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Thursday, September 20, 2018

Online Banking System (OBS)


 Online Banking System (OBS)
In this study to explain the TAM model by using my knowledge and experience on the usage of Online Banking System (OBS) of Commercial Bank of Ceylon PLC (CBC). OBS of CBC enables its users with a wide spread of facilities i.e. Opening of accounts, Opening of LC’s, Fund Transfer facilities within the bank and to other banks on real time basis, Bill payment facilities for CEB, Water Board, Mobitel, Dialog, Hutch,.., Other Bank Credit Cards, Balance inquiries, Rate Payments, School Admission/ Fees for selected reputed schools etc. It enables you to perform the transactions available on 24 hours a day, from anywhere any time tendering greater convenience. The present OBC in CBC was launched in 2000 and was upgraded in 2012.
With the rapid growth of internet and IT, Online banking has become an integrated e service provide by CBC when dealing with its customers. Through the operation of OBS, CBC has reduced its operational cost and widen its market to IT savvy millennials who are the future of the country. OBS enables customers more convenience as they have access to complete banking service even after office hours and without even dropping at a physical bank branch.
Year 2000 is a memorable year for all of us specially for the IT experts in dealing with the Y2K issue. It is the year that CBC initiated and launched its Online Banking System, precisely a decade after the US introduced the mobile banking concept in 1990’s. This is the era where Sri Lanka’s IT literacy started to pick up. At this stage the house hold computer ownership and IT Literacy was at very low level. Thus, a considerable effort was to made to convince the customers to start using the same. We all know operating such a platform is costly to the organization. But such technology was introduced to cater the future with the intention of implementing do it your self-concept and to streamline the operational cost. After automating the systems, one of the major challenges faced by the bank was to arrest the counter rush. When analyzed the majority of the customers were occupying the banking lobby to perform operational work which is time consuming and the bank had to deploy additional staff to cater the increasing requests of the customers with the increase in the customer base. With the launch of OBS in CBC, bank expected to arrest the counter rush by enabling customers to attend to its requirement without dropping in to the bank.
Anchors are the obstacles faced by the customers or staff in adopting to the new technology. Lower the anchors, higher the ‘Perceived Ease of Use”.
Reasons for Success and Failure - Challenges Faced in launching OBS
Sri Lanka is a small country with a population of 22.4 Million. According to Department of Census and Statistics, percentage of computer owned households is 23.5% by the end of Year 2017 (Highest-Western Province 37.1% and Lowest- Uva Province 9.7%) and the Computer Literacy rate was 28.3% by end of 2017. CBC has a customer base more over 3.0 Million and is expanding at a higher pace.
Most elderly population is not that tech savvy and their computer anxiety levels are low. The majority of the customers are falling under this category. Thus, it is challenging and time consuming to get this group of customers with the required technical knowledge to perform the transactions/ get the services done via OBS.
Though CBC’s initiative to launch OBS in 2000 was encouraged, it was a challenging task. Initially, it was made compulsory for the staff to use the OBS and submit its feedback on the system. There were promotional campaigns to customers to offer OBS free of charge and usage base weekly winners were rewarded to encourage usage.
Continuous Adjustments, Value Additions and Upgrades
In year 2000 technology was frequently changing and there were frequent updates to the operating systems. The bank has to update the OBS platform more frequently in line with each windows operating system upgrade to retain customer confidence in using the system.
Options available under the new technology i.e. OBS needs to be reviewed frequently as in case with the change in technology and consumer taste and you need to add frequent developments increasing the ease of use and to compete with the competitors.
Customer Experience
At the initial phase customers lack experience on the new technology. These communication gaps prevent users or make users hesitant to use a new technology. How ever with the gradual use of same and after getting failure, the users tend to use it more frequently as they will whisper that they knew that the new technology will be a success. At the initial stages bank deployed additional PCs in branch lobbies to assist and enable the users to get enroll and try the system with the guidance of trained branch staff. Satisfied customers spread the word of mouth favorably which attracted more and more users to try the same. With the evolvement of technology and wide availability of laptops, iPad, Tabs and smart phones, the frequency in using the facility increased.
Security and Customer Confidence
One of the key success factors in implementing OBS is building customer confidence on the new technology. A single deviation of information and failure of the platform at the initial stages were very costly. It is very difficult to convert a customer with a bad experience or system failure to use the system again. Also, the security aspect plays a vital role. We have to provide information security to safeguard the customers interest. Also, we have to take precautionary measures to prevent the hackers to enter in to your system. Convincing this to an average customer is very difficult with regard to as security breach or a information breach. Thus, the security on the system is utmost important.
Unavailability of Infrastructure facilities (Internet)
In early 2000 the availability of internet was scarce as the case of portable devices. Thus, the adaptation to the new technology was not at a greater pace. Internet is an essential infrastructure facility needed to use the OBS. Thus, unavailability or interruptions to the internet facility is affected the usage of the facility adversely.
Customer Convenience
With the OBS facility customers saved time they spend on traveling to a physical bank branch to perform a transaction. All the fund transfers and inquiries done using the OBS facility was availed free of charge. Moreover, the end users can do its preferred transactions even after the branch is closed. With the Availability of CEFT transfer facility in CBC’s OBS, users can cow transfer funds to any bank, branch account within Sri Lanka on real time.
The above facts endorse ‘Perceived ease of use’ and ‘Perceived Usefulness’ of Commercial Bank’s Online Banking Service Facility, where the end users have adopted favorably in to enrollment of the facility.

Explanation of TAM Model referring to Past Experience


Explanation of TAM Model referring to Past Experience
In this study I am going to explain the TAM model by using my knowledge and experience on the usage of Online Banking System (OBS) of Commercial Bank of Ceylon PLC (CBC). OBS of CBC enables its users with a wide spread of facilities i.e. Opening of accounts, Opening of LC’s, Fund Transfer facilities within the bank and to other banks on real time basis, Bill payment facilities for CEB, Water Board, Mobitel, Dialog, Hutch,.., Other Bank Credit Cards, Balance inquiries, Rate Payments, School Admission/ Fees for selected reputed schools etc. It enables you to perform the transactions available on 24 hours a day, from anywhere any time tendering greater convenience. The present OBC in CBC was launched in 2000 and was upgraded in 2012.
With the rapid growth of internet and IT, Online banking has become an integrated e service provide by CBC when dealing with its customers. Through the operation of OBS, CBC has reduced its operational cost and widen its market to IT savvy millennials who are the future of the country. OBS enables customers more convenience as they have access to complete banking service even after office hours and without even dropping at a physical bank branch.
Year 2000 is a memorable year for all of us specially for the IT experts in dealing with the Y2K issue. It is the year that CBC initiated and launched its Online Banking System, precisely a decade after the US introduced the mobile banking concept in 1990’s. This is the era where Sri Lanka’s IT literacy started to pick up. At this stage the house hold computer ownership and IT Literacy was at very low level. Thus, a considerable effort was to made to convince the customers to start using the same. We all know operating such a platform is costly to the organization. But such technology was introduced to cater the future with the intention of implementing do it your self-concept and to streamline the operational cost. After automating the systems, one of the major challenges faced by the bank was to arrest the counter rush. When analyzed the majority of the customers were occupying the banking lobby to perform operational work which is time consuming and the bank had to deploy additional staff to cater the increasing requests of the customers with the increase in the customer base. With the launch of OBS in CBC, bank expected to arrest the counter rush by enabling customers to attend to its requirement without dropping in to the bank.
Anchors are the obstacles faced by the customers or staff in adopting to the new technology. Lower the anchors, higher the ‘Perceived Ease of Use”.
Reasons for Success and Failure - Challenges Faced in launching OBS
Sri Lanka is a small country with a population of 22.4 Million. According to Department of Census and Statistics, percentage of computer owned households is 23.5% by the end of Year 2017 (Highest-Western Province 37.1% and Lowest- Uva Province 9.7%) and the Computer Literacy rate was 28.3% by end of 2017. CBC has a customer base more over 3.0 Million and is expanding at a higher pace.
Most elderly population is not that tech savvy and their computer anxiety levels are low. The majority of the customers are falling under this category. Thus, it is challenging and time consuming to get this group of customers with the required technical knowledge to perform the transactions/ get the services done via OBS.
Though CBC’s initiative to launch OBS in 2000 was encouraged, it was a challenging task. Initially, it was made compulsory for the staff to use the OBS and submit its feedback on the system. There were promotional campaigns to customers to offer OBS free of charge and usage base weekly winners were rewarded to encourage usage.
Continuous Adjustments, Value Additions and Upgrades
In year 2000 technology was frequently changing and there were frequent updates to the operating systems. The bank has to update the OBS platform more frequently in line with each windows operating system upgrade to retain customer confidence in using the system.
Options available under the new technology i.e. OBS needs to be reviewed frequently as in case with the change in technology and consumer taste and you need to add frequent developments increasing the ease of use and to compete with the competitors.
Customer Experience
At the initial phase customers lack experience on the new technology. These communication gaps prevent users or make users hesitant to use a new technology. How ever with the gradual use of same and after getting failure, the users tend to use it more frequently as they will whisper that they knew that the new technology will be a success. At the initial stages bank deployed additional PCs in branch lobbies to assist and enable the users to get enroll and try the system with the guidance of trained branch staff. Satisfied customers spread the word of mouth favorably which attracted more and more users to try the same. With the evolvement of technology and wide availability of laptops, iPad, Tabs and smart phones, the frequency in using the facility increased.
Security and Customer Confidence
One of the key success factors in implementing OBS is building customer confidence on the new technology. A single deviation of information and failure of the platform at the initial stages were very costly. It is very difficult to convert a customer with a bad experience or system failure to use the system again. Also, the security aspect plays a vital role. We have to provide information security to safeguard the customers interest. Also, we have to take precautionary measures to prevent the hackers to enter in to your system. Convincing this to an average customer is very difficult with regard to as security breach or a information breach. Thus, the security on the system is utmost important.
Unavailability of Infrastructure facilities (Internet)
In early 2000 the availability of internet was scarce as the case of portable devices. Thus, the adaptation to the new technology was not at a greater pace. Internet is an essential infrastructure facility needed to use the OBS. Thus, unavailability or interruptions to the internet facility is affected the usage of the facility adversely.
Customer Convenience
With the OBS facility customers saved time they spend on travelling to a physical bank branch to perform a transaction. All the fund transfers and inquiries done using the OBS facility was availed free of charge. Moreover, the end users can do its preferred transactions even after the branch is closed. With the Availability of CEFT transfer facility in CBC’s OBS, users can cow transfer funds to any bank, branch account within Sri Lanka on real time.
The above facts endorse ‘Perceived ease of use’ and ‘Perceived Usefulness’ of Commercial Bank’s Online Banking Service Facility, where the end users have adopted favorably in to enrolment of the facility.

Porters Five Forces Model application


Porters Five Forces Model application

World renowned marketing philosopher Michael Porter has introduced the “Porters Five Forces Model” in 1979 at Harvard Business School. It is well known framework for enhance competitiveness and to increase its competitive edge in highly competitive business environment. Porter identified the forces that influence competitive advantage in the market place. This model is vital tool for organizations to measure their position and identify factors which are needed development or changes.
Bank is established in 1961 as a Govt. bank and successfully completed 57 years of journey. Banking industry in Sri Lanka is highly competitive and rapidly growing too. Banks are represented in the top business in the country. Here I’m going to apply the Porters five forces model to my bank and to find out how factors effected to success. Porters, five forces are Threats of new entrants, Bargaining Power of Customers/ Buyers, Bargaining Power of Suppliers, Threat of Substitute Products and Rivalry from Competitors within the Industry. There are several competitive strategies for the success of the five forces application. Those are, Cost leadership Differentiation, Innovation, Growth and Alliances.

1. Threat of new entrants
Our regulator (CBSL) has strengthened the easy entrance by imposing new capital requirements for establishing a bank from Rs.5Bn (Previous) to Rs.10Bn presently and further increased to Rs.20Bn year 2020 onwards. Meantime according to the BASEL 111 accord banks are compelled to increase the capital structure by 2019/20 to survive in the business. Due to high regulations, controls, monitoring and procedures starting a bank and surviving in heavily competitive industry is not possible. This industry is highly competitive in Sri Lanka due to high profitability. But with recent finance companies collapses entrance to banking business is very strict. More importantly a new comer cannot survive as banking density very high. In a small country SriLanka, which has around 15Mn bankable population there are 26 Licensed commercial banks,7 licensed specialized banks,43 licensed finance companies,65 registered finance leasing companies, 15 primary dealers, many more money brokers  and plenty of unauthorized money lenders are competing to grab those customers. But Govt.is already granted permission to Bank of China to open branch. Further Govt. wanted to establish an Import/Export bank and another SME bank. So little threat is also developing. But being Govt. bank we are in safe position with Govt. ownership, stability and trustworthiness banners. Further Govt. planning curtail no of small banks in the country via consolidation to create few large scale banks to mitigate unnecessary competition. Further PB have more than 865 branch/Service centre’s, around 13Mn customers, more than 500ATMs, around 110 SBUs and more than 12000 human capital strength  & any threats can be easily managed with 57 years of experience. Hence threat of new entrance is quiet low.

2. Bargaining Power of Customers/ Buyers
Customers are the live wire of the banks. Due to heavy competition prevailing in the banking industry, customers are well aware of banks, products, norms, procedure, rates/commission and other factors. Hence present days customers are always with bargaining characteristic. Specially corporate or large level customers are always demanding to get the maximum and they are utilizing the huge banking competition well for their betterment. They used to ask for higher rates for deposits and very lower rate for borrowings and used to demand time period for borrowings. In SriLanka switching cost is not high except to early settlement charges of loans. Except loyal customers others are always having relationship with other banks too. Some customers are mostly wanted better service and convenience in operations and if failed to deliver they move to others. Except to rural and small level customers it is difficult to handle large or corporate level customers presently. Due to this demanding, banking industry margins narrowing continuously from 7%/8% in the past to presently 2%/3% range. Our bank also facing this threat but our customer base is mixed category such as rural level small customers, Govt.& other sector employees, small scale traders/entrepreneurs, medium/SME customers ,Govt.instituions, co-operatives, corporations and corporate level customers etc…..Our bank has changed physical evidence, SBUs, CDMs, ATM/Kiosk, Wave app, Express banking likewise so many extra features are added to serve customers. Therefore the bargaining power is not very higher level and even demands are raised we under Govt.bank shelter mitigate those threats successfully.

3. Bargaining Power of Suppliers
Not like other businesses, banking concern suppliers are depositors, shareholders, other lenders, and vendors. Our bank is the largest in the country and well expanded. Our share holders are Govt., very little co-op and EPF. Majority is the depositors. No threats from Govt.,Co-op and EPF as shareholders but threats are from depositors and from vendors to some extent. EPF, ETF, Lotteries board (NLB), TRC and Armed forces are very large level depositors of our bank and they utilize Govt. label and demand for very high rates. Exg.EFF invests Billion rupees for 12.5% pa it is equal to lending rate of some scheme landings. Depositors are looking high return, less risk, stability and liquidity & the other side we go for low cost funds.
Other side our bank is depending on heavily on vendors and service providers. Ex. Our core banking IT system was from a Malaysian company and bank pushed to depend on them. They charging heavily for updations and those not done as it is and mostly they have to visit here. Also present banking businesses are totally depending on the telecommunication service providers and their demands also increasing. Specially to get done a breakdown from Dialog is huge task and never turn-up in time due to this our bank is moving from them to SLT.  Same as other service providers too lacking in their obligations we are depend on them. Meantime threat is under control from other stationary suppliers, advertising firms, CDM company, insurance and   logistic providers etc….
4. Threat of Substitute Products
This threat is gradually increasing in the banking industry. There are 141 legally registered bank/financial institutions; those are well spread all over the country. Many more unregistered Microfinance institutions, illegal money lenders, Poli mudalali, Telecommunication providers, Insurance companies, Western Union agents, Sub post offices. Pawn brokers, Money exchangers, Undiyal system and Welfare societies are catering the banking services. Ex. mCash-SLT, EzyCash-Dialog, western Union, Insurance guarantees-Insurance companies. Our bank is the pioneer in the pawning business and now it is done by everyone. All leasing companies started to give personal and mortgage loans, open savings & foreign currency accounts, Money exchangers are given authority sell currencies. Our pawning portfolio was decreased from Rs.220Bn to Rs.120Bn presently. This threat is not only for our bank for entire banking industry become high threat. Factoring for cheques and .PD cheque discounting facilities are only available facilities created by finance companies. Hence this kind fake products are becoming very famous in the market.

5. Rivalry for Competitors within the Industry
There are 26 licensed commercial banks, 7 licensed specialized banks, 43 licensed finance companies, 65 registered finance leasing companies, 15 primary dealers, many more money brokers and plenty of unauthorized money lenders are competing to grab the 22Mn population.  Sri Lankan bank industry is well developed and competition is rocketing in the market. Around 6800 bank branches and more than 1350 leasing /finance branches are competing and it is too high for small country like Sri Lanka. (Saurce-www.cbsl.lk and CBSL annual report 2018). All are trying to grab the little customer base. Our bank also facing numerous threats from banks and financial institutions and some products introduced by us are imitated by others and we have lost market share. Ex. Pawning, Children’s Accounts (Sisu Udana, Isuru Udana), Parinatha(Senior Citizen), Gurusetha Loan (teachers) This threat is going to increase more and more and banks are applying various strategies to gain competitive advantage. Our bank too introduce lot of strategies like Self banking units (SBU), Cash deposit Machines (CDM), Express banking, Peoples Wave app, Digitalized banking and  Extended banking hours etc…

JAT Holdings PLC

  ABSTRACT   This report presents a comprehensive analysis of five consecutive annual reports of JAT Holdings PLC, a leading company...