How the evolution in technology has changed the banking industry and will influence banking in the future
Technological evolution has immensely changed the banking industry for the last 20 years. At present, one cannot mention banking without technology, as the latter drives the whole system forward. When banks could not handle large volumes of information, they introduced computers (Panwa n.d.). Simultaneously, there was an increasing need to promptly convey the financial information to human resource management and even cut the cheque clearance system.
Remarkably, the introduction of computers by the mid-1960s led to decentralization or redistribution of organizations’ duties. Banks use technology in designing new ways of satisfying their customers’ needs. For example, the introduction of Automated Teller Machines (ATM) led to a reduction in the cost of delivering services via other channels like directly at the banking halls. These machines are convenient, safe, and quick in delivering services.
Therefore, RBS has improved their customers’ satisfaction in introducing the ATM machines that are; the customers can take their shortest time to access some of the banking services (Watkins 1998). Also, the bank can simultaneously meet the customers’ financial services. On the other hand, RBS reduced its cost of service delivery; for instance, the bank could minimize the constant historical traffic of customers at their branches (The RBS: Here for you 2012).
The success in the ATMs usage has encouraged banks to include other technological advancements to help in services delivery, therefore, leading to cost reduction, massive production, and customers’ satisfaction. These other services include mobile banking, telebanking, Internet banking, and call centres. At the call centres, there is a lot of information about banks that customers can access 24/7 through their mobile and telephones.
Specifically, the Royal Bank of Scotland (RBS) has introduced several ways by which their customers can bank money efficiently. For instance, in digital banking, customers can manage their money at any place and time of their choice. In mobile banking, customers can access bank services through their Androids, iPads, Blackberry, or iPhones. According to RBS Personal Banking (n.d.), digital banking is accessible 24/7/365, safe and saves time. Moreover, for telebanking at RBS, there is no monthly levy, customers can pay regular bills and have their personal accounts managed at one place. This has helped them ensure high security to their clients and reach close to all their clients at ago.
Additionally, the RBS Group has developed mechanisms of making and receiving international payments. This method enables people in foreign lands to help their families and even buy properties. The royal budget is a method of sending small amounts of money, which do not require any agency. Technology has revolutionized the banking sector and the RBS Group in particular. Recently, there was an Information Technology (IT) failure at the bank, which the CEO blamed on constant innovation at the expense of updating the existing systems (King 2009).
Therefore, it is evident that the RBS Group has been trying to develop new systems that are secure to increase its customers’ confidence. Although there was a system failure, it is evident that the bank uses more funds in the technological field. The bank worked with the CA Technologies in fixing the issue, which occurred because of a software system upgrade.
In the future, the digital revolution will have a pronounced impact on the way banks carry out their activities. Earlier, most banks valued direct interaction with their customers. Still, in the future, this will change, as most customers will be accessing services like loan application through their mobile phones. Through mobile and internet banking, most customers will have their banks in their pockets (Dixon 2002).
Consequently, there will be a reduction in the number of employees at the banks, as full digital automation implies no human movement and thought. Banks will adopt new technological applications in mobile devices to increase customers’ satisfaction and interaction. Notably, customers will be able to use live chats with the bank officials in case of inquiries and clarifications 24/7. Also, the use of video conferencing will reduce the travelling cost of bank executives (Marous, 2011).
This technological idea will save time and travel budgets, thus increasing efficiency in implementing banking services changes. Customers will continue receiving two-way and real-time service delivery. In summary, the constant technology change will force banks to adjust their management to remain competitive in the future market.
The approach of senior management to employees at RBS
The Royal Bank of Scotland (RBS) provides a wide range of financial services to over 36 million customers worldwide. Employees of the company are more than 140,000 people across the globe. The group owns over 40 brands in the market including Coutts, Direct Line and Churchill. For the company to provide the first-rate service, it should attract and retain talented people (Kotter 1998). In the face of competition for highly talented people in the job market, RBS stands a higher chance of attracting these talents. This is because it offers exceptional employment opportunities across the globe. For example, RBS offers a variety of career opportunities ranging from bankers, traders, sales customer service, investment, business advisory, IT, marketing, finance, legal, and human resources.
Moreover, “jobs at RBS are described in terms of specific job targets. This allows management to gauge individual performance and reward accordingly for targets and objectives set at the beginning of the year” (The RBS: Here for you 2012). These are measured during the year, and employees are paid for results. This reward scheme is a strong motivator in the group, as it encourages individual creativity and proper remuneration on personal efforts.
Additionally, the management of RBS has adopted Herberg two-factor theory. This theory puts forward hygiene and motivator factors at the work place. Hygiene factors include salary, job security, working conditions, amongst others. Notably, the absence of these factors causes dissatisfaction, but their presence does not bring higher motivation. However, motivators include achievement, interest in the workplace, and other activities at the workplace.
Motivators make customers develop an inward interest for work. RBS balances the two factors to realize superior growth. In view of this theory, employees at RBS are recognized for exemplary work done; management has in cultivated a collective sense of achievement in employees when the business performs well and ensured a favourable environment for work. Finally, employees gain extra responsibility and growth after the regular performance reviews.
Also, RBS applies Maslow’s hierarchy of needs in management. This theory argues that a person will try to acquire or satisfy his/her immediate need. When this need is satisfied, he/she moves to gratify a higher-order need. RBS strived to create room for recognition, promotional opportunities and a chance for career growth alongside providing quality meals, secure working environment and encouraged employees’ interactions. This boosted the self-actualization of employees (Armitage 2006). Furthermore, “the management created an opportunity for the employees across the globe to share a common goal and vision” (Treanor 2007).
Finally, management created an environment for the employees to improve their self-esteem. Maslow further stated that motivation of employees is not only through money but also through other non-monetary benefits, that is, in self-actualization. The management of RBS embraced this ideology. The “total reward package for employees is made up of non-monetary benefits such as health and medical benefits, paid holidays, confidential advice service, RBS financial products, and flexible pension funding. Further, the company encouraged employees to grow and develop their skills” (RBS axes 9,000 jobs in a bid to cut £2.5bn 2009).
They have training and development programs. Besides, employees are encouraged to gain new skills that will make them stand a chance of promotion in future openings. Finally, RBS gives employees a chance to give back to their communities. This is done through various corporate social responsibility schemes, which the company organizes (Business Case Studies LLP: Motivating through total reward 2012).
Ways to encourage and maintain employee motivation
Motivated workers are very efficient, as displayed at RBS. Therefore, the management of the company should strive to maintain or improve the current level of motivation because it reflects on the output of the organization. In addition to what is already put in place, the management should also consider enhancing team building (Stredwick 2012). The company’s performance has been on a downwards trend in the recent past. This caused the termination of employees and created loss in employees’ confidence since they feel their jobs are not secure (House of Commons Treasury Committee 2009). Sustainable and conservative risk profiles.
The Royal Bank of Scotland decided to address its first strategic objective, to serve customers well, by improving the staff that would be working in each local branch. The management left employees who were more interested in communicating with customers in the local branches, whereas the ones that felt more comfortable in carrying out financial procedures were moved to the manufacturing division; they did not have to deal with customers at all.
The bank’s HR professionals divided the staff using psychometric tests. In the manufacturing division, the employees had to carry out routine tasks; these tasks included clearing of cheques, the opening of accounts, convey the financial information to the human resource management, and other paper works. The adoption of technology immensely changed the service delivery at RBS; for example, the introduction of Automated Teller Machines (ATM) led to a reduction in the cost of delivering services via other channels like directly at the banking halls.
These machines are convenient, safe, and quick in delivering services. Customers can take a short time at their bank branches to get services. ATMs act as alternatives to banks, as customers can withdraw and deposit cash at any time. This has helped the RBS to minimize the constant historical traffic of customers at their branches.
Interestingly, the RBS achieved the various strategic objectives, which the management had set. Currently, the Royal Bank of Scotland is among the most successful banks in the UK. For instance, last year, the RBS received the banking award for being the best bank for credit loans, most innovative for loaning services, most innovative for structured finance amongst others. Evidently, technology has revolutionized the banking sector and the RBS Group in particular.
References
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House of Commons Treasury Committee 2009, Banking Crisis: Dealing With the Failure of the UK Banks, The Stationery Office, London.
King, L 2009 November 6, RBS says technology efficiency will pull it out of £2bn loss, CIO – Chief Information Officer News and Insight. Web.
Kotter, J 1998, Harvard business review on leadership: what leaders really do, Harvard Business School Press, Boston.
Marous, J 2011.Consumers are increasingly using multiple devices to support banking needs, Banking.com. Web.
Panwa, S n.d., Technology & banking,Scribd. Web.
RBS axes 9,000 jobs in bid to cut £2.5bn 2009, Scotsman.com. Web.
RBS Personal Banking n.d., RBS – The Royal Bank of Scotland. Web.
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The RBS: Here for you 2012, RBS – Royal Bank of Scotland. Web.
Treanor, J 2007. RBS tells employees: bank with us or go unpaid. The Guardian. Web.
Watkins, J 1998, Information technology, organizations and people, Routledge, London.