Potential Opportunities Of Implementing An Ecommerce System

Published Date: 02 Nov 2017

E-commerce is seen by many as the new industrial revolution and many people believe that business that does not get online will be left behind by their competitors who do online.

Pest analysis report

Sanasa Development Bank is a bank in Sri Lanka mainly aimed at low income Sri Lankan families with its range of micro finance activities. The bank provides major facilities to the citizens of the country and their level of customer satisfaction is high. Their systems are not automated but they represent a website with latest updates on their activities. PEST is an acronym for political, economic, social and technological analysis. PEST is carried out to investigate the important factors that affect a particular industry influencing the operations of the company in that particular sector.

POLITICAL

SDB will be the apex bank of the co-operative sector with commercial banking status and the leading partner of national development with global focus. When considering the political factors, the government of Sri Lanka intervenes in the economy imposing regulations. This can be majorly identified in the banking sector. For example - tax policy, trade restrictions, tariffs, labor law and political stability. Some of the major factors affecting the bank is as follows;

Focus on regulation of government

Budget and budget measures

Foreign direct investment limits

ECONOMICAL

The economic measures affect the Sanasa Development Bank to boost the economy by giving certain concessions or facilities. When the bank encourages more savings then deposits will be attracted towards the bank and in turn they can lead more money to the agriculture sector and industrial sector and thereby the economy booms. What is happening abroad is always something to be considered by a bank because banks have financial assets that can be worthy of being invested on other counties and gain profit to bank and increase the income of the Country. Interest rates, inflation rate and savings are factors affecting the bank and the economy.

SOCIAL

This includes cultural aspects and health factors, age distribution, population growth rate, career attitudes and safety issues in a bank. Sanasa Development Bank aims at the low income generating citizens of the country so the said factors should be taken into consideration. Increase in population is one of the important factors which affect the banking sector in a greater proportion. Sanasa Development Bank aims to open their branches after looking into the population demographics of the particular area. The newly built branches are made to serve the increasing population. This incentive to the bank comes on the back of the continuing need to open more branches in the particular state in order to make sure more uniform spatial distribution.

TECHNOLOGICAL

Technology plays a very important role in bank's internal control mechanisms as well as services offered by them. The use of technology new products and services are introduced and been used. Sanasa Development Bank is lacking technological advancements. Their transactions are carried out manually and this is a hazel for the customers. Automated Teller Machines are not been installed which is an essential feature for bankers nowadays. Facilities such as Automatic Voice Recorder, credit card facilities, Mobile Banking which are presented in banks such as HSBC are not presented at Sanasa Development Bank. This is a major negative factor for the bank in all perspectives.

Task 2

Aims and objectives for the selected bank

Aims

SDB will be the apex bank of the co-operative sector with commercial banking status and the leading partner of national development with global focus.

Objectives

Sanasa Development Bank has a very broad aim and it is time consuming to achieve the aim in succession. The objective and the necessary steps to be taken by the bank to achieve the aim are listed below;

New Branches

The Sanasa Development Bank should open new outlets and branches to cater a large number of stakeholders. By opening new branches, the bank will have a large customer base to do daily transactions and they can eventually increase the customer satisfactory level. The Bank can create a good image and will have more loyal stakeholders when branches are available for them to do their daily transactions.

Increase the customer base

The bank has to attract more customers by conducting different methods such as granting loans and get better income from savings. They can use advertising as an effective way to attract more customers. People can get to know about the bank through newspaper advertisements, commercials and etc. Deliver life value increasing benefits to children like presents on Birthdays and gifts offered according to the saving levels in their accounts, so that many parents will open up child savings accounts to their children considering the outcomes they get.

Technology Advancements

Sanasa Development Bank has to work more on their technology perspective. They have to implement quality services with more efficiency creating a better management infrastructure into the banking network where professional managing is done. The bank has to implement Automated Teller machines throughout the country for the customers to ease their transactions. The customers can withdraw money without having to come all the way to the bank and to fill slips manually. The customers will be satisfied and this helps the bank to reach towards their aim in quick succession.

Task 3

Potential opportunities of implementing an E commerce System to the bank.

Electronic commerce or ecommerce is a term for any type of business, or commercial transaction that involves the transfer of information across the Internet. For a bank it is essential to implement an e-commerce system to keep in track with the stakeholders. Ecommerce is based on the technologies such as electronic funds transfer, inventory management systems Internet marketing, online transaction processing, supply chain management, automated data collection systems, and electronic data interchange (EDI). Customers are the biggest deal for the bank because they need to fulfill their wants through the bank. When the bank has a wide range of customers they can gain more profits and from those profits the bank can upgrade the facilities to provide a better service.

Benefits gained by the Bank and Stakeholders

Cost

Sanasa Development Bank has a wide range of stakeholders who are loyal to the bank and would prefer if the facilities are been upgraded. By implementing an e-commerce system, the customers will gain a benefit. The customers can reduce the costs which are also known as the side expenses. Costs such as transportation will be taken off from the customers because all the transactions are carried out through the internet.

Better understanding

Through e-commerce the customers can get all the necessary details without any hesitation and they can avoid queues because any amount of customers can proceed with the same transaction at the same time. Electronic transactions are more effective and flexible and purely reliable in comparison with manual transactions. Reading on the instructions or details needed by the customer doesn’t have to happen manually which is very convenient to both parties (Bank and customers). Working period of the bank is enhanced so that the customer can make transaction overnight while the bank saves money on staff doing overtime duty.

Security

This is one important factor and security runs a major role in any bank. Customers will always like very high level of security. When considering e-commerce, security risk is less since Physical money transaction are not done through the system, but the system must be secured since mass scale theft can be done electronically through unauthorized access to the System.

Time

All the customers who do transactions at a daily basis can save a lot of time if an e-commerce system is been implemented. Customers don’t have to reach the transaction point of the bank to do the transaction which overall saves a lot of time which leaves them satisfied.

Task 4

E-commerce systems which are in used by competitors of the selected bank.

Automated Teller Machines

Auto mated Teller Machines are also known as ATM which is widely used by most of the competing banks in the country. This feature allows the customers to make transactions that are usually done manually with a cashier to be done electronically through a machine even when the bank is closed. The bank doesn’t have to recruit staff to do the transactions and it saves a lot of time of the bank since they are done automatically. A more precise definition for an Automated Teller machine is an electronic banking outlet, which allows customers to complete basic transactions without the aid of a branch representative or teller. Perhaps the most common function of the modern ATM, withdrawals are usually allowed from a user's savings or checking account. Other purposes of an ATM is for deposits, balance inquires, account transfer and stamp purchases.

Easy Pay Machines

This machine is very similar to the ATM but it can operate with or without the transfer card. These machines are provided by the banks that are competing with Sanasa Development Bank. The machines operate 24 hours and are allocated around the country for customer satisfaction. It doesn’t require any personal assistance to handle expect the customer itself. All the above systems are added with protection such as the security tokens for online banking.

Self Service Banking

This is commonly used worldwide and it’s also used by the competing banks of Sanasa Development Bank. Mainly used for the daily functions of customers who are carrying out their jobs through the bank by themselves. It enables and fulfills the customer’s requirement by letting the work done day and night by setting protocols provided by the bank and interacting with the system. System in retail banking whereby consumers perform many routine banking transactions themselves, without going to a bank teller.

Task 5

Financial implication of setting up and running an E-commerce application by any organization.

E-commerce has many targets. The main target is to provide a better service to the customers and to make the daily transaction more reliable and easy. It brings luxury to the customer’s lifestyle and saves a lot of his/her time when taking into consideration the time they spend at the bank dealing with different transactions. E- Commerce is a huge benefit to the bank in long term even though the bank has to invest a lot of money at the installation stage. A massive benefit is gained because the operational expenditures are degraded and can be called as completely cancelled in particular scenarios. When transactions are carried out by staff members, they are tend to make major mistakes but when an e-commerce system is implemented, the chances of mistakes occurring are reduced in a greater proportion since everything is been automated. The bank has to recruit if needed and pay a salary every month if the system is carried out manually whereas if the system is automated, there is no salary involvement. E–commerce means better and quicker customer service. Online customer service makes customers happier. 

There are particular drawbacks as well when considering the implementation of an e-commerce system. It is very expensive to implement such a system than a normal system and a large investment should be done at once for the installation. The maintains fee is also proportionately high if something goes wrong with the system at some point. Security continues to be a problem for online businesses. Customers have to feel confident about the integrity of the payment process before they commit to the purchase.

If we take an example, a computer costs roughly about Rs.40,000.00 and the employee who is carrying out the job which is to be replaced by the computer is given a salary of Rs.20,000.00 per month. In the long term we can see that the capital expenditure of one computer can be covered by 2 months of the salary given to the person carrying out the job but the computer is recommended for a lifetime of at least 4 years. So we can conclude by saying that the introduction of an e-commerce system will definitely cost a lot but it’s worthy in the long run. The system can be implemented and known as an investment in the long run because the organization with the system will reduce cost, less time consuming, efficient and very effective.

Task 06

The design Consideration made when developing the E-Commerce Application.

E-commerce is a wide area considering the number of users around the world and the usage of the system. An e-commerce system has a particular environment and its however easy considering the cost. There are different steps to be taken in order to gain an e-commerce environment. It consists of relevant business processes, payment options, legislative rights, reliability and security to the customers.

Reliability

When dealing with a bank account physically or through e-commerce, it is necessary and needed for particular account handler’s information such as Full name, National identification Number, age, contact details, income, occupation and many more. The organization is allowed to collect the required information from the customer but they don’t have the right to misuse the information keeping their valid customer under any risk. This is mentioned under the Data Protection Act of 1998. When designing an e-commerce system, it should enable the user to handle the bank account offshore but still there are a few changes that occur during a transaction (internationally). It’s the tax and VAT figures including the rate of exchange which must be displayed in the website of the bank so that the customers who do daily transactions will make sure to do the transaction in success.

Security

Security is essential because money is the main mode of transaction and it easily can be misused. Each and every transaction should have a specific method to secure them without any intruder alerts for those transactions. Due to this reason, useful methods which can be used are encryption and decryption. In this method a special set of keys are been used for encryption and decryption so that both the end parties have the code. Only the two parties with the code are enabled to have the information for their usage. Talking about this, the bank website can’t be a catalog website because the customers should be able to do online banking freely rather than reading bank information on the bank website. The payment options must be made where the account holders can enchase their money through credit cards and other approved methods by the bank.

Target Market

This is known as a selected group of people from an area where the organization is targeting as their main customers. For any well-made e-commerce website it is highly essential to appeal to the target viewers. When considering a bank, their target market can’t be specifically divided because people at different age do transactions. But the method of transaction that they prefer to carryout will be different when considering the different customers. E-commerce systems like card handling and auto-mated teller machines can be targeted at a customer base who are updated about technology and usually the young crowd.

Business Process

A bank is an organization that provides services to the customers and also they carry out investments from their customers money so that there can be a business to business process. This is because the bank and the organization that gets the investment is also a business and on the other hand can be a customer of the same bank who gets the investment for his own which is the customer to business mode.

Task 07

Suitability of Implementing an E-Commerce Solution to the Bank.

Banks were slow at first to embrace Internet technologies citing security fears. More recently though in the drive for higher profits and greater shareholder return they have been moving more and more of their business online.

Accessibility

Accessibility to the bank details and to make transactions from anywhere is a major advantage for the customer and a lot of transactions can be carried out daily than all of it happening manually. The customers could get the latest details and updates of the bank at any time of the day with no hesitation.

Interfacing

The banking system implemented right now, the customers should be present at the bank to get complete their transaction and it only can be done on a specific time bound. When the implementation of e-commerce, the customers don’t have to be present at the bank to do their transactions whereas they get it done from right where they are. For example- If a customer needs to withdraw money at night, he/she can go to the nearest ATM machine to withdraw money from the card provided to him by the bank.

Technology

E-commerce is the latest technology which is been used by banks and it is very successful globally. Banks carrying out their work manually implement an e-commerce system because it is very effective. The pace of work is very fast and the work is more organized than carrying out them manually. It replaces paper work and less people are needed to maintain the system. The only problem is that it is costly to implement.

Socio Cultural

When an e-commerce system is implemented, the customers will not be familiar with it and they might find it hard to use. The bank would test the new methods and after some time when the customers get used to it, they will prefer using the system because it’s easier and accurate. Through word of mouth, other people will get to know about the new system implemented in the bank and this will bring in more customers to the bank.

Staff

The manual system is been carried out by employees and it is a huge cost to pay them monthly. In the long run it is a major disadvantage because the salaries sum up to a huge total. The requirement of a staff completely reduces when an e-commerce system is implemented and it cuts down the cost completely. This may lead to a loss of job opportunities at the bank.

Task 8

Analyze the impacts (Risk, Benefits) of introducing an e-commerce application to the Selected Bank.

Throughout the report we have discussed the benefits for the Sanasa Development Bank of implementing an e-commerce system and it also has the adverse effects as always. Having implemented an e-commerce system, it has its own risks as well.

One of the main risks of implementing e-commerce is that it can only be aimed at a limited group of customers. Customers who know how to handle technology will benefit from e-commerce whereas the customers who don’t know how to use will be led backwards leaving them frustrated. These customers may be very valuable customers to the bank and even at times may tend to leave the bank and carry out their transactions with another bank.

Another risk is when the organization completely depends on the ecommerce system, they are under the risk of losing the data due to reasons such as computer failures. The bank will have to deal with a lot of problems if they lose the transaction data with their customers and may lead to a complete loss in more time to come. The risk of unauthorized access remains within the customers mind and as well as the organizations point of view.

Running out of storage space required to take down all the transaction details will be another major risk. If the system stops processing at one point due to this reason, all the transaction around the country or global will be affected and customers will not be able to carry out their transactions for a period of time. Also service provider server crashing due to higher internet traffic to the website will be at a major risk. While you may not be aware of and trust your employees the best, you might never know who accesses your data and account illegally. Unauthorized access to your data can also be done by outsiders. Poor configuration of systems and poor encrypted transmission are few factors that can let others access your confidential business data illegally. Machines make our life easier, and technology makes it luxurious. But even technology is bounded by certain barriers. Busy network, with heavy traffic is a common problem. Hardware and software can also because you troubles at any time; yes, might also be when you are on a major transaction. Your processor speed and data storage might also pose as a problem for degradation of your system’s performance.

Section B

Global impact of e-commerce Essay

Electronic Commerce has introduced a new and reliable relationship between electronic media and the valuable customers by acting as a mediator completing the retailer transaction. Electronic Commerce is very valuable and is popular worldwide and is been used by people around the world. Electronic Commerce is known as buying and selling of products and services over the internet or other specific computer networks. The internet together with the reduced cost of telephone calls and the spread of PC ownership has revolutionized electronic commerce which is also known as e-commerce. E-commerce is conducted in two ways which is business to business and business to customer. These facilities provide the customers a lot of benefits leaving the customer satisfactory levels very high. The global impacts of e-commerce on society are in great numbers.

The internet is a worldwide network of computer systems and its major usage around the globe has pushed a lot of business entities to invest and venture on e-commerce. It offers a great deal of new and vacant opportunities for new entrepreneurs who deal through the internet. The internet can be accessed by anyone who clearly means anyone can put up their own business. E-commerce has changed the life style of people and has introduced online shopping which is a common form of business to customer. A lot of people prefer using online shops nowadays to purchase goods and services due to advantages such as cost saving and reduction of time consumption. It is more convenient for the customers to purchase goods and services from the comfort of their own home and goods and services can be purchased at any time of the day in comparison to shopping complexes.

Nowadays a lot of web developers offer different services to help online shops develop public image. E-commerce enhances new website development which is a global impact on society. They provide customized e-commerce websites which is a great opportunity. Web designing is an efficient and effective marketing strategy for almost all online shops and is mainly used by many businesses outsourcing web designers to manage their websites. This clearly has a major impact on the society because it affects the standard of living of different people. For example, ebay is an online store that allows you to bid, sell and buy products. E-commerce has helped ebay mostly in a positive manner allowing more people to buy goods and services online.

E-commerce has made a profound and major impact on society itself. It also forces small scale businesses to shut down or to implement an online division. The people nowadays look at making purchases and spending their own money in a different perspective and this is all due to e-commerce. The look of retail, services and other things that improve our economy work has changed dramatically due to e-commerce and it will continuously influence the method of exchanging goods and services within companies and customers and also how people make orders to buy goods and services for many years to come.

As much as e-commerce has positive global impacts on society, it does carry some adverse effects on society as well. It has created many challenges and adverse effects. When purchases are done online, a tax is been traced on the particular good or service which is been bought by the customer. An issue arises in how customers pay taxes from different states and which state tax should be applied. This is a major adverse global impact on the society.

Another major impact is the payment mode for the transactions that can be done online. The customer is required to have a credit card or else the customer cannot purchase any goods or services. This is an impact on most people living in poor countries and will widen up the enclosure between the rich and the poor. The customers are supposed to have the knowledge of the latest technology in order to keep track of the updates on the latest e-commerce revolution and their services. It is essential that the customers have to provide the details of the payment mode which risks their privacy. This enhances hackers worldwide to trace down information of customer credit card details which is illegal and unauthorized.

E-commerce leads to a major adverse effect on society which is unemployment. Large scale companies which have been carrying out their transactions manually will move with the latest technology enhancement and implement e-commerce resulting a lot of employees to restrict their working capacity or to leave the job. People will have to face a lot of difficulties in being employed at firms and this will create a major problem to the economy of the particular country.

E-commerce has adverse impacts on society in the short run as well as the long run. People tend to think that it is the cheapest and the easiest way to set off a business which is considerable, but in the long run keeping up to date and staying with the business is quiet complicated. It is no hard work to create a website or a homepage so it encourages competition which is a big threat for any e-commerce profits. Another long run adverse impact is that the people will be more dependent on e-commerce. They will rely on e-commerce and all the purchases will be done online and the goods and services will be brought to your doorstep. This impacts the society because people will be lazy to walk into shops to do purchases resulting in health issue long term and the companies running manually will always be at a major loss or breakeven resulting them to go bankrupt. It will result all the companies to implement e-commerce because a large customer base is involvement and the companies don’t have a choice.

This eventually reduces the profits that they used to gain manually because the seller is not specialized in the e-commerce sector and the competition level is very high.

In the fast moving world e-commerce stands a great deal to both the customer and the seller. The global impact of e-commerce works both positively and negatively on society. E-commerce has already made history and is been implemented worldwide with great succession.

Conclusion

After going through all the information gathered in the report, it has come to a conclusion that e-commerce has become a very important party of the society. The internet will definitely have the largest part of our lives allowing all most all the activities of our daily routine to be done in quick succession. Although there are negative aspects of e-commerce, small businesses have tried to accommodate to the needs of the consumers. Overall e-commerce does benefit all businesses even in small ways. This is why it is crucial to understand how e-commerce affects small businesses because it is becoming such a huge part of how society functions that it affects the economy greatly and whatever happens to the economy affects us. This is why is it important to understand this subject because in the long run, it will affect all of us.