Transcript Slide 1

BANKING INFORMATION SYSTEMS
LECTURE 7
Problematic Issues in E-Banking
Management
1. Technology related problems
2. Management problems
Management Problems
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
Regulatory issues
Informa>on management
Outsourcing problems
Security
Loss of personal rela>onship
Organizational structures and resistance
Trust issues
Adoption/acceptance issues
Clash with other services delivery channels
Change management issues
Ethical issues
6. Organizational Structure and
Resistance
• Confusions resulting from fast paced changes can also
have negative effects on customers and suppliers.
• A major source of conflict is over the best ways in
which to move into the future. Many people will have
different views about future directions and may resist
when their opinion is not valued.
• Organizational change is a dynamic process
encompassing different but interrelated forms of
diversity. This diversity might be related to several
dimensions such as organizational structure and
culture, or the interactions between different
dimensions of an organization.
6. Organizational Structure and
Resistance
Causes of failures can often be found in:
1. Inefficient interactions of technical and human
activities, the organization with its
environment, or organizational design and
management style.
2. Lack of systematic change management
methodologies or problems in their
implementation.
6. Organizational Structure and
Resistance
• Most of the change management methodologies
focus on four common dimensions of an
organization:
1.
2.
3.
4.
Process
Design
Culture
Politics
Common dimensions of an
organization
1. Process: may involve changing services development process (from
market research to actual roll out) cash flow (from investments to
profits), human resource input, and information flow.
2.
Design: involves changes to organizational functions, their
organization, co-ordination and control, such as changes in
horizontal and vertical structures; in the decision systems or policy
and resource allocation mechanisms; and in the processes used for
recruitment, appraisal, compensation and career development.
3.
Culture: Culture encompasses such issues as values, beliefs and
human behavior in terms of mutual relationships and social norms.
4.
Politics: may involve the power of change makers or those who
resist it, which stakeholders will be effected and why etc.
Management of Change (MOC)
• The key idea of the MOC framework is to
help manage the diversity and interactions in
organizational change and the change
management methods.
• The power of this approach lies in its ability
to relate different change management
methods to each other through a systemic
framework.
Systematic Framework for the
Management of Change
7. Trust Issues
1. Trust and trustees:
The two parties, truster and trustee, are vital for establishing
a relationship. In an online environment, a website, or rather
the trader behind it, is a trustee and a consumer is a truster.
2. Vulnerability:
Offline traders usually have a physical presence which reduces
the sense of vulnerability but the anonymity associated with
the online world leaves consumers feeling more vulnerable.
This is not just about vulnerability to fraud but also loss of
privacy, because every move made by a consumer can be
recorded and analyzed to assess their behavior. In some
cases, this information is sold to other parties without
consumers’ prior knowledge, further fueling online mistrust.
7. Trust Issues
3. Produced actions:
A consumer action may include just visiting a website for information or
purchasing a product, often providing credit/debit card as well as other personal
information such as home address. Both of these action benefit traders in terms
of a potential sale or an actual sale. To provoke these actions, a trader must do a
number of things to create trust in consumers’ mind.
4. Subjective matter:
•
Trust is a subjective matter. Some people will trust easily whereas others will
not trust no matter what. The majority of consumers, however fall,
somewhere in between, and can be persuaded to trust even a virtual trader.
•
Basically, trust is a psychological state of mind when the person is willing to
accept the risks involved. When the perception of benefits outweigh the
risks in the relationship, the person enters into a trusting relationship.
Therefore the burden is on organizations to promote e-banking benefits and
minimize the related risks (provision of institutional and structural
safeguards) to facilitate trust.
Steps to Promote Trust in e-Banking
• Purchase of similar web domain names so it becomes
difficult for fraudulent traders to set up similar websites.
• Being pro-active in combating online crimes and
cooperating with other banks and other regulatory/
professional bodies to detect and prevent crimes.
• Taking proper care in protecting consumer’s information
and taking particular care in using it for marketing
purposes.
• Providing appropriate guarantees against consumer losses
in the event of fraud.
8. Adoption/ Acceptance Issues
9. Clash With Other Services Delivery
Channels
•
Although e-banking promises to be more cost effective and efficient than
other channels such as branch or phone banking, it may also cannibalize
these other channels.
•
In the short term a cheaper channel replacing an expensive one looks
attractive, but in the long run it may cost banks an established and loyal
customer base. For this reason many banks treat e-banking as only an
extra channel, a factor which could mean that growth of e-banking is
much slower than many expected.
•
Many banks have invested huge resources in their branch networks and
in many ways view it as one of their core competencies. New
technologies can enhance these core competencies but at the same >me
may destroy them.
•
This could mean that entry barriers for new entrants keep coming down
and increasing competition from new and lower cost rivals can erode
profits. Banks need to be pro-ac>ve regarding new distribution channels,
and should allocate resources in order to integrate them in the existing
organization.
10. Change Management Issues
• One of the main problems established organizations
encounter when considering e-banking adoption is
organizational change.
• Technology adoption is usually slow if too much attention
is paid to technical aspects, rather than business
processes and social issues.
• Some companies sell their e-commerce projects as ‘pilot’
or ‘learning’ vehicles and leave it’s development to the IT
department and many senior executives equate ‘going
online’ with a specific technology in mind rather than
using digital technologies to implement their
organization’s strategic objectives.
10. Change Management Process
• Going online is about serving customers, creating innovative
products/services, leveraging organizational talent, achieving
significant improvements in productivity, and increasing revenues.
• High start up cost of e-banking also deters some banks to delay its
implementation.
• Lack of a well defined e-banking strategy that is aligned with
general business strategy is also one of the most common
problem in e-banking adoption.
• Adoption of e-banking initiatives can also be derailed by the
absence of clearly defined performance measures.
• An e-banking initiative, just like any other business project should
be undertaken within a strategic framework.
10. Change Management Process
11. Ethical Issues
• Consideration of the ethics of e-banking have mainly
focused on areas relating to the use/abuse of information
collected through analyzing online customer behavior.
• The main issues may include security/privacy of
information about individuals, accuracy of information,
ownership of information and intellectual property,
accessibility of information held and what uses of this
information are ethically acceptable. These relate to:
freedom of choice; transparency; facilitating fraud
(ethical/illegal activities of others).
• One of the main benefits of e-banking is that
organizations can improve service and potentially
generate more profits for shareholders and job security
for employees.
11. Ethical Issues
• Job losses are one of the methods of cutting costs and this
has numerous negative implications for those effected.
The displacement of job opportunities away from face-toface and back-office service roles to information system
professionals is a common feature of the electronic
commerce revolution. How banks deal with this issue
often raises ethical issues which may be mitigated by a
careful and considerate approach to change management.
• Fraudulent activity by individuals and businesses is both
illegal and unethical but what about the facilitating of
fraudulent activity? How much responsibility do banks
have to prevent their services being used to aid unethical
or illegal activities such as money laundering or depositing
money made through corruption?
11. Ethical Issues
• Taking personal relationships out of responses to credit
applications has the effect of dehumanizing the process. A
client’s relationship with a bank or a manager may have
developed over years of loyal customer commitment.
• Reducing this to boxes ticked and computer-generated
numbers/models would, according to an ethic of care,
result in the loss of the development of individual
relationships, the human touch and the use of intuition.
• Such aspects may be viewed as necessary to the new
electronic economy, but human networks are just as
important a part of business practice as the efficiencies
associated with e-banking.
11. Ethical Issues
• Electronic commerce also allows for the concealment of
the real identity of suppliers of a product or service.
• This white labeling (products sold without clearly labeling
the source/supplier) may offer extraordinarily misleading
information about the source.
• This and many other ethical issues remain to be address
to date and progress seems to be slow.
• All these obstacles need to be identified, and then
minimized through active learning and collaboration with
customers, management, and people within organization
as a whole.