Many firms realize they must accept change in order to remain competitive (Cummings & Worley, 2008). This evolution has led to the emergence of change management, which entails organizational efforts to improve the success of adopting new systems or procedures (Hammoud, Bizri, & El Baba, 2018). Through the development of e-banking, a virtual instrument for facilitating commercial transactions, the Islamic banking industry has witnessed comparable patterns of change (Allied Market Research, 2019).
Despite the undeniable expansion of e-banking in the Middle Eastern financial industry, few Islamic banks comprehend how the virtual platform affects their bottom-line performance. This paper tries to analyze the impact of online banking on the Dubai Islamic Bank in light of this vacuum in the literature (DIB). This financial institution will serve as a case study to illustrate the impact of digitization on Islamic banking in the banking industry. The purpose of this analysis is to explore the effects of online banking on DIB, as posed by the research question that guides this study. The conversations will be guided by three objectives. They are concerned with determining how online banking affects DIB's service quality, customer satisfaction criteria, employee burden, and operational efficiency. These objectives have been adopted by other scholars to examine the influence of digital banking on their respective financial sectors. The aforementioned aims, for instance, are derived from the research conducted by Dinh, Le, and Le (2015) to comprehend the impact of e-banking on the Vietnam financial system.
Theoretical Structure and Subject Statement
As stated previously, e-banking has impacted various areas of the financial sector's new business development. However, no other industry has been affected by this transition as dramatically as the banking industry (Hammoud, Bizri, & El Baba, 2018; Siyal et al., 2019; Allied Market Research, 2019; Dinh et al., 2015). Online banking has emerged as a prominent platform for enabling commercial transactions as a result of the transformation. E-banking is typically described as an electronic payment system that enables fast transactions and the borderless flow of capital (Hammoud et al., 2018; Siyal et al., 2019; Allied Market Research, 2019; Dinh et al., 2015). This description is reinforced by recent events, which have witnessed the growth of internet banking by at least 22% per year to become a significant portion of worldwide financial transactions (Allied Market Research, 2019). It is anticipated that if this rise continues until 2023, there will be a 500% increase in banking activities compared to 2016 numbers (Allied Market Research, 2019). Advanced consumer interfaces and the ease of conducting financial transactions are among the key growth factors in the online banking industry (Hammoud et al., 2018; Siyal et al., 2019).
Globally, the expansion of the banking business has resulted in financial institutions offering goods and services in accordance with their geographic profiles and banking services (Allied Market Research, 2019; Dinh et al., 2015). This transformation has led to the emergence of retail, corporate, priority, and investment banking products, among others (Hammoud et al., 2018; Siyal et al., 2019). The rise of the internet banking industry has been primarily driven by an increased demand for new financial products, as seen in Figure 1.
Figure 1. Global online banking market (Source: Allied Market Research, 2019).
Financial payment is regarded as the largest contributor to the global expansion of e-commerce. In 2017, it contributed $2.866 billion to the revenue of e-commerce enterprises (Allied Market Research, 2019).
Islamic banking is one of the most understudied sectors of the online banking industry. The overall value of the banking sector is estimated to be $2.05 trillion (Research & Markets, 2019). This industry's expansion has attracted a variety of companies, who have segmented the market to boost their profitability by offering specialized electronic products and services (Research & Markets, 2019). In contrast, the worldwide Islamic banking sector has incorporated other Muslim-based financial instruments, such as Islamic Insurance (Sukuk), Islamic bonds, and Sharia capital markets (Research & Markets, 2019). Although moderate growth rates have been observed for the Islamic banking sector, online banking has demonstrated promise for boosting the flow of investment capital across important business groups (Research &Markets, 2019).
Islamic banking is dominated by a number of important investors who are willing to expend enormous sums of cash to remain competitive. Kuwait House Finance, Bank Al-Rajhi, and DIB are a few of the key participants (Research& Markets, 2019). The majority of these financial institutions utilize online banking to achieve their goals. Therefore, the research question directing this inquiry is predicated on comprehending the implications of online banking on DIB, the case study.
Creswell (2014) states that the two primary sorts of research methodologies in research development are qualitative and quantitative. The qualitative method is utilized for research investigations including subjective variables, whilst the quantitative method is typically employed for studies involving measurable data. Both methodologies were combined in this document to build a collaborative mixed methods framework. The rationale for employing both methods was to study the research topic from diverse vantage points. In other words, the investigation was not restricted by the accessible data types.
The mixed-methods architecture enabled the collecting of data from both primary and secondary sources. The conclusions of the case study provided primary data acquired through interviews with members of the DIB personnel. Different types of inquiries regarding the organization's experience with internet banking were posed to the informants. The influence of digital banking on customer satisfaction, service quality, operational efficiency, and employee workload was discussed. The purpose of these questions was to gain a comprehensive knowledge of the impact of internet banking on DIB's core operational initiatives. The informants were selected utilizing the snowball sampling technique since one team member knew several bank employees. The initial set of employees was utilized to contact additional sources of information. The participants in the virtual interviews were middle-level managers from six DIB branches in the UAE. The opinions of management were solicited because the team had a deeper awareness of e-effects commerce's than lower-level personnel.
The second source of information used in the report was secondary data. Existing papers that have explored the subject issue were reviewed in order to compile the data. This type of data collecting was crucial in gathering the theoretical information necessary to address the change challenge (effect of digital banking on DIB's operations). The data was then examined by identifying themes that emerged from the interviews. The themes were produced by discovering patterns of analysis relevant to the aims of the study. Creswell (2014) refers to this style of data analysis as the theme method.
Results (Primary Data)
Organizations that strive to improve their performance by reorganizing their operational procedures frequently employ change management to maximize results (Cummings & Worley, 2008). Although change frequently encompasses all subsets of an organization's processes, the primary change agent is people. Therefore, change management must be integrated into a company's leadership structure for optimal results. This is the case for Dubai International Bank, since the digitization of its banking infrastructure is one of the most significant organizational developments. Detailed interviews were conducted with respondents to elicit their perspectives on the influence of digital banking on DIB, as detailed in this document. The results are listed below.
Impact of Digital Banking on DIB Service Quality
One of the topics posed to respondents concerned the impact of internet banking on DIB's service quality. It was determined that digital banking improved service quality at the bank by reducing the time and effort required to deliver services. It also enabled DIB to work with third-party agencies to enhance the quality of services provided. For instance, the bank has partnered with an external business to strengthen its billing system, a procedure that has contributed to the financial institution's improved service quality. Respondents also noted that digital banking reduced the amount of reported errors in financial transactions. They stated that virtual banking increased the rate of financial integration amongst the various DIB service model agents. Moreover, according to the respondents, the aforementioned benefits were easily realized because the bank's user experience on all banking platforms was intuitive.
Digital banking, according to a second respondent, improved the quality of banking services provided to customers by enhancing the planning, coordination, and control of banking services. This advantage was also associated with low transaction processing delays and higher transaction processing efficiency. Moreover, the favorable impact of digital banking adoption on DIB's operations was consistent with the bank's objective of digitizing banking services. In addition to altering consumer behavior, the institution's deployment of e-banking altered consumer behavior. In light of the aforementioned alterations, DIB has opted to adopt digital banking to suit client demands.
DIB's use of e-banking encompasses the creation of several virtual-based financial products, including t-banking (telephone banking), e-banking (electronic banking), and m-banking (mobile banking). On the same platform, contactless cards, automated teller machines, and point-of-sale services are alternative financial services. Due to greater efficiency and speed in providing customer services, the bank's online banking platform also facilitates the delivery of higher-quality customer support. The convenience provided by e-banking solutions has also been significant in enhancing the banking experiences of customers. The significance of understanding how e-banking has increased the efficiency of DIB's financial services is highlighted by these findings.
Effects of e-Banking on the Effectiveness of DIB Operations
Due to the advent of e-banking services, DIB operations have been more efficient, which has been supported by the incorporation of indirect services into the company's primary online banking platform. For instance, the ease of updating client data on the bank's records has facilitated the simplification of loan approval processes and increased the variety of transactions due to the simple identification of consumer attributes. E-banking has also increased the bank's efficiency by reducing the number of customers who visit physical branches to do transactions. The speed of information transfers between the bank and other parties has also contributed to DIB's increased operational efficiency. Some banking transactions at DIB still require the customer's personal presence, despite the fact that the greater integration of information technology tools has helped enhance efficiency.
Due to a decrease in operational expenses, the bank's cost management division has also reported an increase in the efficiency of e-banking services on DIB's operations. These benefits have decreased the processing time for financial transactions and minimized human error. E-impact banking's on DIB's operations has also increased the company's profitability and efficiency. This result is supported by improved financial indices, such as the cost-to-income ratio and the return on investments. Therefore, higher financial performance is associated with a decreased reliance on manual processing when examining financial transactions or conducting periodic performance assessments.
In general, the findings of this analysis indicate that digital banking has increased the turnaround time and quality of DIB's services, hence increasing the efficiency of DIB's operations. Due to the rise of e-banking, the proportion of transactions requiring the actual presence of clients has also decreased. This decrease in actual bank visits was mostly attributable to the automation-driven minimization of utility-related financial operations, such as the payment of water and power bills.
E-banking services have also been linked to the provision of up-to-date information and real-time updates of financial transactions in order to increase their efficiency. On the basis of the aforementioned benefits of digitization, the respondents indicated that the volume of online transactions conducted by various DIB departments has increased. Consequently, this increase in numbers has contributed to the bank's total number of transactions. One of the informants, for instance, indicated that up to 70% of all business banking transactions are conducted online.
E-Effect Banking's on Customer Satisfaction
Customer happiness is one of the many aspects that influence the success or failure of various sorts of organizations. It has been reported that online banking has a beneficial impact on customer satisfaction at DIB. This outcome is partly linked with the increased efficiency and productivity associated with the bank’s e-banking products and services. These opinions indicate that consumer satisfaction has grown as a result of the increased adoption of digital services. Specifically, the development of user-friendly interfaces has made the e-banking platform easier to navigate, hence increasing consumer satisfaction. In relation to this issue, some of DIB's bank clients are hesitant to embrace internet banking and prefer to visit the bank's branches in order to obtain the bank's financial services. Nonetheless, a few of the informants predicted that this trend would cease as consumers gain knowledge and confidence in internet banking.
The growing usage of DIB's e-banking services has been attributed in large part to customers' awareness of online banking. The stated increase in customer satisfaction levels at DIB can be attributed in large part to the bank's digital banking services. Specifically, the bank's goods have adopted significant characteristics, such as perceived quality and functional value, which influence how clients evaluate the quality of the bank's services. Other characteristics of the bank's online banking platform that have led to a rise in customer satisfaction criteria are service speed, employee-customer engagement, brand trust, and innovation.
Overall, DIB has begun to accept digital banking as the norm for conducting banking transactions. This is why the company has created so many digital banking products. Comparatively, according to one responder, some of their competitors employ digital banking as a distinct entity to conduct certain financial activities. Despite this, there is no disagreement that the bank's clients are growing more aware of digital banking and are prepared to test new products due to the platform's efficiency and convenience.
Employee Impacts of Digital Banking
In many firms, employees are frequently under pressure to fulfill tasks within specified timeframes. The same is true for DIB, as the personnel is contractually obligated to perform effectively. However, digital banking has harmed its performance by altering how its employees carry out their duties and responsibilities. As stated in this report, the automation of numerous banking procedures has shortened the time required to conduct financial transactions. As a result, the financial system has become more efficient due to the reduction of human errors and the accumulation of more client data.
The digital banking strategy at DIB has reduced the present burden of the bank's personnel. This result has been connected to increased automation because such systems perform the majority of the organization's responsibilities. In the same way that human error is a risk element for the bank, the respondents emphasized that the quality of inputs incorporated into the automated process should be thoroughly evaluated. Some of DIB’s employees pointed out that the use of
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