Impact of Modern Technology on Productivity in the Financial Services Sector
Abstract
The financial services sector utilizes modern technology to enhance the productivity of its operations. Advanced technology can improve the sectorial competency, operational efficiency, customer satisfaction, and employees’ productivity, which in turn increases the productivity of the financial services sector. Technological skills, customer satisfaction, operational efficiency, and employee productivity are independent variables, whereas the financial services sector’s productivity is the dependent variable. The study will benefit academia, managers in the industry, and the financial services institutions. The literature review will make use of the relevant secondary sources published between 2013 and 2018. The study will use a questionnaire in carrying out surveys. The questionnaire will be composed of both open and closed-ended questions. A sample size of one hundred participants will be randomly selected from stratified strata. The collected data will be cleaned and coded. Excel spreadsheets and SPSS will be used to analyze the data. A regression analysis will be used to determine the relationship that exists between the independent and dependent variables. The analyzed data will be illustrated using tables, charts, figures, and described using words.
Title of the Proposal
The financial services sector is volatile because of the changing market trends and competition, hence enhancing their productivity. Institutions that are keen on thriving in the industry have to improve their productivity. The institutions could improve their productivity by improving their operations’ efficiency, utilizing efficient systems, generating practical resources, and considering allocating the funds. Implementing proper policies and procedures results in positive performance for institutions operating in the financial services sector. Employees are an essential part of companies operating in the financial services sector. Human capital is in charge of planning and implementing continuous improvement strategies to improve a company’s productivity.
Innovations in technology can enable financial services companies to enhance their productivity. Modern technology is necessary for enabling the discovery of knowledge, improve the employees’ skills and enhance the competencies of the human capital. The enhancement of employees’ skills set allows the companies to attain their goals and objectives, hence achieving success in their operations. Research shows that improving the skills and competencies of human capital results in customer responsiveness and higher employee and customer satisfaction, which corresponds to higher profit margins and productivity.
Institutions in the financial services sector should use modern technology in dealing with concerns on their productivity. Product and process innovation are concepts that could improve service delivery, enhance the efficiency of operations, and minimize the time for carrying out transactions for the financial services sector. Modern technology can be used in enabling the implementation of strategic plans hence realizing the strategic goals. For the strategic goals to be attained, the techniques have to consider end-users’ needs and expectations. The study’s objective is to explore the effects of modern technology on the productivity of employees in institutions in the financial services sector.
Problem Statement
The financial services sector players should have high productivity to enable the institutions to serve their clients effectively. However, employees’ productivity may be hampered by several factors, hence affecting the general productivity of the companies in the financial services sector. Therefore, modern technology can be used to improve employees’ performance, which would consequently enhance the productivity of the financial services sector.
Purpose Statement
This study will be to understand the impact of modern technology on the productivity of the employees in the financial services sector in the Bahamas. At this stage in the research, the productivity of the financial services sector will be defined by its effectiveness and ability to satisfy end-users’ needs and expectations and improve on the company’s bottom line.
Research Questions
Research questions will be instrumental in understanding the extent of modern technology’s impact on the productivity of the financial services sector. The questions will determine the factors that affect employees’ productivity and gauge the effects of modern technology on the productivity of human capital. The study’s potential participants will be required to answer three questions about advanced technology and its perceived impact on their productivity, different areas in the sector, and satisfaction. The questions are:
- What modern technology has impacted on your productivity?
- What areas of the business make use of modern technology to improve the institutions’ productivity in the financial services sector?
- How satisfied are you with your employer’s utilization of modern technology at your workplace?
Theoretical and Conceptual Framework
The independent variables are employees’ technological competency, operational efficiency, and customer satisfaction and employees’ productivity, whereas the dependent variable is the productivity of the financial services sector.
Figure 1.1 The Conceptual Framework
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Dependent variable Independent variables
Significance of the Study
The study’s findings will benefit professional scholars, institutions of learning, financial services institutions, and students. The productivity of the financial services sector relies on the effort of human resources. Human capital faces a myriad of challenges in carrying out their roles in the financial services sector. Customer satisfaction and operational efficiency are essential factors in the productivity of institutions in the financial services sector. To attain customer satisfaction and improve operations efficiency, the employees should aspire to use modern technologies. The study aims at determining the impact of advanced technology on the productivity of the financial services sector. Therefore, education will equip the players with information on enhancing their productivity using modern technology, which would result in customer satisfaction and higher profit margins.
Delimitation
The study will focus on the human capital segment of the financial services sector. The researcher will consider the impact of modern technology on the productivity of employees in the Bahamas’ financial services sector and relate it to the general productivity of the industry.
Review of the Literature
Modern technology has changed the operations in the financial services sector, hence improving its productivity. The output of processes defines productivity compared to its inputs (Jesse, 2015). The outputs can be measured by the services or products produced by a single employee or a specific system. In contrast, the input is defined by time, money, or energy invested in order or person over a measured period. Productivity is measured by the ratio between the output and input: total output of services divided by the total amount of used resources. A high outcome in the rates points towards high productivity (Ameme & Wireko, 2016). The process of determination of productivity varies in different sectors. The financial industry has a different process compared to other industries.
In the financial services sector, the output is defined by the national accounts and production approaches. The national accounts strategy considers the amount of profit and income generated from accounts as outputs, whereas the production account considers the physical and human resources as inputs (Leong & Sung, 2018). The moderate approach assumes that financial services institutions such as banks serve both lenders and borrowers. The productivity of different business areas can be used to determine the efficiency of the financial services sector, hence eliminating unnecessary processes. Employee productivity is an essential consideration for players in the financial services sector (Obeng & Mkhize, 2017). Since staff members are involved in all activities of the company, employees’ productivity affects different aspects of the financial services sector, hence its general productivity.
Currently, there exists more than ten financial services institution in the Bahamas. The high number of companies in the financial services sector has resulted in a stiff competition (Singh & Kamlesh, 2013). Companies face challenges in differentiating their products and services; hence it is quite impossible to increase their market shares. Companies in the financial services sector are continuously seeking new ways to beat their competitors, majorly by differentiation. As a result, modern technology is a viable method of differentiating the company’s products and services.
Modern technology can be used to enhance the company’s operations and improve its efficiency, hence improving the sector’s productivity. Technology has influenced the changes that are evident in different areas (Skinner, 2014). For instance, alarms can be used to detect impurities in the air, hence saving human life. Consequently, in the financial services sector, software and smart devices have made it easy to manage essential equipment that aids in running operations in the offices. In the recent past, the section has experienced immense technological innovations.
FinTech is a common buzz word that exists within the financial world. Modern technology in the financial services sector is keen on improving customer experience and enabling the companies to maintain their corporate image. Research shows that three-quarters of the financial services sector will have to use technological innovations for improved productivity (Teigland et al. 2018). Businesses which are embracing the disruptive FinTech have improved their productivity and become customer-centric.
Modern technology can improve existing products and processes, create new, or modify existing products and processes. Technology has changed the manner of conducting business (Yadav & Garima, 2015). The financial services sector has changed how it offers services and products to its consumers. Online banking is an innovation that has resulted in increased convenience for customers. In the past, banking was a non-virtual practice that demanded people travel to towns to withdraw, transfer, or deposit their finances. However, traditional banking is becoming obsolete as more people are turning to online banking.
Online banking is a modern technology aspect that allows people to deposit, withdraw, and transfer money to their financial services institutions without physically visiting financial services institutions. Subsequent technological innovations have enabled people to pay for goods and services from their homes (Central Bank of The Bahamas, 2018). The sophistication in the financial services sector has allowed people to manage their finances at the push of a button. People no longer visit brick and mortar buildings when they are seeking financial services. Bank accounts can be accessed using computers, tablets, and phones instead of speaking with staff in the financial services sector. Online banking is a technological disruption that has impacted the service delivery and productivity of financial services institutions and customers.
Technology is instrumental in improving security in the financial services sector. Fraud is a typical security concern for the financial services sector. In the past, machines and humans had to work hand in hand to detect and investigate potentially fraudulent activity (Yadav, 2014). The machine systems would identify potential fraudulent activities without pointing out the exact account. The financial services staff would then be expected to evaluate the machine’s information to determine the presence of fraud in a specific account. However, the technological revolution existing in the financial services sector has enabled machines to detect and identify fraudulent activity.
Artificial intelligence is currently being used to prevent the reoccurrence of fraud in financial institutions. Artificial intelligence goes beyond humans’ design capacity to calculate and predict fraud trends in a specific victim. Predicting possible fraud or identifying existing cases can be completed at a faster rate, using artificial intelligence (Lerner & Tufano, 2015). Artificial intelligence is a modern technology that has improved productivity and reduced the amount of human capital in the fraud detection teams.
Modern technology is essential in enabling the growth and development of human capital. Social skills, experience, and competencies are crucial to service delivery, hence enhancing a company’s productivity. Modern technology has promoted staff training and skills acquisition, therefore increasing profitability and customer satisfaction. Human intellectual capacities have enabled the process of delivering excellent quality products and innovate existing services.
Intelligence and skills allow employees to offer varied services to meet the needs and expectations of different customers. Human resources who are well trained can effectively use technology and deliver new customizable services to clients. Human capital is essential in a sector’s general efficiency and productivity (PricewaterhouseCoopers, 2019) PricewaterhouseCoopers. Therefore, financial services institutions should aspire to improve human efficacy for increased growth and profitability. Growth and profitability are significant factors that point to the productivity of a company.
Operational efficiency and improved quality of services can be achieved using modern technology. Innovation is a core competency for most financial services institutions. Operational efficiency can be attained by implementing change in the technical aspects (Schüffel, 2016). Technological innovations can be achieved by generating new or modifying existing processes or products to improve operations’ efficiency. New or significant improvements in the methods have the potential of increasing the effectiveness of services. Operational efficiency could be achieved by changing the techniques, software, or equipment used in carrying out specific financial processes.
Process innovation has been reported to reduce the cost of operation, which is beneficial to companies in the financial services sector—increased operational efficiency results in decline in service delivery time—productivity results in increased flexibility in operations and superior service quality (Masso & Vahter, 2013). Technological innovations can change the process of carrying out business, hence improving customer service quality, which subsequently results in an increase in market share by attracting new customers (Singh & Kaur, 2013). Process automation is an important technological innovation that has transformed the financial services sector by enhancing firms’ sustainability. Electronic documentation and dissemination of commercial communication have increased the efficiency of business operations.
Modern technology has resulted in improved employee productivity. In the financial services sector, employee productivity is defined by the value added by their operations. There exists a positive correlation between modern technology and employment productivity (Aldridge & Krawciw, 2017). Technology has influenced the processes and virtual products to enable digital service delivery to enhance the financial services experience—product innovation results in improved performance in the labor force. Automated teller machines, telephone banks, the electronic transfer of funds, mobile and internet banking, electronic platforms, and personal computer banking are some of the existing product innovations that have improved human capital productivity in the financial services sector.
Branch networking, electronic wallets, electronic alerts, and data interchange are current technologies that have changed carrying out activities in the financial services sector. Process innovation similarly improves the productivity of human capital (Tasca, Tomaso, Loriana & Nicolas, 2016). Currently, the process of disseminating financial communication, banking, and documentation is electronic. The method of innovation has resulted in a decline in efficiency, which promotes employee performance. Research shows that process innovation has a higher impact on employees’ productivity than product innovation (Mishra & Jha, 2014). Employees who have received sufficient training are better equipped to handle all challenges hence superior productivity.
Trained employees are comfortable with the technological innovations which have disrupted the financial sector hence increasing their productivity. In the financial services sector, innovation products boost employee’s morale, which subsequently improves their productivity (Kaur & Bhatia, 2016). Proper use of technology enhances labor quality, hence the need to complement existing processes with technology. Therefore, technology and human capital should coexist to attain effective utilization of resources, consequently improving the financial services sector’s general productivity.
Modern technology is instrumental in improving customers’ satisfaction. Customer service is a significant area of the financial services provider that has been affected by advanced technology. During the past century, a company in the financial services sector needed a team of customer service personnel to serve its clients (World Bank Group, 2017). The highly-trained customer service team was charged with handling all money problems and helping clients who encountered any challenges. Currently, chatbots are being used to serve customers.
Chatbots are an artificial intelligence technological innovation that has evolved. Customers interact with chatbots and have been correlated to better performance using less human touch hence improved productivity (Tasca, Tomaso, Loriana & Nicolas, 2016). However, some customers prefer human touch as it enables them to solve their multifaceted challenges and customize their needs.
The real technological disruptions have improved the productivity of the sector. Modern technology has changed the standard way of carrying out operations in the financial services sector (Rabushka, 2014). The progress in technology changes has rendered some aspects of the business obsolete. Modern technology has necessitated the upgrading or complete removal of old technology and human capital, hence improved productivity. Machines are currently smarter than the people who designed them. As a result, processes are more efficient, faster, and more economically viable.
Technology has reduced the cases of errors that support the evidence of machines’ superiority compared to humans, hence improved productivity. Therefore, institutions that hope to survive and even thrive in the financial services sector have to use technology. Financial technology promises improved effectiveness and enhanced productivity of processes and systems (Aldridge & Krawciw, 2017). However, modern technology has resulted in less customer satisfaction as some customers value a human touch, an aspect which is much reduced with increased technological innovations in the sector.
Summary Conclusion
Intuition, customization, and improvisation are aspects of the financial services sector that still require human intervention. Therefore, an institution should aim at finding a sweet balance between machines and human capital to enable the harmonization of processes and systems in the sector (Tasca, Tomaso, Loriana & Nicolas, 2016). The correct balance between machines and humans will allow continued revolutions in the industry to benefit both the financial institutions and their customers.
Research Design and Methods
A descriptive survey will be used in this research. Descriptive research will be used to illustrate the trends that cut across the target population. The descriptive research design was chosen because it gives accurate information that can be generalized to the whole community (Aldridge & Krawciw, 2017). The study will consider financial services institutions in the Bahamas. Four major financial institutions in the Bahamas will be regarded as in the research. The research will use questionnaires in carrying out surveys. The study will make use of a survey. Questionnaires that will be used in the survey will be sent out to respondents.
The human capital working in four popular financial services institutions in the Bahamas are the target population. The sample population is one hundred employees. The survey will make use of the stratified random sampling method. The stratified sampling technique involves categorizing the general population into smaller homogeneous groups referred to as strata. The strata will be composed of members having similar characteristics. The random samples that will be used in the survey are then selected from each stratum. The stratified random sampling method was chosen because the sample population used in the survey captures all characters of the general population.
Data Collection Instrument
A questionnaire will be used as an essential data collection tool. The questionnaire will have both closed and open-ended questions. The survey will be sent to the randomly selected financial services sector employees. The participants will be expected to answer all questions contained in the questionnaire. The survey will consider employees from varied departments that will give sufficient information on their role-related products and processes and how each role uses technology. The questionnaire that will be used in the study will be modified from existing research. The questionnaire will be tested to select participants to ensure their validity and reliability. The fine-tuned questionnaire will be given to participants between August and September.
Data Collection
The participants to be used in the survey will be randomly selected from all the four financial services sector institutions chosen to be used in the study. The different employees will have varied capacities with business processes and products. The participants will answer questions that explain the extent of usage of technological advancements in their specific roles. The surveys will be available both online and offline. Participants who opt for online surveys will receive email alerts on the dates of closure of the surveys. The people who choose offline surveys will receive text messages to act as reminders to fill in the surveys. The participants will be given a week to submit their answers, after which the survey will be closed. After the closure of the survey, data analysis will commence.
Validity and Reliability
Pretesting of the research instruments will be carried out in the financial services institutions in the Bahamas. Fifteen participants will be conveniently selected and given questionnaires before carrying out the survey. Validity defines the accuracy of inferences with regards to the results of research. The questionnaire will be given to two groups of experts. The first group of experts will access the concepts being analyzed in the instrument, while the second group will ensure that the items are accurate. After five days, the same participants will be given the same questionnaires without prior notice. The feedback given in the first and second tests will be compared. The differences in the input will be evaluated to determine the coefficient of variation between the two tests.
The sources of variation will be analyzed to rectify all ambiguous and unclear questions in the instruments. The people who will participate in the pretesting of the instrument will not be considered in the survey. The tests will be used to ascertain all essential aspects that have been captured in the research instruments. The pretested instruments will be clear and straightforward hence valid. Consistency in collecting data from the repeated tests will be used to determine the instrument’s reliability to be used in the survey.
Data Analysis
Data collected from the questionnaires will be cleaned and edited. It will then be coded and put under further analysis. Data will be analyzed using SPSS. Descriptive methods will be used in data analysis. The analyzed data will be presented using frequency distribution tables and regression analysis. The data analysis will be used to facilitate an explanation and description of the findings of studies. Quantitative data will be subjected to an Excel spreadsheet to generate frequencies and percentages, illustrated in tables and charts. The qualitative data, on the other hand, will be represented using words and observations. Descriptive statistics will describe the years of experience of employees in the financial services sector, among other essential characteristics.
Projected Findings
The projected sample size of one hundred participants will cut across different management levels, as shown in the table below:
Table: Sample Size
| Category | Sample Size | Percentage (%) |
| Top Management | 25 | 25 |
| Middle Management | 50 | 50 |
| Lower Management | 25 | 25 |
| Total | 100 | 100 |
Institutions in the financial services sector should aim to maximize the amount of technology usage in their workplace. Modern technology has the potential to improve the efficiency of operations, improving customer and employees’ satisfaction. Generally, the enhancement of employees’ productivity, improved employee productivity results in enhanced sector productivity, results in better capital utilization, and increased profits.
Preliminary Suppositions and Implications
The study will contribute towards the identification of relationships that exist between technology, customer satisfaction, employee productivity, and the general productivity of the financial services sector. The projected findings show that management should be keen on embracing modern technology. The study will inform the control of the best techniques used in the financial services sector to ensure that the institutions achieve their strategic plans. The research will inform stakeholders on essential factors that impact employees’ productivity, hence pointing towards existing gaps.
The findings will contribute academically by creating content that can be used in debates. Managers working in financial services institutions could use the resource to guide their decision-making process. Insights from the study could be used to implement interventions that aim to improve the competency, operational efficiency, customer satisfaction, and productivity of staff, which in turn enhances the productivity of the financial services sector.
Conclusion
In conclusion, modern technology is essential in improving the productivity of the financial services sector. Advanced technology improves efficiency, customer satisfaction, and employee productivity. FinTech is a common word in the business world, pointing to the disruptive nature of technology. Companies that are keen on striving in the financial services sector should embrace technology. Modern technology can be used to increase the productivity of the financial services sector hence growing its profits. Therefore, the management of institutions in the financial services sector should support the use of technological innovation.
References
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Appendix
Survey Questions
This questionnaire establishes the role technological innovation plays in the productivity of a financial service sector employee. Technological innovation introduces new or significantly improved processes (methods of delivering a service) and products.
Please tick (√) or provide the appropriate responses in the boxes or spaces provided to each question.
Gender [ ] Male [ ] Female
Age [ ] 18–29 [ ] 30–39 [ ] 40–49 [ ] 50–59 [ ] 60 and above
Education [ ] University [ ] College [ ] Polytechnic Other
- How many institutions in the financial services sector have you worked for? ____________
- Please state your current position __________________________________________________
- How long have you worked for these institutions? [ ] Less than 1 yr. [ ] 1–3 yrs. [ ] Over 3 yrs.
- Your employer’s range of services is consistent with the latest technological innovations in the financial services sector.
[ ] Strongly agree [ ] Agree [ ] Neutral [ ] Disagree
- Has your institution significantly improved the functionalities of its product(s) or introduced new product(s) since you joined as an employee? [ ] YES [ ] NO
- Has your institution significantly improved or introduced new operational processes since you joined as an employee? [ ] YES [ ] NO
- How satisfied are you with your institution’s current product(s)/services and procedure (s) in performing your role?
[ ] Very satisfied [ ] Satisfied [ ] Neutral [ ] Not satisfied
- Indicate whether innovation has affected your institution positively in each of the following areas.
- As a bank employee, do you think technological innovation has impacted positively on your productivity?
[ ] High impact [ ] Moderate impact [ ] Less impact [ ] Neutral
- As the institution’s employee, what twomain advantages do you consider technological innovation has brought to your professional daily activity?
[ ] Efficiency
[ ] Motivation
[ ] Quality of output
[ ] Speed to perform the role
[ ] Flexibility
- How has innovation impacted on your institution’s profitability over the last two years?
[ ] Positively [ ] Negatively [ ] Neutral [ ] Don’t know