Read the scenario below and answer all questions:
Suppose a customer visits ABC bank to open a new account. The bank representative asks for the
customer's identification and other personal information. The representative enters this
information into the bank's computer system. The system uses this information to create a new
customer account, which is then stored in the bank's database.
Once the customer's account is created, they can use their online banking service to view their
account information, transfer funds, pay bills and perform other banking activities.
When the customer makes a deposit or a withdrawal from their account, the bank's teller uses a
computer system to record the transaction. The system updates the customer's account balance
and generates a receipt for the transaction.
Moreover, if a customer applies for a loan, the bank uses its information system to process the
application. The system checks the customer's credit history, income and other relevant
information to determine whether to approve or reject the loan request.
Q.1.1 Identify two (2) different types of information systems used in a typical business
organisation other than a Transaction Processing System or Management
Information System.
(2)
Q.1.2 Answer all questions.
Q.1.2.1 Differentiate a transaction processing system differ from a management
information system and provide relevant examples to substantiate the
difference.
(8)
Q.1.2.2 Based on the scenario above, provide two examples of transaction
processing systems that are used by the bank.
(2)
Q.1.3 Identify the competitive advantage strategy applied in each of the following short
scenarios.
Q.1.3.1 Suppose ABC bank wants to attract more customers by offering lower
fees and interest rates than its competitors.
(1)
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Q.1.3.2 ABC Digital Bank offers a suite of digital banking services that cater
specifically to the needs of tech-savvy consumers. These services may
include mobile banking apps, online account opening, 24/7 customer
support and personalised financial advice.
(1)
Q.1.3.3 ABC Bank will invest heavily in innovative banking technology, such as
artificial intelligence and blockchain technology. The bank will also offer
a range of digital banking services, such as mobile banking apps and
online account opening, which make banking more convenient for techsavvy consumers.
Q.1.1 Two different types of information systems used in a typical business organization are:
1) Decision Support System (DSS): This system is designed to support managerial decision-making by providing the necessary information and analysis tools. It helps managers make informed decisions based on data and predictions. An example of a DSS is a marketing decision support system that analyzes sales data and market trends to determine the best marketing strategies.
2) Customer Relationship Management (CRM) System: This system is used to manage and analyze customer interactions and data throughout the customer lifecycle. It helps businesses build and maintain customer relationships by storing and tracking customer information, preferences, and interactions. An example of a CRM system is a salesforce automation system that tracks customer interactions, manages leads, and helps sales teams improve customer engagement.
Q.1.2.1 Transaction Processing System (TPS) differs from a Management Information System (MIS) in the following ways:
- Purpose: TPS is focused on processing and recording day-to-day transactions, such as recording sales, payments, or withdrawals. Its primary purpose is to ensure accurate and efficient transaction processing. On the other hand, MIS helps managers in decision-making by providing them with summarized and aggregated information about the organization's performance and operations.
- Level of Detail: TPS deals with detailed, operational-level data, capturing every transaction and its specific attributes. It is designed to handle large volumes of individual transactions. MIS, on the other hand, provides managers with summarized and aggregated information, often in the form of reports or dashboards, presenting a higher-level view of the organization's performance.
Example: In the given scenario, the customer's identification and personal information being entered into the bank's computer system is a transaction processing activity. This data is recorded at an operational level to create a new customer account. On the other hand, the online banking service, which allows customers to view their account information and perform banking activities, falls under the management information system category. It provides summarized and aggregated information about the customer's account.
Q.1.2.2 Two examples of transaction processing systems used by the bank in the scenario are:
1) Customer Account Creation System: This system processes the customer's identification and personal information to create a new customer account. It records the transaction of opening a new account and updates the bank's database with the customer's details.
2) Teller Transaction Recording System: This system is used by bank tellers to record deposit or withdrawal transactions. It updates the customer's account balance and generates a receipt for the transaction.
Q.1.3.1 The competitive advantage strategy applied in this scenario is Cost Leadership. ABC bank aims to attract more customers by offering lower fees and interest rates than its competitors. This strategy focuses on providing products or services at a lower cost than competitors, thereby gaining a competitive edge and attracting price-sensitive customers.
Q.1.3.2 The competitive advantage strategy applied in this scenario is Differentiation. ABC Digital Bank offers a suite of digital banking services that cater specifically to the needs of tech-savvy consumers. By providing services such as mobile banking apps, online account opening, 24/7 customer support, and personalized financial advice, the bank differentiates itself from competitors and targets a specific customer segment.
Q.1.3.3 The competitive advantage strategy applied in this scenario is Technological Innovation. ABC Bank will invest heavily in innovative banking technology, such as artificial intelligence and blockchain technology. By offering a range of digital banking services, such as mobile banking apps and online account opening, the bank aims to make banking more convenient for tech-savvy consumers. This strategy focuses on leveraging technology to provide superior products or services and gain a competitive advantage.
A1.1 Two different types of information systems used in a typical business organization are:
1. Decision Support System (DSS): A Decision Support System is designed to assist individuals or groups in making informed decisions based on various types of data and information. It provides analytical tools and models to help in analyzing and evaluating alternative solutions. Examples of DSS include financial planning systems, executive information systems, and data mining tools.
2. Customer Relationship Management (CRM) System: A CRM system is used to manage and analyze customer interactions and data throughout the customer lifecycle. It helps businesses to improve their customer service, sales, and marketing strategies. Examples of CRM systems include Salesforce, Microsoft Dynamics CRM, and Zoho CRM.
Q1.2.1 A Transaction Processing System (TPS) is primarily focused on processing and recording day-to-day business transactions, such as sales, purchases, and inventory changes. It ensures that these transactions are accurately and efficiently processed and recorded. On the other hand, a Management Information System (MIS) is designed to provide managers with the information they need to make decisions and manage the organization effectively.
The main difference between TPS and MIS lies in their purpose and the level of detail they provide. TPS focuses on operational activities, capturing and processing detailed transaction data in real-time. It provides the raw data for MIS. MIS, on the other hand, aggregates and summarizes data from various TPS and other sources to generate reports and information for management decision-making.
For example, in the given scenario:
- The system used to create a new customer account and store it in the database is a TPS as it involves processing and recording of customer information.
- The system used by the bank's teller to record customer deposits and withdrawals and update the account balance is another example of a TPS.
Q1.2.2 Two examples of transaction processing systems used by the bank in the given scenario are:
- The system used to record customer deposits and withdrawals and update the account balance when a customer makes a transaction at the bank.
- The system used to process loan applications, check credit history, income, and other relevant information to approve or reject loan requests.
Q1.3.1 The competitive advantage strategy applied in the scenario where ABC bank wants to attract more customers by offering lower fees and interest rates than its competitors is cost leadership. By offering lower fees and interest rates, the bank aims to attract price-sensitive customers and gain a competitive advantage based on cost.
Q1.3.2 The competitive advantage strategy applied by ABC Digital Bank, which offers digital banking services specifically designed for tech-savvy consumers, is differentiation. By providing mobile banking apps, online account opening, 24/7 customer support, and personalized financial advice, the bank aims to differentiate itself from competitors and attract customers who value convenience and technological innovation.
Q1.3.3 The competitive advantage strategy applied by ABC Bank, which invests heavily in innovative banking technology such as artificial intelligence and blockchain and offers a range of digital banking services, is technology leadership. By leveraging cutting-edge technology and providing convenient digital banking services, the bank aims to differentiate itself from competitors and attract tech-savvy customers.