Strategic Information System and the Importance of ERP: Banking

This report delves into the critical role of Enterprise Resource Planning (ERP) systems within the banking industry, using Commonwealth Bank as a case study. It examines the evolution of business processes, highlighting the inefficiencies of manual systems and the need for automation. The report outlines the specific requirements of a modern banking system, including financial and accounting integration, inventory management, secure transactions, and customer service management. It further explores the process of software and vendor selection, emphasizing the importance of choosing the right tools for optimal performance. The report also discusses how banks utilize ERP software to streamline operations, improve decision-making, and mitigate potential security risks and data breaches. Ultimately, the report underscores the necessity of ERP/AIS software for maintaining competitiveness and sustainability in the dynamic banking market.

Running Head: Strategic Information system 1
The importance of ERP System in Banking industry- Commonwealth Bank

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Contents
Introduction......................................................................................................................................3
Business process..............................................................................................................................4
Requirements of business................................................................................................................5
Requirements of System..................................................................................................................6
Software and vendor selection.........................................................................................................8
Ways in which bank use ERP software.........................................................................................10
Level of competence of the technology execution........................................................................12
Potential security risks, data breaches...........................................................................................12
Mitigation of risks..........................................................................................................................13
Conclusion.....................................................................................................................................14
References......................................................................................................................................15

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Introduction
Strategic information system is helped to develop in response to corporate business initiative.
They are planned to provide competitive benefits to the organization. There is a salient feature in
the strategic information system in the world of information technology. Enterprise resource
planning is the system that facilitates business to attain the efficiency in their business process. It
is an effective approach that assists an organization to automate their systems in a way that they
can attain benefits in the competitive environment. It is hard for an organization to support their
number of activities through utilizing an ordinary business process. It is considered as the
helping system to the bank industries in developing the activities in a sufficient manner in the
targeted market.
Moreover, the business process of the bank industry is defined below in this report and the needs
of the business to adopt the software will be defined below. Along with that it also defined that
selection of the vendor and software for the Banks and the process that elaborates that the banks
have implemented successfully in their process to amplify the productivity of the banks.
Furthermore, the report defines the various level of productivity of the implementation of the
technology in which potential risks are linked with several activities of the banking industry
utilizing the software and the moderate to solve these risks. It is necessary for the banking
industry to execute the ERP/AIS software in the operations of the business to maintain the
sustainability of the same industry in the target market. There are number of details regarding
software are discussed below.

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Business process
The business process of every industry is different from others but the aim of every industry is
same to represent them in the target group. The Commonwealth Bank of Australia is
multinational bank. This bank is provided number of services to the customers by entailing funds
management, investment, insurance, superannuation and institutional banking with the help of
strategic information system. CBA has 52,000 employees all over Australia for which it has
adopted hierarchal organization structure. It shall be noted that this bank has repudiated position
in the banking industry that facilitates in developing the sales continuously. It is essential for the
bank to have the effective process of business to attract number of customers and make them
satisfied through the services. The business process of bank is mentioned below which will be
facilitated to understand the concept of the bank to attract the number of customers.

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It is the business process of the bank that helps to develop the efficiency of the operation so that
the business can develop more efficiency within the business. The business process handle the
each activity manually related to financial of the customers so that they cannot face any issues
regarding handling the accounts facilities. According to this process the agents as well as
customers should cooperate in relation to attain the goals (Schlagwein, Thorogood and
Willcocks, 2014). They should buy and activate the multi cash application to make electronic
payments. They have to sign on the document and the request is being accepted by the bank
which takes a lot of time. The bank technical helpdesk will get the annex of customers and
validate it, if everything is perfect as per the requirement. The bank server administrators will
activate the customers. It is considered as the collaborative process in which number of agents
work as per the strict rules and procedures. A business process system of bank is thus created to
automate a higher set of present bank operations and give tactical, operational and strategic
information required in the process of decision making (Schlagwein, Thorogood and Willcocks,
2014). The main feature of a latest banking information system is the linked level between the
aspects included in the banking activity.
Moreover, it must be noted that these activities developed of the organization were good till the
time the ERP/ AIS system were not developed in the environment. It has been found that
physical process of business creates number of errors in the operation that is why it is required
for the banking industry to go for ERP system to increase the productivity of the employees and
the comfort ability of the customers.

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Requirements of business
The banking industry has developed day by day by taking help of latest technology. It has been
found that the business is required of the ERP system in the organisation for making the
employees perform functions in a sophisticated manner. It is essential for the bank to open up to
the innovative technology in the business environment. There are a number of bank that use this
process for deviating the problems and brings the growth for the organisation.
Moreover, it can be found that from the above mentioned business process chart may bring the
number of issues within the organisation that can hamper the productivity of the employees and
trust of the customers over the banks. The employees of the bank perform all the functions
regarding finance manually that brought number of errors in the paperwork. Along with that this
function has become a burden for the employees of the bank that outcomes in reduce the level of
efficiency of them. Along with that, the bank has hired some of the employees to maintain the
paperwork or inventory system of the bank which outcomes in paying heavy cost to the bank.
The above-mentioned business flow chart of the bank does not offer or amplifies the productivity
level of the different activities of the bank. As a bank is related to the financial activities, it is
vital for Commonwealth bank to handle the goodwill and well repudiated image by developing
such activities and efficiently introduce the financial activities as well.
The key requirement of the business process of the bank is to decrease its cost and amplify the
sales of the bank by providing number of financial activities to the customers with Quality
Services. The traditional business process of the bank is unable to satisfy the customers as a
number of latest technologies have taken place in the banking industry appropriately. There is
the presence of many errors in the system and the process which brings the complexity for the
employees. Hence it is the requirement of the business to make use of ERP system to attain

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success in the target market. Commonwealth Bank is wide and diversified in nature that is why it
is vital for the functions of the bank are increased in various parts of the world. Hence, for
managing entire activities, operate sophistically, plan, and develop, the bank need one database.
Single data base will be helpful for the bank to organize activities of finance and attaining
growth in the market.
Requirements of System
It is hard for the bank to execute the ERP system software which is the part of strategic
information system in the business as it needs proper understanding communication and efforts
by all the employees of the bank in a proactive manner. It is vital for the organisation to take care
of the every aspect to implement this software within the operation. Hence, the system
requirements from the company are defined below.
Financial and accounting: It is considered as the important aspect of the ERP system as it is the
major process that it is required to being used and executed in the bank on regular basis.
Financial activities is the major concept of the bank so it is required for the organisation to take
care of each and every financial activities as the presence of any error in the financial accounting
of the Commonwealth Bank may hamper the image of the organisation all over the world. The
ERP system has the ability to convert the complex transaction into simpler ones by which the
employees of the bank and find out the complexities in the financial transaction in a quick
manner. Along with that this system enables employees to do not maintain the record of the
repeated transactions on regular basis as the system can easily add it on itself.
Inventory management: the enterprise resource planning system has the ability to maintain the
inventory management system of the bank in an efficient manner. It has been found that the

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inventory control as well as management is the huge activity for the banks unit as it needs the
employees with good skills to manage the data of the customers related to each transaction. One
mistake can lead the bank into adverse situation that is why it is required for the bank to have the
effective and approachable ERP system in the operations to handle the each activities of financial
in an effective manner. This system has least chance to make mistakes which brings the
proficiency within the operations. Moreover, it shall be noted that it is the need of the system to
attain access of all materialistic data regarding the bank and store it into the cloud.
Secure transactions and 24*7 data base: the functions of the banks ensure the customers of it
that their information and the transactions details are confidential which maintain the trust of
them over the bank. It is necessary for the bank to handle the bank exchanges with alert to
fundamentally dispose of any odds of incidents happenings. The ERP system enables bank to
make customer satisfied in the way of guaranteeing secure exchange. This system is upheld by
cloud servers which are available for the employees as well as customers by 24*7. It facilitates to
not give business supervisors an opportunity to control the business makes better, yet in
additional handle the customers of the banks by making them refreshed for their record point of
interests, EMIs and other financial activities make by them.
Customer service management: the customer service management is the essential process of
the management that defines the use of ERP system within the operation of the bank. It shows
that it direct likes with the satisfaction level of the customers which help to connect them with
the bank for a longer period. The post sales services are entailed within this process that
amplifies the level of satisfaction of the customers (Jinno, Abe and Iizuka, 2017).

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At last, it shall be noted that the ERP system that is to be adopted in the financial activities of
Commonwealth Bank also needs number of functions which should be developed by the
management of the bank. The system wants the management to support with latest operations of
the bank, the management should not refuse to accept changes present in the environment of the
company rather they should go for a change to develop the positive working environment within
the organization. There is another requirement that the management of the bank must initiate
utilizing this ERP system at the time when all the concerns are resolved. It is because if the bank
implements the system at the time of having issues within the operation, then the ERP system
would get fail (Kapp, Latham and Ford-Latham, 2016).
Software and vendor selection
It is very essential for the banking industry to select the software and vendor selection. It has
been found that the working of the organisation is dependent on the business process that they
utilise in their business. That is why it is required for the execution of new ERP system to
facilitate in turning the face of bank and increasing the activities in the new terms in the business.
It is the most important task for any bank to identify the right software and the correct vendor for
the bank. The correct sort of software will facilitate the bank to get growth appropriately in the
target market along with that the right type of vendor will facilitate the bank to gain after sale
services in an appropriate manner. The selection of ERP software is a vital decision of the bank
as it needs wide investment and expensive Automation decisions for the company. Thus, it has
been found that the wrong decision in the selection of ERP system may lead the bank into
adverse situation.

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In order to gather the information regarding the selection of the adequate software and vendor,
the bank requires to take care the requirements of their business, along with that the management
of the bank required to recognize the errors in the business that are recently hindering their
success. Commonwealth bank is being presented in Banking Industry that requires using
software that shows their noteworthy financial activities in the target market. Along with that, the
bank needs to have efficient software to handle the operational activities in an efficient manner.
It is vital for the organization to select right system for the bank after analyzing the requirements
of the operations. ERP system implementation can fail in many banks because of the lack of
well-defined functional requirement. It has been found that the 60% of the ERP systems
execution that lack wide needs definition fail. Over reliance on string customization due to ERP
software inequality, support customization was needed in the program customization which
makes the project of the bank delays and budget overspent.
Financial crimes have been developing at a disturbing rate and the fraudsters are finding a way to
steal the personal information about the customers of the bank to hack the system. It is essential
for the bank to select the right vendor with the help of vender selection approach.

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Figure: vendor selection approach
Source: (Thakur and Anbanandam, 2015).
The process should reduce the complexity as well risk of the work for the employees. This
process of vendor selection helps the organization to opt the best vendor. The organization is not
only purchase the software with the vendor but they also carry out a contract with the vendor of
software. This process will be helpful for the organization to use for a long term. In case the
vendor of the organization is unable to provide the services after purchasing, it would not be able
to make them satisfied towards the product (Banerjee, 2018). The vendor with which,
commonwealth bank would develop alliance should be an effective organization that can
effectively satisfy their needs. Along with that there are some description mentioned which
should be considered by commonwealth bank while buying the software from the vendor.
 Post sale services: it is necessary for the bank to provide the proper guidance to the
customers regarding the financial activities so that they get satisfied from the services of
the bank. It will facilitate to develop the satisfaction level of the organization and
facilitates them to proper coordinate the software in the organization. The contract that
have made between the parties should be flexible with detail of non-compliance of the
cases.
 Licensed company: The Company with whom bank is linked should be licensed
company and verified vendor. The vendor should be reliable and be able to offer the
expected services by the bank.
 Fix the issues before implementation: it is necessary for the organization to fix the
issues in the present system before selecting the vendor and software. It can be possible

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that at the time of testing the software, the bank might face several challenges that are
why it is required for the operation department of the bank to fix the issues initially and
then use the software in the organization.
It has been found that the CBA’s capitalization has developed more than $100 billion for the
very first time due to chase by investors in continuous manner for higher yielding stocks.
Currently company is using Xero accounting software and SAP ERP system that offer the
accurate information regarding the financial activities that will facilitates customers of using time
in right manner (Xero Blog, 2018). This software is helpful to reduce the stress of the employees
in the organization.
Ways in which bank use ERP software
There are number of techniques with which the bank use the software SAP to amplifies its profits
in the market and attain good image as well.
Creating security for organisation: The security of the organisation is increased with the help
of this service software. The threat of misplacing any sensitive information regarding employees
as well as company can be eliminated by storing all the information in the cloud based software.
It is the effective process that developed a number of security tools that increased the business
function. The operation of the banks uses this software to store the information and record the
transactions actively. The operation of the bank can display the personal and price sensitive
information to the people who are connected by the organisation with the help of this process. It
is the criteria of the bank to save the personal information of the employee as well as customers
in those Areas where few people has access to reach. This process reduces the chance of losing