Electronic Banking 1 A Major Technology Implemented in Jamaica over the Past 10 Years

Management o Innovation and Technology Electronic Banking !ro"p Mem#ers$ %alia Ale&ander Yannick +arvey -leardo M"rray 0'0()0* 0,0(')* 0'0,1.1

T"tor/s 0ame$ Mrs1 2ook3ood4 Bro3n

A project s"#mitted in partial "l ilment o the re5"irements or the Bachelor o B"siness Administration degree in Prod"ction and 6perations Management and Acco"nting

7niversity o Technology 8chool o B"siness Administration 8t1 Andre39 Jamaica

Electronic Banking . 0ovem#er ..9 .011

Table of Contents
Ta#le o -ontents11111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111. 6"tline o Electronic Banking in Jamaica111111111111111111111111111111111111111111111111111111111111111111111111111111111111111* Identi ication and +istory111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111* E4Banking Today in Jamaica1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111* P"ll and P"sh :actors in the ;evelopment o 6nline Banking1111111111111111111111111111111111111111111111111111111( Market P"ll :actors1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111( Technology P"sh :actors1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111) 8trategies Employed in the ;i "sion o E4 Banking1111111111111111111111111111111111111111111111111111111111111111111111< Implications or Management1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111, Increased Training 0eeds111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111, 2ed"ction in costs111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111' =ariations in c"stomer s"pport1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111' 2ep"tations at risk111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111> Bene its o E4 Banking 11111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111> Bene its to the -"stomer11111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111110 -onvenience11111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111110 It is easier to catch ra"d"lent activity in yo"r acco"nt11111111111111111111111111111111111111111111111111111111110 Bene its to Banking Ind"stry1111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111 :"t"re Bene its o 6nline Banking 11111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111. Appendi&11111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111* 11111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111* E&ample o 0ational -ommercial Bank E4 Banking ?ayo"t11111111111111111111111111111111111111111111111111111( E&amples o Banks that 7ses E4 Banking 8ystem in Jamaica1111111111111111111111111111111111111111111111111111<

Electronic Banking * Bi#liography11111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111111,

Outline of Electronic Banking in Jamaica

Identification and History
6ver the past 10 years all Jamaica has seen a vast increase in the implementation o technology especially 3ithin the #"siness ind"stries1 6ne s"ch ind"stry that stands o"t clearly in the minds o Jamaicans is the #anking ind"stry1 This ind"stry has revol"tionali@ed #anking 3ith the implementation o electronic #anking commonly called e4#anking or online #anking1 The premise o e4#anking is to e&pand or make it possi#le and easier or e&isting #anking and payment mechanisms9 primarily #y making many transactions cheaper9 aster9 more sec"re9 and more convenient1 To #e dimin"tive9 e4#anking re ers to ho3 #anking and payment transactions are cond"cted rom a remote location9 or e&ample the home or at the 3orkplace9 3hich allo3s c"stomers to gain access #y the "se o comp"ters1 The history o online #anking dates #ack to as ar as the 1>>0s1 To #e e&act on 6cto#er <9 1>>) Presidential 8avings Bank in the 7nited 8tates 3as the irst to anno"nce the acility or reg"lar client "se1 The idea 3as 5"ickly snapped "p #y other 78 #anks like Aells :argo9 -hase Manhattan and 8ec"rity :irst 0et3ork Bank1 In the early phases o online #anking most #anks "sed a very simple layo"t9 3hich allo3ed "sers to sign in9 see their acco"nts and statements9 then make trans ers rom one acco"nt to the other1

E-Banking Today in Jamaica

Electronic Banking ( Electronic #anking started in Jamaica aro"nd .00( ho3ever it 3as not "ntil .00> 3hen signi icant gro3th occ"rred1 In a J"ne .00> article the Jamaica !leaner reported that online #anking is gro3ing signi icantly as more c"stomers choosing B reeB over B eesB1 The article "rther states that the trend s"ggests a direct response to #anksB increasing service charges9 3hich represents #illion in ann"al reven"es or the #ig t3o commercial #anks1 E4#anking in Jamaica today is 3itho"t do"#t another road to revol"tioni@ing #ank services1 Today many transactions has #een made easy thro"gh internet #anking services in Jamaica incl"ding vie3ing o acco"nts and statements9 credit card payments9 arrangement or loans9 sending credit trans ers9 payment o "tility #ills and set "p direct de#its9 all in j"st a e3 clicks1 Banks in Jamaica have also managed to retain the simple easy to "se layo"t1 or online services1 %ey players o the introd"ction o these online #anking services in Jamaica are "ndo"#tedly the 0ational -ommercial Bank and the Bank o 0ova 8cotia altho"gh other #anks 5"ickly ollo3ed1

Pull and Push Factors in the Develo ment of Online Banking

Market p"ll innovations are de ined as the advancement o technology9 oriented primarily to3ard a speci ic market need1 Ahile technology p"sh innovations relates to orms o technology that has #een implemented and the need has to #e created1

!arket Pull Factors

Traditionally9 cond"cting #anking transactions in Jamaica has #een vie3ed as a tedio"s and time cons"ming activity1 -"stomers are "s"ally greeted at #anks #y very long lines res"lting rom
1

8ee appendi& or a sample e4#anking layo"t

Electronic Banking ) lack o technology 3hich co"ld improve the speed o the process1 Another actor res"lting in long lines in Jamaican #anks is the act that the #anks in Jamaica on average are only open or a si& ho"r period per day as compared to those in developed co"ntries that 3ork an eight hr day1 This leads to a r"sh or individ"als to get their #"siness done1 As a res"lt o this #anks co"ld have a red"ction in #"siness9 3hich give more reason or their investment in this innovation1 This is 3here online #anking has come in to #ridge the gap1 ;"e to the market p"ll 3hich re5"ired longer ho"rs or #anking online #anking is a major sol"tion to this pro#lem1 6nline #anking has #een "sed in developed co"ntries or many years #e ore its implementation in Jamaica1 8"#se5"ent its implementation in Jamaica9 individ"als are no longer compelled to 3ait in long lines since their #anking can #e done .(C,1

Technology Push Factors

As it relates to technology p"sh9 #anks are implementing vario"s technologies to "rther appeal to the p"#lic to "se their services1 The 8cotia Bank o Jamaica or e&ample has created a card 3hich is named a 8cene card1 Aith the "se o this card persons 3ill #e a#le to gain points or transactions they do 3ith the #ank9 #oth online and act"al visits1 The points earned 3ill contri#"te to3ards giving them ree tickets to see movies and concession at the snack #ars1 In this move 3e are seeing the #ank creating a certain need or this innovation considering the high costs associated 3ith the cinemaD persons 3ill ind this "se "l and have already #eg"n to "se it1 Also9 n"mero"s #anks no3 o er clients to sign "p or their packages online 3hich seem to #e a aster ro"te to traditionally going in ho"se1

Electronic Banking <

"trategies Em loyed in the Diffusion of E- Banking

;i "sion is de ined as the process #y 3hich an innovation is propagated thro"gh certain channels over time among the "nits o a system1 =ario"s strategies 3ere "sed #y #anks to di "se e4#anking in Jamaica1 These incl"de ease o "nderstanding and "se and e icient comm"nication1 Banks "ses ease o "nderstanding and "se as a di "sion strategy #eca"se the layo"t o the e4 #anking system is set "p in s"ch a 3ay that it is easily "nderstood #y c"stomers and th"s c"stomers 3ill not #e easily de4motivated 3hen they are irst introd"ced to the system1 In act it is the hope o #anks that the system 3ill #e so easy to "se and "nderstand that "sers 3ill recommend it to a riend and th"s aide in the di "sion o the technology1 E icient comm"nication helps to di "se the technology #eca"se #anks constantly comm"nicate the added #ene its o e4#anking to c"stomers/ in order to pers"ade them to "se the technology1 Also i there are any pro#lems 3hile "sing the system there is a c"stomer care n"m#er. directly on the 3e# page that can #e called immediately1 The 84c"rve o di "sion can "sed to ill"strate the di "sion process o e4 #anking1 The 84-"rve has o"r stages namely the Emergence phase9 2apid gro3th9 8lo3 gro3th and Mat"rity phase1 ;"ring the emergence phase the technology 3as rather ne3 and individ"als 3ere not as s"re as to 3hether or not to tr"st the online system as they 3ere not a3are o its #ene its1 In act many individ"als 3ere not a3are o the online system in this phase marketing cost may #e high and there 3ill #e little or no #ene it #eing accr"ed rom the online system1

8ee appendi& or e&ample o 0-B 3e# page 3ith c"stomer care n"m#er

Electronic Banking , ;"e to e icient comm"nication #y #anks 3ith c"stomers the technology then di "sed to the rapid gro3th phase 3here more c"stomers are a3are o the prod"ct and th"s are a#le to red"ce their overhead cost as more persons "se this technology1 This technology also di "sed to rapid gro3th phase #eca"se o the gro3th o technology in general as more persons no3 have access to comp"ters than in previo"s years1 Maya Aalrond9 senior vice4president o c"stomer e&perience at 8cotia #ank arg"es that as more people get access to Internet9 more are "sing e4 #anking as their primary 3ay o #anking1 It is the easiest o all o"r channels9 even easier than telephone #anking9 she stated1 6nline #anking is yet to enter into the phases o 8lo3 gro3th and Mat"rity in Jamaica as it is c"rrently at the 2apid gro3th phase as mentioned a#ove1

Im lications for !anagement

The phenomenon o internet #anking allo3s c"stomers to cond"ct some or all transactions 3ith a comp"ter "sing the Internet1 -"stomers are allo3ed to #ank in their spare time at home9 3ork or school1 The option to cond"ct #anking transactions e&cl"sively online has had several e ects on local #anks9 some positive and some negative1 8ome implications or management are disc"ssed #elo31

Increased Training #eeds

The increased need or training is needed as the learning c"rve or Internet "sage changes 3ith each ne3 development1 -"stomers o ten come into the #ank and ask tellers 5"estions a#o"t online #anking iss"es or they may call "sing the c"stomer care n"m#er provided online1 ;espite

Electronic Banking ' the act that specialists can #e reached #y phone9 it is important to management that all employees 3ho convene 3ith c"stomers have s" icient kno3ledge a#o"t the practicalities and i possi#le the technical aspects o this technology1

Increase in com etition

Aith increasing pop"larity o the internet and access to it9 internet #anking has #ecome a primary eat"re or almost every #ank in the co"ntry1 :rom the emergence o start4"p #anks9 many spro"ted "p as online4only #anks9 eliminating many o the costs that traditional #anks have1 Aith lo3er operating costs9 Internet4#ased #anks are a#le to pass those savings on to their c"stomers in the orm o higher interest rates9 leading to increased competition or traditional #anks1 Management needs to #e a3are o this competition so they can strategically oc"s on gaining a competitve advantage over competitors1

$eduction in costs
Management does not have to 3orry a#o"t "sing reso"rcesD #eca"se internet #anking red"ces costs or #anks9 as transactions can #e done 3itho"t the "se o paper and 3itho"t any #ank tellers9 red"cing the need or employees1 +o3ever more technical persons 3ill #e needed to monitor this technology1

%ariations in customer su

ort

Aith the "se o the Internet9 management can no3 manage c"stomers promptly and e ectively #y creating online s"pport :AE data#ases as 3ell as online chat s"pport1 +o3ever management m"st monitor these s"pport systems and ens"re they are 3orking e iciently1

Electronic Banking >

"ecurity Issues
8ec"rity iss"es are a main so"rce o concern or every person #oth inside and o"tside the #anking ind"stry1 6nline4#anking increases sec"rity risks9 potentially e&posing "p till no3 secl"ded systems to open and risky environments1 Both management and sta need to #e proactive in monitoring and managing sec"rity threats1

$e utations at risk
This is considera#ly heightened or #anks "tili@ing the Internet1 :or e&ample the Internet allo3s or the rapid di "sion o in ormation 3hich in t"rn means that any incident9 either good or #ad9 #ecomes common kno3ledge 3ithin a short space o time1 The rate o the Internet considera#ly c"ts the optimal response times or #anks to any incident1 Any pro#lems e&perienced #y one irm in this ne3 environment may in l"ence the commerce o another9 as it may #ring to 5"estion9 con idence in the Internet as a 3hole1 8o9 there is conse5"entially a risk that one rog"e e4#ank co"ld ca"se major pro#lems or all #anks providing services via the Internet1 This ne3 type o "niversal risk ca"se major concern to e4#anking providers1 6verall9 Internet "sage places importance on rep"tational risks1 Managers need to #e certain that c"stomers/ rights9 in ormation and privacy needs are s" iciently protected and provided or1

Benefits of E- Banking
There are n"mero"s #ene its to #e derived rom electronic #anking1 These incl"de the #ene its to the c"stomer9 #ene its to the #anking ind"stry and "t"re #ene its1

Electronic Banking 10

Benefits to the &ustomer

Convenience Thro"gh Internet Banking c"stomers can operate their acco"nt 3hile sitting in an o ice or home1 There is no need to go to the #ank in person or s"ch matter1 Also most services that are "s"ally availa#le in the physical #ank can #e o"nd on a single 3e#site only a mo"se click a3ay1 Internet Banking is availa#le .( ho"rs a day9 seven days a 3eek th"s c"stomers can do transaction in their o3n time instead o #eing restricted to physical #anking ho"rs1 0o matter 3here yo" are or 3hat time it is9 yo" can easily manage yo"r money1

It is easier to catch fraudulent activity in your account Aith the a#ility to vie3 yo"r acco"nt at anytime it is easier to catch ra"d"lent activity in yo"r acco"nt #e ore m"ch damage is done1 As soon as yo" log into yo"r acco"nt9 yo" can check yo" acco"nts statement to see 3hether there is anything amiss1 I anyone 3rites a check or 3ithdra3s "nds rom yo"r acco"nt and yo" kno3 it 3asnBt yo"9 yo" 3ill see it right a3ay1 This lets yo" get started on correcting the pro#lem immediately rather than having to 3ait a month "ntil yo" receive a physical statement or "pdate yo" #ank4#ook to even have a cl"e it is happening as 3o"ld #e the case 3ith a traditional #ank1

Internet banking costs less ;"e to the lo3er overhead cost associated 3ith online #anks s"ch as less involvement #y salaried employees #ank inc"r savings tho"gh e4#anking1 These savings allo3 them to o er

Electronic Banking 11 higher interest rates on savings acco"nts9 lo3er lending rates and service charges or online transactions1 8ome #anks even o er ree #ill paying services to enco"rage their c"stomers to do their #anking online1

Internet banking account is simple to open and use There is "s"ally a very simple layo"t* or internet #anking1 Yo" j"st enter a e3 ans3ers to 5"estions in a orm 3hile sitting com orta#ly in yo"r o3n home or o ice to create an acco"nt1 To access yo"r acco"nt9 yo" esta#lish sec"rity meas"res s"ch as "sernames and pass3ords1 There is also a .( ho"rs c"stomer care service representative j"st a phone call 3aiting to ans3er yo"r 5"eries1

Benefits to Banking Industry

Banking ind"stry has also received n"mero"s #ene its d"e to gro3th o E4Banking in rastr"ct"re1 There are highlighted #elo3$ The gro3th o E4#anking has greatly helped the #anks in controlling their overheads and operating cost Many repetitive and tedio"s tasks have no3 #een "lly a"tomated res"lting in greater e iciency9 #etter time "sage and enhanced control1 The rise o E4#anking has made #anks more competitive1 It has also led to e&pansion o the #anking ind"stry9 opening o ne3 aven"es or #anking operations1

8ee appendi&

Electronic Banking 1. Electronic #anking has greatly helped the #anking ind"stry to red"ce paper 3ork9 th"s helping them to move the paper less environment1 Electronic #anking has also helped #ank in proper doc"mentation o their records and transactions1 The reach and delivery capa#ilities o comp"ter net3orks9 s"ch as the Internet9 are ar #etter than any #ranch net3ork1

Future Benefits of Online Banking

Technology Integration4 As technology integrates the online #anking system 3ill #e re4 invented in Jamaica to prod"ce a more advance system s"ch as mo#ile #anking1 This may #e done 3ith the integration o a major cell phone company and a #ank1 :or e&ample in the 7nited 8tates Apple ?td integrated 3ith -hase Bank to o er -hase #anking applications on their cell phones1 !lo#alisation4 As the 3orld #ecomes a single glo#al market persons 3ill #e a#le to "se online #anking to trans er cash rom #rand o #ank to the ne&t1 Persons 3ill #e a#le to cond"ct #anking transactions rom any3here in the 3orld 3itho"t hassle an in their o3n convenience1

Electronic Banking 1*

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Electronic Banking 1(

E(am le of #ational &ommercial Bank E- Banking )ayout

Corporate Banking

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Electronic Banking 1<

E(am les of Banks that *ses E- Banking "ystem in Jamaica

There are n"mero"s #anks in Jamaica 3ho engage in online #anking in Jamaica1 These incl"de the ollo3ing$

Bank o 0ova 8cotia4

0ational -ommercial Bank4

Jamaica 0ation B"ilding 8ociety4

:irst -ari##ean International Bank4

2B- 2oyal Bank4

Electronic Banking 1,

Bi+liogra hy
11 Bain#ridge9 2oss1F.00<G1History of Online Banking1 2etreived rom http$CCE@ineArticles1 comC.,00,) on 0ovem#er .09 .011 .1 -ollinder9 Avia F.00>G Online banking grows- more customer choosing free over fees12etreived rom http$CCjamaicagleaner1comCgleanerC.00>0<.'C#"sinessC#"siness11html *1 Online Banking - The Evolution Of Online Banking, Lukewarm ustomer !es"onse Banks, #ervices, $eb, an% &inancial1 2etreived rom http$CCecommerce1hostip1in oCpagesC'0CBanking6nline1htmlHi&@@1eM%Yn<> (1 http$CCecommerce1hostip1in oCpagesC'0CBanking46nline1html )1 http$CC3331jnc#1comC <1 http$CC3331scotia#ank1comCjmCcdaCinde&C099?I;en9001html ,1 http$CC3331#ankersonline1comCtechnologyCg"r"sItech0'1'0*d1html '1 http$CC#ooks1google1com1jmC#ooksJidK&>AE(55jo-LlpgKPA)*Ld5KonlineM.0#anking >1 http$CCecommerce4jo"rnal1comCne3sConlineI#ankingIservicesIe&pansionIinIjamaica