Impact of technology expends on banking, insurance as well as financial services: Economic recession adversely influenced technology spending by businesses. Differentiation model: In order to cope with the observation that banks deliver highly differentiated product, a simple differentiated model can be adopted. There are some alterations that are carried out in a bid to consider the network externality generated by the adoption of information technology (IT). As rightly indicated by Philippon (2015), there is market equilibrium after adoption of information technology and draw from three testable conclusions regarding the association between performance of market and IT expends.
There are certain common themes across four different articles that concentrate on impact of technology in finance domain.
The article “ The impact of Information Technology on the Banking Industry: Theory and Empirics” penned by Shirley J. Ho and Sushanta K. Mallick helps in development and examination of model to scrutiny the influence of information technology (IT) in the banking industry. Essentially, it is said that information technology can enhance performance of the bank in two different ways. In particular, information technology can lessen operational cost; facilitate various commercial transactions among consumers within same network. Particularly, empirical studies have reflected inconsistency on the hypothesis; some are in agreement with the Solow Paradox (Redlinger et al. 2016). However, there are some empirical studies have adopted production function approach; it is intricate to recognize which effect has dominated. Therefore, the reasons attributed have been the variance in econometric methods and measurements. In essence, this research paper intends to illustrate the inconsistency model with specific network effects.
The article “Digital Transformation in Banking- The Future of Banking” presents the fact that digital transformation is way beyond traditional banking to a specific digital world. In essence, this is a crucial transformation in the way banks along with other financial institutions learn about, interact and satisfy their customers. Essentially, an efficacious transformation due tom digital revolution starts with comprehensive understanding regarding digital customer behaviour, tastes as well as preferences along with unstated needs and many others. Vogel (2014) mentions this transformation directs toward major alterations incorporations, from production-centric to particularly customer centric point of view.
The article “Information technology Payoff in E-business Environments: An International Perspective on Value Creation of E-Business in the Financial Services Industry” stated by Kevin Zhu, Kenneth L. Kraemer & Jason Dedrick. Technology-organization-environment framework helps in research model for evaluating the value of e-business at the level of the firm. In essence, e-business value is inspired by economic environments, the two different subsamples from developed as well as developing nations. Founded on structural equation modelling, empirical evaluation shows different important findings (Qiu et al. 2018). In essence, within TOE framework, particularly technological readiness stems as the strongest facet for e-business value, whilst financial resources, worldwide scope along with regulatory environment also considerably contribute towards e-business value. Again, firm size is also negatively associated to value of e-business, recommending that structural media related to huge firms have the inclination to retard overall value of e-business. Again, this article presents the opinion that financial resources are also a significant facet in different developing nations, technological abilities become far more important in different developed nations. This recommends that as firms move into deeper phases of e-business value shifts from particularly monetary spending to different higher dimensions of organizational potential. Also, government regulation plays much more important role in developing nation than in developed nations (Wu et al. 2015). These findings indicate the effectiveness of proposed research model as well as theoretical structure for examining e-business value. They also deliver deep insights for both businesses as well as policymakers.
The article on “Fraudulent Financial Reporting:” replicates fraud instances in financial assertions. There are three different volatile sectors namely technology, financial services along with health care services. This study also points out significant corporate governance variances between fraud companies and no fraud benchmarks on particularly an industry wide basis. In essence, the fraud mechanisms utilized vary considerably across different industries, with specific revenue frauds occurring in different technology corporations and asset frauds along with misappropriations in financial service corporations (Clayton et al. 2014). Three industries are selected for the purpose of the present study. In this case, the sample fraud organization has necessarily very weak mechanisms of governance, diverse fraud corporations operating in the arena of technology as well as financial service sectors. These sectors also have few audit committee whilst fraud companies operating in all the three different industries have comparatively less dependent committee for audit and relatively less independent boards. Furthermore, this study also delivers initial substantiation regarding the fact that fraud corporations in the area of technology as well as health care sectors have comparatively few audit committee programs and meetings. In addition to this, the fraud corporations operating in all the three different firms also possess different internal audit support. In addition to this, the current study also contributes by updating comprehensive understanding regarding fraud techniques along with risk factors in three different industries (Sun et al. 2014).
This study on fraudulent financial reporting talks about fraud mechanisms utilized varies considerably across different industries, with specific revenue frauds. This occurs in different technology corporations and asset frauds along with misappropriations in financial service corporations (Philippon 2016). The theme of this article is to throw light on fraud mechanisms and the way to overcome fraudulent financial practices using technological developments.
The article “Information technology Payoff in E-business Environments” replicates e-business value at particularly the firm level. The theme that is taken into consideration include Technology-organization-environment. This is necessarily a framework that helps in research model for evaluating the value of e-business at the level of the firm (Laeven et al. 2015). In essence, e-business value is inspired by economic environments, the two different subsamples from developed as well as developing nations.
The article “Digital Transformation in Banking” replicates that digital transformation can be considered to be a way beyond conventional banking to a particular digital world. The theme is somewhat different from that of the other studies and talks about crucial transformation in banks along with other financial institutions. The crucial transformation helps in learning about, interacting and satisfying their customers. This helps in improvement and assessment of model for assessment of impact of information technology in particularly the banking segment (Bai et al. 2016).
Examination of technological advances helps in understanding the implications. There needs to be a shift in economic power in the entire world and climate alteration tom urbanisation, demographic alterations. The technological influences on finance industry help in comprehending the alterations, and deliver certain suggestions regarding ways to prepare for specifically opportunities as well as threats ahead. In addition to this, managers have the need to concentrate on enterprise data base, warehousing of data, diverse cloud services. Managers have the need to undertake API scheme, handle issues regarding planning a hybrid integration strategy (Dabla-Norris et al. 2015). Managers have the need to adopt the hybrid integration stratagem that can help in developing technological factors. The implications for managers in this regard is therefore to proactively handle cyber risk as well as regulation, build and at the same time execute strategic cyber security map. Managers can also institute a commercially justifiable cyber security potential. Furthermore there is need for development of world class cyber response, acquire, alignment of cyber security team with risks of business. This can help in establishment of governance as well as lines of reporting for maintenance of cyber security. In addition to this, the managers also have the need to devise new tools for the purpose of fighting diverse cyber crime. In itself, financial institutions can necessarily augment their own capability to handle the cyber risk. For instance, financial institutions can necessarily apply different state of the art systems of data mining. Therefore, new tools can be developed for particularly fighting cyber crime. As rightly mentioned by Bai et al. (2016), financial institutions can enhance their capability to handle cyber risk. For instance, financial institutions can develop technologies for the purpose of detection of diverse anomalies in areas of financial security as well as fraud applications, utilizing specific data from structured as well as unstructured sources (Philippon 2015). Additionally, the company can also establish an innovative accounting information system that can help in establishment of connections of business to business, connections between business to customers, and development of accounting data base, warehouses of data and many others.
As correctly mentioned by Wu et al. (2015), financial institutions have the need to work with particularly their vendors to comprehend policies of data as well as limitations of APIs. Essentially, this can consider services that can be exposed and at the same time consumed at particularly the user interface. Again, there is need for transitioning data to the cloud and there are different ways to transfer data into particularly public/private cloud environment. Managers also need to take into account matters of security as there is a component of risk at the time of exposing data for particularly system consumption (Redlinger et al. 2016).
The limitations of the study “The impact of Information Technology on the Banking Industry” is that there subsists a negative association between IT investment as well as levels of price. Again, technological advances in the banking industry taken into consideration do not consider the effects of altering technology, and security. The limitations of automations permit for automation of accounting by way of transferring data to particularly multiple reports as well as systems (Redlinger et al. 2016).
The article “Digital Transformation in Banking- The Future of Banking” delivers the fact that digital transformation is way beyond conventional banking to a specific digital world.
The article “Information technology Payoff in E-business Environments” replicates e-business value at particularly the firm level. This study takes into consideration six different facets that include technology readiness, worldwide scope, and financial assets, size of firm, intensity of competition and regulatory environment (Redlinger et al. 2016). Thus, the study fails to consider other factors in this study that might perhaps affect value creation of particularly e-business.
This study on fraudulent financial reporting throws light on fraud mechanisms and the way to overcome fraudulent financial practices using technological developments. Assessors have the need to take into account the industry context since they analyse risk of financial risk and ways of alleviating the same (Redlinger et al. 2016). This study presents initial substantiation regarding technology, financial services as well as health care. The other industries are not taken into consideration in this study.
References
Aydalot, P. and Keeble, D., 2018. High technology industry and innovative environments: the European experience. Routledge.
Bai, J., Philippon, T. and Savov, A., 2016. Have financial markets become more informative?. Journal of Financial Economics, 122(3), pp.625-654.
Clayton, T., Spinardi, G. and Williams, R., 2014. Policies for cleaner technology: a new agenda for government and industry. Routledge.
Dabla-Norris, M.E., Kochhar, M.K., Suphaphiphat, M.N., Ricka, M.F. and Tsounta, E., 2015. Causes and consequences of income inequality: A global perspective. International Monetary Fund.
Laeven, L., Levine, R. and Michalopoulos, S., 2015. Financial innovation and endogenous growth. Journal of Financial Intermediation, 24(1), pp.1-24.
Philippon, T., 2015. Has the US finance industry become less efficient? On the theory and measurement of financial intermediation. American Economic Review, 105(4), pp.1408-38.
Philippon, T., 2016. The fintech opportunity (No. w22476). National Bureau of Economic Research.
Qiu, M., Gai, K., Thuraisingham, B., Tao, L. and Zhao, H., 2018. Proactive user-centric secure data scheme using attribute-based semantic access controls for mobile clouds in financial industry. Future Generation Computer Systems, 80, pp.421-429.
Redlinger, R., Andersen, P. and Morthorst, P., 2016. Wind energy in the 21st century: Economics, policy, technology and the changing electricity industry. Springer.
Sun, H., Zhi, Q., Wang, Y., Yao, Q. and Su, J., 2014. China’s solar photovoltaic industry development: The status quo, problems and approaches. Applied Energy, 118, pp.221-230.
Vogel, H.L., 2014. Entertainment industry economics: A guide for financial analysis. Cambridge University Press.
Wu, S.P.J., Straub, D.W. and Liang, T.P., 2015. How information technology governance mechanisms and strategic alignment influence organizational performance: Insights from a matched survey of business and IT managers. Mis Quarterly, 39(2), pp.497-518.
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