1.0 Introduction
As an emerged business trend, the vast applications of information technology (IT) on economic organizations are immense and immeasurable. Organizational systems and functions are now considered effortless and unproblematic because of IT. IT also expanded the opportunities concerning product development processes or innovations that provide organizations with cost and competitive advantages. In a much broader sense, information technology strengthens the business value of every organization. The parameters of using IT for internal affairs have profound impact specifically for core management responsibilities (Gunasekaran, et al, 2002).
According to Land (2004), Information Systems "are systems whose ultimate purpose is to store and manage information". In other definitions, they are basic infrastructures of the modern business organization; they coordinate the resources and activities of the input, process and output sub-systems of the organization, thus monitoring and ensuring internal efficiency. Simply, the information system gathers and stores all the needed information of the organization. After all, to plan effectively, an organization needs to know its present position, its strengths and weaknesses, those of its competitors, market trends, etc. These can all be organized with the used of an information system.
Establishment of information systems is one of the primary techniques that businesses adapt nowadays. The success in the management of information systems development project impacts three key issues: quality, usefulness and usability. Generally, it is not known how information technology affects the financial performance of the banking sector and these three key issues, likewise, are not yet explored in the banking industry. This study proposes to investigate the impact of IT and specifically the use of information systems on the financial performance of banks.
2.0 Brief Literature Review
Frei, Hunter and Harker (2001) noted that technology now plays a key role in the performance of banks. Automation may mean the integration of an Information System that employees can check regularly. Information system, which is a form of back office automation, can be helpful in teaching an employee to have a single view on customers. Seifert and Wimmer (2001) stated some impact of functional economics to retail banks. One is the increased need for banks to improve their monitoring functions, mainly to fulfill the task of assessing and controlling risks, that primarily arising from lending relationships. Aside from the challenges brought by ecommerce, there are also challenges of storing information of customers to databases. That is, most of the bank's financial information is held in the form of reports.
3.0 Research Problem
The key question that the study will seek to answer is - how does IT impact the financial performance of the banks? Other research questions are:
1) Do retail banks perceive IT as strategic and source of competitive advantage as it boost optimum financial performance?
2) Which among the types of information systems - operational, high potential or support - maximises financial performance of the banks?
3) How do information systems contribute in the achieving high financial performance for the banks?
4.0 General Objective
The main aim of this study is to investigate the impact of IT and information systems on banks' financial performance. In lieu with this, the research objectives are:
· To determine which among the type of information systems support banking businesses leading to high financial performance of the banks
· Evaluate in what specific ways and to what extent do information systems could eventually lead to high financial performance
5.0 Methodology (stratified sampling)
The study will explore the problem in an interpretative view, using a descriptive approach which uses observation and surveys. To illustrate the descriptive type of research, Creswell (1994) will guide the researcher when he stated: Descriptive method of research is to gather information about the present existing condition. The purpose of employing this method is to describe the nature of a situation, as it exists at the time of the study and to explore the cause/s of particular phenomena. The researcher opted to use this kind of research considering the desire of the researcher to obtain first hand data from the respondents so as to formulate rational and sound conclusions and recommendations for the study.
Primary and secondary research will be integrated. The reason for this is to be able to provide adequate discussion for the readers that will help them understand more about the issue and the different variables that involve with it. In the primary research, public managers will be surveyed. A structured questionnaire will be developed and it will be used as the survey tool for the study. On the other hand, sources in secondary research will include previous research reports, newspaper, magazine and journal content. Existing findings on journals and existing knowledge on books will be used as secondary research. The interpretation will be conducted which can account as qualitative in nature.
The study will sample 100 banking representatives working in banks that operate technically hence using information systems in their business conduct. The sample will be stratified sampling. The survey strategy will be used for data collection. A structured questionnaire will be constructed for the survey and will be distributed to the respondents through email. Participation of the respondents will be treated with utmost confidentiality. Data will be analyzed using the latest SPSS software. The analysis will look for the percentage and weighted mean of responses on each items.
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