RIJS
Volume 4, Issue 10 (October, 2015)
ISSN: 2250 – 3994
A Journal of Radix International Educational and
Research Consortium
RIJS
RADIX INTERNATIONAL JOURNAL OF
RESEARCH IN SOCIAL SCIENCE
REFORMS ON INFORMATION TECHNOLOGY IN CO-OPERATIVE BANKING SECTOR; A STUDY OF
VIJAYAPUR DISTRICT CO-OPERATIVE BANKS
JAYASHREE R. KOTNAL
Research Scholar
Karnataka State Women’s University,
and Lecturer M.Com Department. A. S. Patil
College of Commerce
Vijaypur (Karnataka) India.
DR. MEENA R. CHANDAWARKAR
Research Guide, Vice Chancellor
Karnataka State Women’s University
Vijayapur (Karnataka) India.
ABSTRACT
The information technology (IT) has transformed the economy, industrial sectors, and business life. People
are better informed and more demanding. Consumption habits and decision-making criteria have shifted.
Most businesses worldwide have been forced to cope with this information-driven revolution. Technology
has not broken many barriers but has also brought about superior products and channels. This has brought
customer relationship into greater focus. It is also viewed as an instrument of cost reduction and effective
communication with people and institutions associated with the banking business. Banking, because it is
highly regulated, has not evolved as quickly as other sectors, such as media and entertainment.
Nevertheless, the IT has spawned a whole new league of competitors in banking. These new players are
free of legacies. Obsolete or inefficient IT systems and costly physical distribution networks are now taken
out from growing world. The article main objective focuses to study reforms on information technology and
prospective influence on the growth of co-operative Banks. The design and simulation results of this work
revealed that, IT led to increase improved operational efficiency, reduced transaction time, better
competitive edge, reduced the running cost and ushered in swift response in service delivery.
KEYWORDS: Co-Operative Bank, Technology, Sustainable Development, Committee,SEBI
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Volume 4, Issue 10 (October, 2015)
ISSN: 2250 – 3994
INTRODUCTION
The Indian banking sector is also trying to wake up from sleep and become proactive till 1990, the Indian
banks have been working in a very comfortable and protected environment. However, since then they
have been pushed into intense competition due to changed economic policies. The technology is lifting the
competition in the banking sector. Traditionally, banks have been using technology to improve their
products and efficiency. Today, technology is not only changing the environment but also the relationship
with customers. Technology has not broken many barriers but has also brought about superior products
and channels. This has brought customer relationship into greater focus. It is also viewed as an instrument
of cost reduction and effective communication with people and institutions associated with the banking
business. The RBI has assigned priority to the up gradation of technological infrastructure in financial
system. Technology has opened new product and services, new market and efficient delivery channels for
banking industry. IT also provides the framework for banking industry to meet challenges in the present
competitive environment. IT enables to cut the cost of global fund transfer.
IT governance is an integral part of banking activities. It involves leadership support, organizational
structure and processes to ensure the bank’s IT sustaining and extends business strategies and objectives.
Effective IT governance is the responsibility of the Board of Directors and Executive Management.
Access to reliable information has become an indispensable component of conducting business, indeed, in
a growing number of banks, information is business. Today, almost every commercial bank branch is at
some stage of technology adoption: core banking solution (CBS), or alternate delivery channels such as
internet banking, mobile banking, phone banking and ATMs.
LITERATURE REVIEW
Shroff F T (2007) in his paper, Modern Banking Technology, Bank net Publications has given a summary of
how Indian banking system has evolved over the year. The paper discusses some issues face by these
systems. The author also gave examples of comparable banking system for other countries and the lesson
learnt. Indian banking is at the threshold of the paradigm shift. The application of technology and product
innovations is bringing about structure change in the Indian banking system.
Mario C (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 technology such as core Banking.
Business process reengineering has been introduced to enhance speed and efficiency of delivery.
Shetty V P (2006) describes globalization in banking is based on four important pillars viz. 1) trade in goods
and services, 2) flow of capital and movement of human beings across boundaries, 3) harmonization of
regulatory framework in different countries, and 4) developments in technology particularly those in
information technology.
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Volume 4, Issue 10 (October, 2015)
ISSN: 2250 – 3994
OBJECTIVES OF THE STUDY
The general purpose of this study is to examine how the adoption of information technology affects the
operation of co-operative Bank in Vijayapur District.
1. To study the reforms on information technology adoption in co-operative banks.
2. To determine the significant impact of information technology on overall growth of Co-operative banks.
RESEARCH HYPOTHESES
Hypotheses are sets of assumptions formulated by the researcher, accepted or rejected personally on the
basis of research findings:
Ho: Information technology has significant impact on the Overall growth of the Co-Operative Banks.
H1: Information technology has no significant impact on the Overall growth of the Co-Operative Banks.
SCOPE OF THE STUDY:
Scope of the study is to cover the impact of Reforms in information technology of Co-operative
banks in Vijayapur District.
RECOMMENDATIONS, ACTIONS ON IT GOVERNANCE PRACTICES
Before adopting these, banks are required to evaluate their nature and scope of activities and the current
level of leverage of IT and related controls.
1. Policies and procedures:
a) The bank needs to have IT-related strategy and policies that covers areas such as:








Existing and proposed hardware and networking architecture for a bank and its rationale
Broad strategy for procurement of hardware and software solutions, vendor development and
management
Standards for hardware or software prescribed by the proposed architecture
Strategy for outsourcing, in-sourcing, procuring off-the-shelf software, and in-house development
IT Department’s Organizational Structure
Desired number and level of IT expertise or competencies in banks human resources, plan to bridge
the gap and requirements relating to training and development
Strategy for keeping abreast with technology developments and update systems as and when
required
Strategies converted into clear IT initiatives with a board time frame
a) IT strategy and policy needs to be approved by the Board
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Volume 4, Issue 10 (October, 2015)
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b) Detailed operational procedures may be formulated in relevant areas including for data
centre operations
c) A bank needs to follow a structured approach for the long-range planning process considering
factors such as organizational model and changes to it, geographical distribution,
technological evolution, costs, legal and regulatory requirements, requirements of thirdparties or market, planning horizon, business process re-engineering, staffing, in or
outsourcing, etc.
d) There needs to be an annual review of IT strategy and policies taking into account the
changes to the organization’s business plans and IT environment
e) Long-range IT strategy needs to be converted to short-range plans regularly for achievability
f) The short-range plan may cover the following: plan for initiatives specified in the long-range
plan or initiatives that support the long-range plans system wise transition strategy,
responsibility and plan for achievements
g) Banks need to establish and maintain an enterprise architecture framework or enterprise
information model to enable applications development and decision-supporting activities,
consistent with IT strategy. The model should facilitate optimal creation, use and sharing of
information by a business, in a way that it maintains integrity, and is flexible, functional, costeffective, timely and secured
h) There is also a need to maintain an “enterprise data dictionary” that incorporates the
organisation’s data syntax rules. This should enable the sharing of data among applications
and systems promote a common understanding of data among IT and business users and
preventing incompatible data elements from being created
i) Banks need to establish a classification scheme that applies throughout the enterprise, based
on the criticality and sensitivity of enterprise data. This scheme should include details of data
ownership; definition of appropriate security levels and protection controls and a brief
description of data retention and destruction requirements. It should be used as a basis for
applying controls such as access controls, archiving or encryption.
INFORMATION SECURITY
Information and the knowledge based on it have increasingly become recognized as information
assets which are vital enablers of business operations. Hence, they require organizations to provide
adequate levels of protection. For banks as purveyor of money in physical form or in bits and bytes,
reliable information is even more critical and hence information security is a vital area of concern.
Robust information is at the heart of risk management processes in a bank. Inadequate data quality
is likely to induce errors in decision making. Data quality requires building processes, procedures
and disciplines for managing information and ensuring its integrity, accuracy, completeness and
timeliness. The fundamental attributes supporting data quality should include accuracy, integrity,
consistency, completeness, validity, timeliness, accessibility, and usability. The data quality
provided by various applications depends on the quality and integrity of the data upon which that
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information is built. Entities that treat information as a critical organizational asset are a better
position to manage it proactively.
BASIC PRINCIPLES OF INFORMATION SECURITY
For over twenty years, information security has held confidentiality, integrity and availability to be
the core principle.
 Confidentiality: confidentiality is the term used to prevent the disclosure of information to
unauthorized individuals or systems. For example, a credit card transaction on the internet
requires the credit card number to be transmitted from the buyer to the merchant and
from the merchant to a transaction processing network.
 Integrity: In information security, integrity means, data cannot be modified without
authorization. This is not the same thing as referential integrity in databases.
 Availability: For any information system to serve its purpose, the information must be
available when it is needed. This means that the computing systems used to store and
process the information, the security controls used to protect it, and the communication
channels used to access it must be functioning correctly.
 Authenticity: In computing, e-business and information security it is necessary to ensure
that the data, transactions, communications or documents are genuine. It is also important
for authenticity to validate that both parties involved are who they claim they are.
 Non-repudiation: In law, non-repudiation implies one’s intention to fulfil one’s obligations
under a contract/transaction. It also implies that a party to a transaction cannot deny
having received or having sent an electronic record. Electronic commerce uses technology
such as digital signatures and encryption to establish authenticity and non-repudiation.
 Identification: Identification is the process by which a subject professes an identity and
accountability. A subject must provide an identity to a system to start the process of
authentication, authorization and accountability.
 Authorization: Once a subject is authenticated, access must be authorized. The process of
authorization ensures that the requested activity or access to an object is possible given
the rights and privileges assigned to the authenticated identity.
 Accountability and Audit ability: An organization’s security policy can be properly enforced
only if accountability is maintained, i.e security can maintained only if subjects are held
accountable for their actions. Accountability relies upon the capability to prove a subject’s
identity and track their activities.
ANALYSIS AND INTERPRETATION
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Volume 4, Issue 10 (October, 2015)
ISSN: 2250 – 3994
The present study focused mainly to analyze the impact of the IT adoption in the Co-operative Banks of
Vijayapur urban region with the help of collected data. The data presented here is collected through
questioner and a statistical analysis was carried out to verify the set hypothesis.
PART – A: Opinion of Bank officials with regard to adaptation of information technology systems and
services in respective Co-Operative banks of Vijaypur district
Source: questioner responses collected through survey
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Volume 4, Issue 10 (October, 2015)
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degree
of
arbitrariness
Strongly
agree
Agree
Undecided Disagree
Strongly
Disagree
scores
5
4
3
1
2
Average score calculated using numerical indicator
Table. 1 indicates the IT service providers have latest hardware and software to support the bank. It
reveals that 63% respondents opined that they have latest IT services. More than 58% IT service providers
have deployed sufficient staff to offer services through IT, while 42% of the respondents disagree.
Materials associated with IT support and services such as equipments, training, manuals, user guide etc are
visually appealing; for this question, 73% of respondents have agreed. It was found that 37% of
respondents have agreed for IT service providers and to adhere to the time limits prescribed or promised
as and when services are required. Whenever users have a problem with IT service, providers show a
sincere interest in solving it? 53% of the respondents have agreed while 47% not agreed. IT service
providers solve the problem in the first instance, for this question, 74% respondents have agreed. IT
service providers keep users well informed about progress of user’s complaint/s, for this question, 52%
respondents have agreed and 48% not agreed. The personnel of IT service providers take users
complaints/queries seriously, for this, 63% of respondents agreed.
Fig. 1: Opinion of Bank officials with regard to adaptation of information technology systems and
services in respective Co-Operative banks of Vijaypur district
The data shows the questioner parameter were in agreement with enforcement of reforms in the field of
‘Information Technology’. The introduction of IT enabled services had helped the customers and banks
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Volume 4, Issue 10 (October, 2015)
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which provide better service and ease of data handling. On the other hand this revolution has greater
impact on growth of banks as well as financial status of the customers. In a 5 point scale, the mean value
of 19 banks (3.0) indicates the significant number of bank’s officials under study sample were in
agreement with the banking reforms that were taken place during study period. The average score (3.40)
calculated using numerical indicator also shows significant influence of co-operative banking reforms for
sustainable growth.
PART – B: Opinion on contribution of information technology systems and services on performance
in the Co-Operative bank
Table 2: Opinion on contribution of information technology systems and services on performance in
the Co-Operative bank
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Source: questioner responses collected through survey
degree of
arbitrarin
ess
Stron
gly
agree
Agr
ee
Undecid
ed
Disagr
ee
Stron
gly
Disagr
ee
scores
5
4
3
2
1
Average score calculated using numerical indicator
Fig. 2: Opinion on contribution of information technology systems and services on your
performance in the Co-Operative bank
The data shows the questioner parameter were in agreement with enforcement of reforms in the
field of ‘Information Technology’. The introduction of IT enabled services had helped the customers
and banks which provide better service and ease of data handling. On the other hand this
revolution has greater impact on growth of banks as well as financial status of the customers. In a 5
point scale, the mean value of 19 banks (3.15) indicates the significant number of bank’s officials
under study sample were in agreement with the banking reforms that were taken place during
study period. The mean score (3.62) calculated using numerical indicator which shows considerable
influence of banking reforms for remarkable growth.
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Volume 4, Issue 10 (October, 2015)
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PART – C: Opinion on overall quality of IT services, information provided by IT systems and Quality of IT
systems of the Co-operative bank
Table 3: Opinion on overall quality of IT services, information provided by IT systems and
Quality of IT systems of the Co-operative bank
Source: questioner responses collected through survey
degree of
arbitrarin
ess
Stron
gly
agree
Agr
ee
Undecid
ed
Disagr
ee
Stron
gly
Disagr
ee
scores
5
4
3
2
1
Average score calculated using numerical indicator
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Volume 4, Issue 10 (October, 2015)
ISSN: 2250 – 3994
From the above table; it can be observed that, out of specific IT services, 73% customers
strongly agreed and agreed the usage of IT for the overall quality of services provided by IT
service provider, 63% for the overall quality of information provided by IT systems, more than
68% for the overall quality of IT systems of the bank. On the whole, it can be concluded that
maximum Co-operative Bank’s accepted the usage of technology for their specific
requirements in their day to day transactions.
Fig.3: Opinion on overall quality of IT services, information provided by IT systems and Quality
of IT systems of the Co-operative bank
The above data were analyzed qualitatively using 5 point scale. The data shows the questioner
parameter were in agreement with enforcement of reforms in the field of ‘Information
Technology’. The introduction of IT enabled services had helped the customers and banks
which provide better service and ease of data handling. On the other hand this revolution has
greater impact on growth of banks as well as financial status of the customers. In a 5 point
scale, the mean value of 19 banks (1.57) indicates the significant number of bank’s officials
under study sample were in agreement with the banking reforms that were taken place during
study period. The average score (3.70) calculated using numerical indicator also shows
significant influence of co-operative banking reforms for sustainable growth.
PART – D: Opinion on contribution of information technology systems on the customer
services of Co-operative bank
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Table 4. Opinion on contribution of information technology systems on the customer services of Cooperative bank
Source: questioner responses collected through survey
degree of
arbitrarin
ess
Strong
ly
agree
Agr
ee
Undecid
ed
Disagr
ee
Strong
ly
Disagr
ee
scores
5
4
3
2
1
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Average score calculated using numerical indicator
0
From the table - 4 it can be observed that, out of total respondents, 63% strongly agreed to services IT
systems of the bank for having improved in the productivity / efficiency of banking services, 69% of
respondent agreed for the question asked for improvement in the overall banking services, 68% strongly
agreed and agreed for the question asked as the introduction of IT has reduced the operating expenses of
the bank. A total of 27% disagreed for IT systems of the bank have improved the productivity and 21% for
the improved the Co-operative Bank’s services. It is clear from the above data that, selected Co-operative
Bank’s attitude towards the adoption of the IT are positive and highly acceptable by them.
Fig. 4. Opinion on contribution of information technology systems on the customer services of Cooperative bank
The above data were analyzed qualitatively using 5 point scale. The data shows the questioner parameter
were in agreement with enforcement of reforms in the field of ‘Information Technology’. The introduction
of IT enabled services had helped the customers and banks which provide better service and ease of data
handling. On the other hand this revolution has greater impact on growth of banks as well as ease of bank
transactions by the customers. In a 5 point scale, the mean value of 19 banks (3.8) indicates the significant
number of bank’s officials under study sample were in agreement with the banking reforms that were
taken place during study period. The average score (3.380) calculated using numerical indicator also shows
significant influence of co-operative banking reforms for sustainable growth.
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LIMITATIONS OF THE STUDY
The present study has certain shortcomings which are enlisted as follows:




This paper examines only the impact of IT Reforms adoption in Co-operative Banks
The scope covers Vijayapur urban area;
The study is based on available primary and secondary data; and
This study is confined to the sample size of 19.
CONCLUSION
To cope with the pressures of growing competition, emerging changes, challenges, opportunities,
Indian commercial banks have adopted several initiatives and many facilities which include new
banking services and technologies to benefits the customers which recently made a remarkable
change towards the IT adoptions and its impact in Vijayapur Co-operative Banks too. Information
Technology is vital in banking sector today, it becomes imperative for banks to realize its impact on
operational performance in order to justify capital investments. The objective of this work is to
examine how the adoption of Information Technology affects the operations of Co-operative Banks
in terms of effectiveness, efficiency, competitiveness, customer base and globalization of the bank.
The design and simulation results of work revealed that Information Technology led to increase
improved operational efficiency, reduced transaction time, better competitive edge, reduced the
running cost and ushered in swift response in service delivery.
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