Report on AIS/ERP Systems Implementation for Banking Efficiency

This report provides a comprehensive research on Accounting Information Systems (AIS) and Enterprise Resource Planning (ERP) systems specifically tailored for banking institutions. The report begins with an analysis of standard banking business processes, including primary functions like accepting deposits and granting advances, and secondary functions such as agency and utility services. It then outlines the business and system requirements for implementing AIS/ERP, emphasizing the need for real-time, accurate information and integration with big data technologies. The study recommends SAP as a suitable software solution, highlighting its customer-centric approach and ability to streamline operations. Furthermore, the report explores the ways technology can enhance business efficiency, such as through digital banking and improved customer engagement, while also identifying potential security risks like data breaches and malware. Finally, it suggests mitigation strategies, including data encryption, system monitoring, and the development of cyber security policies, to ensure the secure and effective implementation of AIS/ERP systems within the banking sector. The report underscores the importance of technology in maintaining a competitive advantage and adapting to the evolving financial landscape.

Research on AIS/ERP systems for banks

Running Head: Report
Contents
Introduction.................................................................................................................. 2
Business process............................................................................................................2
Business requirements....................................................................................................4
Systems requirements.....................................................................................................5
Software and vendor selection.........................................................................................5
Ways to utilize technology for business efficiency............................................................6
Efficiency from technology implementation.....................................................................7
Potential security risks................................................................................................... 7
Mitigation strategies.......................................................................................................8
Conclusion....................................................................................................................9
References.................................................................................................................. 11
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Running Head: Report
Introduction
This report is written for the purpose of conducting a research on the Accounting Information
System (AIS) and Enterprise Resource Planning (ERP) systems. The business report has been
prepared for a banking institution, understanding their business processes, requirements of
the processes of business and the system and the impact of implementation of such a system
on the efficiency of the business processes (Matengu & Swami, 2011). Once the analysis of
the business and its processes is completed, this study aims to recommend an AIS/ERP
system for them, exploring the possible security risks associated with their application and
the ways to mitigate the same (Ali, et al., 2016).
Business process
The business process of any organization can be understood with the help of the functions
that they perform. The functions of a standard banking institution are explained in the chart
below. All banking functions can be segregated into primary and secondary functions. These
are also defined as banking and non-banking functions that these institutions perform. The
primary banking functions are further classified into two categories, these include accepting
deposits in the form of savings deposits, fixed deposits, current deposits and recurring
deposits; and the second category of banking functions is granting of advances. The advances
granted by the banks included overdrafts, cash credits, loans, bills etc. The non- banking
functions of a banking and financial institution are also classified into the following two
categories : agency functions and utility functions. The agency functions are the functions in
which the banks act as an agent for their customers and provide these services. The services
provided by banks as an agent are transfer of fund, collection of cheques, periodic payments,
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portfolio management, periodic collections etc. Apart from the agency functions, banks also
act as trustees, executors, advisers and administrators for their customers working on behalf
of their clients in the form of the above institutions (MIT Press, 2012). They are the link that
the customers have and provide them services that deal with other banks and financial
institutions. The general utility functions that the banks perform are issuing of drafts, letter of
credits, etc., locker facility, underwriting of the shares, dealing with foreign exchange and
currency exchange, project report, social welfare programmes etc.
(Akrani,
2011)
All the above functions performed by a bank or a financial institution are explained in the
chart above. These are the basic functions that banks carry out and there are a number of
additional processes that are carried out in addition to these. However, the most commonly
performed functions and processes are covered in this section (Grande, et al., 2011).
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Business requirements
The banks provide services to the customers that enable them to withdraw and deposit cash,
make inquiries and make payments conveniently. The banking system needs to be updated all
the time to give the customers and the stakeholders the current and updated information. The
information provided must also be accurate and available on a real time basis. The advent of
information technology in the banking system has made it more mobile, customer friendly
and improved the quality of the service being provided to them. This has been made possible
by the introduction of Accounting Information System, also known as electronic banking.
The introduction of technology has also made it possible for the banks to dissipate timely and
accurate information related to the treasury management and information systems. The
revolution of technology has increased the competitiveness of these banking and financial
institutions and revolutionized the way they develop their products and services. The
globalization of all the markets has also increased the need and pressure on the banks to
introduce advanced technology systems to speed up the decision making process and to
comply with the changing financial supervision requirements.
http://booksreadingathome.com/downloads/accounting-information-systems-12th-edition-
test-bank.pdf
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2.pdf&usg=AFQjCNHAnFy48N1TBpLgxcz3IS0u0e6glA
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Systems requirements
It has been observed that the banks are increasingly adopted the ERP systems to digitize their
working and procedures. The banks and financial institutions use these systems with typical
requisitions specific to their line of work. They need a software that helps in simplifying their
operations and overcoming the challenges faced by them. The system needs to be integrated
with big data technologies to handle the banking data that is complex and voluminous
(Mwenje, 2013). The technologies need to be advanced to ensure the safety and security of
the data and the information stored. In addition to this, the data must be encrypted and stored
to prevent any leaks, mishandling and misuse of the confidential information related to the
banking and financial institutions and their customers. The massive network of branches that
the banks possess needs to be remain well connected all the time. The software must be able
to integrate the data, have the ability to perform complex resource planning and have the
ability to synchronize the various functions of management that the banking institution
constitutes of like finance, marketing, human resources, operations etc. The software must
ensure the secrecy of the information while following all the prescribed rules and regulations
laid down for such institutions (Venkatraman & Fahd, 2016). The ERP solution
recommended for a bank would thus be a one stop solution for all of the above needs, making
their processes faster, more accurate and efficient.
Software and vendor selection
There are a number of available alternatives for the software to be selected for managing the
ERP and AIS of a banking institution. Some most common options available for the same are
SAP, Oracle EBS, Corniche, EBANQ, Moneyman and Cashbook. While each of the above
mentioned software has the ability to handle all the banking related operations and provide
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support to all the operations of the organization, the German ERP designing firm SAP
provides the best services. They have a customer centric software that makes use of the 360
degree customer viewpoint. Their software helps with the streamlining of the banking
operations and helps with the automation of processes. They also help in the integration of
the financial and operational functions of management and help in the compliance with the
norms. This software is also preferred as it reduces operational costs of the organization and
reduces the complexity of the tasks to be performed. It also helps the banks in innovating and
providing the customers with best in class services that ultimately help in increasing the
profitability of the bank as well.
Ways to utilize technology for business efficiency
The banking institutions utilize the technology and the advanced ERP systems for the benefit
of both their organization’s operations and to provide better services to the customers. Some
ways in which they are able to do that are:
Digital banking: The digital availability of banking services has made it easier for the
customers to avail these services as per their convenience. The customers can now access
their bank accounts at any time from any place and perform basic tasks like transfer money,
check balance etc. This has also reduced the burden on the banks and has reduced their
expenses on human capital (Fub, et al., 2007).
Customer engagement: The customer engagement level of the banks has increased manifold
with the introduction of technology and adoption of the advanced systems by the banks and
other financial institutions. This has increased the customer satisfaction level and the
productivity of the organization.
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Smarter selling: The banks are able to offer custom products and services as per the
requirements of the customers. This has only been made possible by the introduction of the
technology and enhanced customer centricity due to this.
Wider audience: The number of people availing the services of the banks has increasingly
become borderless with the ease of access. The banks have the ability to serve their
customers any time and at any location. This has increased the avenues for the banking
institutions and made them more decentralized than they were ever before.
Efficiency from technology implementation
The banking systems have without a doubt able to achieve operational efficiency by the
implementation of technology. The adoption of technologically advanced systems has helped
the banks in diversifying their offerings and they are able to broaden their customer base. The
time taken by them for storing, processing and accessing the information has also reduced to
a fraction of what it used to be when the operations were carried out manually. The banks
have become increasingly dependent on these systems and the technology for information
management. The information sharing time has also come down considerably and the
banking systems are now more competent and agile than ever before. The technologically
advanced systems help in better and more efficient strategic management and help in shaping
and positioning of the banks in the market. They are an important tool that help in ensuring a
competitive advantage for the banks (Tally Solutions Pvt. Ltd., 2013).
Potential security risks
With the introduction of technology in the banking systems, their working has become more
efficient and effective. However, the increased connectivity and ease of access to the data has
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also caused an alarming increase in the threat and risks. The banks and other financial
institutions take all measures to adhere to the security compliance and monitor the data for
any leaks or security breach, however the increased connectivity causes a number of threats
to the security of the data. The technological advancements also result in lack of
accountability from the employees. The employee’s carelessness can lead to a risk of data
theft and threat to information security of the organization. This also leaves the banking
institutions vulnerable. Thus, they need to ensure that proper security measures are taken in
order to keep the system up and running and safe for usage to win the trust of the customers.
There are additional risks of introduction of malware, virus or the latest threat in the form of
ransom ware. Another huge risk that the banks face due to digitization is that there is no
manual record available of the transactions, account information and other bank related data.
A loss of server, any glitch in the system or a potential attack that causes data loss can be
threatening to the banking operations. Thus, the technology has although made the operations
more convenient and efficient, the threats and potential risks associated with their adoption
are also not less. Since financial data is one of the most appealing targets for hackers,
institutions dealing primarily in finance need to remain extra vigilant about cyber
security. The banks must take additional measures to maintain the safety and security of the
data and the processes to prevent any such damage from happening (Ramco, 2012).
Mitigation strategies
To help the banks and other financial institutions to prepare for and mitigate the potential
risks associated with the introduction of technology in their operations via ERP and AIS
systems, there are a few steps that can be taken. The first and the most important step to be
taken for preventing data security breach is data encryption. Sensitive data and information
should always be encrypted to prevent misuse of it by the hackers. The account names,
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numbers, addresses, and other account related customer information must be encrypted by the
banks. A holistic approach must be adopted for information security. The activities of the
system and the people must be monitored and a record must be maintained of the same. Any
suspicious activity must be immediately reported and addressed before it aggravates and
creates a problem. The banking institutions can also develop their own policy for cyber
security (Hsuing & Mishra, 2012). This must be communicated to the employees and should
be clear and unambiguous. The systems must be tested regularly and updated to keep up with
the latest technological trends. The data must be backed up on a regular basis and the
potential security risks must be regularly assessed and taken care of. The backdoors must be
detected early on and the systems must set up firewalls to restrict the data traffic from
unreliable sources. The employees must be educated and made aware of the risks and how to
handle situations involving risks or potential threats. These are some of the ways in which the
banks and financial institutions can develop plans for identifying, preventing and recovering
from the attacks on the safety and security of information online.
Conclusion
The business report has been prepared for a banking institution, understanding their business
processes, requirements of the processes of business and the system and the impact of
implementation of such a system on the efficiency of the business processes. Through this
analysis, we have recommended an Enterprise Resource Planning (ERP) system to streamline
their business processes and make their system more efficient. The advent of information
technology in the banking system has made it more mobile, customer friendly and improved
the quality of the service being provided to them. This has been made possible by the
introduction of Accounting Information System, also known as electronic banking. The
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Running Head: Report
introduction of technology has also made it possible for the banks to dissipate timely and
accurate information related to the treasury management and information systems. It has been
observed that the banks are increasingly adopting the ERP systems to digitize their working
and procedures. The banks and financial institutions use these systems with typical
requisitions specific to their line of work. The German ERP designing firm SAP provides the
best system solution to handle all the banking related operations and provide support to all
the operations of the organization. The increased connectivity and ease of access to the data
has also caused an alarming increase in the threat and risks. The banks and other financial
institutions take all measures to adhere to the security compliance and monitor the data for
any leaks or security breach, however the increased connectivity causes a number of threats
to the security of the data. This report ends with suggesting ways to mitigate the risks
associated with the introduction of technology in the banking systems.
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References
Akrani, G., 2011. Functions of Banks - Important Banking Functions and Services, Available
at: http://kalyan-city.blogspot.in/2011/04/functions-of-banks-important-banking.html
Ali, B., Omar, W. & Bakar, R., 2016. Accounting Information System (Ais) And
Organizational Performance: Moderating Effect Of Organizational Culture. International
Journal of Economics, Commerce and Management, 4(4), pp. 1-21.
Fub, C., Strahringer, S. & Schiereck, D., 2007. ERP Usage in Banking: An Exploratory
Survey of the World's Largest Banks. Information Systems Management, 24(2), pp. 155-171.
Grande, E., Estébanez, R. & Colomina, C., 2011. The impact of Accounting Information
Systems (AIS) on performance measures: empirical evidence in Spanish SMEs. The
International Journal of Digital Accounting Research, Volume 11, pp. 25 - 43.
Hsuing, R. & Mishra, M., 2012. The Road to a Smooth ERP Integration: For Corporate
Clients, Available at: http://www.citibank.ro/transactionservices/home/about_us/articles/
docs/erp_integration_0811.pdf
Matengu, K. & Swami, B., 2011. Impact of Enterprise Resource Planning (ERP) in
Accounting Systems: A Case Study. International Journal of Management & Business
Studies, 1(3), pp. 21-27.
MIT Press, 2012. Information Systems: Introduction and Concepts, Available at:
https://mitpress.mit.edu/sites/default/files/titles/content/9780262015387_sch_0001.pdf
Mwenje, A., 2013. Enterprise Resource Planning Systems Implementation Strategies In
Commercial Banks In Kenya, Available at:
http://chss.uonbi.ac.ke/sites/default/files/chss/ENTERPRISE%20RESOURCE
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