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Examine the main forces of change characteristics the UK financial sector over the last two decades focusing in particular on the impact of information technology.

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Introduction

Examine the main forces of change characteristics the UK financial sector over the last two decades focusing in particular on the impact of information technology. I have studied that in business, information technology can be used if effective in a strategic way in order to gain a competitive advantage and this can be seen in the UK financial services. In such an industry it can be said to be one of the most dynamic and rapidly growing sectors of the economy. Such a rate of change and growth has created a prolific environment for the innovation of information technology. The application of information technology has had a qualitative impact by changing the mode of operation in the financial sector, modifying the range of services provided and linking together geographically isolated financial hubs into a global financial community in order to trade 24 hours a day. For the past two decades organisations have noted that information technology is important for profitability on both the cost and revenue side. In the financial services sector costs arise from two broad areas of operation: those connected with the management of information, and those with the execution of transactions. Financial services have always been a labour-intensive industry. ...read more.

Middle

The face-to-face service constructs engendered trust and loyalty. Due to changing consumer preferences, consumers increasingly began to utilise self-service banking channels. Customers have embraced the first self-service offering from financial institutions - the ATM - as well as its technologically advanced relatives: telephone banking and PC/home banking. Typically, the self-service consumer is more sophisticated, better educated, and most importantly, more time-starved than the average customer. The result is a customer that physically visits the local branch less and less because customers have their own bank at home Since the advancement of technology we have now expert systems, which are defined by Feigenbaum and McCorduck (1984) as: Intelligent computer programs that use knowledge and inference procedures to solve problems that is difficult enough to require significant human expertise for their solution. These aid credit card operations to detect fraudulent transactions. The system monitors transactions on a daily basis, and detects those, which are out of character with the normal operation of the credit card account. Early detection of potentially fraudulent transaction can subsequently reduce the cost of fraud to credit card companies. Insurance companies are also using similar systems to scan insurance claims, and to highlight such falsified claims. ...read more.

Conclusion

Cost control and productivity tracking systems lagged behind the new technologies in a rapidly changing marketplace. The result was that tangible paybacks from IT investment were delayed. Since its development in the 60's information technology has been a major support for such a dynamic change and growth in UK financial sector and it also is central to their strategic and operational success. However the introduction and adaptation of sophisticated networked databases has provided the banks with information, which may be mined in the same way as any other resource. Information allows banks to identify new markets and products. It also allows banks to manage their balance sheets more efficiently and has enabled them to reduce cost ratios to meet the threat of new market entrants. However it has also had a negative impact to the financial sector through the spread of virus, which has cost this sector billions in pounds, and also the illegal use of corporate information by hackers in order to prove the weakness of IT. So looking at the outcome of globalisation and outsourcing the financial sector is far of better due to technology in order make corporate lives easier a and hopefully ours too and cheaper in dealing with financial institutions due to more accessibility. Olanike Akinde Feigenbaum, E., McCorduck, P., and Nii, H.P. The Rise of the Expert Company (Macmillian, 1988) ...read more.

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