Page 1 of 54
Journal for Studies in Management and Planning
Available at http://edupediapublications.org/journals/index.php/JSMaP/
e-ISSN: 2395-0463
Volume 01 Issue 11
December 2015
Available online: http://edupediapublications.org/journals/index.php/JSMaP/ P a g e | 443
Impact of Technology on the Banking Sector
Nickson Moseti Ongaki, Dr. Samwel Makori Bosire, & Dr. Esnath Kerubo Bosire
Jomo Kenyatta University of Agriculture and Technology P.O Box 62000 Nairobi, Kenya
E-mail: nickson.moseti@gmail.com
1.0 INTRODUCTION
1.1 Background
Managing the business processes that
facilitate order fulfillment and delivery of
goods and services supplied to customers is
the prime concern of operations
management. Consequently, the study of the
processes of order fulfillment and delivery
in the Internet era necessitates an
understanding of the interaction between
operations management and information
systems (Lyons, 1998). Despite the growing
importance of e-commerce to organizations
of all types, e-operations is a neglected area
of study. Yet many of the problems
associated with e-commerce have centered
on an inability to ‘deliver the goods’, often
literally. Effective and efficient operations
management is as important in e-commerce
as it is in traditional business (John et al.,
2002).
The adoption of e-commerce is tending to
automate rather than re-design existing
business processes. High levels of internal
information systems integration appear to be
associated with low levels of business
process integration. Business process
management (BPM) is a systematic
approach to improving an organization's
business processes. BPM activities seek to
make business processes more effective,
more efficient, and more capable of adapting
to an ever-changing environment. The
integration of literature from the academic
traditions of operations management and
information systems, identifies three key
issues: business process integration;
information systems integration, that is the
extent to which intra- and inter- organizational information systems are
capable of communicating and sharing
information with each other; and the
Page 2 of 54
Journal for Studies in Management and Planning
Available at http://edupediapublications.org/journals/index.php/JSMaP/
e-ISSN: 2395-0463
Volume 01 Issue 11
December 2015
Available online: http://edupediapublications.org/journals/index.php/JSMaP/ P a g e | 444
operating context that is types of customers,
the e-commerce business model and
organizational factors (David et al., 2002).
There can be little doubt about the growing
importance of e-commerce. Recent advances
in technology have created a surge in
“technology-based self-service” (Dabholkar
et al. 2003). Such developments are
changing the way service firms and
consumers interact, and are raising a host of
research and practice issues relating to the
delivery of e-service. Technology and e- commerce is one leading ‘driving force’
nowadays, in different businesses (Tavares,
2000). It was therefore important to research
the business process implications of
adopting e-commerce in the commercial
banks in Kenya. This was because IT
determines the success or failure of
electronic commerce while providing
consumers with a superior experience with
respect to the interactive flow of information
(Santos, 2003; Yang et al., 2001).
1.2 The Development of Commercial
Banks in Kenya
Technology can save time and money and
eliminate errors, thereby addressing certain
issues associated with changing cultural and
social trends, it can also minimize direct
customer interaction and any associated
service value to be gained (Bitner, 2001).
With the Kenyan consumer becoming more
informed, coupled with the advancement of
information technology in doing business,
consumers watchdogs being formed and
awards being created for the best companies,
it is reaching a point whereby either a
company starts being responsible in all its
core and non core activities or goes under.
Brown (1998) acknowledged that Business
had become the most powerful institution on
the planet. He also stated that the dominant
institution in any society needed to take
responsibility for the whole but business had
not had such a tradition.
The banking sector in Kenya which dates
back to 1689, provides financial services to
the low-income households and micro and
small enterprises provide an enormous
potential to support the economic activities
of the poor and thus contribute to poverty
alleviation. This puts emphasis on the sound
development of banking institutions as vital
ingredients for investment, employment and
economic growth. But now the much-
Page 3 of 54
Journal for Studies in Management and Planning
Available at http://edupediapublications.org/journals/index.php/JSMaP/
e-ISSN: 2395-0463
Volume 01 Issue 11
December 2015
Available online: http://edupediapublications.org/journals/index.php/JSMaP/ P a g e | 445
vaunted Kenyan banking sector is looking
tarnished. Precisely the attribute of the
system that previously appeared to be a
virtue, the willingness of banks to go on
lending to firms in distress, now turns out to
have led to serious problems. Borrowers
who should have been cut off were not, with
the result that further billions were lost. The
public has had to pay twice. They pay once,
in the form of slowed economic growth as
the result of the prolonged overhang of bad
loans (and other aspects of the burst bubble),
and then again as taxpayers when the
government ends up footing the bill.
(www.treasury.go.ke).
According to Ochieng, (1998) and Otieno,
(2006) the new information technology is
becoming an important factor in the future
development of Kenya financial services
industry, and especially Kenyan banking
industry. Banks are faced with a number of
important questions, for examples how to
take full advantage of new technology
opportunities, how e-developments change
the ways customers interact with the
financial services provider. Kenya has
achieved significant success in the
implementation of electronic banking; it is
on the top of the emerging markets in this
area and even outpaces the achievements of
some developed countries. This progress is
not coincidence; it has external and also
subjective reasons.
2.0 SOME LITERATURE REVIEW
2.1 The Concept of E-commerce and
Business Process Management
To date, operations management has been
the neglected function in e-businesses. E- commerce (electronic commerce or EC) is
the buying and selling of goods and services
on the Internet, especially the World Wide
Web. In practice, this term and a newer
term, e-business, are often used
interchangeably. For online retail selling, the
term e-tailing is sometimes used. E-business
has been defined as ‘the sharing of business
information, maintaining business
relationships, and conducting business
transactions by means of
telecommunications’ (Zwass, 1996). At its
simplest, electronic commerce may be
defined as ‘doing business electronically
across the extended enterprise’ (Till, 1998).
The operations function is that part of an
organization that is concerned with the
management of the business processes that
