TTEC601 Negative implication of NAB banking system digital platform PDF

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Assignment requirement to present negative implication of an online digital platform. Taking an example of NAB banking system the negative implications are presented regarding online platform....

Description

A REPORT ON NEGATIVE IMPLICATION OF FINANCIAL TECHNOLOGY (NATIONAL AUSTRALIA BANK)

Unit Code

TTEC 601

Unit Name

Due Date

Financial Technology and The Digital Economy

20/06/2021

Assignment Number: 3

Dr. Alex Konashevych

Lecturer Name: Students Student Number

Given Name

Family Name

2020022351

PRASHANT

POUDEL

Student Signature: PRASHANT

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PRASHANT POUDEL

TTEC601

TABLE OF CONTENTS

INTRODUCTION...............................................................................................................................3 Negative implications of NAB digital app..........................................................................................3 Proposed solutions to address the negative implications..................................................................6 Conclusion............................................................................................................................................ 7 REFERENCES....................................................................................................................................8

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INTRODUCTION The purpose of this report is to investigate the negative implications of a FinTech project or program. For this report, the fintech project that has been chosen includes NAB’s digital mobile app. NAB introduced the digital mobile app in order to successfully compete with fintech companies emerging in the industry who are on course to disrupt the traditional banking. NAB is one of the major banking institutions in Australia, with more than 13.5 million customers across Australia and New Zealand, and various parts of Asia (Argus and Samson, 2021). Banking institutions have introduced digital banking apps to ensure that they retain their customers and compete favorably in the market. The NAB digital app can meet various needs of consumers, including making withdrawals, payments, printing statements, getting purchase information, and viewing account balances (NAB, 2020). In fact, with the NAB digital app one does not need to visit the physical bank anymore. Although using the NAB mobile banking apps brought many benefits, efficiency, and convenience for the consumer, it has also presented various negative implications. Therefore, this report aims to examine the negative implications of the NAB digital app. Also, the report will seek to propose solutions for the negative implications.

Negative implications of NAB digital app The NAB digital mobile app brings about some negative implications. It is important to note that the implications can either arise on the part of the organization or the consumers of the services rendered by the app. The usage of the NAB app has had various negative implications ranging from economic, social-cultural, privacy, and the security of the consumers. It has also affected how the bank communicates and interacts with its customers in Australia, New Zealand, and parts of Asia, where the company operates (NAB, 2020). On the economic part, the app has had a major negative implication on the spending habits of the consumers who use the app. Many bank customers have openly admitted that they spend more money daily with the NAB digital app than before when the app had not been made available (Talukder et al., 2017). It is important to note that the NAB digital app allows the consumers to make withdrawals and make payments from the account without putting limits on the number of withdrawals or payments allowed in a day or at a time (NAB, 2021). Although the app makes it easier for customers to access and spend their money any time, it makes them spend more money on shopping and making payments than what they

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might have budgeted for. For this reason, some of the consumers have revealed that from the time that the app became available, their saving culture has become poor as they cannot control their spending (Talukder et al., 2017). In other words, the NAB app has encouraged impulse spending, where customers spend on anything, including what they have not budgeted for, especially for the reason the money is easily accessible. On impulse spending, some customers have pointed out that once they receive money in their accounts, they start spending the money immediately since the money is easily accessible through the NAB banking app without visiting the physical bank. Therefore, it can be seen clearly that the app has brought negative implications, more so because the app encourages impulse spending and hence does not encourage customers to improve their saving behavior or culture (Beza and David, 2020). Some studies have indicated that mobile banking apps have made many people sometimes remain without money in their bank accounts as they keep accessing the money easily through the mobile banking app (Talukder et al., 2017). In some cases, some customers have said that they would no longer use the app for their financial transactions, and some have gone ahead to delegate the app from their cell phones. However, in certain cases, these customers reinstall the app, especially when they need to spend the money on emergency (Talukder et al., 2017). As long as the app continues getting improved and more features to include, the customers will continue to spend more and save less, and this is considered a negative economic implication of the NAB app on the consumers. Another negative implication that is becoming more apparent includes that the usage of the NAB app has had negative implications on the safety, privacy, and even security of the consumers of the services offered by the app. Some customers have observed that using the app to make financial transactions may expose them to third parties. Customers fear that system hackers may access private details, which may become a threat to their privacy and security, especially because hackers may use the information to ruin their financial reputation (Alabady et al., 2020). Studies have shown that most customers from various banks have a reason to get worried about the security of the money, especially because most of these financial institutions have not made aware of the customers about the network and system security arrangements in place (Alabady et al., 2020). Although some banks have assured their customers that the private information, they provide is safe, some consumers are skeptical because they have learnt that hackers have accessed the private details of customers in other industries, such as the hotel and hospitality industry (Beza and David, 2020). An example where hackers accessed private information from a hotel's online system includes 3

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McDonald’s India, where malicious hackers accessed illegality the private information of the hotel’s millions of customers in 2017 (Alabady et al., 2020). This private information includes the customers' location and debit card details (Beza and David, 2020). For this reason, some customers fear being exposed to online fraud that may expose their account details. Therefore, to this end, it can be pointed out that the NAB app, to some extent, has brought negative implications for the privacy and security of the consumers. Finally, the other negative implication is that the app has also brought negative implications on the organization itself. The NAB banking app has reduced the physical interactions that the bank enjoyed with its customers before introducing the app. Reduced interaction with the customers implies that the bank and its staff cannot identify the needs of its customers in time, especially because face-to-face feedback has been reduced. It is important to note that constant physical interaction with a customer is significant for any business organization as it helps the organization gauge customer emotions and perspectives regarding the services that the company provides (Argus and Samson, 2021). Physical interaction with customers builds positive customer relationships stronger than when interacting online (Beza and David, 2020). Many customers no longer travel to the bank since they can perform various financial transactions from the NAB banking app. In a survey conducted recently, various customers with bank accounts have indicated that they could not even remember the last time that they visited a bank, meaning that they rarely visit a bank since they can easily access their money from mobile banking apps such as the NAB digital mobile banking app (Argus and Samson, 2021). Apart from the reduced physical interactions with the customers, it also implies that many of the staff, such as bank tellers, have little work to do, which makes them fear for their job security (Talukder et al., 2017). When employees have no work to do, it is important to note that the next course of action that an organization can take is laying them off to cut expenses spent on salaries and wages. Therefore, reduced customer visitations to the bank have had a negative implication on certain employees. In other words, with the introduction of the NAB banking app, the job security of employees has ever since been shaky, and most of the employees have had to acquire skills to remain relevant in the banking sector (Argus and Samson, 2021). It is also important to note that with the introduction of digital mobile banking technologies, many banks are unwilling to employ more employees since their responsibility has been taken over by mobile digital banking apps such as the NAB mobile banking app (Chiu et al., 2018). Therefore, from reduced customer interactions, reduced employee job security, the mobile banking app has had a negative

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implication on the job market, especially on the people seeking to be employed in the banking sector, such as NAB.

Proposed solutions to address the negative implications One of the negative implications of using the NAB mobile banking app includes impulse spending and reduced saving culture. The reason for this is that the money is readily accessible. To ensure that consumers do not spend money on impulse, banks must advise their consumers and provide them with saving options and tips (Talukder et al., 2017). The saving options and tips need to be included on the app as part of the app features. Every time consumers withdraw, pay or make transfers, they must be notified of the importance of developing a saving culture. It is proposed that bank limits and the number of times consumers withdraw, pay or transfer money using the mobile banking app are limited (Chiu et al., 2018). However, the major shortfall of imposing limits is that some consumers may feel that they are being denied the freedom to spend their money the way they want and may abandon the app (Talukder et al., 2017). The second negative implication identified includes negative implications on the consumers' safety, privacy, and security. For this reason, it is proposed that NAB bank puts in place modern network and system security measures. The ultra-modern system security measures will ensure that malicious third parties do not access private customer information (Nilson, 2020). As a result, this will provide enough confidence to the consumers that their information is secure. On the other hand, it has been discussed that some customers are not aware of the security measures put in place to protect their private information and details (George, 2018). It is proposed that FinTech organizations regularly inform consumers about the measures put in place to array fears that third parties may corrupt the system. Many organizations ignore consumer education. However, consumer education is important, especially regarding information security and system (Alabady et al., 2020). Regular consumer education provides confidence that the app system is safe (Ali et al., 2018). Finally, it is proposed that institutions put in place a customer day. On such customer days, the customers are encouraged to physically attend meetings in the organizations to learn about the services that such organizations provide (Talukder et al., 2017). For example, if NAB starts and implements a customer’s day, it will keep interacting physically with the customers through such days. The customer day can be slated to occur even thrice or four times a year. In such days, the company can showcase its services and can directly get verbal responses from the customers attending the events, and hence a company can understand

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customer motivations, needs, and expectations (Talukder et al., 2017). It is also proposed that employees in the banking sector and those hoping to join the sector and whose roles have been taken away by the banking app should constantly update their skills to remain employable in the industry (Talukder et al., 2017).

Conclusion In conclusion, the various negative implications of the NAB mobile banking app are identified and discussed in this paper. One of the negative implications of the NAB mobile banking app on the consumers is that it leads to impulse spending since the money is easily accessible and, as a result, reduces the saving culture. Another negative implication that has been identified includes a negative implication on the safety, security, and safety of the consumer. Some consumers fear that the system may be hacked and malicious third parties expose their personal account details. Other implications include reduced physical interactions with customers and reduced job security. Finally, various solutions are proposed to address the negative implications, including saving advice, consumer education, and upgrading system security to make it hard for hackers to access.

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REFERENCES Alabady, S, Al-Turjman, F & Din, S 2020, A Novel Security Model for Cooperative Virtual Networks in the IoT Era, Int J Parallel Prog 48, 280–295 (2020). https://doi.org/10.1007/s10766-018-050-z Ali, S, Al Balushi, T, Nadir, Z, Hussain, K 2018, Distributed Control Systems Security for CPS. In: Cyber Security for Cyber-Physical Systems. Studies in Computational Intelligence, vol 768. Springer, Cham. https://doi.org/10.1007/9783-319-75880-0_7 Argus, D and Samson, D 2021, NAB (C): Banking in Australia, NAB’s Track Record and Trajectory. In: Strategic Leadership for Business Value Creation. Palgrave Macmillan, Singapore. https://doi.org/10.1007/978-981-15-9430-4_8 Beza, M and David, M 2020, Factors affecting bank customers usage of electronic banking in Ethiopia: Application of structural equation modeling (SEM), Cogent Economics & Finance, 8:1, DOI: 10.1080/23322039.2020.1762285 Chiu, J, Bool, N and Chiu, C 2018, "Challenges and factors influencing initial trust and behavioral intention to use mobile banking services, "Asia Pacific Journal of Innovation and Entrepreneurship, Vol. 11 No. 2, pp. 246-278. https://doi.org/10.1108/APJIE-08-2017-029 George, G 2018, The Hayne royal commission and trust issues in the regulation of the Australian financial sector, Law and Financial Markets Review, 12:4, 175185, DOI: 10.1080/17521440.2018.1548209 NAB 2021, NAB APP: Manage your money securely, wherever you are, accessed from: https://www.nab.com.au/personal/online-banking/mobile-banking-app NAB 2020, About Us, accessed from: https://www.nab.com.au/about-us Nilson, A 2020, NAB bank app down after major tech issues, The Australian, accessed from https://www.theaustralian.com.au/news/latest-news/nab-bankapp-down-after-major-tech-issues/news story/760bd5fb90c3e2c5ea2688b7975a3f14 Talukder, M, Ali, Q and Sathye, M 2017, Mobile Phone Banking Usage Behaviour: An Australian Perspective, Research Gate, accessed from: https://www.researcgate.net/publication/286136306_Mobile_Phone_Banking_Us

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