machines under the name Autobank. The bank began operations of plastic debit and credit card transactions with launch of Bankcard which was followed by Keycard. Commonwealth bank was awarded best ATM by canstar cannex in the year 2009 with research indicating that 90% of Australian population lives within five kilometers of an ATM owned by commonwealth bank making their services easily accessible to their customers. Introduction of internet banking Commonwealth Bank of Australia launched its internet site on 28th February, 1997 under the brand Netbank offering a 24-hour internet transaction banking services. In the year 2000 Netbank was redesign to offer a more customer driven experience, the site was rated as Australia’s second most visited site with more than 200 Million hits per month. NetBank, a virtual bank offers commonwealth Bank customers the opportunity to view account balances, transfer money between accounts and pay bills through Bpay. In the 2001 Commonwealth Bank announced reached the one million mark base of internet banking customers, with an increase in NetBank transaction values form $395 million 2000 to over $1 billion in 2001. Conclusion Harold and Jeff (1995) argue that financial service providers should transform their traditional operating practices to remain viable in the, they maintain that most of the significant shortcoming in the banking industry today are as a result of senior management in banks disregarding the importance of information technology and lack of incorporate it in their bank strategic operation plans. Commonwealth Bank started online banking in 1997 and since then the bank has been leading the way in banking technology in Australia and it is international recognized as a leader in the customer oriented technology innovation. The bank views technological innovation as the key strategic point for customer interactions to determine customer needs, preferences and expectations in the current market. The bank aims at delivering improved customer experience through increased convenience, choice of products, enhanced security and information to enable customers make more informed financial decisions. The bank understands that technological innovations will continue to guide the future of banking systems thus the bank aligns it’s to continual investment on innovations. It’s only through undertaking information technology innovations that the bank manage to sustain the customer base and competitive advantage in the current business world. Referencing Commonwealth Bank of Australia, ‘The beginnings (Early 19th century)’. Available at: https://www.commbank.com.au/about-us/our-company/history/the-beginnings.html (Accessed on: 9 May, 2016) Commonwealth Bank of Australia, ‘Privatization (1991) and subsequent developments’. Available at: https://www.commbank.com.au/about-us/our-company/history/privatisation.html (Accessed on: 9 May, 2016) Commonwealth Bank of Australia ‘Commonwealth Bank overview’ Available at: https://www.commbank.com.au/about-us/our-company/overview.html#profile (Accessed on: 9 May, 2016) MacKechnie, C. ‘Information technology and its role in the modern organization’. Available at: http://smallbusiness.chron.com/information-technology-its-role-modern-organization-1800.html (Accessed on: 9 May 2016) Harold, B. and Jeff, L. (1995) ‘Don’t Let Technology Pass You By’, ABA Banking Journal, Box 986, Omaha, NE, pg.73 Sathye, M. (1999) ‘Adoption of Internet banking by Australian consumers’, an empirical investigation, Int. J. Bank Mark. 17(7): 324-334. Langdon and Langdon. (2006). ‘Managing Digital Firms’. MIS Review. Ige, O. (1995). ‘Information Technology in a De-regulated Telecommunications Environment’, Keynote address, INFOTECH 95, First International Conference on Information Technology Management, Lagos, November16-17 Read More