Information Technology's Role and Security in the Banking Industry

This literature review investigates the impact of information technology on the banking industry. It explores the benefits of IT, including improved efficiency, cost savings, and enhanced customer service, while also addressing security concerns. The review examines the role of information systems in various banking operations, from basic administrative tasks to advanced managerial decision-making. It covers topics such as cloud computing, online banking, and the evolution of technology in the financial sector. The study also delves into the history of online banking and the importance of information security, including various measures to protect data and ensure confidentiality. The review draws on multiple sources to provide a comprehensive overview of the challenges and opportunities presented by IT in banking.

Literature Review

Table of Contents
LITERATURE REVIEW................................................................................................................1
Abstract............................................................................................................................................1
Introduction............................................................................................................................1
Description of Problem Area..................................................................................................1
Significance of study..............................................................................................................1
Aim of review.........................................................................................................................1
Review Questions...................................................................................................................2
METHODS......................................................................................................................................2
Research findings.............................................................................................................................8
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

LITERATURE REVIEW
Abstract
In this present time period, information technology is a needs in a each and every aspect
of life. In the banking system, an information technology has develop a great essence. The main
aim of this study is to investigate an impact of information technology on the banking industry.
With the help of technology, form can take information or data about the customers as well as
staff members. In the banking industry, information technology contributes more in many ways
like for an instance it helps in saving the times as well as cost. With the help of Information
Technology, banking industry can do its financial transactions in an effective and systematic
manner.
Introduction
In today's business era, information systems are one of the most essential elements for survival
and growth of every enterprise. Every sector of industry is totally dependent on this for
managing data and huge amount of relevant information. From small, medium to large, every
powerful business such as street banks, local and central government are taking help of
information system to regulate and control the data. One of the main benefits of using
information systems is that it helps enterprise in storing huge amount of data with security. All
this helps and support in effective execution of business activities. Various benefits of using
information system in banking industry are all discussed in this report. Different views of authors
and requirements of information system at different levels of banks are also given here. Further,
security needs for this purpose are mentioned.
Description of Problem Area
In this literature review, problem area is impact of the information system on the Banking
Sector. The problem can be related to safety and security of Bank.
Significance of study
A significance of this study to know about the information system which is used in the
Banking industry. With the help of this study, researcher can know about the security system.
Aim of review
"To identify role and security Measures of Information Systems in Banking Industry"
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Review Questions
1. What is Information system?
2. Is Information system beneficial in banking?
3. Is this Information System helping in providing the security to Banking Industry?
Being in a service sector, banks are required to store huge amount of data in order to
provide better and effective services to its customers and to gain competitive advantage. As per
the point of views of Layton, 2016, banking technology refers to the use of data and various
communication technologies together to make the banks able to offer better to all its customers
in an affordable and reliable manner.
METHODS
Banking technology
Lees, 2012 concludes that adoption of effective technology provides a large number of
benefits to banks such as fast customer service, enhanced productivity, increased profits,
flexibility, cost saving, 24x7 services and many more.
As per the views of Willcocks, 2013, use of information technology refers to use of
computers, has seen a marvellous growth in service industry in recent years. Banking industry is
one of the most obvious examples of this in which introduction of products related with
information technology in electronic payments, internet banking, security investments,
information exchanges, banks can offer more diverse and effective services to all it customers
with less manpower.
Kouns and Minoli, 2011 conclude that investment in information system may be
described as the acquisition of any kind of hardware and software which helps in expanding
business operations and providing various benefits to business along with this, provide various
long term advantages to company.
Technology in banking sector
Kavanagh and Johnson, 2017, argued that innovation based on information technology is
divided into four periods such as early adoption (1864-1945), particular application (1945-1965),
emergence (1965-1980) and diffusion (1980-1995) as well as two dimensions of progress in
technology in retail banking. These dimensions help in detail the nature of change brought by
technological innovation.
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Davila, Epstein and Shelton, 2012 concerned with technological capabilities and learning
of Thai banking. Use of technology in mass automation shows that technological change in
banking sector is not revolutionary but evolutionary.
Fischer, Halibozek and Walters, 2012 argued that information technology has contributed
a lot in the success and growth of banking sector but its impact is contradictory. This does not
improve the cost efficiency of banks as all this gives rise to high costs.
Kim, Lim and No 2012 reported that information systems helps in reducing the
transaction cost per customer and helps banks in offering small loans with various types of
services to a large number of rural customers.
Impact of information technology on performances of banks
Kim and Park 2013 examined the relationship between various measures of firm’s
performance and computerization. Study shows that computerisation was related with the overall
performance of bank. Non users of this are small firms having average performance. On the
contrary, enterprises which are using computers tend to be high performers.
Eid, 2011 surveyed 130 life insurance firms in 1983 to identify the financial impact of
information system in industry. Organisational performance was measured in ratio of total
operating expenses to total income. Results revealed that adequate investment in information
technology positive affected the total income.
Yousafzai and Yani-de-Soriano, 2012 examined that information system was able to
reduce the operating cost, save personnel cost, enhance capital expenditures, increase time
deposits and reduce demand deposits.
On the point of views of Lin and Chang, 2011, top performers in banking industry
invested high amount of funds in information systems.
Sohrabi and et. al.,2012 believed that information system can improve the performance of
banks in two ways first is by reduce operational cost of company and second is by facilitate
effective transactions among large number of customers.
Impact of technology on cost and efficiency of banking
Oliveira and Popovič, 2014 concluded that investment in information technology could
make a positive impact on labour productivity and firm's output. However, all measures of IT
system did not have a positive relationship with productivity of enterprise. Basically, information
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technology was likely to increase the efficiency of enterprise. Its impact on productivity and
business performance depends on various factors such as firm's management process and various
IT links which vary across various organisations.
Warkentin, Johnston and Shropshire, 2011 said that one of the biggest advantages of
information technology is that it helps and supports banks to deal with various economic
challenges. In every country, every financial institution relies on collecting, processing,
evaluating and providing information to fulfil the specific requirements of their clients. Banks
were the earliest adopters of information technology.
As per the point of views of Upadhaya, Munir and Blount, 2014, technology has opened
various new products, markets, services and channels of distribution for banking industry.
Internet banking, mobile banking and online electronic banking all are the example of this.
Recently, information technology has been the cornerstone of financial sector that aimed at
improving the speed of financial operations and strengthening the initiatives of banking sector.
Information technology has increased the financial activity across the globe.
Chenhall Kallunki and Silvola, 2011 concluded that progress and development in
technology helped in reducing the cost of funds transferred at the global level. It is the
information which helps banks in meeting customer's expectations which demand more techno
savvy products and the one which demand instant, anywhere and anytime banking services. IT is
the one which has been providing solutions to banks to manage their accounting and back office
operations.
Trkman, 2013 said that large number of banks have modernised their products and
services with the help of various electronic equipment including computer. Electronic revolution
has made it possible to offer flexibility and ease in business operations which provide various
benefits to customers.
As per the views of Lin, 2011, e-banking has made the clients to say goo bye to large
paper bank accounts and registers. The banking system is shifting from traditional banking
towards relationship banking. At early times, relationship between customers and bank has been
on one to one level via branch network. All this concentrated all responsibilities only individual
branch level. Head office was the one, which had responsibility to train all staff members. Now
all this is changing as the way banks are now offering services to its clients. However, all this
give rise to a cost as implementation all technology has been expensive.
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Use and benefits of information system in banking industry
Arrival of computers given risen to information system and this is used on a large scale
by every business enterprise. Features and capabilities of information technology brings various
improvements in business process. One of the main sector which gather the major benefits of
information systems and computers is banks. Being in the service industry, banks are the one
who are in the most need of information. Various technologies such as cloud computing and
various information system helps and allows banks to deliver effective services to its customers
and also help in maintain a competitive position in market. Basic services of a bank consists
book keeping records of clients. However, developing an effective information system require
huge amount of investment and various other measures. Banks are the one which require
information at every stage. Banks need information at the following levels: Basic level: This is a basic level in which banks use information for administrative
purposes. This consists various tasks such as account handling, book keeping and many
more. Revolution of technology has help in made the basic level more attractive for
customers.
 Advanced level: At this level, information play a crucial role and is used at managerial
level. In this, managers use information of annual general meetings and stock listings and
store the same in secure location. Basically this type of information is use by managers to
take decisions.
Nature of information system used by banks
In today's business environment, various type of information technology are use by
banks. Most of the banks operate with various legacy systems that only operate in a single
mainframe computer. Concept of object oriented programming has given rise use of various
service users and this reduce the load on a single computer. Further, internet has evolved a
source of technology that is very useful resource of banks. One of the main feature of internet
based systems is that it allowed banks to collect and keep hassle free record.
Cloud computing
Cloud computing is known as the applications which operate on web pages and are
accessible to everyone who use internet. Basically, it is a concept that take help of third party to
rent the applications. This help banks in tore huge amount of information at one place with
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security and use the same to make decisions. Overall technology provide different number of
advantages to banks.
Information security
Security of information is one of the most essential issue in using internet and is very
significant implementing banking sectors. High security in banking sector creates both
opportunities and challenges in business. Information security is the procedure which an
enterprise use to protect and secure relevant information and media which is very important for
execute its business activities. Financial institutes are the one which protects data with help of a
security process that first identify the risks, formulate a strategy to manage the same and do
continuous monitor the environment to control the risks.
Information security in case of banking can be enhanced by endeavour various objectives
such as confidentiality, availability, assurance and accountability. Main objectives of security
can be achieve by risk assessment, control, strategy, implementation, monitoring and updating.
Monitoring and updating helps in makes this process a continuous one rather than a one time
event. Variables of security risk includes threats, financial institution and many more. All these
standards provide systematic management and at the same time helps in adopts the best
practices.
History of online banking is not is not very ancient, but it get the success within last two
decades. All this happen, due to its various features. In early times in 1990 internet banking
sprayed its network. Nowadays, internet banking is increasing however it has the possibility of
various fraudulent activities. As per the point view of Köhler and et. al., 2011, individuals who
has accepted internet are more convenient, compatible and less complex as compare to those
who did not. Layton, 2016, summarised that e-banking technology is not matured enough.
Davila, 2012 said that, internet and computer networking give rise to the need for new
measures and policies in order to overcomes with challenges and threats that inherent from new
technologies and devices. Banks are the one which face various challenges in the area of
security. Increasing number of external and internal users accessing an increasing number of
applications. Further, security management is ever changing. As various online banking products
were introduced so, it is reasonable to assume the introduction of new product and various
security challenges related with it. Rapid advances in technology which has taken place recent
years are utilise by every financial sector in order to ensure effective execution of business
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activities. Kim, 2012 concluded that, different information technology affect the activities of
banks in only positive way as this help banks in store huge amount of data with security which
was not possible in early times. Along with this, information systems increase flexibility of
business activities and at the same time make the banks able to offer 24x7 services to all its
clients. In order to achieve set goals and targets, it is very essential for banks to use all updated
and new technology in an effective way (Yousafzai and Yani-de-Soriano, 2012). Collection of
relevant data is not only important but store and protect the same data is also very essential.
There is no doubt internet banking provide number of advantages to enterprise but one of
the main problem related with internet based banking is the level of security provided.
Duplication of ATM cards and faults in credit cards are one of the crucial issues (Willcocks,
2013). Due to all this, banks are require to offer a level of security to all its clients that no one
can breach. For achieve the same, banks takes many security measures with help of IT
professionals. One of the main benefit of this is that it allows smooth banking with help of
information technology and various systems. Most common security features consists secure
server technology and data protection act. This law work as a barriers for those who wants to
breaches the security. In addition to this, security measures consists use of passwords. With help
of all this, banks can execute all its business operations with high level of security.
Eid, 2011, said that information system provide large number of benefits to banking
sector. As it is the IT which makes it possible for banks to collect, analyse and store huge amount
of relevant information. All this help banks in offer and provide effective services and products
to all its customers.
One of the major limitation of information technology is that it is very expensive which
give rise to cost of business operations (Warkentin, Johnston and Shropshire, 2011). On the other
hand, it also helps in reduce the overall transactional cost and at the same time helps banks in
provide 24x7 banking services to its clients. Mainly, IT affect the various operations of business
in positive way as this increase the effectiveness of various banking services and at the same
time decrease time serve a client. Lin, 2011 said that e-banking is not enough matured as large
this require huge amount of funds to be invest in same. But at the same time provide various
advantages to banks as this ensure effective execution of business activities which help banks in
offer better services to its customers and at the same time provide competitive advantage to
company.
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Research findings
It is clear that information technology provide large number of benefit to banks especially
in its routine operations. With help of this banks are able to offer fast and effective services to all
its clients which help in capture a larger market share and at the same time increase its profits.
8
Too low
low
Medium
high
too high
0 1 2 3 4 5 6
Column J

From the above given picture, it can be said that today's large number of banks are
dependent on information technology. As this ensure effective execution of day to day
operations. Dependency on information technology of banks is increase on day to day basis.
CONCLUSION
From the above information, it can be summarised that different type of technologies has
changes the overall system of banking. If one will compare the current banking system with the
earlier one then one can see huge number of variations. Being in a service industry, it become
essential for banks to use information as this help them in store huge amount of information.
Further, effective use of different type of technology help banks in store data with security which
was not possible at early times. One of the major limitation of use technology is that it is very
expensive as installation of technical equipment require large amount of funds however benefits
relate with it are also limitless.
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REFERENCES
Books & Journals
Chenhall, R. H., Kallunki, J. P. and Silvola, H., 2011. Exploring the relationships between
strategy, innovation, and management control systems: The roles of social networking,
organic innovative culture, and formal controls. Journal of Management Accounting
Research. 23(1). pp.99-128.
Davila, T., Epstein, M. and Shelton, R., 2012. Making innovation work: How to manage it,
measure it, and profit from it. FT press.
Eid, M. I., 2011. Determinants of e-commerce customer satisfaction, trust, and loyalty in Saudi
Arabia. Journal of electronic commerce research. 12(1). p.78.
Fischer, R., Halibozek, E. P. and Walters, D., 2012. Introduction to security. Butterworth-
Heinemann.
Kavanagh, M. J. and Johnson, R. D. eds., 2017. Human resource information systems: Basics,
applications, and future directions. Sage Publications.
Kim, J. W., Lim, J. H. and No, W. G., 2012. The effect of first wave mandatory XBRL reporting
across the financial information environment. Journal of Information Systems. 26(1).
pp.127-153.
Kim, S. and Park, H., 2013. Effects of various characteristics of social commerce (s-commerce)
on consumers’ trust and trust performance. International Journal of Information
Management. 33(2). pp.318-332.
Köhler, C. F. and et. al., 2011. Return on interactivity: The impact of online agents on
newcomer adjustment. Journal of Marketing. 75(2). pp.93-108.
Kouns, J. and Minoli, D., 2011. Information technology risk management in enterprise
environments: A review of industry practices and a practical guide to risk management
teams. John Wiley & Sons.
Layton, T. P., 2016. Information Security: Design, implementation, measurement, and
compliance. CRC Press.
Lees, F., 2012. Lees' Loss prevention in the process industries: Hazard identification,
assessment and control. Butterworth-Heinemann.
Lin, J. S. C. and Chang, H. C., 2011. The role of technology readiness in self-service technology
acceptance. Managing Service Quality: An International Journal. 21(4). pp.424-444.
Lin, L. H., 2011. Electronic human resource management and organizational innovation: the
roles of information technology and virtual organizational structure. The International
Journal of Human Resource Management. 22(02). pp.235-257.
Martins, C., Oliveira, T. and Popovič, A., 2014. Understanding the Internet banking adoption: A
unified theory of acceptance and use of technology and perceived risk application.
International Journal of Information Management. 34(1). pp.1-13.
Sohrabi, B. and et. al., 2012. An exploratory analysis of hotel selection factors: A
comprehensive survey of Tehran hotels. International Journal of Hospitality
Management. 31(1). pp.96-106.
Trkman, P., 2013. Increasing process orientation with business process management: Critical
practices’. International journal of information management. 33(1). pp.48-60.
Upadhaya, B., Munir, R. and Blount, Y., 2014. Association between performance measurement
systems and organisational effectiveness. International Journal of Operations &
Production Management. 34(7). pp.853-875.
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