Hezron Munge Chacha

CCNA (R&S), MCP (Windows Server 2012), Google Adwords Certified, SEO Specialist, BSc. Computer Science.

How to improve financial institution services through Information Technology

By Hezron Chacha | May 18, 2016 | 0 Comment

How to improve financial institution services through Information Technology

The savings and credit cooperative movement in the world has had tremendous growth, going by its popularity among the ordinary citizens. However, the biggest milestone has been the incorporation of technology in their operations, a move that has seen financial institutions improve efficiency, curb fraud and improve service efficiency to clients. Many financial institutions are having increase in their loan portfolio and rapid expansion thanks to the use of technology in their operations. Deployment of technology reduces operational costs and improves service delivery. Technology enables provision of electronic services (e-services) and it can be deployed in several ways as described below.

Website

The website can be viewed locally or internationally making it the newest media used to exchange and gather information and ideas. It enables customers to find out all the information they need about the products, such as the services provided. The products offer product images with specifics and costs, location of the business/organization and where the services are offered, and special offers to clients. Its advantage is that it reaches a global audience, and allows one to deliver the advertisement to a targeted audience in a manner that actually gets the message through to this targeted audience. One can use a website to sell products and take orders for services round the clock without involvement of humans as the entire process can be automated.

The legal framework and other related legislations including policies should be displaced on the financial institution website.

The respective websites should be enhanced to keep in pace with technological developments. The website needs to be regularly updated.

Online Banking

Online banking is an electronic payment system that enables customers of a financial institution to conduct financial transactions on a website operated by the institution, such as a retail bank, virtual bank, credit union, SACCO or building society. A good online bank or SACCO will offer customers just about every service traditionally available through a local branch, including accepting deposits (which is done online or through the mail), paying interest on savings and providing an online bill payment system.

Online banking allows you to manage your money without having to go into a branch of your bank or SACCO or pick up the phone and speak to someone. Instead, you use an access equipment such as a computer or smart phone to log on to the Internet and connect to a secure website belonging to your bank, SACCO or building society.

Using your bank, SACCO or building society’s website, you can complete most of the banking transactions that people use in day-to-day life. These include checking balances, paying bills, managing direct debits and standing orders, transferring money and ordering cheque books and statements. It is also possible to apply for and manage credit cards or loans over the Internet as well as other financial products such as mortgages and insurance.

Automated Teller Machine (ATM)

An ATM is a computerized machine that permits bank or SACCO customers to gain access to their accounts with a magnetically encoded plastic card and a code number. It enables the customers to perform several banking operations without the help of a teller, such as to withdraw cash, make deposits, pay bills, obtain bank statements, effect cash transfers, facilitate credit card payments and report account information.

Management Information System

Management Information System (MIS) broadly refers to a computer-based system that provides managers with the tools to organize, evaluate and efficiently manage departments within an organization. In order to provide past, present and prediction information, a management information system can include software that helps in decision making, data resources such as databases, the hardware resources of a system, decision support systems, people management and project management applications, and any computerized processes that enable the department to run efficiently.

Every financial institution needs to undertake a requirements collection and analysis process to enable it put in place a functional MIS.

Accounting Information System (AIS)

An Accounting Information System (AIS), subset of a Management Information System (MIS), is responsible for collection, storage and processing of financial and accounting data that is used by decision makers. It provides timely and accurate financial and statistical reports for internal management decision-making, and for external parties such as creditors, investors, and regulatory and taxation authorities. AIS is a structure that a business uses to collect, store, manage, process, retrieve and report its financial data so that it can be used by accountants, consultants, business analysts, managers, chief financial officers (CFOs), auditors and regulatory and tax agencies.

Customer Relationship Management System (CRM)

Customer relationship management (CRM) system is a system for managing a company’s interactions with current and future customers. It often involves using technology to organize, automate and synchronize sales, marketing, customer service, and technical support. Every financial institution needs to put in place a CRM system.

Interface financial systems with other critical systems

The interface with other critical systems like Credit Reference Bureau that issues Financial Cards and the National ID System that issues National ID Cards would enhance the financial institutions’ operations by getting to know more about the members.

Research and Development (R&D)

ICT makes it easier for a large company or organisation to do market research at a competitive price. Financial institutions should invest in ICT innovations that have potential to drive economic growth and stability.

Monitoring and Evaluation (M&E)

For every financial institution, ICT should be used in some of the monitoring and/or evaluation activities.

Education, Training and Mentorship

Financial institutions should lead by example and start an online course in savings and cooperatives.  This would enhance the skills of its prospective and current members. These days it is possible to have effective online mentorship programmes and every financial institution should explore starting online mentorship for its staff and the board.

Other E-services

ICT can enable financial institutions to come up with e-profiles of its members, create awareness through its website and e-newsletter, provide feedback online through the website interface and SMS system, mobilise members to save by inculcating a savings culture through public awareness campaigns that could involve online campaigns, etc.

Technology Adoption in Financial Institutions

The savings and credit cooperative movement in the world has had tremendous growth, going by its popularity among the ordinary citizens. However, the biggest milestone has been the incorporation of technology in their operations, a move that has seen financial institutions improve efficiency, curb fraud and improve service efficiency to clients. Many financial institutions are having increase in their loan portfolio and rapid expansion thanks to the use of technology in their operations.

Therefore, growing financial institutions need to undertake study visits to other successful financial institutions in their respective regions. This can be complimented by online interactions and exchanges.

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