Essay: ERP Systems' Role In Managing Business Processes For Banks - National Australia Bank Case Study.

You will be required to conduct research on AIS/ERP Systems for your client.

The report talks about how Enterprise Resource Planning helps in processing the business and managing the requirements of the business and the system. It includes suggestions to avoid the risks and threats that are generally raised in business. The report talks about how banks functions and operates as a business. It is a long assignment covering eight topics that focus how banks manage to run their business and what risks it has to face. It gives knowledge on how the requirements of business should be fulfilled so that banks can stand in the expectations of its customers.

National Australia Bank has been taken in the task. It is situated in Australia and is considered one of the largest financial institutions serving thousands of its customers since it establishment. The bank was founded in 1982. The report shows how NAB has managed to flourish in all these years and how effectively it has been working since ages. It is one of the largest banks of Australia and is known to be the most efficient one. The report presents the picture of National Australia Bank and how ERP system software works for the betterment of business.

The business process of any company has to be effective. It helps in the functioning of business. The process involves proper accounting, maintaining finance, customer service and support and number of services. ERP is one of the important and effective systems of functioning used in any business (Jörgens, 2013). The banks of Australia use Enterprise Resource Planning in order to process business. Every industry functions differently. Like the National Australia Bank (NAB) uses ERP approach to process the business. The services provided by the bank are vast in number as it provides services like customer support, withdrawal/ deposit center, enquiry and passbook section, etc. the effective resource planning of the bank helps it to attract number of customers. This increases their value by serving large number of society. For example, the process takes place when customers open their account in the bank and follow all the regular activities like depositing, withdrawing and transferring in monetary terms. The bank is responsible for satisfying its customers to the maximum by providing support and solutions to their problems. If the customers are satisfied the bank is able to open many accounts in order to serve its customers. This way bank manages to attract number of customers to its branch and raises its value in the country. The business process handles all the responsibilities so firmly that it manages that its customers does not face any problem or issues. They handle the important monetary transactions using various developed software which reduces the chances of risk or errors (Blundell-Wignall, Atkinson and Roulet, 2014). This business process gives good results to the bank. The process of business also involves targeting the required goal working in the team. The members of the National Australia Bank work in group which helps the bank to perform their responsibilities in lesser time and giving more output. More than one member is assigned on the same position. This enables them to serve many customers at the same time and helps them in solving their issues related to bank services in an appropriate manner. The business process therefore seizes the wrong practices by providing all the facilities to its customers (Cavusgil et al, 2014).

Requirements of Business

(Source: https://www.tuicool.com/articles/VfUZbu)

Any bank that serves number of customers has certain requirements. These requirements are the basic needs that they want to stand on the expectations of the public. National Australia Bank (NAB) is one of the largest banks of Australia which serves thousands of customers. Therefore it is obvious that is requirements are vast and excessive. Bank requires ERP system now days to give better services to its customers (vom Brocke and Sinnl, 2011). They need innovative technology to perform technical tasks like maintaining the cash record that is withdrawn or deposited and credited and debited transactions that take place in the form of transferring money through net banking, credit/ debit card, or any other online services. National Australia Bank (NAB) has its own application software that gives easy access to its customers to keep a track on their accounting activities. National Australia Bank (NAB) requires good and advanced technologies to manage the records and more resources to provide facilities to its customers. The major requirement of the bank is to reduce its cost effectiveness and increase its sales. To fulfill these requirements of bank the major role is played by ERP. It helps the in collectively enabling the business information through its integrated elements. Enterprise Resource Planning involves planning to fulfill the business requirements so effectively that it can facilitate the growth of the business by not letting it to have lack of resources (Beyea, 2011). Hence, National Australia Bank uses ERP system to facilitate its growth and to establish new development. The requirements of the business involves satisfying its customers and growing of banking sectors by using latest technologies. The planning to fulfill these requirements is done in proper manner by the professionals who are aware of the kind of strategies one should make and implement. This makes an easy growth for the banking sectors also making it suitable for its customers. Resources like automated teller machines, cash sorter machine, PIN pad, ATM machines, drive- up systems, entrance control systems, etc. are very essential tools used by the banks and also in National Australia Bank (NAB). To installation and permission to these resources is given by the government. These resources make it easy for them to run the business effectively and efficiently and it gives an easy access to serve its customers. Seeking new banking equipments is not that easy as it seems. Bank has to go through many formalities to get the permission of installation (Haldane, 2011).

Requirements of System

Every bank needs systems to acquire profits in business. The commonly used system is ERP system. This regulates the functioning of banking sector by working on the integrated elements and presenting them as a whole. Working with Enterprise Resource Planning system is not an easy task. The method of ERP is complex. In order to understand how ERP system helps the bank in working it is necessary to communicate with the professionals of engineering. There are number of system requirements followed in banks like NAB that are discussed below:

Financial and Accounting

Bank needs system to maintain the financial transactions and accounting software to maintain records. Financial and accounting is considered as one of the important aspect of Enterprise Resource Planning system. This aspect is seen functioning on a daily basis in banking sector. Finance is the heart of bank. Finance and accounting is a commerce used term that deals with the monetary transactions. The use of ERP system helps National Australia Bank to convert complex transaction into simple ones making it easy for the employees of the bank.

Inventory Transactions

Enterprise Resource Planning has an excellent approach towards managing the inventory. The transactions made in NAB based on stocks are managed by ERP in such a manner that it does not cause further problems in transactions related to inventory. The transactions are manageable and can be changed as and when needed. ERP in such cases becomes an effective source of planning how to manage these inventories related to banking sector. It helps the business in operating over stocks and reduces the chances of making mistakes by recording the proper entry. The need of system in inventories transaction is very much beneficial as it creates an easy platform for the business to grow.

Secure transactions and 24*7 data base

ERP system is a satisfactory source for customers as it provides 27*7 facility of keeping track on their banking records. It provides the customers with full security over their accounts and any mishap done to in the back is barred by bank itself. This facility draws the customers towards bank and increases its sales. Total security is measured in National Australia Bank where security agents are hired for keeping check over the bank. They are qualified and trained persons who can easily get through the situations such as robbery, theft, etc. 24*7 data base becomes a satisfactory level for the account holders as they can check the details of their account at any time without having to go to the bank. 24 hours service facility provided to customers makes it easy for them to trust the bank as they can solve their queries at anytime and they are ready to help.

Customer service management

ERP system helps the bank in managing customer's services. The service mainly needed by customers include depositing or withdrawing large amount of money, opening and closing of accounts, cheque bounces and other related issues. ERP therefore to maintains such problem keep record of the transaction made by the customers from the being tool the end. The software also allows banking employees by providing them the way facility of opening and closing the accounts. Customer service satisfies the customers by solving their problems that occur in their bank accounts. The customers of National Australia Bank are advantaged by ERP system as their records are safely managed in the hands of the bank and they can ensure about anything by going to the bank or visiting their logging account over internet provided by bank through ERP (Haddara and Zach, 2011).

The software and vendor selection in the bank is one if the very essential things without which it becomes difficult for the business to operate. In order to have proper availability of inventory, resources, information or data, it becomes difficult in such cases due to the lacking in selecting right thing for the company. The software is used for running the business in a unique manner differently from others. The software are made and designed by the professional engineers who works on advance level and can develop software that can be beneficial for the company completely. The software needs to be timely updated to bring new changes in the business process. Software and vendor selection is a technological way of working in the business. It brings changes in the banking function whenever needed. Software and vendor selection has to be wise as it is that important part of business where all the major decisions come from. In National Australia Bank these technologies have given a significant approach to banking sector by allowing employees to work in less time than doing manually. The software and vendor selection in NAB has helped the bank to serve its customers. The bank uses ERP system to regulate its actions. The software helps it to get an easy approach towards business by making proper decisions within time. ERP has given a new platform to business by giving the collective information. This system covers all the areas as the software is designed in such a form that it manages all the facilities of the business.

(Source: https://docs.oracle.com/cd/E37017_01/doc.1115/e22658/F424213AN100FF.htm)

The diagram above shows how the process of software selection and vendor selection is done in banking sector. It depicts the supplier/ vendor who give number of authorities to the business.

There are many ways in which Enterprise Resource Planning software can be used in banking sector. It depends from bank to bank as which facilities it desires for and accordingly the ERP software is developed (Al-Dhaafri, Yusoff and Al-Swidi, 2013). This ERP software is used differently in bank. Some of its uses are discussed below:

Creating security

ERP software is especially designed software which has the facility of creating security over the bank activities. The software controls the working of the business through login and password, which restrains other users to use services that National Australia Bank provides (Goldstein, Chernobai and Benaroch, 2011). The security keeps the business operations protected. It protects the bank from theft, robbery, loot, etc. It avoids the threats of misleading important information of the business. The chances of mishap reduce using the ERP software. It maintains the important and confidential decisions from being out of the business (Laudon and Laudon, 2016).

Incorporative communication

To have incorporative communication in the bank is one of the effective ways of communicating with members of organization. The use of ERP software helps the bank in managing the work of business by not allowing it to repeat because of communication. Incorporative communication builds the relation among the employees (Vrancianu and Popa, 2010). This helps in creating harmony and reduces the chances of conflicts. It serves with its incorporative behavior not only to the employees but also to its customers. Having informal communication in business develops the relationship and therefore the employees can easily share their problems with other employees. This will make easy to find the solutions also (Lin, 2011).

Employee’s productivity and efficiency

The more the employee will work the better the output will be generated in no time. Banks like NAB have efficient employees who work for the given time period and are able to manage their work on time. These employees are trained and encouraged to put efforts in the business. They are taught to be productive at all times. Employees are the essential part of business, in order to keep them interested in the business they must give them incentives and appreciate them for their good work (Silvestro and Lustrato, 2014).

The diagram above shows the ways how ERP system is used. The sectors that focus on Enterprise Resource Planning include finance, supply chain, inventory, planning, service, project, etc (Chen et al, 2012).

An Enterprise resource planning software is highly efficient, given a condition that it is implemented fittingly with the environment of the organization. Here we talk about cost efficiency, operational efficiency, scalability and security (Cezar, Cavusoglu and Raghunathan, 2010). The whole process is proficient throughout. Operational efficiency- with the implementation of ERP software, the need to enter the data manually and repeatedly reduces to a great extent. This reduces the work load on the employees and the need for more people in the organization (Sahdat et al, 2011). The bank can focus on its own work irrespective of taking care of the data of its users, as this will be taken care by ERP system (Monk and Wagner, 2012). The ERP system allows the organization to think in a wider aspect of operation, cost, productivity etc. It reduces the burden on the organization. The synchronization in the operations of bank is well performed. This technology has given the benefit to both, the bank (organization) and the customers. Hence, we can easily rely on this software as it provides high level of efficiency when implemented (Abou-Moghli, Al Abdallah, and Al Muala, 2012). The following can be kept in mind while discussing the level of competence of the technology execution:

Cost efficiency- If the system is integrated properly, it can prove to be highly cost-savvy. The return of investment (ROI) of the bank will upturn to another level. Since there will be no delay of work hence decisions can be made faster, which will be fruitful to the bank.

Scalability- the ERP system enables to add as well as remove the number of users according to the demand of the organization. In a bank, there is no surety of the count of the users; hence a system which is well efficient to keep this amount of data is required. This functionality is very well provided by the ERP system as its scalability feature (Angelakopoulos and Mihiotis, 2011).

Security- this is highly secured system. There are very less chances of breaching into an ERP system and steal the data of the users. Considering it as the case of bank, the details of each and every user is very crucial and sharing or hacking of this information will prove fatal to the bank.

Potential risks of the business relates to the risks that can hamper the business process and make its downfall. These risks can create a big loss for the firm. Some risks that are seen in an organization are mentioned below (Ula, Ismail and Sidek, 2011):

Appointing of employees:

We must appoint the reliable and efficient employees who can effectively work for the welfare of the company. Appointing the employees without knowing their background can be a harmful step. The employees must be examined otherwise hiring them to work for bank can be chargeable for the company. The employees must be willing to work and should be honest towards the activities (Chou et al, 2014).

Improper decisions regarding software

The decisions regarding security must be confidential else it can cause great loss to the business if they come in the wrong hands. Making of improper decisions can really be hazardous and can impact wrongly on the company’s growth. It is highly influential for the business to avoid making of the decisions that can create loss (Sahdat et al, 2011).

Ineffective motive to implement software

Software that is implemented in the business must function correctly. Incorrect working of software can risk the business process. The ERP system that is designed to provide a platform to these banks must be motivated and implemented correctly. Improper implementation of software can lead to greater risks (Vrancianu and Popa,  2010).

Customization

Bank use various customized software that provide a unique manner of working to them. This customized software should be beneficial for the organization else it can turn out to be a security risk for the business. The customized areas give limited access to other works. It is not vast and effective. This becomes a hurdle for the bank. It is better to use software developed by professionals than to customize it for a unique purpose. This will avoid the chances of risks that develop due to software’s incapability (Gupta, Agrawal and Yamaguchi, 2016).

Revelation of sensitive data

In many large organizations the decisions made or planned by the professional and the authorities have chances of getting released. It is important for them to be alert while planning strategies for the company. The sensitive data must not be shared with everyone. It should be kept confidential. These sensitive data are the important information that should not be leaked. Leaking of such information can be really dangerous for the organization and will also impact on its reputation (Abou-Moghli, Al Abdallah and Al Muala, 2012).

These factors show that running a bank is not an easy task. It gives an insight in the risk factors involved in the business process. These potential risks are threats to business and can be affect the growth of the business. In order to avoid these risks, the further mentioned risks must be followed (Biener, Eling and Wirfs, 2015).

• Banks can hire tight security all over by calling one of the best security agents from all over the world. These agents are well trained and skilled and know the procedure of maintaining the security. Calling them for taking care would be a good decision that any bank can take.
• Also the banks can have a separate control room for keeping an eye on each and every activity performed in the business. This will help the banks to get control over the illegal practices performed in the business. Looking at the footage will be an effective way to get hold of the culprit, if any (Bessis, 2015).
• In order to keep a check on who is coming in the bank and what are they carrying, they can also appointed guards with checking system machines which will help them to catch the person carrying any tool which they are not supposed to. Using these methods band can lower the chances of risk rising in the banking sector.
• The vendors of the banks must be reliable one so that they cannot think of pressurizing the bank for money again and again (De Jonghe, 2010).
• Banks must sign a contract with the employees where all the policies of the bank are mentioned. This will keep the employees intact and bound with the policies and they will not think of creating any issues to the organization.
• There should be an appropriate use of the resources. Whatever the resources an organization takes must have the record. This will ensure the bank authorities that the resources are used appropriately without stealing them (Arif and Nauman Anees, 2012).
• The ERP system software that is used for managing the business must be updated on a timely basis. This will ensure whether the system is corrupt or not.

Conclusion

The report concluded that the risk is seen in the banks can be mitigated if the ERP system is updated and works as per needed without any faults. The report depicts how organization has to manage each and every part of business in order to make its customers satisfied. The organization here is the banking sector which talks about National Australia Bank of Australia, which uses Enterprise Resource Planning system software to regulate its business. The report also talks about the potential risks that are seen in the organization and suggest ways to get out of those risks. The report is an overview telling about the ways of working of NAB and how much it is important for them to keep their customers satisfied. The working of ERP system is something that is talked all through the report as it is the essential unit of this report. Hence, it provides information on how ERP system software helps in business process with the example of National Australia Bank

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