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CHAPTER I

THE PROBLEM AND ITS SCOPE

Introduction

It is an undeniable truth that ever since its appearance, technology in its modern

sense has been useful to the people, the environment and the society as a whole –

economically, politically, and even culturally. Karehka Ramey (2012) stated, “society

has a cyclical co-dependence on technology.” Humans use technology for

transportation, communication, education and learning, and to be able to live a

financially stable and comfortable life. Their daily life, needs, demand and dependence

on technology keep on increasing. Technology is continuously evolving as time passes

by. Humans then adapt to this change in order to survive. Similarly, banks must also

validate the use of technology in order for them to equally stand and compete against

other banks in this global world.

Banks and other financial industries play an important role in the effective

allocation of resources and job creation. Also, one of its responsibilities is to uphold and

boost the economy of a country (Roghanian et. al, 2012). However, the progress in

technology and globalization of financial services is influencing competition. Due to the

development of technology, bank’s superiority in information is declining, entry barriers

are deteriorated and new competitors have emerged (Dangolani, 2011). Hence, banks

are imposed to find new basis to build and protect its competitive position and improve

the quality and productivity of their own products and services. Productivity is a vital
 2

element for operation of organizations in global and competitive condition. Through

productivity enhancement, profitability, cost-competitiveness and long-term goal will be

achieved.

It is certain that advancement of technology is widely used in almost all activities

of daily lives, banking included, to maintain and boost its competitiveness and enhance

its efficiency and productivity. Thus, the researchers conducted this study to have an in-

depth knowledge regarding the advantages of using technologies in the enhancement

of global competitiveness. In this manner, excellent business operation and services will

be provided to their clients and customers while fulfilling their role to the country’s

economy. (Dangolani, 2011)

Statement of the Problem

This study aimed to determine the benefits of the used modern technologies in

relation to the productivity and competitiveness of bank industries. This sought to

answer the following questions:

1. What are the modern technologies used among banks in terms of transactions?

2. What are the significant advantages of modern technologies in the transactions

within bank industries?

3. How important is technological advancement in banks?

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Scope and Delimitation

This study was about technological advancement in the selected banks in

Barangay Maranding, Lala, Lanao del Norte. This is to determine how technological

advancement affects the productivity and competitiveness of banks in Barangay

Maranding. This was limited to identifying the importance of current technology used in

transactions among and within bank industries.

The researchers have selected two banks among four in Barangay Maranding,

namely Rizal Commercial Bank Incorporation (RCBC) and One Network Bank (ONB).

This selection had been made as per informal survey about which banks are more

effective in handling financial transactions. The respondents were bank managers and

bank employees in the said banks of Barangay Maranding. The respondents are

selected randomly. One bank manager and four banks employees are to answer a

given questionnaire in each bank.

Significance of the Study

The importance of the study is to give knowledge about technological

advancement in banks. This will be beneficial to the following:

Bank Managers. This study will help the bank managers monitor in efficient and

up-to-date approval of proposed transaction by customers.

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Bank Employees. The study will help bank employees to process transactions

easily and promptly such as checking accounts.

Researchers. This study will give them ideas about the advantages of using

modern technologies in banks. Also, this serve as future references for other

researches with the same concept.

Definition of Terms

To have a better and clearer understanding of the study, the researchers listed

the meaning of the used terms in the study. The terms are defined conceptually and

operationally.

Adaptability. In Merriam Webster (2019), this refers to the ability to change in

order to fit in a certain situation. In this study, this refers to the ability of the banks to

adapt or adjust itself in response to a given situation.

Bank. This refer to a financial establishment that invests money deposited by

customers, pays it out when required, makes loans at interest and exchanges currency

(Britannica Encyclopedia, 1993). In this study, this is defined as a legalized institution

that deals with money and its substitutes and provides other financial services.

Competitiveness. It is a possession of a strong desire to be more successful

than others (English Oxford Dictionaries, 2019). Operationally, this refers to the ability of
 5

banks to offer products and/or services that meet the standards of both local and

international markets.

Productivity. Merriam Webster (2019) defined it as the rate at which goods are

produced or work is completed. It is the state of being productive. This research defined

it as the efficiency of banks and its employees in achieving their objectives and goals.

Technological Advancement. It is referred to as the generation of information

or the discovery of knowledge that advances the understanding of scientific relations or

technology (Enduro Performance Ltd, 2019). In this study, it is the use of digitalized and

computerized bank transactions.

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CHAPTER II

Review of Related Literature and Studies

This chapter presents the related literatures after the thorough and in-depth

search done by the researchers. The purpose of this literature reviews is to provide the

reader w/ the general overview of specific concepts in accordance to the study.

Related Literature

Bank

A bank deals with the money the same way that a business deals with the good.

A bank is a legalized institution that deals in money and its substitutes and provides

other financial services. They accept deposits at lower rate and make loans at higher

rate. Banks derive a profit from the difference in the interest rates paid and charged to

its customer’s individuals, firms, and occasionally governments. Britannica

Encyclopedia (1993) stated that banks have the power to create money.

Banking is of ancient origin. Though little is known about it, the concept of

banking started prior to the 13th century. Much of the business of early banks is money

changing and the supplying of foreign and domestic coin of the correct weight and

fineness. According to Kunle Awosika in the evolution of banking (2017), merchant

banks were the original banks wherein merchants trade commodities like grain, then

loan it to farmers and trades across cities. The evolution and development of modern

banking can be to the 17th century Renaissance, Italy.

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Classes of banks

The business of banking consists of borrowing and lending. Similar to other

businesses, capital is the basis of the operations of banks. However, compared to the

volume of its transactions, banks employ little of their capital. For banks, capital and

reserve accounts are to cover losses and investments

The Top Differences (2017) stated that there are classes of bank in every

country. Each type performs mainly certain functions. Banks have been classified on the

basis of their functions, some of them are: Commercial Banks, Co-operative banks,

Central Bank, Industrial Banks, Agricultural Banks, Savings Bank, Foreign Exchange

Banks, Exchange Banks, and Private Bankers.

Commercial banks are the banks that offer checking account services. They

make money by providing loans and earning interest from these loans (Investopedia,

2019). Co-operative banks are the banks that usually provide short term, medium term,

and long term credit to agricultural purposes and usually provide credit facilities to

farmers, small scale industries, etc. at a cheaper rate of interest. Central bank aims at

non- profit functioning. It regulates the monetary and credit system of the country.

Central banks act as controller, supervisor, and regulator of the activities of commercial

banks and other financial institutions in the country.

Another classes of bank is imdus6rial banks which are also called as investment

Banks. According to Top Differences (2017), industrial banks provide long-term loans to

the industries. Industries require long-term capital for buying machinery, construction of

buildings, expansion of operations, etc. These capital required by industries is provided

 8

by industrial banks for industrialists to grow their businesses. Agricultural Banks are the

banks which provide agricultural credit to the farmers that established by the

government to promote agricultural credit in the country.

Savings banks mainly concentrate on the mobilization of savings of the people.

On the other hand, Foreign Exchange Banks are the banks which provide finance for

foreign trade. These banks accept deposits from the public (Top Differences, 2017)

Foreign Exchange Banks are specialized banks in providing credit for the foreign trade.

Exchange Banks are the banks which operate by financing the imports and exports of

the country. These banks are mainly concerned with providing foreign exchange to their

customers and help to promote international trade. They also offer to discount of foreign

bills of exchange to their customers. Private Bankers are the individuals who do banking

business individually or as a partnership.

Thus banks are classified on the basis of their functions in which they are

specialized. But it must be noted that Commercial Banks are now providing services of

agricultural banks, they are providing loans for industries as industrial banks, they are

even expanding their services into foreign exchange replacing the foreign exchange

banks. Therefore the commercial banks are raising their capabilities for attracting a

large number of customers. (Top Differences, 2017)

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Related Studies

Productivity of Banks

The main responsibility of financial institution is to allocate and multiple the

savings of society, and the efficiency in which the intermediate capital has substantive

resonation on the performance of the economy. Parasuraman (2010) stresses on the

significance of analyzing productivity since banks must attempt to boost their capability

in order to convert inputs including deposits and saving to loans sa outputs, resulting to

the improvement of the organizations and the economy in a general sense. To achieve

accurate and true value of productivity, effectiveness and efficiency must be measured.

According to the definition by European Productivity Agency (1958), productivity

is a social concept and introduced as attitude of the mind. Financial institutions play a

vital role in the effective allocation of resources, economic growth, and job creation.

Better financial organization results to improvement in the economy of a nation. It is

observed as a significant success element for operation and organization in global

competitive condition. They point out that achieving the profitability, cost

competitiveness, and growth in long-term would be created through productivity

enhancement. The important role of banks in the economic activities, the investigating

about their productivity and efficiency becomes more important. It can be most

significant part of process and operational management, in spite of increasing the

growth of innovative services to attract customers and competition among different

banks, knowing the accurate level of productivity has been pressing. It searches to

improve things which already exist continuously and stressed that one can do better.
 10

Productivity is composition of effectiveness and efficiency and it is referring to

broader concept that whatever makes the organization has better function. Banks play

an important role in capital allocation and risk sharing. Productivity must attempt to

asses customer and employee satisfaction as well as productivity in service quality. The

productivity and efficiency of banks critically impacts the productivity and efficiency of all

economic activity and is a matter of concern for policy makers and economy watchers,

while the banks form the core of a nation’s financial system performing liquidity, maturity

and risk transformation (Roghanian et. al, 2012).

Competitiveness of Banks

The global practice of banking of organization is to stimulate national economic

growth development. Competitive advantage as a broad concept deals with business

engineering process that will put the firm/organization in a lead among other

competitors within their sector. It specifically addresses what the organization has in

stock that will achieve advantage in the competitive market. According to Kasabhe et al.

(2017), the antecedent factors of competitive advantage are found to be (electronic)

quality of service or and management, corporate social responsibility, strategy

formulation, (electronic) marketing innovation and creativity, customer orientation and

market differentiation. Identifying these antecedents are essential for conceptualizing

and investigating constructs that are related to competitive advantages in the banking

sector in order to achieve success in the global competitive market.

Banks like other productions units, are worthy of examination, particularly when

their role is a great importance to the whole economy. Realizing their great contribution,
 11

competitiveness of a bank is a great interest. Every industry has an underlying structure

and technical characteristic which give rise to competitiveness force. Bank

competitiveness refers to how banks manage the totality of their competencies to

achieve profitability and stability, within the available structures, policies and regulatory

framework. (Musau, S., et.al, 2018)

Adaptability in banks

To achieve productivity and gain competitive advantages against

competitors, banks must learn to adapt their financial services. Adaptability (Chris,

2018) is important to lower operational risk, regulatory risk and competition. Operational

risk as it is an important factor that banks cannot ignore. Operational risk is associated

with the consequences of the operations of a financial institution, and why adaptability in

the finance sector is important is because all financial institutions experience regulatory

risk. To effectively manage regulatory risk, and to adapt theme be sure financial

institutions should carry out their business activities within the regulatory framework.

Improving to adapt the risk regulation according to the regulatory risks is just one way

that financial institutions can reduce the danger associated with regulatory risk, and

cater for changes in the risk environment to ensure success.

The lack of adaptability in the financial sector is one reason why financial

institutions suffer from the consequences of failed internal systems and processes such

as insufficient information management and trading errors. Banks are not as simple

borrowing and lending. Competition in the financial sector is vital for numerous reasons.

Banking institutions must adapt their offerings and streamline their processes as a result
 12

of consumers being more informed. In order to keep up with the rapidly changing

markets, financial institutions across the globe must adapt to the digital revolution.

Banks especially have already begun to embrace the digital revolution in order to

accommodate the demand for accessible banking. (Chris, 2018)

Chris (2018) stated that adaptability in the financial sector is essential to

managing an environment that is so unpredictable in order to measure position. Whilst

the finance sector is overwhelmed with changing information, it is paramount that

financial institutions sustain a competitive advantage for the best delivery of service and

it has

Technologies and its significance

After the industrial revolution, the information revolution has been hailed as the

most significant developments in the information technology revolutions were the

invention of the microprocessor, invention of the personal computer, evolution of the

software and the rapid advances in the field of telecommunication (Ramey, 2012).

The banking is known as one of the oldest business in the world. Due to

technological advancement as stated by Ramey (2012), the banking sector has been

evolving, progressing and growing with every passing year. Banking industries has

evolved from papers into digitized and networked banking services. One example is the

Automated Teller Machine (ATM). ATM allowed customers to withdraw cash from

different convenient locations.

Information Technology has provided the banking industry the capital to deal with

economic challenges. It has been the keystone of financial sector reforms in increasing
 13

the speed and reliability of financial operations and of initiatives to strengthen the

banking sector. Information Technology enables banks in meeting the customers’

expectations and demands. Technology has opened up new markets, new products,

new services and efficient delivery channels for the banking industry. Without a doubt,

information technology has become a vital business resource because its absence

could result in poor decisions and business failure.

The use to the mobile banking and internal banking is beneficial for the both

banking industries telecom sector and customer, in the area of technology. Demand of

customers’ satisfaction, customer retention, timely and easy services, accessibility,

availability and cost effectiveness are the challenges of the banking industry. Using

technology especially in mobile banking and internet banking, the banks is able to cope

with these challenges. It is conclude that with technology the banking can survive, as

we can say banking without technology is not possible.

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CHAPTER III

RESEARCH METHODOLOGY

This chapter presents the research design, locale of the study, respondents of

the study, sampling procedure, methods of data gathering, research instruments, and

methods of data analysis.

Research Design

A descriptive research was used in the research. This aims at defining or giving a

verbal portrayal or picture of person, thing, event, group, situation, etc.

This study described the importance of technological advancement in the

selected banks in Barangay Maranding. This also determines the technologies used in

banks and explore the advantages it suffices in terms of productivity and

competitiveness including the employees functions as parts of the industry.

Locale of the Study

The study was conducted at the selected banks in Barangay Maranding, Lala,

Lanao del Norte. It is located in Northern Mindanao, south of the Philippines. Barangay

Maranding is considered as the center of trade and industry of the other barangay in the

municipality of Lala.
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As years passed by, various industrial and commercial buildings and

establishments have emerged such as bakeries, restaurants, hospitals, banks, etc.

Presently, there are four (4) banks in Barangay Maranding namely, One Network Bank

(ONB), Philippine National Bank (PNB), Rizal Commercial Bank Incorporation (RCBC),

and First Valley Bank. Adjusting to the emergence of technology, these banks have

used its advancements.

Respondents of the Study

The respondents of the study were bank managers and bank employees of the

selected banks in Barangay Maranding, Lala, Lanao del Norte. The researchers gave

out questionnaires to two (2) banks managers and eight (8) banks employees. This

study has a total of ten (10) respondents. The respondents were essential to the

completion and success of the study. The answers of the respondents were the basis

for drawing out results in the research, thus formulating a conclusion.

Sampling Procedure

The researchers gathered data using simple random sampling. In this manner,

selecting the individuals to be inquired is chosen entirely by chance as to secure the

basis of data to be analyzed. Therefore, each employee on the banks has an equal

chance of being selected.

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As per informal survey about which banks are more effective in handling financial

transactions, the researchers have selected two banks among four in Barangay

Maranding, namely Rizal Commercial Bank Incorporation (RCBC) and One Network

Bank (ONB). In each banks, 5 respondents will be picked out randomly. The target

number of respondents is 10.

Methods of Data Gathering

A letter was sent to the bank managers considerably asking for permission to

conduct the study accordingly. This letter was signed by the school principal.

Following its approval, the questionnaire was distributed to the respondents and

answered. Moreover, the results was gathered and analyzed, thus a conclusion was

made.

Research Instrument

The researchers used this research instrument to obtain the data needed for the

research:

Questionnaire for Bank Managers and Bank Employees. This is a modified

questionnaire to befit the desired information for the study. The first part lists the

technologies used in the banks. The second part determines the advantages of

adapting to technological advancement in the banks. Lastly, the importance of

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technological advancement is rated in a scale of 1-10, 1 being not important and 10 as

the most important.

Method of Data Analysis

The researchers listed and/or noted the answers of the respondents from the

given questionnaires. The answers of the respondents were the basis for drawing out

conclusions in the study.

The most number of technologies checked by the respondents were noted. The

advantages checked by the respondents were also noted and listed as the most

checked and least checked. The importance of technological advancement was rated

as very important, important, and not important.

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CHAPTER IV

PRESENTATION, ANALYSIS AND INTERPRETATION OF DATA

This chapter presents, analyzes, and interprets the data obtained from the

respondents regarding the technologies used in Rizal Commercial Bank Incorporation

(RCBC) and One Network Bank (ONB), as well as its advantages and importance.

Problem Number 1. What are the modern technologies used among banks in

terms of transactions?

Rizal Commercial Bank Corporation (RCBC)and One Network Bank (ONB) both

uses the following modern technologies in their transactions: Automated Teller Machine

(ATM), pin pad, computer, printer, electronic bill payment, and electronic fund transfer.

ATM allows customer to withdraw cash in various convenient locations; pin pad, also

called PIN entry device is used to accept and encrypt the cardholder’s personal

identification number (PIN) in a debit, credit or smart card-based transaction; computer

is a device that can be instructed to carry out sequences of arithmetic or logical

operations automatically via computer programming; printer is used to make a

persistent human-readable representation of graphics or text on paper; electronic bill

payment is a process which companies use to collect payment via the internet, direct

dial access or other electronic method; and electronic fund transfer is the transfer of

money from one bank account to another electronically.

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RCB also uses a bank code, smart code and digital currency. Bank code is a

code assigned by central bank in order to identify it during financial transactions; smart

card is a plastic card with built-in microprocessor used typically for electronic processes

such as financial transactions; and digital currency is a currency available in digital form.

Problem Number 2. What are the significant advantages of modern technologies

in the transactions within bank industries?

The advantages of using modern technologies in bank transactions are the

following: a) availability of wide range of inquiry facilities; b) fast and up-to-date

information transfer; c) accurate computing of cumbersome and time-consuming jobs;

d) automatic printing of deposit receipts pass book; e) signature retrieval facility; f)

avoidance of duplication of entries; and g) immediate replies to customer queries.

Problem Number 3. How important is technological advancement in banks?

Technological advancement is very important in banks as it helps in transferring

information faster, computing and printing of entries accurately and automatically,

entries’ duplication is avoided and there is a wide availability of inquiring facilities.

Using modern technologies in bank transactions causes accessibility, availability and

cost effectiveness. It also increases productivity and efficiency resulting in customers’

satisfaction and retention due to timely, organized and easy services provided to the

customers.
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CHAPTER V

SUMMARY, CONCLUSION, AND RECOMMENDATIONS

This chapter presents the summary, conclusion, and recommendations of

the study based on the data presented.

Summary

This study aimed to determine the benefits of the used modern technologies in

relation to the productivity and competitiveness of the selected banks in Barangay

Maranding namely, Rizal commercial Bank Incorporation (RCBC) and One Network

Bank (ONB). This aimed to describe the importance of technological advancement in

bank transactions in the said banks.

This study used a descriptive type of research. There are a total of 10

respondents, consisted of two bank managers and two bank employees. Simple

random sampling was used in selecting the individuals to be inquired.

For data gathering, the main tool used was a questionnaire. The study was

conducted at Barangay, Maranding, Lala, Lanao del Norte. Afterward, the data gathered

for the research was noted, analyzed and interpreted.

It was found out that RCBC and ONB both used pin pads, computer, printer,

electronic bill payment and electronic transfer. Modern technologies have brought

numerous advantages to the banks. Fast transfer of information, automatic printing of

deposit receipts and avoidance of duplicated entries are some of the advantages it
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brought to banks. In this regard, technological advancement is very important in banks

as it provide certain advantages towards bank productivity and enable banks to locally

and globally compete with other banks.

Conclusion

1. The common modern technologies used between RCBC and ONB are ATM, pin

pads, computer, printer, electronic bill payment, and electronic fund transfer. In

this regard, banks in Barangay Maranding were advance in using modern

technologies for transactions within and between banks.

2. With the aid of modern technologies, cumbersome and time consuming jobs in

banks are converted to a faster and more organized work. Thus, good service

are provided to the customers, earning a customer satisfaction merit.

3. Based on the data collected and gathered, technological advancement is very

important in banks. It helps both bank managers and bank employees to be

efficient and productive in their work.

Recommendations

1. Bank managers and bank employees must use modern technologies in bank

transactions to save more time and energy. Therefore, employees’ efficiency and

productivity will increase.

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2. Banks must adapt to technological advancement as to provide an improved

product and excellent service to each customer. As a result, banks will be more

locally and globally competitive.

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