Information Technology in Banking and Finance: A Case Study of Westpac

This report analyzes the need and importance of Information Technology (IT) in the banking and finance sector, with a focus on Westpac Banking Corporation Australia. It discusses the advantages and risks of IT, the requirement to apply IT, and how IT is used by banking and finance. The report also covers the maintenance and monitoring of IT.

Running Head: Westpac

1
Westpac
Contents
Introduction........................................................................................................................2
Need of IT for Banking and Finance..................................................................................2
Importance of IT for business survival...............................................................................3
Requirement to apply IT in banking and finance...............................................................3
How IT is used by Banking and Finance...........................................................................4
Advantages of IT to Banking and Finance........................................................................4
Risks of IT to Banking and Finance...................................................................................4
Maintenance and Monitoring of IT.....................................................................................5
Conclusion.........................................................................................................................5
References.........................................................................................................................6
Information Technology

2
Westpac
Introduction
With the ramification in technology and the need of the businesses to survive the
dynamic environment, it is important for any organization to integrate its business
process with Information technology. One such sector where the use of Information
Technology has been in demand is the Banking and Finance sector. Banking sector
have become one of the highly competitive sectors nowadays. To be able to sustain
and compete with the contemporaries, the banking industry is running for the latest
technologies. Banks are leveraging IT to improve the processes that can respond much
faster to the dynamics of a changing environment. But with growing demand of
technological tools, the threat of data breach and cyberattacks makes it vulnerable.
From the recent incidents, it is evident that cyberattacks has seen a surge in both
sophistication and frequency for all types of industries. One of the recent victims of such
attack was Westpac banking corporation Australia, wherein almost ten thousand of
Westpac customers were exposed to data breach. In this report, the analysis will be laid
on Westpac Banking and the need of information technology for Westpac’s business.
Need of IT for Banking and Finance
In the earlier days, when the technology was still limited to few industries, the banking
industry relied on more paper works and required manual intervention of people for
every small aspect of banking process. With the coming of 90s, banking sector
witnessed the tornado or technological evolution and all the banking process started
getting automated. Information Technology enables the implementation of techniques
that is more reliable and controlled in risks. It helps the banking sector to fully automate
its process and provides more convenient option to its customer to avail its facilities
(Jaggia and Thosar, 2017).

3
Westpac
Westpac banking needs IT because it is one of the top banks in Australia and has a
large customer base across the globe. In order to make sure that every customer is
satisfied with the service, Westpac has leveraged the IT to provide facilities 24X7 to its
customers. Customers are able to get their account details, transfer funds and view
statements anytime at the tip of their hand. The flexibility and reliability of technology
has made Westpac one of the largest banking service provider in the world (Thaichon et
al., 2017).
Importance of IT for business survival
The dynamic environment has forced the business to go for technologies that are quick,
reliable and provides more facilities. The application of IT in banking sector is
advantageous to the bank, the employees of the bank and the customers. For the
survival of business, it is important that these three factors are taken care of. IT has
helped the bank in upgrading its front and back office tasks and also adding new
products. For the employees, IT has increased the graph of their productivity to a new
scale by reducing the time taken to complete a cumbersome job. Similar, the customers
are now able to get various facilities at one touch (Lee,Thomas and Baskerville, 2015).
Westpac has integrated its processes with the latest tools to make sure there is no
backdrops. In order to survive the competitive market, Westpac needs to keep
upgrading its existing IT system to be updated with the latest technological tools in order
to provide better facilities to its customers, its employees and to its existing
infrastructure (Chae, Koh and Park, 2018).
Requirement to apply IT in banking and finance
The main purpose of integrating banking process with IT is to make the process fast,
reliable and more secure. The customers must be able to use all the facilities easily and
without any hassle by sitting at their homes. As implementing IT is not economical for all
businesses, the most important aspect is the investment that will be needed. More
advanced process needs more investment. The next aspect is the planning and
designing, wherein a proper analysis of the banking process should be done so as to
make sure that the most important areas are covered which requires technology to
make work much smoother (Pisedtasalasai and Rujiratpichathorn, 2017).

4
Westpac
A set of rules and protocols needs to be devised and the architecture of the technology
should be designed based on the banking operations. Once the planning and designing
phase is covered, in order to integrate IT with the process, equipment is needed. In
Westpac, this equipment includes the PCs, networking related systems, other software
and tools necessary for banking. Now all the equipment needs to be installed properly
so as to make sure that the whole IT system is working as desired (Tarafdar et al.,
2015). As all employees, are not skilled enough to start working on the IT tools right
away, it is important that every employee is imparted with proper training facility in order
to leverage the IT for ease of business. In Westpac, before handing over the job roles,
every employee goes with a proper training facility to get their hands-on experience with
IT tools and to learn about the process (Campanella, Della Peruta and Del Giudice,
2017).
How IT is used by Banking and Finance
The most important aspect of implementing IT is that it can be used internally (by
employees of the bank) as well as externally (by customers of the bank). The bank
employees use IT for several purposes. As banking related works involves lot of
cumbersome calculation, time taking work and bulk transactions, employees can use IT
to save the time taken to perform these jobs. People at Westpac use IT for internal
communication by leveraging the E-mail facility. Use of MICR technology is also
significant in Westpac, as they are using it to clear the cheques at a much faster pace.
The customers are able to avail all the facilities at just one click like Electronic Fund
Transfer, Phone Banking, Internet Banking, and Customer Service. Westpac has
launched its own mobile application and web based service so that the customer can
access all the service related to banking at a single place. The customers of Westpac
are able to transfer funds easily and are availing self-inquiry facilities (WestPac, 2019).
Advantages of IT to Banking and Finance
There are several key advantages IT offers to banking. The flexibility is increased as it
offers you to handle your transactions and get access to bank statements 24/7. It has
certainly reduced the bank visits in person and made the process hassle free. The
operation excellence that IT provides has increased the efficiency and now more

5
Westpac
amount of work can be done in the same time thereby increasing the revenue. The
efficiency of the employees has been increased and there is less paper works which
has reduced the operational costs. It also offers faster banking service where the
transactions get processed with in no time. For example, Westpac has provided debit
card to its customers through which they can make payments instead of a check. The
transaction done through debit cards is very fast and it reflects in the account
immediately. This is an added advantage because it gives the customers timing control
of transaction and instant update of account balance (Chen et al., 2017).
Risks of IT to Banking and Finance
The use of technology also comes with its own demerits. Technological tools require
regular upgradation and maintenance in order to keep the systems up to date else it will
be prone to security risks. Also, banking sector deals with huge amount of private and
confidential data that is always a soft target for hackers to invade the privacy.
Information security breaches has always hit the news now and then making the IT
system vulnerable (Graetz and Franks, 2016). This is evident from the fact that Westpac
was also in news recently due to the breach of personal banking info being
compromised by hackers. Confidential details like name, phone numbers, account
details and PayID were breached which allowed hackers to transfer the money instantly
to different bank accounts (Bai, Krishnamurthy and Weymuller, 2018).
Maintenance and Monitoring of IT
It is important to maintain and constantly monitor the IT system so as to avoid any kind
of operational failure and foreign attacks. A robust system can only be achieved by
regular upgradation and maintenance of existing systems as technology get outdated
after every few years and an obsolete technology possess more risk of external
attacks. There are several tools for monitoring IT activities which can give information
about the data that is transferred, limit the persons who can access sensitive data and
create a digital log for every action that is performed (Cui et al., 2015).
After the data breach, a spokesperson from Westpac told 7News.com.au that the data
protection of customers and privacy are taken seriously by the Westpac group and
continuous monitoring of the same is done with the help of several IT tools.

6
Westpac
Conclusion
The analysis of the paper brought to the light the fact that IT has played a major role in
changing the banking and finance sector by providing tools that has changed the face of
how businesses operates.IT is helping the internal as well as the external stakeholders
in to perform their respective jobs with more efficiency. This shows the importance and
advantages of IT for banking business. It is also true that technology has loopholes and
are prone to cyberattacks and data breaches, but by proper monitoring and upgradation
one can mitigate the issue.
References
Bai, J., Krishnamurthy, A. and Weymuller, C.H., 2018. Measuring liquidity mismatch in
the banking sector. The Journal of Finance, 73(1), pp.51-93.
Campanella, F., Della Peruta, M.R. and Del Giudice, M., 2017. The effects of
technological innovation on the banking sector. Journal of the Knowledge
Economy, 8(1), pp.356-368.
Chae, H.C., Koh, C.E. and Park, K.O., 2018. Information technology capability and firm
performance: Role of industry. Information & Management, 55(5), pp.525-546.
Chen, Y., Wang, Y., Nevo, S., Benitez, J. and Kou, G., 2017. Improving strategic
flexibility with information technologies: insights for firm performance in an emerging
economy. Journal of Information Technology, 32(1), pp.10-25.
Cui, T., Ye, H.J., Teo, H.H. and Li, J., 2015. Information technology and open
innovation: A strategic alignment perspective. Information & Management, 52(3),
pp.348-358.
Graetz, G. and Franks, D.M., 2016. Conceptualising social risk and business risk
associated with private sector development projects. Journal of Risk Research, 19(5),
pp.581-601.
Jaggia, S. and Thosar, S., 2017. Pay-for-performance incentives in the finance sector
and the financial crisis. Managerial Finance, 43(6), pp.646-662.

7
Westpac
Lee, A.S., Thomas, M. and Baskerville, R.L., 2015. Going back to basics in design
science: from the information technology artifact to the information systems
artifact. Information Systems Journal, 25(1), pp.5-21.
Pisedtasalasai, A. and Rujiratpichathorn, K., 2017. Competition, Stability and Financial
Crisis in Thai Banking Sector. Journal of Advanced Studies in Finance, 8(15), pp.5-18.
Tarafdar, M., DArcy, J., Turel, O. and Gupta, A., 2015. The dark side of information
technology. MIT Sloan Management Review, 56(2), p.61.
Thaichon, P., Quach, S., Bavalur, A.S. and Nair, M., 2017. Managing customer
switching behavior in the banking industry. Services Marketing Quarterly, 38(3), pp.142-
154.
WestPac., 2019. Online services. [Online] Available at: [Accessed on 5th May 2019].