Information Technology in Financial Services: Approaches to Information System

BANKING DIPLOMA EXAMINATION

Banking Diploma Courses in Bangladesh under The Institute of Bankers, Bangladesh (IBB)

Information Technology in Financial Services-DAIBB

L-2: Approaches to Information System  

A.  Contemporary approaches to information system :

 1.  Technical approach :

2.  Behavioral approach :

B.  Major types of information systems :

            Different types of information systems are serving in each organizational level and they are most valuable to the organization. These information systems are : 

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1.  Executive support systems ( ESS ) :

            Senior managers use a category of information systems called executive support systems ( ESS ) to make decisions. Executive support systems serve the strategic level of the organization. They address unstructured decisions and create a generalized computing and communication environment rather than providing any fixed application or specific capability. They filter, compress and track critical data, emphasizing on the reduction the time and effort required to obtain information useful to executives. ESS is not to design primarily to solve specific problems. Instead, ESS provides a generalized computing and telecommunications capacity that can be applied to a changing array of problems.           

2.  Management information systems ( MIS ) :

            Management information systems ( MIS ) normally serve the management level of the organization, providing managers with reports and in some cases, with on - line access to the organization’s current performance and historical records. Typically, they are oriented almost exclusively to internal, not environmental or external event. MIS primarily serve the function of planning, controlling and decision making at the management level. Generally, they are depended on underlying transaction - processing systems for their data.

            MIS usually serve managers interest on weekly, monthly or yearly basis and do not work on day - to - day basis. When mangers have to take decision then they use MIS. These systems are generally not flexible and have little analytical capability. But at present, new types of MIS are more flexible and much more software are included that lets managers to structure their own reports and combine data from separate files and transaction processing system.        

3.  Decision support systems ( DSS ) :

            Any system that supports a decision is a decision support system ( DSS ). Information systems support decisions in vastly different ways and decision support system are a class of systems that supports decisions in a unique way.

            DSS help managers to make decisions that are semi structured, unique or rapidly changing and not easily specific in advance. DSS have to be responsive enough to run several times a day in order to corresponding to changing conditions.

            Clearly, by design, DSS have more analytical power than other system, they are built explicitly with a variety of models to analyze data. DSS are designed so that users can with them directly.      

4.  Knowledge work systems ( KWS ) :

            Knowledge work systems ( KWS ) serve the information needs at the knowledge level of the organization. In general, knowledge workers are people who hold formal university degree and who are often members of a recognized profession, like engineers, doctors, lawyers and scientists. Their jobs consist primarily of creating new information and knowledge. Knowledge work systems, such are scientific or engineering design workstation, promote the creation of new knowledge and ensure that new knowledge and technical expertise are properly integrated into the business.           

5.  Office automation systems ( OAS ) :

            Office automation systems are information technology applications designed to increase the productivity of the data workers in the office by supporting workers through the coordinating and communicating activities of the typical office. Office automation systems coordinate diverse information workers, geographic units and functional areas. The systems communicate with customer, suppliers and other organizations out side the firm and serve as a clearinghouse for information and knowledge flows.

            Typical office automation systems handle and manage different types of documents ( through word processing, desktop publishing and digital filing ), scheduling ( through electronic calendars ) and communication ( through electronic mail, voice mail or videoconferencing ).     

6.  Transaction processing systems ( TPS ) :

            Transaction processing systems ( TPS ) are the basic business systems that serve the operational level of the organization. A transaction processing system is a computerized system that performs and records the daily routine transactions necessary to the conduct of the business. Such as, sales order entry, hotel reservation systems, client information ( for public agencies ), payroll, employee record keeping and shipping.

            Transaction processing system has two most important features. First is, many TPS span the boundary between the organization and its environment. They connect the customer to the firm’s warehouse, factory and management. If TPS do not work properly, the organization fails either to receive inputs from the environment ( order ) or to deliver outputs ( assemble goods ). Second is, TPS are major producers of information for the types of systems. Because TPS track relations with the environment, they are the only place where managers can obtain both - up - to - the minute assessments of organization performance and long - term records of past performance.              

C.  Systems form a functional perspective :

1.  Sales and marketing systems :

2.  Manufacturing and production systems :

3.  Finance and accounting systems :

4.  Human resources systems :

D.  New role of information system in organization :

            There is a growing interdependence between business strategy, rules and procedures and on the other hand information systems software, hardware, data and telecommunication. A change in any of these components often requires changes in the other components. This type of relationships becomes critical when management plans for future. What a business would like to do in next five years is often dependent on what its system will be able to do ? Increasing market share, becoming the high quality or low cost producer, developing new products and increasing employee productivity depend more and more on the kinds and quality of information systems in the organization. 

            A second change in the relationship of information systems and organizations results from the growing complexity and scope of system projects and applications. Building systems today involves a much larger part of the organization that it did in the past. Where as early systems produced largely technical changes that affected few people, contemporary systems bring about managerial changes and institutional ‘core‘ changes.            

E.  The challenges of information system :

            Building, operating and maintaining information systems are challenging activities for a number of reasons. These are :

1.  The strategic business challenge :

            How can business use information technologies to design organizations that are more competitive and effective ?

2.  The globalization challenge :

            How can firms understand the business and system requirements of a global economic environment ?

3.  The information architecture challenge :

            How can organizations develop an information architecture that support their business goals :

4.  The information systems investment challenge :

            How can organization determine the business value of information systems ?

5.  The responsibility and control challenge : 

            How can organization design systems that people can control and understand ? How can organization ensure that their information systems are used in an ethically and socially responsible manner ?

L-2 Approaches to Information System