Discuss about the Commonwealth Bank of Australia for IT.
Being one of the big four major banks in Australia, the Commonwealth bank of Australia (CBA) serves many people and businesses across different countries including Fiji, New Zealand, USA, the UK among many others. Its integrated services are enabled by information technology, services such as retail banking, fund management, insurance and broking services are primarily facilitated by information monitored and analysed by information systems/information technology (Commonwealth bank of Australia 2017). Furthermore, the bank’s international presence is also enabled by IT systems that integrate its services into one holistic package.
Information technology has led to many new business markets for the banking industry, new services such as electronic banking are now available because of the channels created by different revolutionary technologies. In addition to this, consider the applications of mobile banking and internet banking where people are able to send money with the touch of a button. In fact, It is hard to survive the current competitive environment if a bank does not provide these services (Rahman 2007). However, several challenges are faced when deploying these services to the masses such authentication and confidentiality. Nevertheless, IT also provides the necessary solutions to deal with these challenges.
Moreover, the solutions offered by IT go beyond the challenges of delivering banking services, today technology is used to meet the high expectation of consumers who prefer automated services. Teller workers, ATM and other services apply information systems to deliver accurate and consistent results. In essence, IT helps meet the challenges of a modern economy (Kumar 2013). Finally, consider the bank in question CBA, its survival, in the past and now rests on its ability to increase its financial activities across the globe. Apart from increasing the global fund transfer, the global outreach helps increase a bank’s profitability margins.
Decision management calls for strategic planning prior to commencing in any business project, similarly before applying IT systems and more so, information’s systems it’s good to have the requirements in mind. First the cost, according to the American bankers association (2013), banks expenditure in 2013 was over 460 billion dollars on new IT technologies. Which shows the investment needed for a successful service delivery system. An IT infrastructure will cater for resource management system, customer management system and even the services themselves. This affirms the current estimates that see banks investing more than 7.3 percent of their revenues on IT, similarly the development stages must apply similar values (Duetsche Bank 2012).
Secondly, we have the designs for the applications themselves, these designs depend on the application requirements which are also set by prior strategic planning. CBA had to consult far end wide to design their latest technological investment called blockchain. Similar to bitcoin technology, this revolutionary technology simplifies financial transaction allowing businesses to transfer money securely (Pash 2016). Operational research is the key to implementing good technological systems into a business, this because there a lot of elements to consider for instance the equipment’s to be used. CBA at some point bought teller machines and ATM based on research they did, driven by their objectives. Moreover, these equipment’s are used by individuals who are trained prior to them performing their respective roles (Blumberg & Cotter 1975). Research operations help identify weaknesses and strengths of systems, equipment and the people who use them, concepts still used to date especially in applying information technologies.
CBA’s financial information and transactions are recorded by banking Softwares designed to store and analyse data efficiently. This enterprise Softwares can manage large customer’s data which is later used to develop business strategies by applying the concepts of business intelligence (BI) and business processing. BI systems use records to forecast future activities such as the cost of expenditures, profits and expected customer base. An employee at the CBA bank will enter a customer record which is then stored in a database filled with other customer records. From these databases, a bank can analyse its data to monitor progress and make strategic investments. Moreover, with big data (information based on consumer behaviour) a business can predict its customer’s behaviour. Furthermore, information systems help monitor employees while they conduct their daily duties, which is a good management practice (Martin 2015).
Externally, information technology is used by customers to access a bank’s resources. CBA’s customers can access their transactions via secured banking portals. Furthermore, they can transfer money from different bank accounts including those in other countries other than their host nations. In addition to this, consider ATM services where money is accessed automatically via electronic cards absent of the tellers. These ATM systems depend on a combination of technological systems such as encryption, databases, networks etc to deliver their services (Martin 2015).
Information has had profound advantages on the financial sector, for instance, a bank like CBA has had increased revenues and reduced its expenditure cost through technological investments. Today, it does not rely on middlemen to secure its currency from one state to another, instead, the currency is transferred electronically based on the business regulation and requirements set. Consider the efficiency and flexibility of these inclusions, however, the advantages are more precise and even more than these mentioned here. Let’s critically analyse the benefits of IT in a business world especially in the banking industry.
(Advantages modified from Karehka Ramey 2012)
In the banking industry and in any other business, information technology is used to automate processes and the activities involved. This automation has its associated risks, more so for a banking industry where the processes involve money. Operational risks are a better way of defining the IT risk faced by the banking industry, which may result from inadequate or even failed systems (Aboli 2015). Internet banking, for instance, has serious risks as hackers can impersonate banking services to acquire customer’s confidential information. In the process, an innocent user may enter their confidential information losing their money or even other confidential information.
Secondly, information systems and technologies pose serious risks to the existing legal policies. To access some services, thorough backup checks or scrutinization are done by the service provider which may infringe on people’s personal privacy and secrecy rights. Furthermore, electronics systems are known to fail just like any other aspect of life, an automatic risk considered by those who invest in them.
Information technology has many advantages which can provide a business with the necessary competitive edge to outdo its competitors. However, IT can also lead to serious negative outcomes if poorly maintained. For instance, a bank like CBA with poor encryption systems can loss confidential customer’s information and as a result, lose its clients.
A business like CBA should invest in continuous assessment systems (CAS) that monitor technological systems such as the hardware and software involved in the business. The overall aim of CAS systems is to evaluate the effectiveness of technologies applied to meet an organisation’s requirements. Furthermore, the business should also provide basic system administration to monitor and maintain their IT systems. The administration is responsible for alleviating the risks involved such as data loss, privacy, security and confidentiality concerns. Moreover, the organisation should identify future technologies that supplement their existing systems to meet their standard requirements. Innovation helps to develop new ideas and reinforces the existing ones.
Conclusion
Businesses investing in information technology is no longer an option but a necessity to surviving the current competitive market. In essence, having IT systems such as customer database and customer management systems is the first step to starting a business. For the banking industry, technology has helped revolutionise the way business is done. Today, services such as instant money transfer are available and are dominating the market because of IT systems. Moreover, banks like CBA account for these technologies to assess their progress and to make future decisions. Therefore, information technology is now a survival tactic rather than a supplementary tactic or option.
References
Aboli. (2015) 8 Risks in the Banking Industry Faced by Every Bank. Let’s talk payment, Retrieved 13 January, 2017, from: https://letstalkpayments.com/8-risks-in-the-banking-industry-faced-by-every-bank/
Berisha-Shaqiri A. (2015). Impact of Information Technology and Internet in Businesses. Academic Journal of Business, Administration, Law and Social Sciences, 1(1), Retrieved 13 January, 2017, from: https://iipccl.org/wp-content/uploads/2015/03/Ajbals-73-79.pdf
Blumberg L & Cotter L. (1975). Operations research and bank planning. Long Range Planning, 8(5), Retrieved 13 January, 2017, from: https://www.sciencedirect.com/science/article/pii/0024630175900928
Commonwealth Bank of Australia. (2008). Commonwealth Bank of Australia to acquire Bank West and St Andrew’s.
Deutsche bank. (2012). IT in banks: What does it cost? Banking & Technology Snapshot. Retrieved 13 January, 2017 from: https://www.dbresearch.com/PROD/DBR_Internet_ENPROD/PROD0000000000299039.pdf
Kumar B. (2016). The Importance of Technology in Banking Industry (519 Words). Preserve articles, Retrieved 13 January, 2017 from: https://www.preservearticles.com/2013082933396/the-importance-of-technology-in-banking-industry-519-words.html
Martin. (2015). How Big Data Changes the Banking Industry, Cleverism, Retrieved 13 January, 2017, from: https://www.cleverism.com/big-data-changes-banking-industry/
Pash C (2016). The Commonwealth Bank just used block chain in a ‘world first’ global transaction, Business insider Australia, Retrieved 13 January, 2017 from: https://www.businessinsider.com.au/the-commonwealth-bank-just-used-blockchain-in-a-world-first-global-transaction-2016-10
Rahman I. (2007). Role of information technology in banking industry. FPO driving IP forward, Retrieved 13 January, 2017 from: https://www.freepatentsonline.com/article/Review-Business-Research/177943283.html
Ramey K. (2012). Advantages and disadvantages of information technology. Use of technology, Retrieved 13 January, 2017 from: https://www.useoftechnology.com/advantages-disadvantages-information-technology/
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