Action Research in Banking Industry

The assignment provides a critical analysis of the significance of action research in the banking industry. It explores how action research can help organizations identify problems and take necessary actions to resolve them. The assignment also discusses an example from CAF Bank Ltd, which faced challenges due to high e-banking maintenance costs and insecurity. By applying action research, the bank identified the issue and took necessary steps to reduce it. The document concludes by referencing relevant studies on banking and financial innovation.

Running head: LEADERSHIP STRATEGY
Leadership Strategy and Human Resource
Name of the Student:
Name of the University:
Author’s Note:

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Table of Contents
Task 1...............................................................................................................................................3
Force field analysis to critically evaluate how banking industry is influenced by technological
changes and customer behavior.......................................................................................................3
Task 2...............................................................................................................................................8
Critical analysis of the significance of action research and its implementation in baking industry8
References......................................................................................................................................11

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Activity 1
Task 1
Force field analysis to critically evaluate how banking industry is influenced by
technological changes and customer behavior
Customer behavior and technological changes leave a big effect on the operation process
of the banking industry. It is often difficult for the banking sectors to cope up with the changing
customer behavior and the technological emergence (Jayawardhena and Foley 2000). As per the
given scenario, it has been found that the irreversible changes in the customer behavior and the
technology affect the current shape and operation model of the banking industry. Therefore, it is
difficult for this industry to sustain their present business model for future (Oliver 2014). The
effect of changing customer behavior and technology on banking industry are discussed below
through the force field analysis process. In this process, 30 managers from different baking
sectors of UK are taken to collect data. The questionnaires are given below:
Q1. How far do you agree that a technological change is necessary for the banking industry
to get competitive advantages?
Types Total number of
participants
Respondents Percentage
(%)
Strongly agree 30 5 16.66
Agree 30 10 33.33
Neutral 30 0 0
Strongly disagree 30 4 13.33

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Disagree 30 6 20
Table 1: Importance of technological change in banking industry
(Source: Author)
Critical analysis: From the above data it has been found that 33% of total participants agreed
that technological change is significant for the banking industry. However, it has been received
from the different research studies that technological innovation enables the banking industry to
make their operation process fast, which reduces the workforce (Webb and Martin 2017). On the
other hand, every business industry focuses on the fast operation process, which can be done
through technological innovation. Thus, banking industry requires technological innovation to
improve their operating process. On the other hand, 20% of the total respondents disagreed with
this viewpoint as technological innovation often leads the banking sector to face high cost as
they need to hire more technical experts.
Q2. How far do you agree that customer behavior is affecting the current operation of
banking industry?
Types Total number of
participants
Respondents Percentage
Strongly agree 30 4 13.33
Agree 30 16 53.33
Neutral 30 2 6.66
Strongly disagree 30 3 10
Disagree 30 5 16.66
Table 2: effect of changing consumer behavior in banking industry

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(Source: Author)
Critical analysis: According to the above table 535 of the total candidates agreed that changing
customer behavior affects the current system of the banking sector. According to the given
scenario, it has been found sustainability of the current business structure is hampered due to the
rapid changes in technology and consumer behavior. As argued by Frame and White (2014), in
order to meet the changing demand of the consumers the banking industry failed to retain their
existing structure. On the other hand, in order to gain competitive advantages, they need to meet
the consumer demand, which leads them to adopt the new system in their operation. This often
increases complexity in the system. Despite this 16% of the participants were disagreed with the
negative impact of consumer behavior on operation process of the banking sector.
Q3. What are the major impacts of changing customer behavior and technology in banking
industry?
Types Total number of
participants
Respondents Percentage
Introduction of new
product
30 5 16.66
High cost 30 10 33.33
Implementation of new
system such as
network banking
30 3 10
Changes in the current
structure
30 12 40

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Table 3: Major impacts of changing consumer behavior and technology on banking sector
(Source: Author)
Analysis: According to the current data it has been found that 33% of total respondents said that
high cost of the operation process is one of the major impacts of changing customer behavior and
rapid technology on banking industry. On the other hand, 40% of total participants revealed that
rapid changes in technology and consumer behavior bring change in the existing structure and
operation model of the banking industry, which is not good for the organization. A change in the
existing system is vital for an organization to improve their structure while technological
changes often modify the entire system. As a result, employees face problem to cope up with the
new system (DeAngelo and Stulz 2015). On contrary, 16% of total participants agreed that
changing consumer behavior and new technology lead banking sector to introduce a new product
in their organization.
Q4. How far do you agree that changing technology and customer behavior will be
beneficial for bringing innovation in banking industry?
Types Total number of
participants
Respondents Percentage
Strongly agree 30 3 10
Agree 30 11 36.66
Neutral 30 2 6.66
Strongly disagree 30 4 13.33
Disagree 30 10 33.33

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Table 4: Benefits of changing technology and consumer behavior on banking sector
(Source: Author)
Analysis: According to the above tabular format is has been found 36% of total participants
stated that changing technology and consumer behavior are beneficial for banking industry as it
allows the industry to bring innovation by introducing new product or service. On the other hand,
33% of total candidates disagreed with that concept. From this analysis it can be evaluated that
changing customer behavior and technology have both positive and negative impact on banking
industry. As opined by Egan et al. (2017), if banking industry is able to restructure their
operation process successfully then they will be able to cope up with changing technology and
customer behavior. On the other hand, if banking sector fails to incorporate the technological
changes in their system properly then it can affect their operation process.
Q5. How far do you agree that rapid changes in technology and customer behavior have a
negative impact on the sustainability of banking industry?
Types Total number of
participants
Respondents Percentage
Strongly agree 30 8 26.66
Agree 30 10 33.33
Neutral 30 1 3.33
Strongly disagree 30 4 13.33
Disagree 30 7 23.33

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Table 5: Impact of rapid technology and changing attitude of the customers on the
sustainability of banking sector
(Source: Author)
Analysis: From the above data it has been received that majority of total respondents agreed that
rapid changes in consumer behavior and technology hamper the future sustainability of the
existing system in banking sector. Sustainability can be achieved by keeping an existing system
in future (Webb and Martin 2017). If continuity of a system breaks then it is difficult for an
organization to maintain the sustainability of such system. Such data also support the fact, which
is mentioned in the given scenario. Despite this 23% of total candidates are disagreed with the
negative effect of changing technology and customer attitude on banking sector. From the entire
data, it can be said that rapid changes in technology and consumer attitude have both positive
and negative effect on banking sector. The major negative effect is declining of the sustainability
of current operating system in banking sector.
Task 2
Critical analysis of the significance of action research and its implementation in baking
industry
Action research is a process to solve any problem that may occur in any business
industry. However, action research is involved in bringing changes in a system (McNiff 2016).
However, action research helps an organization to identify their current issue and then take
action based on such issue. Through the implementation of action research process, the
management of an organization can detect the problem based on the gathered data. Action

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research enables an organization to take necessary and quick action based on the current
problems. Therefore, it is involved in changing the environment of an organization. Action
research is an action based research. By using this tool an organization is able to develop
necessary action based on the research data. This tool is used to deal with the critical situation in
an organization. As per the given scenario, it has been received that the banking industry has
been facing rapid changes in technology and the consumer behavior. This affects the
sustainability of their existing system.
Implementation of the action research can be done by using a seven steps method. At the
first step, the banking sector needs to select a focus to identify their major problem. In the next
step of action, research implementation identification of the values of this method should be
done. In the next step preparation of the research question needs to be done to collect data
regarding the current problem. In fourth and fifth stage the data will be collected and analyzed.
In sixth stage, the report is prepared and in seventh stage, necessary action is taken to resolve the
problem ((Mertler 2016).
As for example, CAF Bank Ltd faced challenges due to the high cost of network banking
or e-banking and the insecurity of this system (Cafonline.org 2018). However, the maintenance
cost of the sophisticated software and training of the employees is high. Hence, application of
action research is helpful for this bank to identify the exact issue and take necessary action to
reduce it. CAF Bank Ltd focused on action-based research tool and they have identified the
reason for their high operation cost due to the maintenance of e-banking. They have
implemented this method by gathering data from the customers and the employees regarding the
advantage and disadvantage of e-banking. Based on this problem they have hired more technical

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staffs to ensure the security of e-banking. This action helped them to reduce the training cost as
they have hired technical staffs who have no requirement of any training.

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References
Cafonline.org. (2018). CAF Bank Ltd.. [online] Available at: https://www.cafonline.org/about-
us/about-caf-bank [Accessed 16 Mar. 2018].
DeAngelo, H. and Stulz, R.M., 2015. Liquid-claim production, risk management, and bank
capital structure: Why high leverage is optimal for banks. Journal of Financial
Economics, 116(2), pp.219-236.
Egan, M., Hortaçsu, A. and Matvos, G., 2017. Deposit competition and financial fragility:
Evidence from the us banking sector. American Economic Review, 107(1), pp.169-216.
Frame, W.S. and White, L.J., 2014. Technological change, financial innovation, and diffusion in
banking. The oxford handbook of banking, p.271.
Jayawardhena, C. and Foley, P., 2000. Changes in the banking sector–the case of Internet
banking in the UK. Internet Research, 10(1), pp.19-31.
McNiff, J., 2016. You and your action research project. Routledge.
Mertler, C.A., 2016. Action research: Improving schools and empowering educators. Sage
Publications.
Oliver, R.L., 2014. Satisfaction: A behavioral perspective on the consumer. Routledge.
Webb, I. and Martin, G., 2017. The effect of banking and insurance on the growth of capital and
output.