The impact of information systems on the efficiency of banks: an empirical investigation

Abstract

Financial institutions, and banks, in particular, are one of the largest investors in information systems (IS) and information technologies (IT) and there are indications that this trend is likely to continue. However, there is growing concern that IS investments are not yielding the anticipated results, an issue that is of grave concern to many CEOs and top managers. One way to address this concern is to analyse the relationship, if any, between investments in IS and an organization’s efficiency measures. Reports the results of an empirical study that assesses the role and contribution of ISs to a bank’s efficiency, based on a study of nationalized banks in the state of Florida. More specifically, reports on the role of ISs in achieving business goals, improving productivity, and enhancing customer service in banks.

Review of Related Literature

“…It is therefore argued that the library MIS would provide the means and methods to manage multimedia-computer based information systems to help gain useful, and timely information through its objective of satisfying scholarly, academic, administrative and information needs of the University. Uma and Collins (1997) conducted an empirical study that evaluated the contribution of MIS to various productivity and efficiency measures in a bank. The survey was mailed to the CIOs of all member banks of the Florida Bankers Association and was found that banks rely heavily on mainframes, minicomputers, microcomputers, and workstations.…”

A framework for evaluating organizational choice and process redesign issues

“…They gave the 'dehumanization of banking' as the main reason for failure, coupled with inappropriate measures of technological investment, such as ROI (return on investment). Research has suggested that such short-term critera are inappropriate because the returns on relationships are long term and dif cult to quantify, though ultimately of more importance (Gupta and Colins, 1997). Therefore, whilst the banking community appears to be investing in technical infrastructures, the investment in tacit knowledge to provide the interface with the client of the relationship is neglected.…”

The Impact of Information Systems on Efficiency: Evidence from the Bank of Ceylon of Sri Lanka

“…According to Gupta and Collins (1997), most of the successful financial institutions have clearly demonstrated that information systems and technologies can be a powerful competitive weapon that can be used to capture market share, improve customer service, reduce operating costs, and also create new products and services [Lederer et al, 1988;Gupta el al., 1997]. Yet measuring the return on investments in Information Systems is important and almost impossible.…”

“…This is mainly since the benefits obtained from Information Systems are intangible and long term. According to Gupta (1997) the survey was conducted by mailing member banks of FBA5. Multi-part questions were broadly divided into the following categories or factors identified.…”

“…Multi-part questions were broadly divided into the following categories or factors identified. [Gupta and Collin, 1997] The factors of IS efficiency identified by Gupta et al (1997) are Profile and characteristics of the bank, Technologies used by the bank, Investments in technology, Alignment between IS and business goals, Top management's commitment to technology, Role of IS in supporting organizational tasks, Efficiency measures used to identify the contribution of IS, and Critical success factors. According to Gupta (1997) and Chen (1999) changes in the environment were identified and also the factors affecting the use of Information Systems and on efficiency and a banking institution were listed down for the study.…”