Modernization practices and Operating Models: An Empirical Study on a Retail Bank in Sri Lanka

S M Chaturika  Seneviratne; Sandani Gunawardane

doi:10.35912/ijfam.v4i2.865

Modernization practices and Operating Models: An Empirical Study on a Retail Bank in Sri Lanka

https://doi.org/10.35912/ijfam.v4i2.865

05 Sep 2022

Abstract

Purpose: The purpose of this research is to investigate how modernization practices adopt concerning operating models, to comprehend how a retail bank has responded to such transformations, and to investigate the challenges in executing modernization strategies in a Sri Lankan local bank.

Research methodology: This study was conducted according to a qualitative single-case study at one leading licensed-commercial bank in Sri Lanka. Data was gathered from semi-structured interviews, direct observations, and archival documents.

Results: The findings revealed that unprecedented changes in customer behavior, fierce competition, and capitalizing on capabilities for surviving a dynamic operational landscape were the factors that led a bank to adopt modernization.

Limitations: As the study narrowed down to one leading retail bank, it does not cover modernization initiatives offered within the other services portfolio in the banking industry.

Contribution: The findings assist professionals to understand the need for modernization of a retail bank’s operating model and thereby formulate strategies in order to capture the benefits of such a transformation.

Keywords

Modernization Retail-Bank Institutional Theory Operating System

How to Cite

Seneviratne, S. M. C. ., & Gunawardane, S. (2022). Modernization practices and Operating Models: An Empirical Study on a Retail Bank in Sri Lanka. International Journal of Financial, Accounting, and Management, 4(2), 183–198. https://doi.org/10.35912/ijfam.v4i2.865

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References

Awasthi, G., & Sharma, M., (2001). ‘Information technology in banking: challenges for regulators’, Prajnan, vol. 29, no. 4, pp. 17 – 22.
Barnes, D. & Collier, J., (2013). ‘Investigating work engagement in the service environment’, Journal of Services Marketing, vol. 27, no.6, pp. 485 - 499.
Bollard, A., Larrea, E,. Singla, A. and Sood, R,. (2017), “The next-generation operating model for the digital world”, McKinsey digital.
Chigora, F., Kapesa, T., & Svongoro, P. (2021). Revisiting nation branding: An infrastructure financing perspective in Zimbabwe. International Journal of Financial, Accounting, and Management, 3(2), 179-192. https://doi.org/10.35912/ijfam.v3i2.611
Dabholkar, P.A. and Overby, J.W. (2005), "Linking process and outcome to service quality and customer satisfaction evaluations: An investigation of real estate agent service", International Journal of Service Industry Management, Vol. 16 No. 1, pp. 10-27.
Deloitte, (2019). Architecting An Operating Model To Accelerate Digital Transformation. Digital Industrial Transformation.
DiMaggio, P.J. and Powell, W.W. (1983), “The iron cage revisited: institutional isomorphism in organizational fields”, American Sociological Review, Vol. 48 No. 1, pp. 147-60.
Ditmore, C,. J,. & , Miller, A., K. (2021). Mobility as a Service Operating Model to Enable Public Policy, Journal of Transportation Research Record, Sage Journals. https://doi.org/10.1177/03611981211026664
Djelic , M., (2004), Social networks and country-to-country transfer: dense and weak ties in the diffusion of knowledge, Socio-Economic Review, Volume 2, Issue 3, September 2004, Pages 341-370.
Durkin, M., McCartan?Quinn, D., O’Donnell, A. & Howcroft, B., (2003), ‘Retail bank customer preferences: personal and remote interactions’, International Journal of Retail & Distribution Management, vol. 31, pp. 177-189.
FIS Global Banking Solutions, (2018). Targeted Core Banking Modernization. pp.1 – 20.
Girish, V, & Preetha, S. (1997). Technology in banks – A global perspective. IBA Bulletin, 68(4): 183-189.
Gupta, S.D, Raychaudhuri, A. & Haldar, S.K. (2018). ‘Information Technology and Profitability: Evidence from Indian Banking Sector’, International Journal of Emerging Markets, vol.13, no.5, pp. 1070 – 1087.
Hinings, C. and Greenwood, R. (1988), The Tracks and Dynamics of Strategic Change, Organization studies. Blackwell, Sage journals, Oxford.
Hinings, C. R., Logue, D., Zietsma, C. (2017). Fields, institutional infrastructure and governance. In Greenwood, R., Lawrence, T., Meyer, R., Oliver, C. (Eds.), Handbook of organizational institutionalism (2nd ed., pp. 163-189). Thousand Oaks, CA: Sage.
Imeson, M. & Pugh, G., (2012). Modernize or Fail: The Modernization Challenges Facing Banks, and the Technology Implications, Oracle Financial Services, pp. 16 – 18.
Jaja, S.A. , Gabriel, J.M.O. & Wobodo, C.C. (2019), “organizational isomorphism: the quest for survival’, Noble International Journal of Business and Management Research, Vol. 03, No. 05, pp: 86-94.
Kumar, S., & Gulati, R., (2010), ‘Measuring efficiency, effectiveness and performance of Indian public sector banks’, International Journal of Productivity and Performance Management, vol. 59, no. 1, pp. 51-74.
Laukkanen, P., Sinkkonen, S. and Laukkanen, T. (2008), ‘Consumer resistance to internet banking: postponers, opponents and rejectors’, International Journal of Bank Marketing, vol. 26, no. 6, pp. 440-455.
Macky, K., Boxall, P., (2007), ‘The relationship between 'high-performance work practices' and employee attitudes: an investigation of additive and interaction effects’, The International Journal of Human Resources Management, 18(4), pp. 537-567.
Meyer, J. W., & Jepperson, R. L. (2000) The ‘actors’ of modern society. Sociological Theory 18(1): 100–120.
Mittal, D., & Agrawal, S.R, (2016), ‘The effects of traditional practices on modern banking system’, International Journal of Bank Marketing, Vol. 34 No. 4, pp. 476-500.
Mouawad, M. & Kleiner, B.H. (1996), "New developments in customer service training", Managing Service Quality: An International Journal, Vol. 6 No. 2, pp. 49-56.
Muhammad, S., Salleh, S., & Yusr, M. M. (2020), ‘Understanding Employee Brand Trust and Internal Brand Communications & Training (BCT) Effects on Employee Brand Performance: A study of the banking industry’. International Journal of Financial, Accounting, and Management, 2(2), 95–120.
Piyadasa, E. (2007), ‘Effects of Financial Sector Reforms in Sri Lanka: Evidence from the Banking Sector’, Asia Pacific Journal of Finance and Banking Research, Vol. 1, No. 1.
Scott, W.R. and Meyer, J.W. (1992), “The organization of societal sectors”, in Meyer, J.W. and Scott, W.R. (Eds), Organizational Environments: Ritual and Rationality, Sage, London, pp. 129-53.
Sofi, U. Q. (2019). The study of the consumption process with a prominence of behavioral approach and its influence on the business units. International Journal of Financial, Accounting, and Management, 1(1), 57-68. https://doi.org/10.35912/ijfam.v1i1.79
Teece, D. J. (2012). Next-generation competition: New concepts for understanding how innovation shapes competition and policy in the digital economy. Journal of Law, Economics, and Policy, 9 (1): 97–118.
The Annual Report of the Central Bank of Sri Lanka of 2018 (2018), Central Bank of Sri Lanka, Sri Lanka. ISBN: 978-955-575-385-2
The Annual Report (2001), Federal Reserve Bank of San Francisco, United States.
The Annual Report_ABC Bank (2019), ABC Bank, Sri Lanka.
Uppal, R. K.(2010), ‘Paradigm Shift in E-Banking: Some Evidence from Indian Banks, Journal of Bank Management . Vol. 9, Issue 1/2, p 42-59.
Vadlamani, R., (2011), ‘Introduction to Banking Technology and Management’, Institute for Development & Research in Banking Technology, pp. 1 – 7.
Zucker, L. G. (1986) ‘Production of Trust: Institutional Sources of Economic Structure, 1840–1920’, Research in Organizational Behaviour 8: 53–111.

Awasthi, G., & Sharma, M., (2001). ‘Information technology in banking: challenges for regulators’, Prajnan, vol. 29, no. 4, pp. 17 – 22.
Barnes, D. & Collier, J., (2013). ‘Investigating work engagement in the service environment’, Journal of Services Marketing, vol. 27, no.6, pp. 485 - 499.
Bollard, A., Larrea, E,. Singla, A. and Sood, R,. (2017), “The next-generation operating model for the digital world”, McKinsey digital.
Chigora, F., Kapesa, T., & Svongoro, P. (2021). Revisiting nation branding: An infrastructure financing perspective in Zimbabwe. International Journal of Financial, Accounting, and Management, 3(2), 179-192. https://doi.org/10.35912/ijfam.v3i2.611
Dabholkar, P.A. and Overby, J.W. (2005), "Linking process and outcome to service quality and customer satisfaction evaluations: An investigation of real estate agent service", International Journal of Service Industry Management, Vol. 16 No. 1, pp. 10-27.
Deloitte, (2019). Architecting An Operating Model To Accelerate Digital Transformation. Digital Industrial Transformation.
DiMaggio, P.J. and Powell, W.W. (1983), “The iron cage revisited: institutional isomorphism in organizational fields”, American Sociological Review, Vol. 48 No. 1, pp. 147-60.
Ditmore, C,. J,. & , Miller, A., K. (2021). Mobility as a Service Operating Model to Enable Public Policy, Journal of Transportation Research Record, Sage Journals. https://doi.org/10.1177/03611981211026664
Djelic , M., (2004), Social networks and country-to-country transfer: dense and weak ties in the diffusion of knowledge, Socio-Economic Review, Volume 2, Issue 3, September 2004, Pages 341-370.
Durkin, M., McCartan?Quinn, D., O’Donnell, A. & Howcroft, B., (2003), ‘Retail bank customer preferences: personal and remote interactions’, International Journal of Retail & Distribution Management, vol. 31, pp. 177-189.
FIS Global Banking Solutions, (2018). Targeted Core Banking Modernization. pp.1 – 20.
Girish, V, & Preetha, S. (1997). Technology in banks – A global perspective. IBA Bulletin, 68(4): 183-189.
Gupta, S.D, Raychaudhuri, A. & Haldar, S.K. (2018). ‘Information Technology and Profitability: Evidence from Indian Banking Sector’, International Journal of Emerging Markets, vol.13, no.5, pp. 1070 – 1087.
Hinings, C. and Greenwood, R. (1988), The Tracks and Dynamics of Strategic Change, Organization studies. Blackwell, Sage journals, Oxford.
Hinings, C. R., Logue, D., Zietsma, C. (2017). Fields, institutional infrastructure and governance. In Greenwood, R., Lawrence, T., Meyer, R., Oliver, C. (Eds.), Handbook of organizational institutionalism (2nd ed., pp. 163-189). Thousand Oaks, CA: Sage.
Imeson, M. & Pugh, G., (2012). Modernize or Fail: The Modernization Challenges Facing Banks, and the Technology Implications, Oracle Financial Services, pp. 16 – 18.
Jaja, S.A. , Gabriel, J.M.O. & Wobodo, C.C. (2019), “organizational isomorphism: the quest for survival’, Noble International Journal of Business and Management Research, Vol. 03, No. 05, pp: 86-94.
Kumar, S., & Gulati, R., (2010), ‘Measuring efficiency, effectiveness and performance of Indian public sector banks’, International Journal of Productivity and Performance Management, vol. 59, no. 1, pp. 51-74.
Laukkanen, P., Sinkkonen, S. and Laukkanen, T. (2008), ‘Consumer resistance to internet banking: postponers, opponents and rejectors’, International Journal of Bank Marketing, vol. 26, no. 6, pp. 440-455.
Macky, K., Boxall, P., (2007), ‘The relationship between 'high-performance work practices' and employee attitudes: an investigation of additive and interaction effects’, The International Journal of Human Resources Management, 18(4), pp. 537-567.
Meyer, J. W., & Jepperson, R. L. (2000) The ‘actors’ of modern society. Sociological Theory 18(1): 100–120.
Mittal, D., & Agrawal, S.R, (2016), ‘The effects of traditional practices on modern banking system’, International Journal of Bank Marketing, Vol. 34 No. 4, pp. 476-500.
Mouawad, M. & Kleiner, B.H. (1996), "New developments in customer service training", Managing Service Quality: An International Journal, Vol. 6 No. 2, pp. 49-56.
Muhammad, S., Salleh, S., & Yusr, M. M. (2020), ‘Understanding Employee Brand Trust and Internal Brand Communications & Training (BCT) Effects on Employee Brand Performance: A study of the banking industry’. International Journal of Financial, Accounting, and Management, 2(2), 95–120.
Piyadasa, E. (2007), ‘Effects of Financial Sector Reforms in Sri Lanka: Evidence from the Banking Sector’, Asia Pacific Journal of Finance and Banking Research, Vol. 1, No. 1.
Scott, W.R. and Meyer, J.W. (1992), “The organization of societal sectors”, in Meyer, J.W. and Scott, W.R. (Eds), Organizational Environments: Ritual and Rationality, Sage, London, pp. 129-53.
Sofi, U. Q. (2019). The study of the consumption process with a prominence of behavioral approach and its influence on the business units. International Journal of Financial, Accounting, and Management, 1(1), 57-68. https://doi.org/10.35912/ijfam.v1i1.79
Teece, D. J. (2012). Next-generation competition: New concepts for understanding how innovation shapes competition and policy in the digital economy. Journal of Law, Economics, and Policy, 9 (1): 97–118.
The Annual Report of the Central Bank of Sri Lanka of 2018 (2018), Central Bank of Sri Lanka, Sri Lanka. ISBN: 978-955-575-385-2
The Annual Report (2001), Federal Reserve Bank of San Francisco, United States.
The Annual Report_ABC Bank (2019), ABC Bank, Sri Lanka.
Uppal, R. K.(2010), ‘Paradigm Shift in E-Banking: Some Evidence from Indian Banks, Journal of Bank Management . Vol. 9, Issue 1/2, p 42-59.
Vadlamani, R., (2011), ‘Introduction to Banking Technology and Management’, Institute for Development & Research in Banking Technology, pp. 1 – 7.
Zucker, L. G. (1986) ‘Production of Trust: Institutional Sources of Economic Structure, 1840–1920’, Research in Organizational Behaviour 8: 53–111.

Author Biography

S M Chaturika Seneviratne Senior Lecturer, Department of Accounting, University of Sri Jayewardenepura, Sri Lanka

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1	.	S M Chaturika Seneviratne
		Senior Lecturer, Department of Accounting, University of Sri Jayewardenepura, Sri Lanka
		https://orcid.org/0000-0003-0695-1918

2	.	Sandani Gunawardane
		Department of Accounting, University of Sri Jayewardenepura, Sri Lanka

International Journal of Financial, Accounting, and Management

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Modernization practices and Operating Models: An Empirical Study on a Retail Bank in Sri Lanka

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Author Biography

S M Chaturika Seneviratne Senior Lecturer, Department of Accounting, University of Sri Jayewardenepura, Sri Lanka

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