Economic Impact of Innovation

1.2 Research aims and objectives

Aim and objective of research are given below.

Aim: To examine the impact of technological innovation on the financial performance of HSBC and Barclays.

Objectives of research

oReview the progression of technological advancements used by the banking sector within the UK for past 10 years.
oInvestigate published annual reports of the banks, compare yearly statistics to see performance rate.
oExamine additional factors (both positive and negative) which are caused by implementation of innovative products/services.

Research questions

• What level of technological advancements happened in the banking sector within the UK for past 10 years?
• What variation comes in the yearly statistics to see performance rate?
• What additional factors (both positive and negative) are caused by implementation of innovative products/services?

1.3 Rationale of research

It was important to conduct the current research study because with passage of tome more and more banks are innovating their technology base up to great extent so that better services can be offered to the custoemers and enhance their satisfaction level to great extent. In order to do this study broadly it become necessary to identify the developments that happeened in the technology base of the nation banks. It can be said that there is huge importance of the present research study. Main focus of the present study is on identifying variation that comes in the performanace of banks after innovation of technology. It was also very important to find out the negative sides if any are there in respect to implementation of innovation of technology. It can be said that it was necessary condition to explore the every aspect of innovation of technology. It can be said that there are number of reasons due to which it become important to carry out research related work.

1.4 Significence of research

It is one of the important section of the present researcvh study. Merely preparation of research report is not sufficient, it is very important to communicate significence of research to the audience. Main significence of the present research study is that it help one in understanding the positive and negative sides of the innovation that is going on in the banking field. Thus, one can come to know advantages as well as disadvantage that firm and other relevant entiities have to bear due to innovation in technology base. Through this research one will come to know about performance of the banks and its associaton with the firm performance will alslo be explored. Thus, present research study will help one in identifying whether there is any relationship between performance of the banks and advancement of technology. Current research report will give one an overview of technology advancement that happened in last 10 years. Hence, it can be said that there is huge significence of the present research study for the readers because it is not just giving brief overview of the innovation that happened in the technology sector but also cover varied aspects of same. It can be said that there are multiple dimensions in respect to innovation of technology in banking sector that are covered in the report.

1.5 Methodology used in the research

In the current research study literature review will be done in respect to research subject. In this regard in respect to topic varied literature like research papers will be download from the internet and will be reviewed. Data that is related to the Barclays and HSBC bank will be analyzed by using ratio analysis method. Appriopriate research approach will be taken in the present research. Along with this, research design will be choosen for the present study from various available alternatives. There are three sort of research designs namely experimental, descriptive and exploratory research design. Out of these options exploaratory research design will be used because in the current research study from starting relevant literatures are reviewed and broad understanding is developed about technology innovation that is done by the business firms. It can be said that research methodolgy is prepared in proper manner in the present research and it will be very helpful in conducting the research study.

CHAPTER 2

LITERATURE REVIEW

Review the progression of technological advancements used by the banking sector within the UK for past 10 years

According to Lewis, (2013) innovation in technology is happening at rapid pace across the nations. It can be observed that there are number of nations where focus is on advancement of the current technolog base. This is because technology make human life easy to live and ensure safety of performnace of activities. In the banking field lots of technology innovation takes place at fast rate. These innovations highly transform the mentioned industry and bring lots of changes in same. It can be said that technology advancement bring big change in the banking operations. In last 10 years many big changes comes in the UK banking sector in terms of innovation. Analytics is using at wide level by the banks in the UK to solve business problems. Number of trends in respect to innovation of banking operations can be observed in the UK and use of analytics is one of them. Under this banks are either creating their inhouse data analytics team or are taking help of the third party. By using analytics lots of things are done in the business like fraud detection and customer segmentation etc. apart from this, lots of hidden facts are identified by using data mining methods. It can be said that there is huge importance of data analytics for the business firm. Increasingly banks are using analytics in their business. Use of analytics lead to less cost in the business and effeciency in the busines operations. Hence, it can be said that there is advancement in the banking sector of UK.

As per view of Cornaggia and et.al., (2015) social value chain is the new concept that is introduced in the market. As per this new concept banks of the nation ask general public to give proposal about changes that need to be made in the product line. Bank of UK think that correct advise is given then in that case they must do innovation in the product. Few banks are doing this and they successfully are innovating their business operations. It can be said that there is significent importance of such kind of concepts for the banks.

Contrary to this Van der Boor, Oliveira and Veloso, (2014) state that practice of taking opinion from public in respect to innovation in the product is not so successful idea because people does not have much knowledge about variation that must be brought in the product. It can be said that it depends on the firm that which option it choose. There is need to select this option as part of innovation strategy with due care. This is because if same will not be done then in that case firm may move in wrong direction.

Accoriding to Bultum, (2014) recent trend that is going on the market is that increasingly firms are using concept of artificial intelligence in the business for prediction purpose. It can be observed that use of artificial intelligence is increasing in the UK banks. UBS in the UK is offering real time portfolio analytic serviceson personalized basis to those clients that have high portfolio by using IBM Watson. This is one of the big innovation that is done by any bank of the UK in decades. It can be observed that when someone ask portfolio details from the portfolio manager then it take long time to prepare portfolio details. But this software enable firms to provide immediate details to the customers about their products. It can be said that use of artificial intelligence by UBS bank enable it to provide much better services to the customers.

As per views of Gheeraert, (2014) in the UK banks bank of things like internet of things is the new concept that emerges in the curren time period. Under this varied things will be interlinked to each other. For example it is possible that your bank account may be linked to car and automatically car according to requirment place order for replacement of product to spare part repairer and on single click from side of client automatically amount deducted from bank account. Like same lots fo things are evolved under bank of things in the banking industry of UK. This is the one of the latest trend that is going on in UK. In UK Barclays bank in partnership with Hitachi group launch new biometric reader for the customers under which one simply needs to put its thumb on machine and same will be recognized and wil get direct access to the bank account and can make payment in seconds. Interesting fact is that one does not need to use ID or passwords for login. By doing so Barclay bank ensured that transactions through its banks are safe and no one can access individual account without taking its permission.

REFERNECES

• Akhisar, Ä°., Tunay, K.B. and Tunay, N., 2015. The effects of innovations on bank performance: The case of electronic banking services. Procedia-Social and Behavioral Sciences.
• Bultum, A.G., 2014. Factors affecting adoption of electronic banking system in Ethiopian banking industry. Journal of Management Information System and E-commerce.
• Cornaggia, J. and et.al., 2015. Does banking competition affect innovation?. Journal of Financial Economics.
• Gheeraert, L., 2014. Does Islamic finance spur banking sector development?. Journal of economic behavior & organization.
• Lewis, M.K., 2013. Off-balance sheet activities and financial innovation in banking. PSL Quarterly Review. 41(167).
• Obay, L., 2014. Financial innovation in the banking industry: the case of asset securitization. Routledge.
• Reis, J., Ferreira, F. and Monteiro Barata, J., 2013. Technological innovation in banking services: an exploratory analysis to perceptions of the front office employee. Problems and Perspectives in Management.
• Van der Boor, P., Oliveira, P. and Veloso, F., 2014. Users as innovators in developing countries: The global sources of innovation and diffusion in mobile banking services. Research Policy. 43(9). pp.1594-1607.

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