In the current reality, most banking activities are propagated by the advancing technology in information technology (BankNetIndia 2011). Moreover, since the discovery of Automatic Teller Machines (ATM) most of the back-office work has been automated and most of the transactions in the banking industry are being carried out automatically. Success in banking in the world today depends on a bank’s ability to specialize in advancing in information technology. Though many banks assume that IT is more of a technological necessity, IT is also a very resourceful aspect in a bank and can help it in earning a competitive edge over its competitors. This paper is intended to come up with a competitive strategy based on IT and its implementation process. A bank’s success is determined by appropriate use of its resources both tangible and intangible to earn a better competitive strategy in the market that will drive it to the right direction. Resources could be a good reputation, human skills and financial endowments.
Financial institutions deliver a variety of financial services like investment services, offering loans and banking to a large number of consumers both individuals and small business enterprises. Banks also gives full financial products and services to satisfy the needs of both big and small corporations, institutional investors, individual investors and also governments (WebFinance 2011). A bank can have several branches that comprise local offices in the areas they are found and are complimented by automatic teller machines, internet banking services, electronic delivery systems and cell phone/mobile banking platforms. Specific products and banking services offered by banks include accounts, loans for individuals and business enterprises. Many banks have been established in the banking industry and all of them aim at serving the same customers. The banking industry therefore requires a bank to come up with a competitive strategy that will help it earn a sustainable competitive advantage over its competitors.
Competitive strategy relates to how a company can compete in a given business. It is concerned with showing the way a firm would gain a competitive edge by using a certain distinctive way of competing (Michael E Porter publications 2011). Competitive advantage often relates to the ability of a company to attain above average profits in a given business (Jackson R. 2011). A source of a firm’s competitive advantage is characterized by things like value contribution where the resources used by a given firm are more superior in one way or another, or a firm uses a more superior advantage such as use of a more advanced method of production that is less costly hence the firm gets a cost advantage. Rareness is another common aspect of competitive advantage. This is where the firm has access to a given set of rare resources not easily available to other competitors.
A bank’s competitive strategy must be integrated with IT systems which earn...