Beyond profitability: ICT investments and financial institutions performance measures in developing economies
Journal of Enterprise Information Management
ISSN: 1741-0398
Article publication date: 28 July 2020
Issue publication date: 12 April 2021
Abstract
Purpose
The national and global digital transformation makes investments in information and communications technology (ICT) by financial institutions a necessity, not only for gaining a competitive advantage but also for expanding their knowledge and learning about their customers. This study assesses the business value of ICT investments by financial institutions using a mixed-method approach.
Design/methodology/approach
This study adopted a mixed-method approach. First, financial data were gathered from Omani banks' annual financial reports and through a longitudinal quantitative analysis in order to assess the value of ICT in financial institutions' profitability performances. Second, a Delphi qualitative approach was utilized in order to further assess how top managers view the impact of ICT investments in different aspects of business. We used an extended balanced scorecard (finance, customer, internal process and learning and growth) and a sector perspective to address how future ICT investments can offer value that goes beyond traditional metrics of profitability.
Findings
The results of the longitudinal study demonstrated significant evidence of the impact of ICT investment on finance performance indicators; ICT value is significantly positive. Furthermore, the results indicated that there is an acceptable consensus among business and ICT managers that ICT is linked to performance indicators beyond financial; ICT value is linked also to customer indicators, internal process indicators and learning and growth indicators in addition to sector indicators.
Originality/value
ICT is vital for a diversified and knowledge-based economy, especially for developing countries, because modern banking and financial institutions are relatively new in economies such as those that had previously relied on cash and informal financing institutions. Therefore, continued ICT investments face challenges and may not succeed. Most of the existing literature on ICT value has focused on tangible financial performance indicators. The financial evaluation of intangible performance indicators of ICT investments still remains a problematic area of high relevance to decision-makers. The present study provides an integrated assessment that enables financial institutions to develop their strategies and assessments in terms of ICT investments and to go beyond typical, tangible financial profitability indicators. Furthermore, it integrates assessment indicators that are beyond organizations themselves and reaches sectors and countries. This type of investigation is limited in the literature yet important for the financial sector as it is highly integrated by nature and critical to the development of a nation's economy.
Keywords
Acknowledgements
The authors thank Prof. Rajiv Kohli from William and Mary (USA), the consultant of this SQU funded research project. They would like to also thank the participating financial institutions business and ICT managers greatly for their valuable inputs.Funding: This work benefited from an internal small grant from Sultan Qaboos University.
Citation
Al-Busaidi, K.A. and Al-Muharrami, S. (2021), "Beyond profitability: ICT investments and financial institutions performance measures in developing economies", Journal of Enterprise Information Management, Vol. 34 No. 3, pp. 900-921. https://doi.org/10.1108/JEIM-09-2019-0250
Publisher
:Emerald Publishing Limited
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