INFORMATION TECHNOLOGY

The Role of Information Technology in the Banking Service Sector



Table of Contents

Introduction3

Impact of technology on the banking sector4

Banking in Australia6

Service quality using importance-performance measurement6

Competitiveness Banking Environment in Today World9

E-Banking11

Benefits of E-banking:12

To the Customer:12

To the Bank:13

Impact of IT on the Service Quality:13

Impact of IT on Banking System:14

Traditional Banking Sector15

The New Relationship Oriented Bank16

Impact of IT on Privacy and Confidentiality of Data:16

The New Era17

Technology and Banks Transformation17

How to survive22

The new Delivery Systems.23

The Role of Information Technology in the Banking Service Sector

Introduction

Over the past 15 years technology has increasingly been employed in the delivery of services. The adoption of technology into service industries is becoming a strong trend as service providers are now being urged by industry bodies to invest in technology as a way of securing their future in the electronic age (Radha, 2008, 101-118).

The role of technology in service organisations as discussed by Joe (2005) has been predominantly employed to reduce costs and eliminate uncertainties. In the service sector, technology has been used to standardise services by reducing the employee/customer interface. The majority of consumers now more than ever prefer to opt for a technology-based service delivery over that of the employee (Joe, 2005, 83-113). This emerging trend raises some important issues about the impact that technology will have on service quality and customer satisfaction levels. To what extent can the employee/customer interface be removed from the front line and still maintain or improve the levels of customer satisfaction? Thanikodi (2005) suggests that little is known about consumer preference for self-service options, particularly those that are technological based.

Furthermore Mittal, (2006) have researched tolerance levels of consumers' preferences for using technology instead of the human touch (Mittal, 2006, 33-41).

The growth of technology in the delivery of services has had a dramatic effect on the nature of the core offering. Mittal, (2006) uses an analogy to make it simpler to understand the ``revolution'' that has taken place in technological development in the past two decades. If technology (in terms of development, pricing and accessibility improvements) had occurred in the transport industry over the same period of time (1975 1997) as the computer, an aircraft that cost AU$10 million in 1975 would now cost AU$450 (, 2006, 33-41).

The nature of service organisations has changed over the past two decades. This change has been influenced by the development of storage and speed of data transfer, particularly in electronic funds transfer known as EFTPOS. Whole new industries have emerged, including news retrieval services and video conferencing (Radha, 2008, 101-118).

Subbiah (2008) discusses how technology based services have made new service delivery options available to organisations, making customer participation more widely possible. Customers use touch screen kiosks to order take-away food, whilst banks have widely distributed automatic teller machines to withdraw, transfer funds or make deposits into accounts (Subbiah, 2008, 55-102). Accessibility has been extended through technological developments as well as the introduction of new service delivery methods that allow consumers to do business with service firms from the home and office (Uppal, 2008, ...