The Role of IT in Banking: Commonwealth Bank's Digital Transformation

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Information Technology for Business
Commonwealth Bank of Australia

Contents
Introduction...................................................................................................................................2
1. Need of IT in Banking Industry...............................................................................................2
2. Why IT is importance for business survival?..........................................................................3
3. What is required to apply IT into your chosen business?......................................................4
4. How does your chosen business use IT?................................................................................4
5. Benefits and advantages of IT................................................................................................5
6. Risk of Information Technology.............................................................................................6
7. How can your chosen business maintain and monitor IT?.....................................................7
Conclusion..................................................................................................................................... 8
References..................................................................................................................................... 9

Introduction
Advancement in technology has affected lot of industries banking industry is one of them.
Information technology has transformed the banking industry into digital industry. Lot of
banking operations depends on IT like transaction, online banking, customer care etc. The
report is produced for understanding the importance of information industry in banking sector.
Using IT has lot of advantages but it can be a challenge for a business. There is cyber security
threats associated with IT. Commonwealth bank of Australia recently was in news for data
breach at the company. News heading such as “Commonwealth Bank customers' medical data
exposed in potential privacy breach”, “Commonwealth Bank admits it lost the details of almost
20 million accounts, didn't tell customers” and “Commonwealth Bank of Australia Suffers
Massive Data Breach” have become common newspaper headings. The company have to
understand the importance of information technology. The company must take effective
measures to overcome these challenges (Aliyu and Tasmin, 2012).
1. Need of IT in Banking Industry
Advancement in technology especially the information technology has helped the Banking
industry to move fast. Banks all over the world depend on their IT resources for their
operations. Information technology in banking sector is referred to use of information and
communication technology to offer better services. Banks have utilized the opportunity and
transformed themselves from a paper based banking system to a digital form of banking
systems. Digitalization of banking system has lot of advantages both for customers and the
banks. Customers can view their bank statements online. They can do online transactions for
transferring money. The digitisation of banking service has resulted in change of accounting and
management system of banks. Implementation of Information Technology at the bank is
expensive but the advantages and reward associated with IT is limitless. Banking industry has
adopted technology and they are also getting the business advantage of embracing IT (Luftman
et al., 2017). Banking is a big industry it involve lot of different departments, management of a
bank is very difficult without computer systems. Hundreds of transactions are carried out daily
keeping the record of each transaction cannot be done by writing it in file. Computer systems

are used for performing banking operations. Banking system has become very competitive and
all banks are using latest technology for doing their business. To be competitive in the
marketplace banks need to adopt and use technology. With reduction in broadband cost
customers can easily use internet. They can access banking services from their home using a
computer. They can easily perform online transactions, view bank statements, register for new
service or can open a new bank account. Adopting Information Technology will help the bank in
business growth, it also help customers by making the banking process simple. Information
technology brings lot of advantages to banking industry. Common wealth Bank of Australia
should adopt IT and take advantage of benefits associated with it.
2. Why IT is importance for business survival?
Information technology helps the banks to solve complex business problems. Complex
computers algorithms are used for analysing the banking data. Information technology gives
tools to solve complex problems. Improved hardware and software system help in solving
complex business problems. Information technology can help banks make better decisions. The
banks can use video conferencing, online feedback, reviews and social media to analyse the
customer’s sentiments (Senadheera et al., 2011). Banks can use online survey to get customer
feedback. Information technology improves marketing opportunity for business. Banks can
market their services through online advertisement. Facebook advertising, SEO, SEM, PPC can
be used for promoting the product and service. Internet marketing is more effective as
compared to traditional marketing. Banks can target large number of potential customers.
Through Facebook advertisement banks can specifically target customers of particular age
group. Information Technology can be used for offering better customers. Bank can use modern
communication tools such as social media, emails, videos, and webinars. Customer’s behaviour
can be analysed by using relationship management systems. Information technology helps the
bank in resource management (Javaid, 2013). The main aim of the business is to generate
profits; adopting latest technology will help the business grow. Through these methods Banks
can attract new customers. Businesses cannot survive without information technology they
have to embrace the advantages of Information Technology.

3. What is required to apply IT into your chosen business?
Cost- IT equipment such as server, hardware, and database are expensive. Banks should have
sufficient financial capacity for implementing IT.
Planning: Proper planning is required for implementing the IT at an organization. Improper
planning can result in wastage of company funds. Number of computers requirements, hard
ware and software requirements should be analysed.
Designing: designing of layouts for installing equipments.
Equipment: for implementation of information technology lot of it equipment are required.
Banking Server, database server, desktop, router, network switch are some of the equipment
that will be needed.
Installation: Equipment such as server, router, switch etc needed to be installed. Proper
planning should be done before installing any device.
Training: Necessary training should be provided to employees. By training the employee will be
able to operate and use the IT equipment.
4. How does your chosen business use IT?
For Customers:
Banks are launching new service and making them available to customers through IT.
Information Technology has increased the level of competition among businesses. Banks are
using IT for providing customer satisfaction. Banks have developed lot of services that the
customers can use for banking (Coltman et al., 2011).
Self-inquiry facility: customers can use self-inquiry facility for viewing their transaction history
and they can inquire if needed.
Remote banking: Remote banking can be used for making remote inquiry. A remote terminal is
used for making inquiry online.

Anytime Banking: Banks can install ATM machines. Users can withdraw cash at any time.
Connection between intercity networks will allow the customers to transact from any branch.
Telebanking: In telebanking a phone can be used for inquiring about the account and balance.
Electronic Banking: Bank provides the electronic banking facility. The customer is provided with
an online platform that the user can use to do transactions, view account data, check book
issues and various other facilities are provided (Loureiro, 2013).
For banks:
Banks use information technology for managing their business. Banks offer various services
through online platforms. Banks have lot of advantages of IT
Through IT banks can offer services such as inquiry facility. Banks can use IT for doing business
development. They can use IT to provide customer service (Bajada and Trayler, 2015).
Reduces customers visit to the bank branch. Customers get the facility that can be used to do
banking from home.
Employees: IT improves the productivity of employees. They can use high performance
computer to carry out tough calculations.
Automatic printing machine helps in printing pass books. Employees can save time and use this
time to give attention to other customers.
5. Benefits and advantages of IT
Use of Information Technology increases the productivity of employees it also increases the
efficiency of employees. The employee can provide better customer service. Less time is
required when IT technology is used. Another benefit of IT is that we can pay bills online.
Monthly subscriptions can be used for paying bills. We can save our debit card details and bills
can be paid when the bill is released. The main benefit of IT in banking sector is that cash is
slowly phased out. In near future there will be no need of carrying cash and coins. Technology

will help in achieving a cashless society. Nowadays many businesses are using smart pay
solutions (Chavan, 2013).
Operational Excellence
Use of technology helps in achieving high level of productivity. Technology enables efficient
utilization of resources. Tasks can be completed with less numbers of errors (Luftman et al.,
2012).
Major Business Initiative
Technology can be helpful in achieving the business objective of the organization. Customer
relations management, sales and automation can be achieved using information technology.
Supply Change Management
IT system can be used for automating the inventory management system. Business can benefits
from supply chain management.
Customer Relationship management
IT can be used for improving the customer service and customer relations. New methods and
tool should be used for better communication with customers.
There are lot of benefits associated with use of information technology. Company have to
utilize this opportunity
6. Risk of Information Technology
Strategic IT Risk: There are many risks that an organization has to overcome to implement
information technology at the organization. Proper strategy will help the organization in
implementing the IT in an efficient and effective way (Luftman et al., 2012).
Cyber security risk: Unethical hackers pose great risk for a banking organization. To save the
important data and financial capital of the bank cyber security experts should be employed by
the bank. Financial institutions are easy target for hackers. Banks also have responsibility of
saving their customers from online frauds. They should be made aware of dangers of using

online platforms. Customers should never tell their bank details to someone else. Banks should
also make sure that the private information does not get hacked or leaked on the internet
(Subsorn and Limwiriyakul, 2011).
Technology vendor risk: Banks use lot of different equipment that are supplied by third-party
companies. Financial institutions must ensure that they are using standard devices (Broadhurst,
2017).
Data management risk: One off the important use of information technology is management of
data. Data is very important for financial institutions. It should be saved on secure servers.
IT program execution risk: Execution of IT program at a financial institutions have lot of hurdle.
The complexity of the business also makes the situation worse. Banks should hire IT experts for
executing IT projects.
Technology operations risk: Implementation of IT program at an organization can be difficult.
Everyone may not be technology expert. Employees have to be trained so that they can
effectively use IT.
7. How can your chosen business maintain and monitor IT?
Computer systems are machines and to operate at highest performance the computer system need
routine maintenance. Monitoring of computer system make sure that pre-emptive action can be
taken before they cause any loss to a business. If any problem occurs monitoring technician will
provide information that will be helpful in recovering the system. Monitoring tool provide all the
data that can be used for making decisions without affecting the monitoring service. Mainly there
monitoring service can be divided into two categories (Coltman et al., 2011).
Agent-based monitoring and Agentless monitoring: agent runs inside the system and gives
important information about the system working and its behaviour. The Agent analyse behaviour
of the system by collecting performance data.
Agentless monitoring:

Local mode: Local mode of agentless monitoring runs software on the same virtual machine. The
software is capable of collecting data about the system performance. A log file is an example of
local mode agentless monitoring.
Appliance mode: A software or hardware component that runs on remote location. The
component is separated but it collects performance data through network.
Agent based monitoring is the best method for monitoring the IT infrastructure. A gent based
tool have agent inside monitoring system. It can provide detailed information about the
monitored system. Agent requires CPU and memory which raises the maintenance cost. The
agentless tool will not use system resource.
There are 4 major elements for monitoring the IT infrastructure.
 Hardware Monitoring
 Monitoring the Operating System Health
 Monitoring application components
 Monitoring application component on cloud
Conclusion
In banking sector, staying ahead in technology is important. Digital transformation is required
for attracting new customers. Information Technology has transformed the Banking Industry. IT
has helped the industry transition from file based banking system to digital banking system. Most
of banking process is now digital this is possible only through IT. Banking system provide lot of
functionality to its customers, they can do transaction, view bank statements. Banking sector is a
very competitive business therefore banks are providing best customers service to their
customers through online digital tools. The report has covered all major area of Information
technology in banking industry. Its benefits and advantages are also discussed. Risk associated
with IT is also analysed. Finally the maintenance and monitoring of IT infrastructure is
discussed. By studying these factors it can be concluded that information technology is important
for banking industry.

References
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