Introduction

E-business technologies refer to the application of internet technology to increase the profitability or productivity of a business. The term is generally used to describe electronic business which involves utilization of computers and the internet. E-business technologies are used for customer and technical support (Ravi 2008, p. 122). Virtually, all businesses in the modern world are relying on e-business. This paper discusses the use of e-business technologies in the banking industry and focuses on JP Morgan Chase. JP Morgan Chase is among the four largest banks in The Unites States. It is a multinational bank with branches in various parts of the world dealing with retail, investments and securities. The asset base of the bank is estimated over 2 trillion dollars and it was ranked by Forbes as second largest public company in the world. In 2011, the bank surpassed The Bank of America to become the largest bank in the United States based on the ownership and value of assets (Stanton 2012, p. 105). The bank owns five subsidiaries in the United States and operates in over sixty countries.

For management reporting purpose JP Morgan is divided into six segments: commercial banking; investment banking; personal and business banking; card services and consumer lending; asset management and corporate banking; and home lending, treasury and securities services(Stanton 2012, p. 106). The investment banking division has several teams to deal with various industries including media and telecommunication; real estate and technology; metals and mining; financial institutions; natural resources; healthcare; and consumer and retail. The JP Morgan and Chase brands serve the most prominent government, institutional and corporate brands.

Critical Assessment of How E-Business Technologies Have Altered the Nature of Competition within the Industry

Information and communication technology has become so integral to the conduct of business in the globe to an extent that if the technology collapses, so will the world economy. Technology has become the heart of the banking industry in a world where the banking industry is the heart of every economy (Cronin 2012, p. 43).  E-business technologies have revolutionized the banking industry and altered the nature of competition in the industry. E-business has become a strategic marketing tool and has enhanced the competitive edge of operations in the banking industry (Rhodes 2011, P. 83). Traditional banking concepts have been replaced with electronic banking. All global and national stakeholders in the industry are connected through a motor way of high bandwidth information exchange. Online banking systems all over the world have changed the conventional concept of banking as an individual can access a bank at the single click of a button.

Transactions no longer have to be conducted at a physical banking location making it possible for online entrepreneurs with limited capital to offer online banking services and have a chance at competing with the mainstream banks and secure some profits (Glover 2007, p. 95). E-banking began with the use of private networks and proprietary software and gain wide popularity with the emergence of the internet and the World Wide Web. Use of e-business technologies saves money and time for the users, since they do not have to queue or pay high transaction fees. Banks can also reach customers in far and remote places without having to open new branches (May 2010, p. 115)

Innovation in the banking industry courtesy of e-business technologies has led to cut-throat competition amongst players in the industry as innovation affects consumer behavior. It has enabled banks to reduce transaction costs, improve the quality of customer service delivery; and abreast of global development (Glover 2007, p. 97). To deliver services more easily and at a faster rate to clients, most banks use The Graphical User Interface(GUI) software making it possible for clients to use their computers to access bank details, transfer money from one account to another , inquire about financial transactions and print bank statements. Banks also use the Electronic Date Interchange (EDI) software to transmit transactions in an electronically-readable form (Rhodes 2011, p. 84).

Smart cards and credit cards such as Visa Electron and Master Card have increased flexibility in the banking industry. Credit cards enable customers to borrow money from a bank and use it to buy anything then pay the bank later (Rhodes 2011, p. 84). The inconveniences of borrowing loans of small amounts are thus eliminated. The money is deducted automatically. Customers can also use the cards to withdraw and deposit money in ATM machines. Rather than line-up for inquiries, a customer can use an electronic device or an ATM card to make automatic inquiries (Cronin 2012, p. 36). Presence of ATM machines virtually everywhere ensures that customers can make transactions from remote places without having to walk long distances looking for a physical bank (Ravi 2008, p. 124).

Opportunities and Threats Posed by the Internet and Technology

Database corruption is one of the major threats posed by the use of e-business technologies and the internet in a firm. Clash of applications clash, may have negative effects on financial viability of a company and on the world economy at large (Hemingway 2009, p. 163). Database corruption occurs when the extracted information turns out to be incorrect or incomplete or when the entire information is lost due to a hardware or software fault. Corruption of the data base may cripple the business as it brings the business down for weeks or even days. Most financial service providers are usually not prepared for data base corruption (Soares 200, p. 55). To compound the threat, unknown threats to the system infrastructure will always exist.

In March 2004, the M3 database at JP Morgan Chase went offline for 3 days. The database records data for high yield businesses and credit derivatives investment which provide risk management and valuation support. The backup data was also corrupt and it was impossible to restore the system (Stanton 2012, p. 107). When the database was eventually restored, the system infrastructure encountered problems causing more outages and backlogs. Restoration of the system took three days. During the outage, the financial loss was estimated to be around 1 million dollars. In May 2005, the Trevor database experienced a major outage due to a MySQL table corruption.

Attempts to restore the database were failing for three days consecutively. During the outage, the New York market was down for 54 hours while the London market was down for 36 hours (Stanton 2012, p. 108). The root causes of The Trevor outage were lack of effective operation team and unreliability of MySQL. MySQL is not recommended for the use in banking systems because it causes fragmentation as it cannot handle large volumes of data (Glover 2007, p. 98). On the 19th of March 2013, the media reported that customers of JP Morgan Chase had seen zero balances in both their online and mobile accounts. There were suggestions made that the bank system had been hacked, thogh the bank clarified that it had a technical problem in relation to balance information (Stanton 2012, p. 108).

Data base corruption e-technology is caused by various factors ranging from bugs in applications, software bugs, hardware failure and human error. Human error is the most common cause of database corruption as it cannot be prevented neither predicted (Hemingway 2009, p. 166). In one of the major database corruption episodes at JP Morgan Chase, the crash of the system was caused by execution of the wrong script by an operator. In most cases, the problem is aggravated by attempts by database operators to fix the issue. Software and applications which have access to a database also cause corruption as the primary database is unable to recognize whether the background operations running in the application are valid or invalid. Faults and defects on the server computer especially the disk controllers, the hard disk drive and the main memory are also likely to corrupt databases or interfere with the smooth running of e-business technologies (Ravi 2008, p. 125).

Financial service providers like JP Morgan Chase also face threats related to handling large volumes of data daily and hourly. The data passing through the system is not constant and keeps growing in size (Stanton 2012, p. 109). This poses challenges to the system architecture and support software. Therefore, significant cases of outages and system crashes are caused by data volume and capacity problems. The database space also poses problems as once a database space is full, it cannot be used and the users and applications trying to access it get error messages. This may reduce customer and client confidence in the bank.

Security of the information system also presents a number of challenges for companies. Breach of data can erode customer confidence and undermine a corporate brand (May 2010, p. 118). A system of tightly protected and robust protection must be put in place whenever data or information enters, resides or exits. Reliable safeguards must be put in place to ensure that sensitive data at both the product and enterprise level is beyond compromise. E-business systems are exposed to hackers who can break into the networks to gain access to information; viruses in the form of malicious software which may delete or destroy data and spoofing which involves impersonating an internet service provider service electronically (Soares 2008, p. 60). Recently, several banks in America were subjected to Distributed Denial of Service (DD0S) attacks that led to distribution of mobile and online banking services for long terms. To protect against dangers to security, JP Morgan Chase and other banks have installed antivirus software, firewall, authentication mechanisms and auditing and intrusion detection (Laudon & Trevor 2008, p. 47).

Despite the challenges, use of e-business technologies has created a lot of opportunities for JP Morgan Chase. The company has been able to provide prices and risks evaluation to its clients and customers at a very high speed. The company has been able to become more accurate in its financial analysis as it can factor in several factors at once. Risk exposure is managed in a better away and chances of risk are comparatively low (Rhodes 2011, p. 85). Harnessing the power and capacity of General Processing Units has enabled the firm to leapfrog its competitors due to enhanced speed and accuracy.

Application of E-Business Technology in JP Morgan

JP Morgan has embraced technology on a large scale. The bank is recognized as a leader in application of e-business technology in the banking industry. Information technologies are applied in order to anticipate the needs of clients as well as gain a competitive advantage by applying information technology to achieve different strategic visions for the firm (Stanton 2012, p. 111). Technology is also applied to support the staff and make the bank an attractive place to work in. The bank spends an estimate of between 1 billion dollars and 8 billion dollars annually on technology which is more on than most tech firms do. It has 90 global data centers.

At JP Morgan Chase, technology is meant to make tangible real-time impact. The technologies are meant to improve risk management, drive efficiency and develop new products in order to expand to new markets (Porter 2012, p. 232). Technologists at JP Morgan influence the activities at Silicon Valley, the hub of technology, by emerging with new products to re-invent the experience of clients and customers. E-business technology is particularly applied in consumer banking business to make customers loyal to JP Morgan Chase as a brand. In 2006, the bank launched the Blink Credit cards which allowed users to hold the card in front of a reader eliminating the need to swipe, sign and enter a pin (Stanton 2012, p. 111).The bank has put up a sophisticated infrastructure to establish electronic trading platforms for institutional and corporate investors to analyze high-end trading and risks on a real time basis.

Utilization of e-business technologies at JP Morgan Chase has made the firm more profitable, more global and more flexible in it operations. Constant innovation is entrenched in the company’s culture and 8% of revenue is invested in technology (Rhodes 2011, p. 89). The firm recruits the brightest and most innovative minds through regularly organized recruitment. Large amounts of money are also drawn to keep important applications running.

JP Morgan chase is concerned about the safety of the data and sensitive information of its customers and clients. The bank employs an information technology risk management program as required by the data privacy laws (May 2010, p. 120). It utilizes a secure digital signature with multifactor authentication known as Portal Security Transaction Protocol (PSTP). The signature authenticates the identification of a customer who intends to transfer money using an internet browser. The customer then applies his or her PSTP digital signature with extremely high anti-forgery security in order to complete the transaction (Stanton 2012, p. 113). The digital signature is portable and simpler than traditional certificate technologies. Advanced encryption technology is used to ensure the security of transactions. The bank utilizes measures such as reverse positive pay, debit bocks, discrete disbursement and daily account reconciliation to countercheck fraud. The security measures contribute to market competitiveness of the bank as customers have come to trust JP Morgan Chase with effective handling of their data (Stanton 2012, p. 113).

JP Morgan Chase considers e-business technologies as the differentiator in providing it with a competitive advantage. It has developed "Kapital"; the most advanced pricing and advanced financial risk management system. The system enables hybrid businesses to trade and exchange large amounts of complex financial instruments with flexibility and ease (Porter 2012, p. 237). The system has enabled the firm to easily tap into new markets as it is able to integrate the technical infrastructure of those markets with financial applications creating new financial products in the process. JP Morgan, therefore, markets its new products within a very short span of time. “Kapital” also enables technicians at JP Morgan to identify, detect and resolve potential problems and bottlenecks quickly. The "Kapital" system is able to manage high volumes of data effectively; thus, eliminating scalability problems (Stanton 2012, p.115). The "Kapital" system also runs the “Smalltalk” application that allows bank officers to communicate in real time with customers and clients. The application is portable and runs on Linux, Windows NT and Solaris making it possible for JP Morgan Chase to beat competitors who rely on old programs developed using Java or C++ (Stanton 2012, p. 115).

JP Morgan Chase emphasizes on the use of Graphic Processing Units (GPUs) which are the high speed processors designed for processor-intensive commercial applications that deliver exceptional performance to risk and pricing models. The processors allow the firm to calculate complex issues quickly giving traders information on selling and buying stock faster than conventional Central Processing Units which many banks depend on (Porter 2012, p. 236). The firm is also efficient in use of social media as it uses its Twitter and Face book accounts to inform the customers about new products and services, as well as to respond to their queries. All its public documents are uploaded on the website enhancing transparency and accountability.

Conclusion

JP Morgan Chase has consistently ranked among the top twenty technology innovators in the United States during the annual information week. The bank’s commitment to technology development and innovation is outstanding. Incorporation of e-business technology in its operations has enabled the bank to maximize its revenues, gain a competitive advantage over rivals and increase productivity and profitability levels. The most innovative technologies include the mobile and digital programs which allow users to access their accounts and conduct transactions using their i-phones and e-mail addresses. Other banks in the industry should follow the trend set by JP Morgan Chase as it provides an excellent platform for growth and sustainability in this digital era.

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