Cooperative Bank of Kenya was founded in 1965 as a
cooperative society but was not able to fully function as a bank until 1968
when its registration was acknowledged under the Banking Act (Co-operative
Bank, 2011). The bank would however serve cooperative societies almost exclusively
until 1994 when it converted to a fully-fledged commercial bank with the
mandate to provide a range of services which included personal banking as well
as banking for corporate and institutional customers (Co-operative Bank, 2011).
Issues of information management and ensuring the integrity of data began to
arise with a growing number of clientele which made it difficult for the bank
to operate efficiently with their traditional data handling processes which
mainly bordered on the use physical files. The bank would then seek to solve
this problem by embarking on an ambitious MIS program. In fact, the bank is
known to have been the second bank to create a stable network of its branches
countrywide hence enabling them to offer centralized banking based on the fact
that data on clients could be accessed from all branches without much risk of
compromise (Tieto, 2011). This was a major advantage given that the system made
it very convenient for customers to access services without necessarily having
to travel long distances to their original branches. Centralized banking refers
to a system where client information is shared across all branches hence
enabling any client to access any of the required services from any branch of
the bank countrywide (Otieno, 2006). This use of MIS enabled them to reduce
their loss position by 60% in 2001 through the handling of increased volumes
without any major changes in the composition of their employees (Co-operative
Bank, 2011). The bank would realize profitability in 2002 and subsequently
experience some of the highest rates of growth in the economy to be among the
largest and most profitable banks in the Kenyan market (Co-operative Bank,
2011).
The use of MIS is common in the banking sector and
is widely used to create a strategic advantage for the banks on a number of
fronts. It helps ensure the integrity of data in banks through the
establishment of programs that safeguard the data security. It also enables
better internal controls as well as the provision of value added services aimed
at enhancing the level of customer satisfaction in the market (Tieto, 2011). Cooperative
Bank has been keen to embrace MIS in its operations and is bound to have
experienced some merits and demerits in the process. Banking information is
among the most sensitive pieces of information for consumers with banks being
the main targets for unscrupulous individuals who may wish to access other
people’s financial information. This research therefore focuses on how the Cooperative
Bank uses MIS to ensure that their data remains secure and not prone to any
compromise.
The topic of this research is: the role of MIS in
enhancing Data Security among the financial service providers in Kenya: A Case
Study of the Cooperative Bank of Kenya
The objective of this research is to establish the
extent to which MIS is used in the bank to ensure data security and the reason
for such usage. The research shall also establish any challenges that may have
been encountered safeguarding data integrity at the Cooperative Bank. The
benefits of such systems to the bank and to its customers will also be
elaborated upon. The research will
therefore answer the following research questions:
- Does data security constitute a competitive advantage to the bank and how?
- What management information systems consistent with data security are in place at the Cooperative Bank?
- Is data security at the bank ensured as a result of the MIS programs adopted?
- What are the challenges associated with the establishment and implementation of the MIS?
- Does the preoccupation with data security compromise on the quality of service to the customers?
- What other MIS have been adopted by the bank and do they reinforce or conflict with the goal of ensuring data security?
2.3 Rationale for the
study
From historical times, the banking sector has been
prone to security breach as far data security is concerned. While many reasons
may exist for people wanting to compromise data security, the fact remains that
the practice can potentially erode the confidence customers have in the banking
sector and lead to a financial crisis of monumental proportions. MIS is fast
becoming the newest platform on which the concerns on data security are
addressed. Various studies have been conducted at the industry level to
establish how players in the industry embrace MIS and to what extent the
systems help in the development of value-added products in the market. However,
few of the studies have specifically addressed the question of data security
and how MIS impacts it. This research will specifically focus on the
Cooperative Bank of Kenya highlighting the specific experiences that the bank
has had with data security, its MIS initiatives, and how the programs adopted
have helped enhance data security.
The banking industry in Kenya has in many occasions
been described as one of the most prolific users of management information
systems in their operations (Central Bank of Kenya, 2011). This is perhaps due
to the strategic importance of MIS in assuring service quality and hence
greater customer satisfaction. Management information systems may be described
a system that provides the information needed to run organizations more
effectively and efficiently. MIS uniquely combines three key elements
(technology, information, and people) in a manner that not only adds value to
the information available, but also enables the organizations to accomplish
larger volumes of work with the same or a lower number of employees (Ombati,
Magutu, Nyamwange and Nyaoga, 2010). This may be illustrated by the growth
patterns of Kenyan banks which have in many cases not been proportionate to the
growth of the employee tally in the affected banks (Tieto, 2011). The benefits
of information management systems in organizations are immense. Firstly, these
systems help strengthen the internal controls and procedures in organizations
hence lessening any losses that would usually be associated with inefficiencies
and improprieties (Mwangaza Counseling Services Ltd, 2004). The systems can
also be used to enhance the provision of value added services thereby helping
banking institutions to create a competitive advantage in the market (Ombati,
Magutu, Nyamwange and Nyaoga, 2010). Such value added services may include the
use of automated teller machines (ATMs), internet banking, and mobile phone
banking among others (Central Bank of Kenya, 2011). MIS is therefore proving to
be a crucial strategic tool in Kenyan banks including the Cooperative Bank of
Kenya.
The research shall be gathering information that
will both be representative of the perceptions of the bankers as well as
factual figures on data security and its role in value addition to the bank.
The research philosophy to be predominantly used in this study will therefore
be the realist philosophy.
The research shall predominantly be primary
research. However, secondary research shall be conducted with an aim shed light
on some of the issues that may need interpretation and analysis. Secondary
research shall make use of previous studies to enrich the findings of this
research.
The data collection method for primary research
shall be through interviews. This method was chosen due to its advantage of
minimizing misinterpretations as well as its ability to capture the perceptions
of the employees.
The population for the research shall be the staff
of Cooperative Bank across the branch networks in the country. A sample of 100
employees shall be settled upon with 30 of them being management level staff.
Sampling shall both be judgmental and random where both methods shall be
applied proportionately applied to assure the quality of the findings.
The data shall be analyzed using qualitative
methods. Presentation shall be done using various visual aids for ease of
reference and clarity of understanding.
For more theory and case studies on: http://expertresearchers.blogspot.com/
For more theory and case studies on: http://expertresearchers.blogspot.com/
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