Competing in the Age of Information Technology in a Developing Economy: Experiences of an Indian Bank

Competing in the Age of Information Technology in a Developing Economy: Experiences of an Indian Bank

S.C. Lenny Koh (University of Sheffield, UK) and Stuart Maguire (University of Sheffield, UK)
DOI: 10.4018/978-1-60566-424-8.ch018
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Abstract

This case describes how banking in India has changed after developments in information technology in the last decade. The new private and foreign banks, which are strong in technology, are giving tough competition to old public sector banks. Private banks have pioneered Internet banking, phone banking, anywhere banking, mobile banking, debit cards, automatic teller machines (ATMs), and retail banking in urban India. This case is about the VN Bank, a public sector bank that has to formulate its strategy in order to compete in this new environment. The case also explores the opportunity and challenges for the bank in rural India and makes readers think about how information technology can help the bank in building a strong position in the rural markets. The findings of the case study also can be generalized across other developing countries, where domestic companies are facing tough competition from foreign and private players.
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Organization Background

Veerat National (VN) Bank was founded on November 14, 1939, by the family of Anupam Chandra under the name Veerat National Banking Company Ltd. It became a Public Ltd. Company in December 1944, and subsequently, the name was changed to Veerat National Bank Ltd. In July 1969 VN Bank Ltd., along with 13 other major banks, was nationalized and is currently a Public Sector Bank (PSB) constituted under the Banking Companies (Acquisition & Transfer of Undertakings) Act of 1970 (see Appendix I to understand the Banking History in India). The bank’s comparative performance over the last three years is shown in Table 1. The income statements over the last two years are shown in Table 2. The interest income of the bank amounted to $158 million for the year 2003-2004 compared to $151 million for the year 2002-2003, showing a marginal rise of 2.08%. The amount of interest expended also has declined by 5.06%. The non-interest income of the bank has registered an impressive growth of 41.28%, thereby reaching a level of $167 million for the year 2003-2004 compared to $116 million for the year 2002-2003. VN Bank has a network of 1,368 branches in the country and has 12,461 employees. The number of branches statewide is given in Appendix II.

Table 1.
Veerat National Bank yearly comparative performance
Particulars $ Mn2001-022002-032003-04
Number of Branches136813681368
Number of computerised Branches80910341106
Reserves and Surplus ($ Mn)165.6175.2193.56
Capital Adequacy Ratio (%)7.646.029.48
Deposits ($ Mn)4094.644397.644893.12
% Increase5.367.411.27
Advances Net ($ Mn)2006.162249.642509.92
% Increase7.412.1411.57
Investment ($ Mn)2059.682289.362605.56
% Increase12.211.1413.81
Operating Profit ($ Mn)89.4131.64189.5
Net Profit \ Loss ($ Mn)030.561.5
Total Staff (No.)12,84012,66412,416
Per Employee Business ($ Mn)0.50.540.6
Per Branch Business ($ Mn)4.54.85.8

Complete Chapter List

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Table of Contents
Foreword
Elias G. Carayannis
Acknowledgment
Chapter 1
S.C. Lenny Koh, Stuart Maguire
The issues that are currently affecting all managers are similar to those facing managers of ICT. The following is a list, though not exhaustive, of... Sample PDF
Review of Current ICT Developments
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Chapter 2
S.C. Lenny Koh, Stuart Maguire
The ultimate reason why organizations develop information systems is so that their employees can make good decisions. If firms did not make... Sample PDF
Linking Information to Business Strategies and Decision-Making
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Chapter 3
S.C. Lenny Koh, Stuart Maguire
The introduction of new IS can often have a significant effect on the business practices within an organization. It is important that a lack of... Sample PDF
Developing and Implementing an ICT Strategy
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Chapter 4
S.C. Lenny Koh, Stuart Maguire
It is important for today’s dynamic organizations to develop a strong and sustainable links with outside organizations and agencies. It may be... Sample PDF
Strategic Alliance Through the Use of ICT
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Chapter 5
S.C. Lenny Koh, Stuart Maguire
Information Systems (IS) has borrowed many techniques from other disciplines. However, many of these have been borrowed from areas where the outcome... Sample PDF
Planning and Managing ICT Change
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Chapter 6
S.C. Lenny Koh, Stuart Maguire
The reason for going ahead with a new information system (IS) development can come from many sources. A new business requirement may force an... Sample PDF
Identifying Opportunities for Using ICT
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Chapter 7
S.C. Lenny Koh, Stuart Maguire
The development of information systems (IS) has for many years been regarded as the domain of the technical expert. In what appears to be a growing... Sample PDF
Introduction to Current Techniques for Effective ICT Development
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Chapter 8
S.C. Lenny Koh, Stuart Maguire
Nearly all information systems developments follow a structured approach. This is true of all projects. This chapter takes a critical look at both... Sample PDF
System Development and Project Management
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Chapter 9
S.C. Lenny Koh, Stuart Maguire
If organizations were good at ICT planning there would not be as many information systems failures. There is a definite need for improved... Sample PDF
Critical Success Factors for ICT Development
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Chapter 10
S.C. Lenny Koh, Stuart Maguire
For many organizations, the implementation of a new information system (IS) may be the biggest capital expenditure they undertake. If substantial... Sample PDF
Impediments to the Successful Implementation of ICT
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Chapter 11
Learning From Failures  (pages 176-206)
S.C. Lenny Koh, Stuart Maguire
Strategic.failures can be defined as failures of achieving the expected benefits from the organizational, size and industrial sectors or countries’... Sample PDF
Learning From Failures
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Chapter 12
S.C. Lenny Koh, Stuart Maguire
The Internet Cultural Era (ICE) has driven many Small and Medium sized Enterprises (SMEs) in the UK and Ghana to adopt ICT technology. This... Sample PDF
Drivers and Barriers for ICT Development
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Chapter 13
S.C. Lenny Koh, Stuart Maguire
Although Boeing and Rolls-Royce are operating in the same aerospace industry sector and use ERP, but the ways that they implemented their systems... Sample PDF
Current Developments and Diffusions in ICT: ERP, SCM, CRM
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Chapter 14
S.C. Lenny Koh, Stuart Maguire
Globalisation, modernisation and streamlining paradigms have driven many enterprises to use various e-Technologies in order to improve the... Sample PDF
E-Technology: E-Business, Intranet, Extranet, Internet
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Chapter 15
Knowledge Management  (pages 285-296)
S.C. Lenny Koh, Stuart Maguire
Knowledge.Management can be defined as the critical issues of organisational adaptation, survival and competence against discontinuous environmental... Sample PDF
Knowledge Management
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Chapter 16
S.C. Lenny Koh, Stuart Maguire
In information terms, security can be defined as the processes of ensuring that private information remains private and uncompromised in an... Sample PDF
Security and Risk Management
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Chapter 17
S.C. Lenny Koh, Stuart Maguire
Commercial airlines face an extremely challenging operating and competitive environment. To remain in business they must comply with ever-changing... Sample PDF
Improving IT-Enabled Sense and Respond Capabilities: An Application of Business Activity Monitoring at Southern International Airlines
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Chapter 18
S.C. Lenny Koh, Stuart Maguire
This case describes how banking in India has changed after developments in information technology in the last decade. The new private and foreign... Sample PDF
Competing in the Age of Information Technology in a Developing Economy: Experiences of an Indian Bank
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Chapter 19
S.C. Lenny Koh, Stuart Maguire
The Telecommunications Act of 1996 opened competition in the telecommunications market in the U.S. and forced the incumbent telecommunications... Sample PDF
Developing a Telecommunication Operation Support Systems (OSS): The Impact of a Change in Network Technology
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Chapter 20
S.C. Lenny Koh, Stuart Maguire
Nazar Group of Companies has been a leading producer and distributor of cookies, crackers, cakes, chocolate, and other products in Turkey for more... Sample PDF
Nazar Foods Company: Business Process Redesign Under Supply Chain Management Context
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Chapter 21
S.C. Lenny Koh, Stuart Maguire
The TeleDoc project of Jivan Institute has combined mobile commerce and the ancient concepts of Ayurveda for treatment of rural residents of India... Sample PDF
The Expansion Plan of TeleDoc: What and How Much of the Technology Employed is to Change?
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Chapter 22
S.C. Lenny Koh, Stuart Maguire
E-government is becoming a reality rather than a theoretical ambition; however, achieving the e-government anticipated benefits is still illusive... Sample PDF
Process-Aware E-Government Services Management: Reconciling Citizen Business, and Technology Dynamics
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About the Authors