Information technology capability and value creation

This article investigates whether an organization’s information technology capabilities can increase competitive advantage and contribute financial significance. The article examines the capability of information technology directly as an independent variable, in contrast to previous research that assumed that investments in information technology would automatically lead to technological capability and subsequently result in competitive advantage. Lin (2007) investigated the primary and cooperative effects of Information Technology Competence and the human capital asset on five measures of company performance using data gathered from a sample of 175 banking institutions. The outcomes from the research conducted revealed that both Information technology and human capital affect the creation of general value performance of financial Institutions. The study additionally suggested that the technological ability and human asset investment could have an adverse outcome on the company’s value creation. The banking system should view Information technology as an essential instrument for developing more financial value instead of corporate support that makes commercial transactions effective. Based on the findings, Lin (2007) believes that technological capability is the foundation for creating competitiveness, especially in the information intensive industries like the Banking sector. Secondly, the study also reveals that a human asset is a fundamental form of logical asset that certainly contributes to the success of any banking institution, both in the short-term and the long term. The third finding purports that Information technology ability and human assets investment can mutually influence the productivity of a firm positively or negatively depending on the level of investment, the bank has injected in this mission. The author summarizes that economy of scale witnessed in the banking system can reveal that established financial firms are better positioned to tap into the advancements of Information technology and quality human capital as compared to smaller or start-up banks.

This article highlights that technology could both be beneficial and disadvantageous to the banking institution at the same time. The benefits could be harnessed when the Bank is ready to invest in the technological process heavily. In cases where Banks tend to invest partially in technology, the bank would probably incur various drawbacks. Lin (2007), advises that if a bank wants to explore in the field of technological advancements let it go that way entirely, but if the bank is not ready to uphold technological advances then let it not explore this area at all because partiality in technical use could lead to more harm than benefits. Lin (2007), further advises that, when pursuing technological advancements, banks should not forget to invest in human capital that will be operating, maintain and monitoring this technology. Insufficient invest in human capital is a recipe for failure. This journal is a peer-reviewed article, which means that various academicians have scrutinized, approved and criticized it. For this reason, I think it is credible enough. Secondly, the researcher has used both secondary peers reviewed information and primary data and analyzed the information collected through snowballing.

The conclusions of this report are compatible with different recent surveys documented in the collected works on human capital. Most researchers have stated constructive feedbacks between human assets investment and the overall performance of a firm. However, this study goes contrary to a study carried out by Dewan and Min that stipulates that technology is increasingly displacing other outputs in the Banking system and future, there will be a tradeoff between two types of intellectual capability, which is Information technology and human capital.

Dandago, K. I., & Rufai, A. S. (2014). Information technology and accounting information system in the Nigerian banking industry. Asian Economic and Financial Review, 4(5), 655-670.

Dandago & Rufai (2014), points out that technology has motivated the development of the banking system and the range of services offered in the present era. Information technology has specifically become a valuable resource, and the absence of it could lead to poor decision making within a firm and ultimately result in its failure. The primary intention of the authors was to determine the influence of technology on accounting fabrication concerning the Nigerian financial Industry. The investigation utilized both secondary and primary data and analyzed the data using Analysis of Variance to test the hypothesis. The authors used the means of judgmental sampling to select the sample population. Dandago & Rufai (2014) contemplated that the general efficiency of Nigerian banks had increased as compared to the past decades. However, the enhancement of cost effectiveness is comparatively lesser than in the state of profit performance. The authors further perceived that accounting technology could be helpful in improving the performances of banks by cutting down on the operational expenses and helping in transactions between clients in a similar or different system. The study resolved that accounting technology is essential in streamlining concerns and providing quality knowledge to the financial institutions in Nigeria. This notion demonstrates the reasons why financial Institutions invest numerous capitals on technology and deliberate its purpose as a corresponding advantage in the dynamic financial industry. The article concludes by recommending that the effect of the process in accounting technology on the services offered by banks should not be the reason behind the banks increasing their operational costs. This will call for an inquiry on the possibilities to realize economies of scale by the Banking institutions in Nigeria.

This article brings about another aspect of the importance of technology to the banking system that was somehow forgotten, and that is the use of technology in the banking system for decision-making. With an empirical study in Nigeria, this study gives concrete facts that are proven by the data analysis process and could be used to bring about real change. The authors of this article are respected academicians in their country and take part in teaching business in various universities. The article is also a peer-reviewed report, suggesting that it has been subjected to various scholars for approval and criticisms. Therefore, I find this source of information credible.

Like most of other studies, this study explains the benefit of informatics on the banking system. The study also highlights the increased efficacy in the banking sector as a product of technological advancements. However, they focus much on accounting information technology and only gives us the advantages of accounting technology, further research needs to be done on the disadvantages of accounting information technology in the banking sector so that we can have a comprehensive report on the same. This research could help policy makers and managers to choose whether to pursue this type of technology or not.

Arcand, M., PromTep, S., Brun, I., & Rajaobelina, L. (2017). Mobile banking service quality and customer relationships. International Journal of Bank Marketing, (just-accepted), 00-00.

This study examines the use of mobile phones as a technology that can enhance various processes in the banking system. The concept of mobile banking is multidimensional regarding the quality of services it provides; these services include security/privacy, sociality, aesthetics, and enjoyment. These services effect on the final relationship quality between the consumer and the banking institutions. This relationship could be affected regarding trust, commitment to the bank and satisfaction. The study was conducted using an online survey that had sampled 375 respondents, who all had mobile devices and all tendency of accessing banking services via their phones. Arcand et al. (2017) analyzed the results of the study using structural modeling techniques. The study revealed that trusts and other commitments and customer satisfaction was realized while using mobile phones to access banking services. The quality of mobile service offered by a particular bank would also influence the client’s trusts and satisfaction. Customers’ trust is associated with the privacy and security satisfaction that the mobile platform offers, while commitment and satisfaction are driven by enjoyment and sociality of the platform. There was no link found between the mobile platform’s design interface and either trust or dedication and customer satisfaction.

This research contributed to the theory of bank marketing by being the first study to demonstrate how vital banking services and quality facets drive customer perception of relationship quality. The study extends beyond the adoption of mobile services in the short term by addressing issues in customer engagement with financial institutions and problems that relate to long-term quality relationship. Concerning managerial repercussions, the findings indicate to the marketers in the banking industry the importance of understanding the power of hedonic factors, which are sociality and enjoyment, when coming up with mobile platforms. These dimensions are mostly ignored or overlooked by the banking sector, yet the industry believes that utilitarian motives virtually compel consumers. This contradictory notion has been the main factor behind laxity in adopting sound mobile technologies that could be used to enhance the internal process of the bank and service delivery to the clients via mobile platform. This article is a new publication that has not been subjected to various criticisms, but it has convinced that publishers of the International Journal of Bank Marketing, that its findings are credible enough. The article offers the most recent information on the importance of technology in the financial industry, collected through primary data.

This study adds to the large pool of studies that highlighted the importance of technology in the banking sector; however, it comes out peculiar from other studies, due to its focus on mobile banking, a section of technology, which has not been explored by various authors. Such a study also calls for criticisms (which so far have not been offered, because the study is relatively new) and further research on the disadvantages of mobile banking on the banking sector and any other dynamics that comes with accessing business services on mobile platforms.

Campanella, F., Della Peruta, M. R., & Del Giudice, M. (2017). The Effects of Technological Innovation on the Banking Sector. Journal of the Knowledge Economy, 8(1), 356-368.

Campanella et al. (2017), states that there have been important developments that have influenced the banking division universally due to the tremendous impacts of development and courses in information and intelligence technology, risk management strategies, and business intelligence. The study stipulates that the primary problem to be discussed no longer concerns shifts in the financial area, but the improvement to valid ways of operation in the current business environment, to redefine customer relationship, yield the desired outcomes and innovation process. Any financial institution that is enthusiastic to improve will work to adjust to the evolving productive, fiscal and productive setting. The authors argue on the impact of complexity and advancements of rising technologies on the behavioral and structural aspects anticipated as commercial criticalities and provisions for regulating decisive development rights of banks. The study hypothesis was verified using an experiential exposition of both qualitative and quantitative data collected between the periods of 2008 to 2011 and was selected from a sample population of 3200 financial institutions from 17 different nations. The studies established that there is some adversarial connection between economic advantage and the two technological innovation concerning enterprise supply devising software system and the software used to manage credit risks. The second conclusion was that the company resource planning innovation and Software used to manage credit risk seems to affect the provision capabilities and structure of the financial institutions. Lastly, the change that concerns the enterprise resource management risk increases the profit margins of banks.

This study has broken down the importance of information technology in various aspects of the banking system. It gives various recommendations on how banks can use information technology to improve their internal environment and increase their profit margin. The authors assume that if the Banking industry can enhance their internal process, then this will automatically translate to better customer relations. The author’s main contribution does not only involve the use of technology in the banking industry to improve output. However, they concentrate on how banks can utilize the various software in their operations such as credit risk management and enterprise resource management among other management services. The authors carried a vast and extensive research that involved collecting primary data from 3200 banks in 17 different companies. The results of such studies are always viewed as universal and could be used to implement a policy in any bank in any country. The credibility of this source could be retrieved from the fact this is a peer-reviewed article, which has been assessed by various scholars and critics. Furthermore, the fact that this section is published in the Journal of the Knowledge Economy means that most of the variable and arguments of this paper have been proved via scientific means.

This study continues to highlight the importance of technology to the banking sector, specializing in the use of software to improve the international operations of the banking industry. These authors are among the few writers who have highlighted the benefits of using technology in the banking system and yet at the same time identified gaps of the adverse effects of technology if not used effectively in the business process.

References

Arcand, M., PromTep, S., Brun, I., & Rajaobelina, L. (2017). Mobile banking service quality and customer relationships. International Journal of Bank Marketing, (just-accepted), 00-00.

Campanella, F., Della Peruta, M. R., & Del Giudice, M. (2017). The Effects of Technological Innovation on the Banking Sector. Journal of the Knowledge Economy, 8(1), 356-368.

Dandago, K. I., & Rufai, A. S. (2014). Information technology and accounting information system in the Nigerian banking industry. Asian Economic and Financial Review, 4(5), 655-670.

Lin, B. W. (2007). Information technology capability and value creation: Evidence from the US banking industry. Technology in Society, 29(1), 93-106.