Essay: The banking sector, technology and service delivery

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  • The banking sector, technology and service delivery
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The revolution came after the modernization and globalization process in economy has a considerable impact on the financial institutions. The financial sector reforms and the reforms of banking sector are a part of the economic reforms. The banking sector holds the central position in the global economy. In this modern world of money and finance, the importance of banks in the economy of any country is vital. A strong banking industry is crucial for the up grooming and growth of any country. Banks are involved in all type of activities from the mobilization to distribution of the public finance also from the purchase of the car to the financial assistance to the individual and business projects. (Mehmood, 2004)
The role of banking sector in the success, prosperity and development of any country cannot be over looked. Banks and other financial institutions are a key resource and reserves of capital funds which are essential for the local investments and contribute to the economic growth to a large extent of every country. Banks play an important role in the enhancement of investments in the country and also support the expansion of the business of all levels including small and large enterprises. Banks through their services ensure the smooth operations and expansion of the economic activities which in turn generate wealth by increasing the production. Commercial banks are the most portentous financial intermediaries and depending upon the policies of the place where they located, they greatly help in minimizing the rate of unemployment in a way by inciting more people to become entrepreneur and should employee others. Today, the banks are working together with the government, to identify the growth demanding sectors of the economy like agriculture and make them potential enough by providing the finance.
Pakistan banking sector has witnessed an outstanding and unique development in recent years. A remarkable rise of $60bn in assets of industry has ranked this sector as Pakistan’s and region’s best performing sector. This sector has shown an excellent profitability and diversified public credit. Another achievement is well maintained system risk. In Pakistan growing per capita income, development of middle income group and increase in relative wealth are presenting new demand and opportunities to the retail banking industry. (Akhter, 2007). Pakistan’s well established banking system is comprised of wide variety of institutions. This includes a central bank, various commercial banks and specialized agencies. In 1947, the country had no notable banking network but by 1970, it succeeded in developing a prosperous banking industry. (Mehmood, 2004)
The banking sector in every country, Including Pakistan is subject to many internal and external forces. Technological changes are considered to have most far reaching impact on the banking sector. Technology, particularly the internet is the key operator of internal changes. Within this sector the external changes have attracted many new entrants and also maximize the customer influence. Internal changes have been greatly amplified by the internet. The internet is causing the major delivery changes and the combination of these forces internal and external will bring about a major mutate the banking sector.
Under the current scenario of business world and with the development of the information technology and globalization of the market place, Internet and the World Wide Web have become essential instruments to survive. Products and services have promptly shifted to digital form and are now being delivered by the internet. Electronic services basically administer two key hall marks; information efficiency and transaction efficiency.(Parasuraman, Zeithaml, & Berry, 1985). It is also a fact that electronic services aids in the development of trust and relation with the customers. So, all enterprises are focusing on this regard.(Chowdhury & Ullah, 2013).
It should be noted that the banking industry was one of the very first to implement the information technology back in 1960’s and has record influencing the development through technology. Technologically facilitated services actually means that the type of service delivery which have the aptitude of benefiting the customer, employee and the management alike.(Evangelista & Vezzani, 2010). Service quality is one of the major factors that determines the success and prosperity of the electronic banking. There are several competitive advantages linked with the reception of the technology in the service sector. Information technology is progressively becoming inestimable and dominant tool driving the development, aids in growth and promote competition and strengthens the competition.
There are many examples of information technology application associated with banking sector that assist in building new markets and fuel the economy for example, automated teller machine ATMs. Technology adoption has led to the community efficiency which results in reduction of cost, improvement of service quality and enhances the added value to the customer. Acknowledgment of service quality as a competitive weapon is a recent phenomenon in today’s banking.
There is a direct and positive impact of technology on the service quality of every sector especially the banking sector. Today, the banks, to remain in the competitive position are facilitating their customers with the technology based services according to their demand. The diffusion of IT has led to a drastic transformation of the product user relationship due to the improved services being provided by the banking sector.
The product service innovations which took place due to the dissemination of information technology in service sector have a great impact on demand and employment. It is important to realize that in service sector the issues of generation and dispersion of innovation are inextricably important. Both are highly correlated and is considered important in all service industries and financial sector like banks.(Redlinghuis & Rensleigh, 2010). So the current study is designed to investigate the impact of technological advancements on banking service quality.
Literature review
(“Australian Coalition of Service Industry, Annual Review,” 1997a. )From last 15 Years, the use of technology is enhanced in the service quality field. The industry of service takes advantage through investing in new technologies.(B.Carroll, 1985) All fields of work in the business administration know that quality service has very important to retain customers and earn profit.(Gilbert, 1997)The trend of Information technology change and its growth has intense effect on the service quality.(Chipp, Hoenig, & Nel, 2006)Banks in the developed countries moving towards the technological innovation for example ATM, internet banking Etc., to compete in the competitive world.(Avasthi & Sharma, 2001)The information technology has completely changed the financial contracts in the service industry.
(Coskun & Frohlich, 1992)The key of the success in deliver a quality of service to the consumers and maintain it in the today’s competitive environment in banking sector.(Malhotra, Ulgado, Agarwal, & Baalbaki, 1993) In the past few years, the service quality has much growth. It is maintain from management and major focus in developing countries. (Yavas, Bilgin, & Shemwell, 1997) in recent themost competitive tool is toidentifying the service quality and it is a strong phenomenon in today’s banking. (Valarie A. Zeithaml, Berry, & Parasuraman, 1988)Through latest studies the quality service can put on 4th a positive on the customer satisfaction.
(Clark, 2007)An ATM is configured to make withdrawals,distribute cash, issue account balance and transfer money in between accounts. It iscomputerized electronic machine.(Daniel, 1999)An ATM is the mostrenowned and advanced banking servicebecause it is provide an option to do transactions,access your accountand can make online purchasing.(Atinuke & Ayo, 2010)ATM is a speedily accepted technological breakthrough, in the entire world, because of its accessibility, easy to use and time saving feature.(Singh & Tigga, 2012)ATM provides the recent balance in our account, source of cash with drawls, gives the statement ordering facility and is a mode of give payments to any of the third party.
(Clark, 2007)Telephone banking enables us to pay bill or do banking transactions without leave the house. (Ahmed, Zairi, & Alwabel, 2006) Telephone banking enables to performDaily transactions by giving security information and it also allow to carried out non-cash transactions. (Marr & Prendergast, 1990) Telephone banking service saves time spent during traveling. It is useful,convenient and speedily service. (Al-Ashban & Burney, 2001)Telephone banking reduces the cost and providing ease to customers. All services are expected to be in telephone banking which are available in bank’s branches.
(Rahimudinand Bhukhrai, 2010)Internet banking is use of electronic methods or means without cash or check we can transfer money from one account to other account. (Akinyele & Olorunleke, 2010)in recently internet banking is introduced as a channel of delivery. Internet is use to give information on a web page about the bank.(Dabholkar & Bagozzi, 2002)Internet banking entertains customers to access the data at any time and place. (Laukkanen, 2007) All the banks should established strategies to create awareness about online banking, for this marketing and promotions campaign can be useful.
(Boon & Kurtz, n.d) Smart cards are the plastic cards that stores encoded information on the fixed computer chips. It is the most important and very easy way of online payments. (Worthington & Edwards, 2000)Smart cards are used to withdraw funds from bank account. Through smart card funds or payments can be transferred easily from customer account to their merchant’s account.It is easier way rather than carrying a check book.(Birch, 1997) The use of Smart cards are secured in these days of technological advancement and these are well-established international standards in easy to use.
According to (Lewis, et al., 1994), there is a relationship between service delivery and the technological evolution in term that it helps in retaining and satisfying the customers. According to the(Ozdemir & Trott, 2009) It is the evidencethat technology has positive impression on the service quality that being delivered. And on the basis of the new technology banking sector can improve their service quality.(Porter & Miller, 1985) Describe that these is exit relationship between technological innovation and service quality. (Lang & Colgate, 2003) Conclude that through using technological revolutionthe service quality would be the benefits for the banker and its management that shows banking institutions can provide service quality to their customers by using the latest technologies. According to (Walker & Jhonson, 2006)Customer are more satisfied with the service quality and technological evolution in banking sector. According to(Joseph & Stone, 2003) When services is delivered via technology then it is correlated with the majority of customer satisfaction. (Jayawardhena & Foley, 2000)Describes that there is a positive impact of technology on service quality in banking sector. (Pikkarainen, Pikkarainen, Karjaluoto, & Pahnila, 2004b)Elaborate that useful information on the web site of the bank are the major factor for influencing the acceptance the service of online banking. According to (Singhal & Padhmanabhan, 2008)Technology of internet banking is increasingly becoming a need to have this service. According to (Sirilli & Evangelista, 1998) there is a relationship exist between service and new technologies. Now days the service firms are greatly depends on a large range of the technological innovative sources. According to (Evangelista & Sirilli, 1995) service quality and technology innovation is correlated. Service firms have different resources to explore the new technological evolutions. Technological information can be collect mainly from the suppliers, clients,delivery departments and customers etc.

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