effectiveness of management information system in improving the performance of punjab national bank ...

8/17/2019 Effectiveness of Management Information System in Improving the Performance of Punjab National Bank (PNB)

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International Journal of Business and Management Tomorrow Vol . 2 No. 5

ISSN: 2249-9962 May|2012 www.ijbmt.com Page | 1

Effectiveness of Management Information System inImproving the Performance of Punjab National Bank

(PNB)

Mr. Suyash Mishra*, Research Scholar, (U.G.C-JRF), Department of Management Studies, Central University

of Haryana Mr. Rishi Kant, Assistant Professor, Department of Management Studies, Futura Institute of ManagementStudies

AbstractA continual stream of information technology innovation is transforming the traditional business world .Oldsystems are being creatively destroyed and entirely new system are taking place. The importance of effectiveManagement Information System for maintaining customer bases for strategic planning is discussed in this

paper. Management Information System being the pivots of financial institutions facilitates the solution to the banks for operations and customer base. The main part of the banking system resolves around them. Now in the present era, management information system works as a catalyst that accelerates the development and growth.

Thus the need to evaluate the effectiveness of these systems is priority issue. The purpose of this study is toevaluate the effectiveness of Management Information System with respect to the performance of Punjab National Bank. Since banking is considered as an integral part of people’s life, this study is of great importancefor knowing the customers’ perception towards various dimensions.

Keywords: Technology, Innovation, Banking, Customer.

1.

IntroductionThe field of management information system tries to achieve this broader information system literacy.MIS dealwith behavioral issues as well as technical issues surrounding the development, use and impact of information


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systems used by managers and employees in the firm. Information systems are an integral part of organizations.Indeed for some companies such as credit reporting firms, without an information system there would be no business. The key elements of an organization are its people, structure, business processes, politics and culture.It is said that without information, it is tough to make the accurate decisions and without proper information

systems, it is not possible to acquire the correct information. The term Management information system alsodesignates a specific category of information systems serving middle management. MIS provide middlemanagers with reports on the organization’s current performance. This information is used to monitor and

control the business and predict future performance. MIS summarize and report on the com pany’s basic

operations using data supplied by transaction processing systems. MIS serve managers primarily interested inweekly, monthly and yearly results, although some MIS enable managers to drill down to see daily or hourlydata if required. MIS generally provide answers to routine questions that have been specified in advance and

have a predefined procedure for answering them. Decision support system (DSS) support non-routine decisionmaking for middle management. They focus on problems that are unique and rapidly changing, for which the procedure for arriving at a solution may not be fully predefined in advance.

PNB is considered for this study because PNB has continued to retain its position amongst the nationalized banks. PNB has remained fully committed to its guiding principles of sound and prudent banking. Banks always

looked at technology as a key facilitator to provide better customer service and ensured that its ‘IT strategy’follows the ‘Business strategy’ so as to arrive at the ‘Best Fit’. The bank has made rapid strides in this direction.Towards development of cost effective alternative channels of delivery, the bank with 5050 ATMs has the

largest ATM network amongst Nationalized Banks.

2. Review of LiteratureA number of studies have been made to analyze the importance of management information system in banks.Suni l Kumar (2008) explores the relationship between Technical Efficiency (TE) and profitability in the Indian public sector banking industry. The technique of Data Envelopment Analysis (DEA) has been utilized to

compute the TE score for each bank in the year 2005. The mean level of TE for the industry is found to be 88.5 percent. This implies that public sector banks can produce 1.13 times as much output from the same inputs, ifthey operate at ‘efficiency frontier’. In 20 inefficient banks, the technical inefficiency ranges from 2.6 percent to

36.8 percent. Both Andhra bank and Corporation Bank appear as an ideal benchmark for the laggards on theefficiency and profitability dimensions of performance evaluation.

Z I rani , A.M. Sharif , P.E.D. Love (2007) seeks to explore the human and organizational dynamics associated

with knowledge and technology evaluation within a manufacturing organization . Inductively, showing the propagation of knowledge and learning when set against a backdrop of information systems evaluation. Therationale for exploring knowledge and information systems evaluation in manufacturing is that through

empirically extrapolating explicit and tacit knowledge drivers, a knowledge map will emerge for others to useduring their technical evaluation.

Olugbode M , Elbeltagi I , Simmons M, Biss T (2008 ) attempts to evaluate the effect of information system on

the performance as well as profitability of a firm using a case of Beale and Cole Company. A thorough analysisof the operational systems was carried out covering both the manual systems and those supported by its

computerized accounting system . A number of beneficial changes were made, including the implementing of amajor new business system replacing the old accounting system.

Mamoun N. Akroush , Fahed S. Khatib (2009) examines the relationship between services quality dimensions

( functional and technical ) and banks performance assessed based on financial performance and customerindicators . A quantitative methodology was employed to test a model of service quality which was developedfor the purpose of this study. The research findings indicate that the service quality dimensions (functional and

technical) have positively and significantly affected banks performance assessed based on financial performanceand customer indicators.

Tarawneh (2006) found that the bank with higher total capital, deposits, credit or total asset does not alwaysmean that has better profitability performance. Financial performance of the banks was strongly and positivelyinfluenced by the operational efficiency and asset management, in addition to the bank size.

Sagar R. Dave , Rajesh Bhatt (2008) , evaluates the significance of intangible aspects as a tool for performancemeasurement in Indian Banking Sector . Panel data spread over ten years from 1997 to 2006 and 19 indicatorsof a representative Indian bank, namely Bank of Baroda, are used for the purpose. The importance for the

measurement of intangible assets and integration of contingencies in performance evaluation is discussedinitially. Being a part of service sector, long term strategic planning in a bank need to concentrate on these.


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Das et al. (2005), examined the output oriented technical efficiency , cost efficiency, revenue maximizingefficiency and profit efficiency of Indian banks for the period 1997-2003. Four inputs were considered for theirstudy-borrowed fund, number of employees, fixed asset and equity. Only those banks which had at least three

branches during the entire study period were included in the study. The result shown that the Indian banks arestill not much differentiated if one considers input or output oriented technical efficiency or cost efficiency.However, they differ sharply if one considers revenue and profit efficiencies for performance evaluation.

3.

Need of Management Information System (MIS) in Punjab National

Bank (PNB) The entire banking sector has undergone a restructuring during recent years as a result of innovation in financialreforms. The arrival of foreign and private banks with the technology based services forced Public Sector bankslike PNB to follow the same by going in for the modern technologies so as to meet up the threat of competitionand hold their customer base. The technology that allows the bank to do so is clearly that of Management

Information System. As Information is inevitable for organizational decisions.

Significance of MISThe MIS is very significant for a bank. In Punjab national Bank, there is a great role of ManagementInformation system in PNB as it provides accurate information related to customer requirement and datagathering and processing. It helps in many ways to the Bank for the better result and customer satisfaction. This

research paper considers different dimensions to study the customer satisfaction as bank is using very concreteinformation system to provide the best result to its customers and to compete in the market. Because Private andForeign Banks are good enough to provide the best technological support to its customers.

4. Objective of the Study To analyze the response time of the services and complaints, provided to the customers by PNB.

To find out the reliability and convenience of the customer while doing transactions and using the bankingsystem.

To find out different factors which has encouraged or discouraged to the customer for banking with PNB.

5. Research Methodology To obtain the data for this study a survey instrument was designed. The present study is empirical, descriptive

and analytical in nature based on primary and secondary data. To collect primary data, a well structuredquestionnaire was distributed with close-ended questions. The survey was conducted in Lucknow (U.P.) among


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152 customer of Punjab National bank (This study is based on 200 customers of PNB out of which 152questionnaires were relevant for the study.). The study was conducted in the Month of January to April in 2012.The respondents were asked to indicate the degree of agreement / disagreement on a five point Likert type scalethat ranged from strongly agree to strongly disagree (Strongly agree , agree , Neither agree nor disagree ,

disagree and strongly disagree ). The survey included multiple item measures for each of the five dimensions of perception of performance. Percentage and Weighted Average Score method was applied. The validity ofconstructs was assessed by use of factor analysis. The data was analyzed using Statistical Package for the Social

Sciences (SPSS). The paper is also based on analysis and interpretation of the secondary sources of information

i.e. research report, Central government authentic reports and documents, reports by world level institutions andother relevant publications and their findings.

6. Results and DiscussionsThe table-1 represents the demographic profile of the respondents. All the respondents are the customers of PNBtaken for the study. The demographic profile considered Age , Gender , Marital Status , Education , Occupationand Income . The previous studies on banking have shown that demographic profile of the respondents to be oneof the factors that affect their perceptions towards various dimensions of services provided by bank. It is clear

from the table -1 that around 44% male and 55 % female are taken for the study and study also shown thatrespondents of the age 50+ were highly dissatisfied with the services provided by PNB.

The table-2 shown the 16 variable under the four dimensions of the services and it is clear from the table-2 that

the respondents highly agreed that the most important factors which influenced them to adopt PNB serviceswere - satisfaction with the way the bank treats them as a customers, satisfaction with the ATM services & bank

branches and grievance with respect to the service of the bank. The weighted average score for these servicesare 1.375%, 0.763% and 0.757 % respectively.

6.1 Factor AnalysisTo find the underlying constructs and investigate the relationship among the variables which were supposed todetermine efficiency of management information system for the better performance of Punjab National Bank,

factor analysis was applied. After literature review, 16 variables of the four dimensions were selected. To testthe sampling adequacy, Kaiser-Meyer-Olkin measure of sampling adequacy was calculated and it was 0.777. Itindicates that sample is good enough for sampling. The overall significance of correlation matrix was testedwith Bartlett test of sphericity (Chi square 781.417 and significant at 0.00). This supports the validity of

applying the factor analysis. For extracting variables, principle component analysis was employed and varimax

rotation with Kaiser Normalization was also applied. The variable whose communalities were greater than 0.50were retained. The factors with Eigen values greater than one were considered. All the 16 variables had their

communalities greater than 0.50 and were retained for the analysis. Table -3 gives the communalities of thevariables and also depicted in chart-1. For the study, five factors having Eigen-value greater than one wereextracted .The Eigen- value of the five factors along with the cumulative percentage of the variance is shown in

the table- 4.

The percentage of the total variance which is used as an index to determine how well the factor solution

accounts for what the variables together represent was found to be 65.732%.Table-5 gives the factor loading ofthe variables under each of the five extracted factors. Chart -2 depicts the eigen value and cumulative percentage

Factor one describes satisfaction with the services that has five measure. These measures are satisfaction with

the ATM Services and bank branches, easy to use while doing transaction, reports like mini-statements, quickly

solved problems and reference to the other. This is the most important factor explains 28.833 % of variance before rotation.

Factor two covers grievance and banking system and has four measures. These measures are easy to accessible,easy to learn, difficulty while operating and grievance , explains 12.157 % of variance before rotation. Factorthree refers websites and safety, explains accessibility of website and safety while doing transactions Factor

three explains 10.512 % of variance before rotation. Factor four refers for timely delivery and staff, explains7.355 % of variance before rotation Factor five stands for appropriate reply for the complaints and explains6.874 % of variance before rotation.

7. ConclusionStudy shows that among the varied dimensions , the customer are highly satisfied with the way bank treat with a

customer, ATM services , reports like mini-statement, accessibility of website and there is a requirement toimprove the speed of transaction, problem solving technique , and confidentiality of the customers , restvariables are satisfactory .There is a need to guide the customers for using new electronic services which is


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provided by the bank and the customers are not aware about that like internet banking , mobile banking etc.Public relation as a part of information system try to increase the trustworthiness of a banker’s interactions byappearing finely in a third- party editorial vehicle.MIS is one relations approach that aims to suggest action. Itsunique feature is the ability to target small segments of customer, to measure response to different offers and to

build customer database. The promising discipline and philosophy of management information system tries tomake all these essential work with one voice and in mutually reinforcing ways. In order to successfully utilizethe MIS, Public Sector Banks like PNB should use it as a strategic tool to stay ahead of their competitors.

Mr. Suyash Mishra* Research Scholar, (U.G.C-JRF), Department Of Management Studies,Central University of Haryana,

Mahendergarh

Mr. Rishi Kant Assistant Professor, Department Of Management Studies, Futura Institute of Management Studies,

Lucknow

References Bhasker B. (2003), Electronic Commerce, Tata McGraw Hill , India.

Das Abhiman, Ashok Nag and Subhash Ray (2005).Liberalization, Ownership and Efficiency in Indian Banking: A Nonparametric

Analysis. Economic and Political Weekly , May 19,XL ,12

Devi P. Ambiga and Malavizhi V. (2010). Customers’ Perception of E -banking: Factor Analysis. The IUP Journal of Management

Research, IX, 6, 7-18. Irani Z, Sharif A.M., Love P.E.D. (2007). Knowledge mapping for information systems evaluation in manufacturing. International

Journal of Production Research ,45, 11,2435-2457.

Kalakota R and Whinston (2002), Frontiers of E- Commerce, Person Publication

Mamoun N. Akroush , Fahed S. Khatib(2009).The impact of Service Quality Dimensions on Performance : An Empirical

Investigation of Jordan’s Commercials Banks. Journal of Accounting – Business & Management, 16, 1, 22-44.

Olugbode M, Elbeltagi I, Simmons M, Biss T (2008), The Effective of Information Systems on Firm Performance and Profitability

Using a Case – Study Approach. The Electronic Journal Information System Evaluation , 11, 1, 35-40.

Sagar R. Dave , Rajesh Bhatt (2008).Incorporating Intangible aspects in performance evaluation of Indian Banks. Social Sciences

Research Network , September 2008.

Sunil Kumar (2008). An Analysis of Efficiency – Profitability Relationship in Indian Public Sector banks . Global Business Review, 9,

1, 115-129.

Tarawneh , Medhat (2006) .A comparison of financial performance in the Banking Sector :Some evidence from Omani Commercial

Banks International Research Journal of Finance and Economics , 3, 101-112.

Tables

Table 1: Profile of the Respondents

Parameters Segmentation of the parameters Total Percentage

Age

Less than 20 36 23.6842

20-30 57 37.5

30-40 27 17.76316

40-50 14 9.210526

50+ 18 11.84211

Total 152 100

Gender

Male 68 44.73684

Female 84 55.26316

Total 152 100

Marital Status

Married 76 50

Unmarried 76 50

Total 152 100

Education

Graduate 57 37.5

Post Graduate 48 31.578947

Professional 12 7.8947368

Other 35 23.026316

Total 152 100

Occupation

Salaried 30 19.736842

Self Employed 50 32.894737

Student 63 41.447368

Other 9 5.9260526

Total 152 100

Income

Less than 1 Lakh 90 59.210526

Rs. 1-2 Lakh 30 19.736842

Rs. 2-3 Lakh 20 13.257895Rs. 3 Lakh and above 12 7.8947368

Total 152 100


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Table 2 : Preference for the different variables

Dimensions Variables SA A N DA SDA WAS

Response time of the

services and complaints

I am satisfied with the way the bank treats me as a customer. 83 54 7 5 3 1.375

Timely delivery of the services. 13 80 47 9 3 0.599

I am satisfied with the ATM services and bank branches 44 56 27 22 3 0.763

I get appropriate reply for my complaints from banks. 12 74 39 22 3 0.434

Reliability

The bank website is accessible, when I need. 40 44 45 17 6 0.625

The banks never misuse personal information. 22 51 60 15 4 0.474

I feel safe in my transactions with my bank 31 53 32 33 3 0.5

My bank is fast to complete the transactions. 20 56 43 19 14 0.322

Convenience

The system is easy to use while doing transactions. 25 66 44 13 4 0.625

The reports like mini - statement provided by bank are in a proper

manner.41 57 27 24 3 0.717

The services are easy to accessible. 22 73 35 10 12 0.546

The banking system is easy to learn. 15 75 41 16 5 0.52

Complaints of the customer

Difficulty while operating with the bank. 53 36 29 29 5 0.678

I do not have any grievance with respect to the service of the bank. 44 58 27 15 8 0.757

The bank quickly resolves my problems. 35 53 31 21 12 0.513

I shall give the reference of the bank to other people. 57 38 19 20 18 0.632

Table 3: Communalities

Variables Communalities

I am satisfied with the way the bank treats me as a customer. 0.838

Timely delivery of the services. 0.672I am satisfied with the ATM services and bank branches. 0.665

I get appropriate reply for my complaints from banks. 0.621

The bank website is accessible, when I need. 0.646

The bank never misuse personal information. 0.66

I feel safe in my transactions with my bank 0.691

My bank is fast to complete the transactions. 0.677

The system is easy to use while doing transactions. 0.623

The reports like mini - statement provided by bank are in a proper manner. 0.56

The services are easy to accessible. 0.614

The banking system is easy to learn. 0.581

Difficulty while operating with the bank. 0.714

I do not have any grievance with respect to the service of the bank. 0.526

The bank quickly resolves my problems. 0.746

I shall give the reference of the bank to other people. 0.682

Extraction Method: Principal Analysis. Component Analysis

Table 4 :Total Variance Explained

Variables Initial Eigen Values % of Variance Cumulative %

F1 4.613 28.833 28.833

F2 1.945 12.157 40.99

F3 1.682 10.512 51.502

F4 1.177 7.355 58.857

F5 1.1 6.874 65.732

Extraction Method: Principal Analysis. Component Analysis

Table 5 : Rotated Component Matrix( Factor Loading >0.50)

VariablesComponent

F1 F2 F3 F4 F5

I am satisfied with the way the bank treats me as a customer. 0.885

Timely delivery of the services . 0.714I am satisfied with the ATM services and bank branches. 0.623

I get appropriate reply for my complaints from banks. 0.696

The bank website is accessible, when I need . 0.664

The banks never misuse personal information.

I feel safe in my transactions with my bank 0.714

My bank is fast to complete the transactions.

The system is easy to use while doing transactions. 0.547

The reports like mini - statement provided by bank are in a proper manner. 0.69

The services are easy to accessible. 0.632

The banking system is easy to learn. 0.729

Difficulty while operating with the bank. 0.624

I do not have any grievance with respect to the service of the bank. 0.649

The bank quickly resolves my problems. 0.844

I shall give the reference of the bank to other people. 0.814Extraction Method: Principal Component Analysis.

Rotation Method: Varimax with Kaiser Normalization.


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Graphs

Chart 1: Communalities of variables

Chart 2: Depicting Eigen Value and Cumulative Percentage

4.613

1.9451.682

1.177 1.1

0

0.5

1

1.5

2

2.5

3

3.5

4

4.55

F1 F2 F3 F4 F5

Initial Eigen Values

Initial Eigen Values

28.833

40.99

51.502

58.857

65.732

0

10

20

30

40

50

60

70

F1 F2 F3 F4 F5

Cumulative %

Cumulative %

0.838

0.6720.6650.621

0.646 0.66 0.6910.677

0.623

0.560.614

0.581

0.714

0.526

0.746

0.682

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

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