Managing information system for a better banking services
par Jean Damascene HABARUREMA
Kigali independant université - Graduate 2009
As it has been defined by LOOIJEN, M, Management Information Systems (MIS) is all hardware with the relevant basic software and application software, dataset and people involved into producing information for the purpose of right decision making.» 17
16 SPROUT, A., «The Internet inside Your Company,» Fortune, November 27, 1995, pp.161-162
MURDICK G, JOEL E. «Ross and James R: Information Systems for Modern Management,» Edition, McGraw
Hill 2006, p.14
In other words, MIS is a set of five following components: Hardware, Software, Data, Procedures and People necessary to produce information, useful for decision making. This can be presented into the follow drawing:
Figure 3: Management Information Systems (MIS) Components
Source: MURDICK, G. (2006, 16)
126.96.36.199. Definition of the hardware
Hardware is the mechanical and electronic parts that constitute a computer system, as distinguished from the computer programs (Software) that drive the system. The main hardware elements are the Central Processing Unit, Disk or magnetic tape data storage devices, Cathode-Ray Tube display terminals, keyboards, and Printers.18
18 STEWART, THOMAS, «What Information Costs,» Fortune, July 10, 1995, pp.86
188.8.131.52. Computer Hardware
A computer is a machine that can be programmed to accept data (input), process it into useful information (output), and store it away (in secondary storage devise) for safekeeping or later reuse. Equipment associated to that computer is called hardware and consist of the central processing unit, primary storage, secondary storage, input devices, output devices, and communications devices.
Figure 4: Hardware components of a computer system.19
Source: HAAG, S. (2000, p121)
Processing Unit (CPU)
- Central Processing Unit (CPU)
The CPU is at the heart of all computers. All data passes through it.
The CPU is the computing part of the computer. Also called the processor, it is made up of the control unit and ALU. Today, the CPUs of almost all computers are contained on a single chip. The CPU, clock and main memory make up a computer.
19 HAAG, S. « Information Technology: Tomorrow's Advantage Today,» McGraw-Hill, New York, 1996, p37
Micro, or personal, computers use microprocessors that run at approximately 500 megahertz per second. Mainframe computers measure their speed in millions of instructions per second.
- Random Access Memory
Random access memory (RAM) consists of microchips that allow for the temporary storage of data. RAM functions as the workspace for the CPU. The "workspace" temporarily holds the program and the active calculation before deriving an outcome. One example would be using a word processor's spelling check tool on a document. The words being checked and the program would be temporarily stored in RAM.
- Input Devices
Computers receive information from a variety of sources. The most common input device is a keyboard, but the pointing device (mouse or trackball) is equally important with today's GUI interface. Other input devices include video cameras, scanners, microphones, digital cameras, CD-ROMs, and voice commands that operate the computer.
Figure 5: Input devices
Sources: STEWART, T. (1995, pp.125)
- Output Devices
The computer monitor is an output device that is changing rapidly. For several decades computer screens only displayed letters or numbers onto a green or amber screen. As computers began using GUIs, the display device took on greater significance. The success of Apple's Macintosh computer with the graphical user interface caused Microsoft to come out with their GUI, called the Windows Operating System. Thus, all current operating systems use GUI and color for both print and images.
The standard monitor for many years has been a cathode-ray tube (CRT). CRT monitors are still very common, and they are capable of high-quality pictures. However, they are inherently bulky and relatively heavy. Portable computers became possible only when smaller and lighter-weight and display units became available. Current portable or laptop computers use LCD (liquid crystal display) panels, which are flat. LCD panels are now also being used for desktop monitors. LCD units cost about three times what comparable CRT units do, but they occupy far less space and have a very bright picture.
Computer projectors are commonly used to display data or information onto a large screen. This setup can be used to demonstrate programs, provide visuals for training, or show Web sites to large groups of people. Many businesspeople travel with both a portable computer and a computer projector to visually display information for training or to aid in sales.
The GUI and the general popularity of computers have caused significant changes in the hardware available for printing. The earliest printers were essentially automatic typewriters and had little flexibility. Today, there are wide variety of printers currently available that are capable of nearly professional-quality output.
Laser printers, which first became available in the early
1980s, had an inherent
size or typeface. Further, they can print text in any direction and also print pictures. Current laser printers print at a very crisp 1200 dots per square inch and are considered to be very reliable. Color laser printers are also available, though they are much slower and also more expensive than black-and-white printers.
Ink-jet printers essentially spray ink onto the paper. They are normally very quiet, are relatively inexpensive, and have high-quality output. Further, all the newest ink-jet printers offer reasonably high-quality color printing. Both the in creased use of the Internet to download color pictures and the prevalence of digital cameras have significantly increased the popularity of color ink-jet printers.
Figure 6: Output devices
Source: STEWART, T. (1995, pp.129)
- Connection Devices
Partially because of the popularity of the Internet, more and more computers of all kinds have some means of connecting to other computers. For desktop computers in schools and businesses, a network interface card (NIC) is frequently used. Portable computers and home desktop units typically use a modem as a connection device. Modems connect a personal or portable computer to dial-up networks through a regular telephone line. This connectivity has served as a boon to telecommuting and changed the way work is
performed in organizations. Modems and NICs can serve as both input and output devices, depending on whether the computer is receiving or sending information.
- Sound Cards and Speakers
Today, any multi-media computer contains a device to reproduce sound. Typically this means that computers have a sound card that contains a mini-amplifier and connects to speakers. Sounds can also come from programs, from the Internet, and from participants in desktop teleconferences. A sound card can also function as an input device when it utilizes a microphone.
- Storage Devices
The number and size of storage devices are increasing. Floppy disks are portable, but they can store only a relatively small amount of information compared to the newest storage units, Zip disks, which are also portable and small. A Zip disk has about a hundred times the storage capacity of a floppy disk. Hard drives are internal storage devices that hold the computer's operating system, the application software, and other files.20
184.108.40.206. Classifications and Definitions of Computers
There are three main classifications of computers: mainframe, minicomputer, and microcomputer. The major categories can only be used as general guidelines because of the huge variety in product lines. Computer "servers" have also been included in this discussion because of their important role in networking and Internet applications.
A mainframe computer is any large computer system, such as that
used by the Internal
20 STEWART, T. «What Information Costs,» Fortune, July 10, 1995, pp.119-121
ticketing system, which can have thousands of users connected to one computer. The next smaller-sized computer is termed a minicomputer. It is of medium scale and can serve up to several hundred users. The microcomputer is the smallest in size and power, and the term is "generally synonymous with personal computer, such as a Windows PC or Macintosh, but it can refer to any kind of small computer". Very small computers include hand-held units and pen computers that store information the user enters with a stylus rather than a key board.
A "server" computer is one that is used to connect a cluster of personal computers through using a local area network (LAN). World Wide Web pages are also stored on a "Webserver," which is typically a dedicated personal computer.
Figure 7: Classification of the computer
(1) (2) (3) (3)
Mainframe (1) Mini computer (2) (3) Desktop & Laptop PCs
Source: HAAG, S. (2000, p57)
220.127.116.11. PC technical measurement capacities
Scientists give us the following technical characteristics of a Personnel Computer according MIS discipline's norms:
- The speed of data processing: more or equal to 1GHZ - The local disc storing capacity: more or equal to 10GB - The temporally Memory (essentially RAM): more or equal to 100MB
The software is the set of instructions that cause a computer to perform one or more tasks. The set of instructions is often called a program or, if the set is particularly large and complex, a system. Computers cannot do any useful work without instructions from software; thus a combination of software and hardware (the computer) is necessary to do any computerized work. A program must tell the computer each of a set of minuscule tasks to perform, in a framework of logic, such that the computer knows exactly what to do and when to do it.
There are two major types of software: system software and application software. Each kind performs a different function.
18.104.22.168. The System Software
System software is a set of generalized programs that manage the computer's resources, such as the central processor, communications links, and peripheral devices.
22.214.171.124. The Application Software
Application software describes programs that are written for or by users to apply the computer to a specific task. Software for processing an order or generating a mailing list is application software.21
21 LAUDON, K. and LAUDON, J.P. : Management Information Systems, Prentice-Hall of India: New Delhi, 1999, pp.127
1.3.3. DATA 126.96.36.199. Definition
Data must be distinguished from information (as defined before), and this distinction is clear and important for our purposes. Data are facts and figures that are not currently being used in a decision process and usually take the form of historical records that are recorded and filed without immediate intent to retrieve for decision making. An example would be any one of the supporting documents, ledgers, and so on that comprises the source material of profit and loss statements. Such material would only be of historical interest to an external auditor.
The term «database» is perhaps one of the most overused and misunderstood terms in today's business environment. Many of people will tell you that they have a database, in fact, have only files. Others simply refer to a gathering of information as a file. In reality, many of these files are probably databases. Consider these definitions of a database:
Collection of data organized to serve many applications Collection of related files
Integrated collection of computer data
Collection of files
Superset of related files
This is why it's easy to misunderstand the database concept. Each definition refers to a database as a «collection,» but describes the collection differently. Let's adopt the following definition of a database:
A database is a collection of information that you organize and access according to logical structure of that information.
A procedure is a specified series of actions or operations which have to be executed in the same manner in order to always obtain the same result under the same circumstances. Less precisely speaking, this word can indicate a sequence of activities, tasks, steps, decisions, calculations and processes, that when undertaken in the sequence laid down produces the described result, product or outcome. A procedure usually induces a change. It is in the scientific method.»22 Procedures can differ from one organization to other; it depends on the industry in which the firm operates.
188.8.131.52. Meaning of people in the organization
It's true that any individual who works in Human Resources must be a "people person." Since anyone in this department deals with a number of employees, as well as outside individuals, on any given day, a pleasant demeanor is a must.
None can talk about employee in organization and forgets to talk upon motivation because in today's turbulent, often chaotic, environment, commercial success depends on employees using their full talents. Yet in spite of the countless of available theories and practices, managers often view motivation as something of a mystery. In part this is because individuals are motivated by different things and in different ways.23
In addition, these are times when delivering and flattening of hierarchies can create insecurity and lower staff morale. Moreover, more staff than ever before are working part time or on limited-term contracts, and these employees is often especially hard to motivate.
22 KEOHAN, M. «The Virtual Office: Impact and Implementation,» Business week, September 11, 1995, pp.95-98
23 BARLEY, D., «Groupware and Your Health,» Health Management Technology, Forbes, September 1995, pp.20-22
184.108.40.206. Advantages of Employee Motivation
A positive motivation philosophy and practice should improve productivity, quality, and service. Motivation helps people:
Among various behavioral theories long generally believed and embraced by businesses are that of Abraham MASLOW.
MASLOW, a behavioral scientist and contemporary of HERZBERG's, developed a theory about the rank and satisfaction of various human needs and how people pursue these needs.
220.127.116.11. MASLOW's hierarchy of needs as the employee motivation tool
In 1954, MASLOW first published Motivation and Personality, which introduced his theory about how people satisfy various personal needs in the context of their work. He postulated, based on his observations as a humanistic psychologist, that there is a general pattern of needs recognition and satisfaction that people follow in generally the same sequence. He also theorized that a person could not recognize or pursue the next higher need in the hierarchy until her or his currently recognized need was substantially or completely satisfied, a concept called prepotency. MASLOW's hierarchy of needs is shown in table-1. It is often illustrated as a pyramid with the survival need at the broad-based bottom and the self-actualization need at the narrow top. 24
24 STODGILY, R. «One Company, Two Cultures,» Business Week, January 22, 2004, p.68
Table 1: Maslow's hierarchy of needs
Source: STODGILY (2004, 24)
On basis of various literatures about motivation, individuals often have problems consistently articulating what they want from a job. Therefore, employers have ignored what individual say that they want, instead telling employees what they want, based on what managers believe most people want under the circumstances. Frequently, these decisions have been based on MASLOW's needs hierarchy. As a person advances through an organization, his employer supplies or provides opportunities to satisfy needs higher on MASLOW's pyramid.
CHAPTER 2 MANAGEMENT INFORMATION SYSTEMS IN FINABANK
The present chapter has the objective of investigating upon the Management of Information Systems within FINABANK SA, for the 2004-2008 time frames. Referring to the simplest definition of Management Information Systems brought out by LOOIJEN (located in the first chapter), this analysis is based on five MIS components (Hardware, Software, Data, Procedures and People). Prior we do that, let's first present briefly the organization on which the study has been curried out:
2.1. PRESENTATION OF FINABANK 2.1.1. FINABANK-Rwanda Background
In 2004, FINABANK acquired a formerly insolvent privately-owned commercial bank known as BACAR, transforming it into a major commercial bank. The bank which had obtained a full banking license in 1983 and was one of the first privately owned banks formed in the country had been under central bank supervision due to managerial issues. Following extensive renovations, the bank was formally launched in 2008 with the redesign and renovation of the new Head Office along with the formation of the new SME department.
The bank's principal activities comprise corporate banking, international trade financing and retail banking financial services and products to corporate and established medium and small businesses as well as salaried workers.
The bank has revamped all its operations and seeks to become a leader in small and medium business banking. FINABANK was the first Kenyan bank to venture into the Rwandan market and its entry into the market is part of an ambitious expansion plan that seeks to see it becomes the regional SME bank of choice through its excellent customer service, cross-border products and modern look branches countrywide. Since its entry
into the Rwandan market, FINABANK has come to be regarded as a leader among its peers. 25
2.1.2. FINABANK Corporate Governance
The Bank pursues policies and strategies aimed at entrenching sound corporate governance practices. In doing this, the Bank benchmarks itself with best practice as per statute, prudential requirements and world class practice.
The Board of Directors is responsible for the governance of the Bank. To discharge its mandate effectively, the bank delegates its authority to Board Committees which meet quarterly or on ad hoc basis whenever need arises. The authority for the day to day running of the Bank is delegated to the Managing Director.
Currently, the Bank has four Board Committees, namely Board Risk Management, Board Audit, Board Credit and Board Assets and Liabilities (ALCO). All these committees operate as per the provisions of the country's Prudential Guidelines. In line with the Corporate Governance requirements under the Prudential Guidelines the Bank has ensured compliance in the following ways:
25 FINABANK, «Annual Report,» Kigali, 2006, p.2
5. With the Board and Directors Charters in place, the Board conducts an annual Board Evaluation and Directors Peer Evaluation.
The Board also ensures that effective communication with the stakeholders is upheld. This is done through holding of AGM with full compliance of the requirements of the Companies Act and provision of annual Report and financial statements. Considering, ones financial services are provided to; FINABANK produces financial products into four categories.26
2.1.3. FINABANK's Mission
«To be recognized as the leading SME bank that encourages entrepreneurship, with a reputation for providing a proactive and personalized service while practicing the highest standards of integrity in all that we do.»27
2.1.4. FINABANK Social Responsibilities
Corporate Social Responsibility (CSR) has over the years been embraced by organizations that seek to make a difference in the community they serve. CSR is important as it enhances a good relationship between the organization, its clients and the community. Through CSR, the organization continues to communicate that it is interested in the needs of its clients and the community they serve. FINABANK is committed to growing the face of its CSR programs through its continued focus on partnering with others to meet the real needs of the society rather than the perceived needs. In addition to supporting children and health programs, we also seek to give back directly to our clients through free business workshops for our Small and Medium Enterprises (SME) clients in addition to sponsorship of various activities that influence the community.
26 FINABANK, «Annual Report,» Kigali, 2006, p. 2
27 Idem, p.3
2.3. THE «HARDWARE» COMPONENT OF THE FINABANK INFORMATION SYSTEM
Within FINABANK, hardware is composed by all tangible machinery allows the bank: capturing, conveying, creating, treating, cradling, storing and communicating information to internal as well as external users.
As particularity of FINABANK, this one has many subsystems under Management information systems and all putted together enable this bank to provide services of quality to its clients at right time. Among these subsystems we can say: EQUINOX Banking System, Video Surveillance System, Queue Management System, Network Communication System, Hard Communication System, Wireless Access System and Fire Safety System and each system requires its own and specific hardware.
2.3.1. Equinox Banking Hardware
EQUINOX is the Banking System currently used by FINABANK to handle all problems related to the daily banking activity. Computer provides the underlying physical foundation for the FINABANK's IT infrastructure means that it is the principal hardware tool used by this system.
The following table indicates the situation of current hardware used by EQUINOX Banking System within FINABANK:
Table2: Equinox System hardware
Source: Primary Data (2008)
Client/Server computing systems is the architecture of choice for helping organizations control costs and remain competitive in the ever- changing global economy.
Client/Server allows an organization to store data centrally, but share processing between the server and PC client workstations so that they can run many applications and process work simultaneously.28
28 FINABANK, «Equinox Banking System: The back Office Processing,» Kigali, 2008, pp.2
Figure 8: Equinox Banking System
As seen from the illustration above, there are three basic hardware components that work together in the Client/Server environment in FINABANK:29
18.104.22.168. File Server
A file server is a computer attached to a network that has the primary purpose of providing a location for the shared storage of computer files (such as documents, sound files, photographs, movies, images, databases, etc.) that can be accessed by the workstations that are attached to the computer network. The term server highlights the role of the
29 Idem 2008, pp3
machine in the client-server scheme, where the clients are the workstations using the storage. A file server is usually not performing any calculations, and does not run any programs on behalf of the clients. It is designed primarily to enable the rapid storage and retrieval of data where the heavy computation is provided by the workstations.
The File Server houses the applications and handles network administration. The Equinox Banking System application software is stored on the file server. Additionally, the file server directs the paths on which message requests travel. For example, if a teller requests an account balance, the message requesting the balance goes from the PC Client Workstation, through the File Server, then to the Database Server. In response, the Database Server finds the balance, sends it back through the File Server to the PC Client Workstation.