Research Proposal

Technology impacting the Financial Service industry

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Contents
1. Introduction................................................................................................................................................... 3
2. Brief of the key Literature.............................................................................................................................. 4
3. Proposed Methodology.................................................................................................................................. 6
4. Conclusion...................................................................................................................................................... 7
5. Time plan for the Completion of the Project on a Gantt chart........................................................................8
6. References..................................................................................................................................................... 9

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1. Introduction
In the past 30 years, information technology has extended its presence across all the industries,
thereby increasing the competitive nature of the economic businesses (Nikoloski, 2014). Firms
operating in different financial sectors, brokerage houses, mutual funds, underwriters, retail
bank, insurance underwriter, retail bank, institutional banks, etc. are identifying measures for
integrating technology into their existing business processes for both improving their operational
efficiencies as well as securing their future in the digital age. However, the role of information
technology, especially in the financial service industry, has been predominantly deployed for
reducing costs, enhancing the quality of service delivered to customers, enabling firms to expand
its geographical outreach, strengthening client service, deploying high-end analytics to make
informed investment decisions and exploit new business opportunities and remove uncertainties
(Kelley, 1989). Khanna & Gupta (2015) highlighted that information technology has transformed
the entire financial service industry, and technology change has become one of the key factors
driving development in the financial service industry. Instead, according to recent estimates
projected by Gartner, the banking and securities sector across the world spend across $514
billion in 2020 to enable a remote workforce, respond to the credit and changing needs of the
customers as well as to ensure the continued viability of the business (Gartner, 2020). This
emerging trend synthesizes the need to study some important issues about the impact of
technology on both service quality as well as customer satisfaction of the financial service. This
is because despite the immense benefits of the enabling technologies in the financial service
industry for both the firms as well as the clients, technology has not been still fully adopted by
the sector. This might be because companies operating in the financial service industry might not
be aware of the benefits of digital channels or how to capitalize on the available technological
solutions for delivering exceptional customer services or generating profitable revenues.

Therefore, the purpose of the study is to identify, examine and synthesize the diversified aspects
of technology-enabled transformations in the financial service industry which the companies can
use for generating returns and how these technological solutions are likely to help the company.
The findings of the study can be used by the sector for transforming its business model.
Correspondingly, the study purposes to answer the following research question:

How do digital technologies shape the landscape of the financial service industry?
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In light of the research question, the study intends to fulfill the following research objectives:

1. To analyze the impact of technological evolution on the financial service industry

2. To examine how the incumbent firms are leveraging technological solutions

3. To study the challenges raised by technological transformations in the financial service

industry

2. Brief of the key Literature

Technological changes, regulatory pressures, and increasing competition from the globalized
business environment have caused disruption even in the less volatile business sectors (Bucy et
al. 2016). Today no organizations can sustain unless and until it comprehends how the industry
operates and what are the resourceful investments that it can use for sustaining increasing
competitiveness. If the industry is witnessing radical changes, all the incumbent firms are
expected to dissolve and adopt new business models. According to Standard Industry
Classification codes (SIC), the financial service industry comprises of the following institutions;
non-depository credit institutions, security and commodity brokers, exchanges and services,
dealers, insurance carriers, insurance agents, banks, brokers, and other investment institutions. In
the recent past few years, the financial service industry has witnessed a combination of digital
innovation, societal, and regulatory change. Numerous authors have explained the different
benefits of technological advancements for financial service industries. Haroldo Jayme and M.F.
Cruz (2001) examined the impact of technological advancements of financial systems and found
that technological changes have benefited the customers in terms of the new products that they
have received and service deliveries. ATMs, debit cards, and credit cards have not only
contributed to the level of customer convenience but also have increased the level of
transparency in the financial systems. Likewise, Avasthi, Sharma, and Clifford (2001) also
asserted that technology has brought up several advancements in the banking sector, like
telebanking and internet banking has radically changed service delivery channels. Li-Fen-Chu
(2003) identified and proposed the potential benefits of information technology for the banking
industry like reducing costs, upgrading production levels, increasing service quality,
strengthening customer satisfaction, and improving operational efficiencies. Saka et al., (2010)

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examined the technological programs implemented in the context of the banking industry and
found that technological changes in the banking industry have improved its quality and variety of
banking services. Trivedi et al. (2003) used two case studies for explaining the potential benefits
of e-banking over conventional form of retail banking and found that e-banking is much more
quick, efficient, safer, and transparent. Arora (2003) defined the role of technology in facilitating
financial transactions, thereby providing the provision of convenience to customers. Hogarth and
Hilgert (2004) proposed the widespread usage of technology in the banking system in the form
of ATM services, automatic bill payments systems, electronic fund transfers, and PC Banking,
which will in saving time, decreasing human errors, inaccurate computation and accounting
methods and preventing handling of information. Jain and Hundal (2006) explained the
importance of mobile banking systems and problems that one encounters while switching to the
mobile banking system. Malhotra and Singh (2006) analyzed and discussed the implication of
internet technologies for the Indian banking system and found that banks using internet
technologies are comparatively more massive than the banks that are not using them and have
better operational efficiencies and generates superior returns than non-internet banks. The results
drawn from regression analysis revealed that profitability and offering of internet banking are not
correlated with each other, but internet banking shares a positive association with the risk profile
of the banks. Bansal (2009) identified the manner in which information technology solutions
generates financial value for the financial service industry and found that IT resources help
financial institutions in increasing their revenues at marginal costs and uplifting overall profits.

All the existing studies have explored how IT technologies have helped banks in increasing their
financial performances or increasing the level of profitability in terms of ROA and ROE, either
by improving business processes or by expanding the scope of the business or through added
product lines. But, none of the existing studies have discovered the exact technologies that the
majority of financial institutions are using, how it has benefitted them, and what are the
challenges that these financial institutions faced while undergoing technological transformations.
The current study will uncover this gap by identifying the common and most effective
technological transformations that the majority of the financial institutions have undergone and
how has it impacted the industry.

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 Potential Benefits of
Technological advancements technological advancements Challenges of using
(ATM, e-billing, online
(Reducing manpower, ROE, Technological Advancements
trading, ABP etc.)
Profitability etc.)

Figure1 Theoretical Framework

3. Proposed Methodology
The main objective of the current is to examine and understand the potential benefits of digital
transformations for the financial service industry. In order to address this objective, the current
study has used an Interpretivism approach for understanding the technological solutions that are
being used in the industry and a pragmatic approach for reviewing the potential benefits of the
same. Moreover, the study has utilized a case study research design. The case study research
approach is best suited for the existing study as this approach can be used for answering the
"how" and "why" questions (Yin, 2003) for understanding how digital technologies can be used
for transforming the financial service sector. Moreover, the case study approach is the best
approach is best suitable for instances where the theory is not well-developed (Eisenhardt, 1989).
Moreover, Dubé and Paré (2003) explain the potential benefits of case study approach, to
understand the complex interrelationship between financial services and technological
innovation. The case study approach helps in exploring the real-life instances where companies
operating in the financial service industry have integrated digital technologies into their existing
outmoded platforms. Additionally, a descriptive research process has been deployed for
analyzing real-life cases and exploring the interrelationship between the variables proposed in
the theoretical framework in the previous section.

For the purpose of the study, suitable financial institutions and technological advancements
implemented by them were scanned and recorded. All the required information was sourced from
authentic secondary resources like published articles, newspaper articles, journals etc. Also, a
convenience sampling method has been used to select appropriate cases depending upon the ease
of availability of the information. The different cases selected were presented to fulfill the
research objectives stated in the previous section. The theoretical framework has guided the
study to execute the procedure of analyzing the data.

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There are several limitations in the current study. The first one is that the current study has been
conducted by using secondary published sources. However, the results might be more precise
and accurate by analyzed the same piece of information by interviewing the senior officials of
financial institutions. Moreover, the study has been conducted to oversee the technological
advancements of financial institutions as a whole comprising of insurance companies, banks etc.
Thus, the potential technological solutions cannot be proposed to the industry sub-component as
the technological solutions which might be profitable for the banking industry might not be
beneficial for the other. Also, the current study has discovered the impact of technology on the
financial service industry as a whole and has not studied the same for a particular geographical
area. Thus, the results cannot be generalized for uplifting the situation of the financial service
industry of a particular area.

4. Conclusion
The purpose of the existing research was to investigate the impact of technology on the financial
service industry. The tension that accelerated the need to study this topic was the rapid
restructuring of financial institutions and its future. Previous studies have examined the potential
benefits of technological solutions for various financial companies across the world but have not
deeply evaluated the precise technologies that have benefitted the industry and have not
evaluated their future impact are. Thus, the same impact was assessed using a case study
approach, explaining the potential technological solutions used by different financial
intermediaries and the challenges faced by them while undertaking these changes. The results of
the study will uncover the gap in the literature that has been stated in the previous section.
Moreover, as the role of financial markets has become even more significant, technological
integration into the sector has become even more important in the current economy. The results
drawn from the study can assist the financial service industry, both the larger and the smaller
ones, to sustain in the rapidly increasing competitive environment. The study will also provide
recommendations for the industry players to deal with the challenges associated with the
restructuring process. A detailed analysis of how a particular case underwent a technological
change can be used as a guide for formulating policies and strategies for financial intermediaries
for successfully foraying technological changes into their respective obsolete business processes.
Future studies can focus on discovering a similar relationship for smaller banks. Also, future

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studies can take into account external and internal factors contributing to this change or
inhibiting firms from undergoing this change.

5. Time plan for the Completion of the Project on a Gantt chart

1 1
Week 1 2 3 4 5 6 7 8 9 0 1
Supervisor meeting                      
Submission of research proposal                      
Data collection methods                      
Literature Review                      
Data Analysis and Interviews                      
Results Interpretation                      
Final Discussion, Conclusion and
Recommendations                      
Finalizing the project                      
Project Submission                      

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6. References
Arora, S. and Kaur, S., 2006. Financial Performance of Indian Banking Sector in Post-Reform
Era. The Indian Journal of Commerce, 59(1), pp.96-105.

Bansal, S., 2015. The Impact of Technology on the Performance of Indian Banking Industry: an
Empirical Study. Macro Research Project, Indian Institute of Banking.

Bucy, M., Finlayson, A., Kelly, G. and Moye, C., 2016. The 'how’of transformation. McKinsey
& Company.

Gartner (2020). Gartner Forecasts Worldwide Banking and Securities IT Spending to Decline
4.7% in 2020 Before 2021 Rebound. Available
from<https://www.gartner.com/en/newsroom/press-releases/2020-08-12-gartner-forecasts-
worldwide-banking-and-securities-it >.[Accessed on 26th October 2020].

Hogarth, J.M. and Hilgert, M.A., 2004. The adoption of electronic banking technologies by US
consumers. International Journal of Bank Marketing, 22(4), pp.238-259.

Jain, A. and Hundal, B.S., 2006. Barriers in mobile banking adoption in India. The IUP Journal
of Bank Management, (3), pp.64-73.

Kelley, W.N., 1989. Textbook of internal medicine. Lippincott.

Khanna, V.T. and Gupta, N., 2015. Customer's Perception about Banks Technology for
Innovative Delivery Channels of Public Sector Banks (PSBs) of India. International Journal of
Business and Management, 10(2), p.214.

Lin Wicong and Zhu Lifen, Discussion on the Reference Model of Enterprise Resource Planning
System Introduction-Taking Taiwan's IC Manufacturing Industry as an Example.

Malhotra, P. and Singh, B., 2009. The impact of internet banking on bank performance and risk:
The Indian experience. Eurasian Journal of Business and Economics, 2(4), pp.43-62.

Nikoloski, K., 2014. The role of information technology in the business sector. International
Journal of Science and Research (IJSR), 3(12).

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SAKA, A., 2010. Effects of Foreign Bank Entry on Technical Efficiency of a Bank Sector–The
Case of Ghana.

TRIVEDI, K.K., 2020. A STUDY ON DIGITAL TRANSFORMATION OF BANKS IN

INDIA: CHALLENGES AND OPPORTUNITIES. Studies in Indian Place Names, 40(8),
pp.178-181.

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