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com Procedia
Social and
Procedia - Social and Behavioral
Procedia Sciences
- Social and 30 (2011)
Behavioral 13 – 00
Sciences 16 (2011) 000–000 Sciences

WCPCG 2011

The Impact of Information Technology in Banking System

(A Case Study in Bank Keshavarzi IRAN)
Saeid Khajeh dangolania
Bank Keshavarzi, IRAN


The advent of information technology to every aspect of human life and business has been so obvious that it does not need to be
accentuated more. Information technology has been of great essence in banking system. This study aims to investigate the effect
of information technology in the banking system of Bank Keshavarzi Iran. The data are obtained both through the customers and
the employees. The data were then analyzed using the exact percentage and the 5-point Likert scale to determine the impact of
Information technology in the banking system affairs. The findings then proved that Information technology contributes to the
banking system in three different ways as follows: IT saves the time of the customers and the employees conspicuously, IT cuts
down the expenses and IT facilitates the network transactions.
© 2011
PublishedbybyElsevier Ltd.
Elsevier Ltd. Open access under CC BY-NC-ND license.
Selection and/or peer-review under responsibility of the 2nd World Conference on Psychology, Counselling and
Key words: Information Technology; Bank Keshavarzi Iran; time saving; expenses; network transactions
1. Introduction

All the necessities of modern life brought light to the fact that information for the modern organization is a
resource parallel in importance to land, labor and capital. It is very vital and a priceless resource. It is no longer
news that we are now in information age that is characterized by an ever-changing information technology
revolution and an information superhighway on which every corporate entity and profession must more, if it is to
survive in the 21st century.
The sector that has been most radically affected by the information technology developments is the banking
system. The information technology has become a critical business resource because its absence could result in poor
decisions and ultimately business failure. Technology has opened up new markets, new products, new services and
efficient delivery channels for the banking industry. Online electronics banking, mobile banking and internet
banking are just a few examples.
Information Technology has also provided banking industry with the wherewithal to deal with the challenges
the new economy poses. Information technology has been the cornerstone of recent financial sector reforms aimed
at increasing the speed and reliability of financial operations and of initiatives to strengthen the banking sector.
The IT revolution has set the stage for unprecedented increase in financial activity across the globe. The
progress of technology and the development of worldwide networks have significantly reduced the cost of global
funds transfer.

1877-0428 © 2011 Published by Elsevier Ltd. Open access under CC BY-NC-ND license.
Selection and/or peer-review under responsibility of the 2nd World Conference on Psychology, Counselling and Guidance.
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Saeid Khajeh dangolani/ Procedia – Social and Behavioral Sciences 00 (2011) 000–000

It is information technology which enables banks in meeting such high expectations of the customers who are
more demanding and are also more techno-savvy compared to their counterparts of the yester years. They demand
instant, anytime and anywhere banking facilities.
Other researches show that information technology has been providing solutions to banks to take care of their
accounting and back office requirements. This has, however, now given way to large scale usage in services aimed
at the customer of the banks. IT also facilitates the introduction of new delivery channels--in the form of Automated
Teller Machines, Net Banking, Mobile Banking and the like. Further, IT deployment has assumed such high levels
that it is no longer possible for banks to manage their IT implementations on a standalone basis with IT revolution,
banks are increasingly interconnecting their computer systems not only across branches in a city but also to other
geographic locations with high-speed network infrastructure, and setting up local area and wide area networks and
connecting them to the Internet. As a result, information systems and networks are now exposed to a growing
All in all, this auspicious technology influences the banking industry, mainly in the following three aspects:
1. Technology is influencing competition and the degree of contestability in banking.
Due to the development of technology, bank’s superiority in information is deteriorated. Entry barrier have been
declining, new competitor have emerged. Some financial products and services have become more transparent and
commodities, customer show willing to unbundled the demand for financial products and services, all these lead to a
more competitive market environment. Due to lowered entry and exist and deconstruction, for some sub-financial
markets, contestability in banking is also raised.

2. Technology influence Economy of scale:

Competitive pressure force banks to lower their cost. Bank seeks to get economy of scale in bank procession
instead of being a big bank. Bank seeks to secure the optimal business structure, and secure the competitive
imperative of economy of scale. There are other options to get economy of scale, including joint venture and
confederation of financial firms. Small firms also can get economy of scale by outsourcing, i.e. buy in economy of

3. Technology influence the economics of delivery

Technology has a major impact on the way banking and financial services are delivered. A wide range of
alternative delivery mechanism becomes available, Internet, ATM… these Reduces the dependence on the branch
network as a core delivery mechanism. With the development of technology, the financial systems are substantially
over-supplied with delivery system through a duplication of net work, bank has to change their delivery strategy,
rationalize their branch network strategy, and widen the range of delivery option.
Banking industry has been taking advantage of the following 22 Technology Products: (1). Net Banking; (2).
Credit Card Online; (3). One View; (4). InstaAlerts; (5). Mobile Banking; (6). NetSafe; (7). e-Monies Electronic
Fund Transfer; (8). Online Payment of Excise & Service Tax; (9). Phone Banking; (10). Bill Payment; (11).
Shopping; (12). Ticket Booking; (13). Railway Ticket Booking through SMS; (14). Prepaid Mobile Recharge; (15).
Smart Money Order; (16). Card to Card Funds Transfer; (17). Funds Transfer (eCheques); (18). Anywhere Banking;
(19). Internet Banking; (20). Mobile Banking; (21). Bank@Home (i) Express Delivery; (22). Cash on Tap: (ii)
Normal Delivery.
The research questions are as follows:
1. Does IT have a meaningful effect on saving the time of the customers and the employees of bank
Keshavarzi Iran, Golestan province?
2. Does IT have a meaningful effect on cutting down the expenses of bank Keshavarzi Iran, Golestan
3. Does IT have a meaningful effect on facilitating the network transactions of bank Keshavarzi Iran,
Golestan province?
Saeid Khajeh
Khajeh dangolani
dangolani // Procedia
Procedia -–Social
(2011)13 – 16
000–000 15

2. The Review of Related Literature

The number of studies on information technology in the literature is abounding and is dramatically on the rise
due to its indispensable significance in all aspects of our life. As Princhard and Cole (1997) state, Information
Technology (IT) is a term, which generally covers the harnessing of electronic technology for the information needs
of business at all levels. It is a computer based system as well as telecommunication technology for storage,
processing and dissemination of information.
The role of information technology in the banking industry is accentuated too but not sufficient in Iran.
Lichtenberg (1995) concludes that there is significant benefit from investment in Information Technology especially
in the Banking Industry. Mario Castelino (2006) suggests that Indian banking industry has provided the leading edge
to what is happening to the Indian economy. Banks have equipped themselves with the latest of technology--core
Banking. Business Process Reengineering has been introduced to enhance spleen and efficiency of delivery.
Information Technology has basically been used under two different avenues in Banking. One is Communication
and Connectivity and other is Business Process Reengineering. Information technology enables sophisticated
product development, better market infrastructure, implementation of reliable techniques for control of risks and
helps the financial intermediaries to reach geographically distant and diversified markets. But focusing on both
threats and opportunities of information technology, Blili and Raymond (1993) concluded that the strategic use of
information technology can both threaten and benefit small and medium-sized enterprises (SMEs). In this paper, the
strategic importance of information technology is analyzed in light of the specificity of these organizations. Planning
approaches are then outlined, focusing on how SMEs can attain a mastery of information technology for competitive
There are also statistical reports regarding the banking industry affected by IT announced by organizations
throughout the world. For instance, you can find those released by Computer Industry Report, March 27, 1992 as
The banking sector in the survey base saw budgets drop 10% on average in 1991, and expects only average
growth in 1992. With average site budgets in excess of $4 million, the highest in the survey group, the downturn for
banking has affected the entire IT market.
Banking had the highest negative rating in its attitude towards IS spending; almost half checked choices
indicating stable spending with no major growth in any area, or a contraction of spending.
Controlling costs is a critical imperative for nearly two-thirds of the banking community, by far the highest ratio
for any of the sectors surveyed.
The replacements will presumably be largely PCs, since banking had the lowest percentage (18%) agreeing that
UNIX workstations are becoming a viable alternative to traditional personal computers.
A survey-low 29% of PCs in banking were connected to a host computer, compared to an average of two-thirds.
Overwhelmingly the major activity of software staff at banking sites is systems or network maintenance, which
accounted for 60% of staff time compared to an average of 33%.Only 16% of staff time went to developing new

3. Method

Both Exploratory Research and Descriptive Research were used in accomplishing the objective of the study.
3.1Sampling Design
Random sampling is the sampling design of this study; it is the most appropriate design to use in this study
since the researcher decided the sample size of the study i.e. 100 bank customers and a sample of 20 clerical and 20
managerial in the bank.
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Primary research was conducted using questionnaire surveys to them. The researcher tallied, scored and
tabulated all the responses in the provided survey questions. The researcher conducted the survey personally with
the respondents. Further research will be carried out through consultation of books, journals and magazines.
Secondary data will support primary data collection to show a clearer picture of the information technology's effect
on Bank Keshavarzi Iran.

4. Findings and Conclusion

The research brought to light the fact that IT has been of great impact on bank Keshavarzi Iran, Golestan
province. The findings both from the questionnaires and the library research reveal that IT leads to saving the time
of the customers and the employees conspicuously, cutting down the expenses and facilitating the network
transactions. The details are as follows:
Regarding the first research question, both the customers and employees believe that IT has a meaningful effect
on saving the time of the customers and the employees of bank Keshavarzi Iran, Golestan province. (84% and 91%
Apropos to the second question, around 91 % of the bank managers believe that IT has a meaningful effect on
cutting down the expenses of bank Keshavarzi Iran, Golestan province.
Concerning the third research question, the customers and bank employees answered that IT has a meaningful
effect on facilitating the network transactions of bank Keshavarzi Iran, Golestan province. (88% and 93%
respectively). The data gathered from the library research also approved the abovementioned results.
The outcome of this study is limited only to the data gathered from the books and journals about information
technology and its impact on bank Keshavrazi Golestan province and from the primary data gathered from the result
of the questionnaire survey and interview conducted by the researcher. As the research was completed in a limited
period of time other factors and variables are not considered. This might have an impact on the results of the study.
We cannot deny that the advancement of technology was a necessity of the current era. Businesses need to adopt
and embrace new technologies to provide excellent business operation and services to their clients. The bank
industry is not an exception with regards to this adaptation. So it is worth suggesting that the banking industry needs
to spend more on IT and better apply IT to improve its operations, customer services and products. Banks should
devote more resources to development of secure IT systems, services and products


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