YANGON UNIVERSITY OF ECONOMICS

DEPARTMENT OF COMMERCE
EXECUTIVE MASTER OF BANKING AND FINANCE
PROGRAMME

INFLUENCING FACTORS ON EFFECTIVENESS OF CORE

BANKING SYSTEM IN PRIVATE BANKS IN MYANMAR

WIN WIN MYINT

(EMBF - 5th BATCH)

DECEMBER, 2019

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 INFLUENCING FACTORS ON EFFECTIVENESS OF CORE
BANKING SYSTEM IN PRIVATE BANKS IN MYANMAR

A thesis submitted as a partial fulfillment towards the requirements for the degree of
Executive Master of Banking and Finance (EMBF)

Supervised by: Presented by:

Daw Khin Nwe Ohn Win Win Myint

Associate Professor Roll No. 77
Head of Department of Commerce EMBF 5th Batch
Yangon University of Economics

DECEMBER, 2019

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 ABSTRACT

This study is to determine the influencing factors on effectiveness of Core

Banking System in selected private banks in Myanmar. There are 27 private banks, 4
stated own banks and 13 foreign banks, so total 44 banks are doing the financial
transactions in Myanmar. In this analysis, the relationship between the operational
factor and the effectiveness of Core Banking System through the use of Linear
Regression model. 120 respondents (20%) out of total 600 employee who are
working at different position at selected private banks which are KBZ (Kanbawza
Bank), CB bank (Co-porated Bank) and UAB (United Amara Bank) with different
core banking vendors during their core banking function. Statistical survey is
performed by analyzinfg the 5 factors in terms of flexibility, cost, reliability, speed
and awareness which are determined whether they are the good signs of influencing
factors on effectiveness of Core Banking System. Correlation analysis shows that;
awareness, cost and reliability have significant relationship of all these variables to
the effectiveness of Core Banking System. The other dimensions of flexibility, speed,
operational factors show no distinction to change the effectiveness of Core Banking
System. The study’s finding influencing factors on the Core Banking System’
effectiveness depends on awareness, cost and reliability. To order to be reduce
operating cost, the customers can be consistent and the loyal customer can be
received. The study recommends that the influencing factors on effectiveness of Core
Banking System is followed, established that more employees have the skills to
perform their work effectively. And need to be maintain the speed of bank
transaction.

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 ACKNOWLEDGEMENTS

Upon completion of this paper, I would like to convey my heartiest Thanks to

all of those who have contributed much assisted me in various ways in all times
before, during and after the preparation of this paper.
First of all, I would like to express my sincere gratitude to Prof. Dr. Tin Win,
Rector, Yangon University of Economics for the concern and encouragement to the
participants of MBF Programme.
I would like to express my sincere gratitude to Prof. Dr Ni Lar Myint Htoo,
Pro- Rector, Yangon University of Economics, for her support and guidance.
I would like to express my thankfulness to Our Program Director, Prof. Dr.
Soe Thu, for her kind effort, good contribution and great encouragements to our
program, master of banking and finance.
My heartfelt thanks go to Prof. Dr. Aye Thu Tun, Yangon University of
Economics.
My special deepest thanks to Supervisor, Daw Khin New Ohn, Associate
Professor, Yangon University of Economics for her great effort and guidance to
successfully finished this paper.
I would like to express my thankfulness to our respected Professor, Associate
Professors, Lectures and all the teachers from Department of Commerce, who
imparted their time and valuable knowledge during the course of my study at the
Yangon University of Economics.
Furthermore, thanks to the core banking member of KBZ, UAB and CB Bank.
For their kind supports for providing the data and all the information needed in this
study.
Last, but not the least, I would like to say deepest thanks, all my family
members, friends, and colleagues who give me the strength and encouragement to
accomplish my academic goal. This study would not have been achieved without the
encouragement, support and assistance of a number of people and organizations.

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 TABLE OF CONTENTS
Page
ABSTRACT i
ACKNOWLEDGEMENTS ii
TABLE OF CONTENTS iii
LIST OF TABLES v
LIST OF FIGURES vi

CHAPTER I INTRODUCTION
1.1 Rationale for the Study 2
1.2 Objectives of the Study 3
1.3 Methods and Scope of the Study 3
1.4 Organization of the Study 3

CHAPTER II THEORETICAL BACKGROUNG OF THE STUDY

2.1 Concepts of CORE Banking System 4
2.2 Elements of Core Banking System 6
2.3 Elements of Core Banking System for Effectiveness 6
2.4 Advantages and disadvantages of CBS 7
2.5 Conceptual Framework of Previous Study 9
2.6 Conceptual Framework of This Study 9

CHAPTER III PROFILE AND PRODUCTS OF CORE BANKING

SYSTEM IN PRIVATE BANKS IN MYANMAR
3.1 Profile of Banks in Myanmar 11
3.2 Products and Services of Banks in Myanmar 14
3.3 Profile of Selected Private Banks 15
3.4 Products and Services for Selected Banks 17

CHAPTER IV ANALYSIS OF EFFECTIVENESS OF

CORE BANKING SYSTEM IN PRIVATE BANKS
IN MYANMAR

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 4.1 Survey Design 18
4.2 Demographic Factors of Respondents 19
4.3 Analysis of Effectiveness of Core Banking
Systemin Selected Private Banks
4.4 Influencing Factors on Effectiveness of Core
Banking System 30
4.5 Regression Analysis of influencing factors on
Effectiveness of Core Banking System 30

CHAPTER V CONCLUSION
5.1 Findings and Discussion 33
5.2 Suggestions 34
5.3 Needs for Further Research 35

REFERENCES
APPENDIX

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 LIST OF TABLES

Table No. Particulars Page

4.1 Number of Respondents by Gender 19
4.2 Number of Respondents by Age Group 20
4.3 Number of Respondents by Occupation 21
4.4 Number of Respondents by Banking Experience 22
4.5 Flexibility 23
4.6 Cost 24
4.7 Reliabilities 26
4.8 Speed 27
4.9 Awareness 28
4.10 Effectiveness 29
4.11 Relationships of the Operational Performance and Effectiveness of CBS 30
4.12 Analysis of Operational Influencing Factors on CBS 31

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 LIST OF FIGURES

Figure No. Particulars Page

2.2 Conceptual Framework of this Study 10
4.1 Number of Respondents by Gender 19
4.2 Number of Respondents by Age Group 20
4.3 Number of Respondents by Occupation 21
4.4 Number of Respondents by Education Level 22
4.5 Number of Respondents by Banking Experience 26

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 LIST OF ABBREVIATIONS

CBM Central Bank of Myanmar

CBS Core Banking System
ATM Automatic Teller Machine
POS Point of Sale
KBZ Kanbawza Bank
CB Co-operative Bank Ltd
UAB United Amara Bank
IT Information Technology
ICT Information and Communication Technology
GDP Gross Domestic Product
IFRS International Financial Reporting Standards
SWIFT Society for Worldwide Interbank Financial
Telecommunication
ISP Internet Service Provider

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 CHAPTER I
INTRODUCTION

In any country, financial services sector occupies a unique place among all
business sectors. It plays a vital role as a catalyst for overall economic development,
seeding growth in other sectors by providing the necessary funds to various economic
agents, namely private individuals and corporations. Today’s business environment is
very dynamic and undergoes rapid changes as a result of technological innovation,
increased awareness and demands from customers. The banking industry is no
exception and financial institutions are required to adapt to rapidly changing business
environment and adopt technology-based solutions in order to serve the customers
with efficient and cost cutting solutions.
Core Banking System (CBS) brings a functional necessity to the banks. Its
timely introduction of various products to suit the diverse needs of customers.
Flexible, consistent, secured and cost-effective CBS enable banks to remain
competitive in a volatile economic climate, ever increasing competitiveness and
continuous pressure to meet regulatory requirements. International Core Banking
System provides various alternative delivery service channels, which reduce cost and
time taken for the transactions and also intended to improve banks operational
effectiveness.
Core (Centralized Online Real-time Environment) banking is a banking
service provided by a group of networked bank branches where customers may access
their bank account and perform basic transactions from any of the member branch
offices. Core banking is often associated with retail banking and many banks treat the
retail customers as their core banking customers. Businesses are usually managed via
the corporate banking division of the institution. Core banking covers basic
depositing and lending of money. Core banking functions include transaction
accounts, loans, mortgages and payments. Banks make these services available across
multiple channels like automated teller machines, Internet banking, mobile banking
and branches. Banking software and network technology allow a bank to centralize its
record keeping and allow access from any location.
The banking system in Myanmar developed since 2010 and private banks
allowed processing foreign currency to private banks at early 2012. All of private

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banks are using computerized system, this system is distributed data in the duration.
And then this system has challenged the revaluation of multicurrency, inability to
offer direct SWIFT messaging service, not smoothly in adding new products and
services. So, some of big private banks change to centralize Core Banking System at
2012.
Core Banking System provides various alternative delivery service channels,
which reduce cost and time taken for the transactions and also intended to improve
banks operational effectiveness. The purpose of this research is to investigate the
effectiveness on Core Banking System in selected private banks in Myanmar.

1.1 Rationale of the Study

The study aims to identify and analyze the effectiveness of Core Banking
System in selected private banks in Myanmar because Core Banking System would
potentially shape the future banking industry landscape. It is crucial to understand if
the Core Banking System would bring a good return on investment for the local
banks.
Since 2012, big bank like KBZ and CB have adopted international Core
Banking System to offer products and services to customers in more efficient way
and to remain competitive in today’s business environment. Among the 27 private
banks in Myanmar, 22 banks have adopted international Core Banking Systems such
as Infosys, Temenos, Flexcube, Misys whereas the rest of the banks are still relying
on the domestic Core Banking System like ACE-IBS and MIT-iCBS.
Core Banking System is timely introduction of various products to suit the
diverse needs of customers is a functional necessity to the banks. Technology
provides the cutting edge to come out with customer centric products and delivery
channels in time. Banking technology has greatly changed from the days of back
office automation to the electronic, streamlined and integrated solutions of today.
Nowadays, most banks use core banking applications for the smooth running
of their service. This system allows the entire bank's branches to access applications
from centralized data centers. It basically means that the deposits made are
automatically reflected on the servers of the bank and customer can withdraw the
deposited money from any branch of the bank worldwide (NBE, 2011). Such systems
also now have the ability to address corporate clients’ needs, offering a robust
banking solution. So, increase in customer loyalty, employee efficiency, reduction in
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operational and support expenses, reduced IT maintenance, and immediate access to
analytics.
In order to determine the effectiveness of the international Core Banking
System in selected banks, the researcher used five parameters (Essayas Taye, 2016)
there are flexibility, cost, reliability, speed, awareness. A questionnaire designed
based on those parameters.

1.2 Objective of the Study

To determine the effectiveness of Core Banking System in selected private
banks in Myanmar

1.3 Scope and Method of the Study

The scope of the study would be Core Banking System used in private banks
in Myanmar. And this study was only 120 responsible persons with 20 persons per
selected bank who are core banking users selected to conduct this survey on the
factors influencing the using Core Banking System in selected private banks.
The descriptive statistical approach is used to analyze the factors affecting the
Core Banking System in selected bank. The online survey is also conducted with
faithful from KBZ, CB and UAB bank to collect the primary data. Selected private
bank are selected by using sample random sampling method. Secondary data are also
collected from various sources such as journals, articles, reports, and website and so
on.

1.4 Organization of Study

This study is divided into five chapters. Chapter (1) presents the introduction
of the study, rationale of the study, objective of the study, method and scope of the
study, and organization of the study. Chapter (2) explores theoretical background of
the study, concept of CBS, element of CBS, element of CBS for effectiveness,
advantages and disadvantages of CBS, conceptual framework of previous study,
conceptual framework of this study. Chapter (3) describes profiles and products of
CBS in private banks in Myanmar, profile of banks in Myanmar, products and
services of banks in Myanmar, profile and services private banks, products and
services for selected banks. Chapter (4) presents analyzes of effectiveness of core

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banking system in selected private banks. Chapter (5) is findings and discussion,
suggestions, needs for further research.

CHAPTER II
THEORETICAL BACKGROUND OF THE STUDY

The chapter discusses the theories and effectiveness of Core banking system
in private banks in Myanmar. They are Concept of Core Banking System, Elements
of Core Banking System, Elements of Core Banking System for Effectiveness and
Advantages and Disadvantages of Core Banking System.

2.1 Concepts of Core Banking System

Core banking can be defined as a back-end system that processes banking
transactions across the various branches of a bank. New accounts are floating, loans
servicing, interest calculation, deposits and withdrawals processing, and customer
relationship management activities are among the vital Core banking services.

Core Banking Systems are designed to allow current and future customers to h
ave greater freedom in their account transactions. Transactions are now easier,
quicker and less complex with technological developments. The fact that these
transactions can be carried out remotely has made Core Banking Systems a big
feature of banking these days from any part of the world. Core banking also
significantly reduces operational costs, ensuring lower execution demands for
manpower. It also allows customers to be more accountable. Application based
software frameworks make Core Banking Systems more user friendly and efficient.
The advantages of Core Banking Systems are multifaceted keeping pace with rapidly
changing economies, simplifying banking processes and making them more
convenient for customers, and extending banks' scope to remote locations.
(Vijayakumar, 2019)

This took at least one day for a transaction to be reflected in the account a few
decades ago, because each branch has its local servers, and the server data in each

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branch was sent in a batch to the data center servers at the end of the day. Core
Banking System was a major change, as central banking approaches forced banks to
spend huge amounts of money in infrastructure building. One this infrastructure was
in place, banks began to explore new opportunities in the fields to ATMs, debit cards
and internet banking, which in turn increased the demands of Core Banking solutions
(Alemayehu, 2011).

Using SWIFT, Western Union, MoneyGram and other networks in financial

technology, it has entered international business communication. Actually, new
application software is introduced to their data center any time banks want to launch
new services or products. It eventually means that the engagement of consumers
through products and services is not really 100 % standardized. Even though, banks
that have invested enormous amounts in the Core Banking System still provide
service primarily on manual service from many customers of the bank.
Today, without information and communication technology, we can not talk a
bout the performance of a banking system. The role of the banking sector in the
economy has been expanded. It is now possible to process financial transactions and
payments quickly and easily. In the dynamic financial market, banks with the latest
technology and techniques are more effective. We were able to generate more and
more companies, leading to greater productivity.
Core banking is about understanding the needs of customers; providing them
with the right services through the right channels at the right time. Core Banking
Solutions are known as the forum where communication technology and information
technology are combined to address the core needs of banking. Computer software is
built here to conduct core banking operations such as transaction reporting, passbook
management and interest deposits, customer records, balance of payments and
withdrawal.

Today’s technologies are able to complete these tasks through multiple

distribution channels in an integrated browser-based environment. Experts believe
that core banking substitution is the most complicated, risky and costly IT project that
any bank can pursue. Core Banking System forms the backbone of the IT
infrastructure of a bank and includes records of all customer transactions and their
processing. A minor error in this area cause the entire system of banks to crash and
damage its reputation. Technology is a key driver of change: flexible development,

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market speed, real-time delivery and a single customer experience across all business
lines. Many of the largest institutions still struggle with the self-imposed impairment
of old- fashioned, obsolete and insufficient core systems. Two factors stand in the
way: risk and cost in carrying out a core banking replacement.

2.2 Elements of Core Banking System

Automated Teller Machines (ATM): It is an electronic terminal that enable
customers to access banking services at almost any time. ATM card allows a
cardholder to withdraw cash from banks even when they are closed. In addition, a
consumer needs an ATM card and identification number (PIN).

Point-of-Sale Transfer Terminals (POS): generally, includes a computer, cash

register and other equipment or software for the sale of goods or services. The system
allows consumers to pay with a check card, a new debit card brand, for retail
purchases. This card looks like a credit card but the difference significant. The sales
money is immediately transferred from the debit card holder’s account to the store's
account.

Internet banking: referred to as online banking or web banking, the result of PC

banking, is a more advanced service, a system that allows bank customers to access
accounts and general information about banking products and services or to make
account transactions directly with the bank via a personal computer using the internet
as the distribution channel.

Mobile banking: is best described as the newest channel in a banking to provide a

convenient way to use mobile phones or other mobile devices to conduct banking
tractions.

Credit and Debit Card: It is a regular card that allows a holder to buy goods without
having to pay cash immediately. Credit card is based on the principle of revolving
credit. In general, the amount of money that a cardholder may spend a month using
the card is reduced. The holder pays a percentage of the remaining at the end of each
month. The debit card is used to buy goods and services or to receive advances for
which payments are made in a bank account from existing funds.

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2.3 Elements of Core Banking System for Effectiveness
It is a well-established fact that the preferences and beliefs impact of
individual users have an impact on almost any system’s performance or practice. This
study discusses the efficacy criterion of the Core Banking System from the viewpoint
of the customers. The following five parameters were used more often than others in
relation to Core Banking System and research goals among so many different
measuring parameters.
Flexibility: A flexible system of Core Banking is a major contributor to the ability of
a bank to respond quickly to changing market conditions. Gartner Industry Research
note reported in 2011, Core Banking Solutions should be versatile, includes
application communication and data integration, workflow and components-based
architectures.

Cost: Reducing cost is now Core Banking services fundamental standards. Many
banks look at Core Banking from a cost savings point of view, as the cost per
transaction is much lower than for other service delivery channels is widely reported
in ecommerce literature.

Reliability: Reliability is an attribute of any computer-related component that

performs consistently with its specifications. It has long been considered one of three
related attributes that must be taken into account when producing, buying, or using a
software product or part. Similarly, Reliability has been described as consistent
performance and reliability.

Speed: Core banking facilitates transactions by disseminating the information or data

needed at a faster and faster pace. In many ways, the banking industry is being
revived at the moment. One of these fields has to do with digitalizing processes that
used to be based on paper. The implementation of ICT, on the other hand, improves
the productivity of the employee in the bank

Awareness: Socio-economic factors, variables of personality and behavior of

communication all contributed to innovation. Innovativeness is the degree to which
an individual or other unit of adoption adopts new ideas relatively early compared to
other members of a system.

2.4 Advantages and Disadvantages of Core Banking System

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 A Core Banking System guarantees reliable and error-free delivery of
financial services to clients when well implemented, thus contributing to the
efficiency and performance of the banks. Some of the most positive impacts of
deploying CBS in banks:
1. Makes the internal staff more competent
2. Minimizes human intervention thereby limiting errors
3. Helps prevent frauds and thefts with real-time banking facilities
4. Reduces operational costs
5. Aids in studying changing customer demands
6. Facilitates decision making through reporting and analytics.
Core Banking System provides consumers with 24/7 online shopping, mobile
banking and ATM services so that customers do not have to visit a branch for their
banking needs. Centralization helps to evaluate, track and deliver thee product.
Aspects such as product adjustment, increases in interest rates and payment of interest
can be performed centrally for all the branches. Centralized system enhances the
protection of the device and user management. Manpower for IT administration is
required in traditional banking at each branch. But only one position is needed in core
banking. Therefore, the need for and cost of manpower reduction. IT manpower is
used efficiently because of the single point resource available.
All bank transactions in the Core Banking System have a direct impact on
General Ledger and Profit and Loss Account. This gives a real-time analysis of the
bank's financial position and situation. This helps to make timely and efficient
financial management decision-making; banking is a very important and complex role
today.
Centralize Core banking supports in better product analysis, monitoring, and
rollout. Aspects such as adjustments in interest rates, product adjustment and
allocation of interest can be performed collectively for all the branches from one
location. Bank respond quickly to the business scenario and the needs of customers. It
provides the bank with a competitive edge.
Each customer becomes the bank's client, not a branch. With unique ID /
Account Number, the bank can access the customer’s accounts centrally. As such,
customer profile, description of his services and consumer behavior can be well

17
understood about the bank’s business. This view of the consumer offers the bank the
opportunity to decide how to improve business and marketing strategies.
The availability of continuously live updated centralized data ensures accurate
report / statement generation at all times. It helps tremendously to make decisions as
well as to send them to various authorities. The bank's operating performance is
increased due to the Bank as a whole's rapid reporting.
Nonetheless, the central banking system has some drawbacks. If the network
or bank servers’ malfunction, the banking process in the branches are broken down at
the data center. So, we need to prepare backup plain for operation consecutive and
customers’ reliable. And the costs as well as the risks are high, but the benefits are far
greater. Financial institutions that have already announced plans to undertake such
projects, quickly reap the benefits and set an example for others in the industry.

2.5 Conceptual Framework of Previous Study

The purpose of this study is to investigate the effectiveness of Ethiopia’s Core
Banking System with particular reference to Buna International Bank. Descriptive
survey approach has been used for this purpose. This research is the quantitatively
and qualitatively examination of the data collected. It is a well-established fact that
the desires and values of individual users influence almost every system’s efficiency
or practice. This review examines the parameter of Core Banking System’s
effectiveness from the perspective of the customer. The researcher has analyzed and
presented the actual data collected from Bank’s customers through questionnaires and
observation of researchers. While BIB customers were distributed among the 400
questionnaires in the selected branches of the bank. The researcher used six
parameters based on reviews literature to measure the effectiveness of Core Banking
System, namely; flexibility, cost, reliability, assurance, speed and awareness. This
earlier study indicates that consumers are more reluctant to join new technologies
with little risk. The website should therefore be designed by banks to address security
and trust issues. In addition, bank needs to be concerned with consumer
understanding about the successful uses of core banking system products. There is no
doubt, however, that BIB makes sincere efforts to popularize the core banking
services and products.

2.6 Conceptual Framework of this Study

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 The conceptual framework for this research was developed on the basis of the
environment and nature of the industry by adapting the study. In this study, the
influencing factors are flexibility, cost, reliability, speed and awareness are
independent variable on effectiveness of Core Banking System.

Figure 2.1 Conceptual Framework of this Study

Independent Variables

Flexibility
 defining interest rate
 creating new product
 doing transfer multi a/c

Dependent Variable
Cost
 reducing operation
 using slight bandwidth
Effectiveness of Core
Banking System

Reliability  Easy move to digital

transform
 applying to IFRS  Using every where
 reliable SWIFT message  Improve doing
business
 Faster decision making
 Need to security
Speed
 Facilitating speed of
report
 quick transfer of fund
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Awareness
Source: Adopted from Essayas Taye Lemma, 2016

CHAPTER III

PROFILE AND PRODUCTS OF CORE BANKING SYSTEM

IN PRIVATE BANKS IN MYANMAR

This chapter provides the history profile of Myanmar's private banks and the
products of the selected private banks ' Core Banking System. It also shows how
many private banks in Myanmar use CBS in this chapter are focused on news and
survey information and materials as well as on the study and websites of private
banks.

3.1 Profile of Banks in Myanmar

The people of Myanmar and the economy of the country have been living
through an age of harsh restrictions under the rule of a military regime for nearly five
decades. Since 2010, reform efforts by the Myanmar government and the opening up
of the economy have triggered economic growth and high hopes for millions of low-
income households. The banking sector is one focus of the new government’s
economic reforms. A quick look at the history of the banking sector in Myanmar help
explain the current situation. Myanmar's modern banking sector went through five
different phases the British colonial era until 1948; the post-independence period
from 1948 to 1962; the military-socialist regime from 1962 to 1988; the military

20
regime after 1988 with far-reaching economic reforms starting in 2010; and finally,
the reforms began in November 2015 under the new NLD government. In the British
colonial era from 1826 to 1942, Burma's banking system, as it was then called, was
influenced entirely by the British rulers. The first central bank originated from the
Indian Reserve Bank's Ran-goon branch in 1939.A total of 20 banks operated in the
country by the end of the colonial era, most of them with headquarters abroad.
Nevertheless, after the Japanese defeat, foreign banks returned and the position of a
central bank was taken over by the Union Bank of Burma. In 1948, Burma became
independent and under the new parliamentary democracy the banking sector
flourished. At that time, more than one third of the banking industry contributed to
Burma's gross domestic product and the Burmese banking sector was considered to
be the most advanced in the world. (GIZ Banking Report, 2018)

After the 2010 election quasi-civilian government has pursued a series of

political and economic reforms. Prudential controls have been relaxed and full
autonomy has been granted to the central bank. In January 2016, the new Financial
Institutions Law was enacted on the basis of international best practices. Licenses
were granted to several new private banks. Today in Myanmar there are 27 domestic
private banks that own about 67 percent of total bank assets. In Myanmar's banking
sector, private banks are the drivers of innovation and growth. Private banks are the
drivers for innovation and growth in Myanmar’s banking sector. However, asset
concentration is high and most private banks are struggling to meet the new
regulatory requirements. The re-admission of foreign banks to trade in Myanmar in
1990. There are currently 13 international approved banks and 49 foreign banks '
representative offices in Myanmar. (GIZ Banking Report, 2018)

3.1.1 Government Banks

Myanmar has four government banks: the Myanma Agricultural Development
Bank (MADB), the Myanma Economic Bank (MEB), the Myanma Foreign Trade
Bank (MFTB) and the Myanma Investment and Commercial Bank (MICB). Although
private banks are more prevalent today in Myanmar, state-owned banks still play an
important role. (GIZ Banking Report, 2018)

3.1.2 Private Banks

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 Until 1992, private banks were banned by the military regime. As of
November 2018, Myanmar has had 27 domestic private banks. These banks held
assets worth MMK 48.5 trillion (about USD 35.6 billion) in September 2017, about
67% of total bank assets. Private banks are the engines of innovation and growth in
the banking sector in Myanmar. The concentration of assets is high, however, and
most private banks struggle to meet the new regulatory requirements. (GIZ Banking
Report, 2018)

The following table shows the list of Private Banks in Myanmar and their
Core Banking System.

No. Private Banks’ Name Core Banking System Name

1 Myanmar Citizens Bank Ltd TEMENOS-T24

2 First Private Bank Ltd Finastra (MISYS)-Fusion Essence
3 Co-operative Bank Ltd TEMENOS-T24
4 Yadanabon Bank Ltd MIT-iCBS
5 Myawaddy Bank Ltd INFOSYS-Finacle
6 Yangon City Bank Ltd MIT-iCBS
7 Yoma Bank Ltd MISYS-Fusion Essence
8 Myanmar Oriental Bank Ltd TEMENOS-T24
9 Asia Yangon Bank Ltd Nantian
10 Tun Foundation Bank Ltd Oracle FLEXCBUE
11 Kanbawza Bank Ltd Oracle FLEXCBUE
12 Small & Medium Industrial TEMENOS-T24
Development Bank
13 Global Treasure Bank Ltd INFOSYS-Finacle
14 Rural Development Bank Ltd MIT-iCBS
15 Innwa Bank Ltd ACE-IBS,IBL
16 Asia Green Development Bank Ltd INFOSYS-Finacle
17 Ayeyarwaddy Bank Ltd JITS-Max7, MISYS-Fusion Essence
18 United Amara Bank Ltd NEPAL(Mercantile Office
System)PUMUORI Enterprise
19 Myanma Apex Bank Ltd Oracle FLEXCBUE

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20 Naypyitaw Sibin Bank Limited MIT-iCBS
21 Myanmar Microfinance Bank Limited TEMENOS-T24
22 Construction and Housing TEMENOS-T24
Development Bank Limited
23 Shwe Rural and Urban Development Oracle FLEXCBUE
Bank
24 Ayeyarwaddy Farmers Development INFOSYS-Finacle
Bank (A Bank)
25 Glory Farmer Development Bank INFOSYS-Finacle
(G Bank)
26 Mineral Development Bank MIT-iCBS
27 Myanma Tourism Bank Oracle FLEXCUBE
Source: Surveyed Data

3.1.3 Foreign Banks

Foreign banks were not allowed to operate in Myanmar after the banking
sector was nationalized in 1963. Myanmar's government re-admitted foreign banks to
the country in 1990. The number of foreign banks licensed has steadily increased,
especially over the past five years. There are 13 international approved banks and 49
foreign bank representative offices in Myanmar as of November 2018. There are the
Bank of Tokyo-Mitsubishi UFJ, Ltd., Overesa-Chinese Banking Corporation,
Sumitomo Mitsui Banking Corporation, United Overseas Bank Limited, Industrial
and Commercial Bank of China, Malayan Banking Berhad (Maybank), Mizuho Bank
Limited, Australia and New Zealand Banking Group Limited, The Joint Stock
Commercial Bank for Investment and Development of Vietnam (BIDV), Shinhan
Bank, E.Sun Commercial Bank Limited, State Bank of India and Bangkok Bank
Public Company Limited. (GIZ Banking Report, 2018)

3.2 Products and Services of Banks in Myanmar

Deposit: Myanmar banks are offering fixed deposits, calling deposits and current
accounts. Deposit accounts are often designed to meet the needs of different
customers, such as banks, small deposit accounts, sailor accounts, wedding deposit
account, and foreign currency deposit accounts. (GIZ Banking Report, 2018)

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Remittance: Around 3 million Myanmar nationals living abroad remitted around
USD 3.5 billion in 2015, about 5.4 percent of Myanmar's GDP that year. While it is
difficult to estimate the exact remittance figures in and out of Myanmar as a large
proportion is transferred through informal networks, domestic and international
remittances play a crucial role in Myanmar's economy. (GIZ Banking Report, 2018)

Credit: The Myanmar banking sector relies primarily on overdrafts and land or
buildings as protection for loans in response to the CBM's restrictive lending
regulations. This practice culminated in, among other undesirable consequences, low
loans to small businesses and poor credit quality. As CBM recognized the associated
risks, by converting overdrafts into loans, it recently forced banks to reduce the share
of overdrafts in their portfolios. (GIZ Banking Report, 2018)

Trade Finance: Export finance had been monopolized by state-owned banks before
2012. Local banks currently offer fee-based services such as credit cards, bank
guarantees and interest-bearing services, including import financing and export
financing for pre and post shipments. In December 2017, Myanmar's Central Bank
started allowing foreign banks to carry out export financing, and in August 2018
foreign banks were allowed to start offering services for import trade financing. (GIZ
Banking Report, 2018)

Card Services: Myanmar was first introduced by the Asia Wealth Bank to offline
debit cards in 1996 and 11 offline ATMs were launched by the Myanmar Mayflower
Bank in 2002. Thanks to the banking crisis of 2003, the growth of these cards and
electronic payment systems has come to an abrupt end. It wasn't until the introduction
of debit cards in 2012 that credit cards were introduced to the nation three years later.
For many years, the Myanmar Payment Union (MPU) had a monopoly on issuing
debit and credit cards, but the government lifted restrictions on international payment
firms in January 2017, enabling banks to issue co-branded cards with Visa, JCB,
MasterCard and UnionPay Foreign. (GIZ Banking Report, 2018)

Mobile Financial Service: Myanmar has the highest mobile penetration rate in the
world, with a penetration rate of almost 95 percent. In view of Myanmar's large
unbanked population, with bank branches and infrastructure inaccessible in most rural
areas, mobile financial services have become an important means of financial
inclusion. (GIZ Banking Report, 2018)

24
3.3 Profile of Selected Private Banks
Kanbawza Bank (KBZ): KBZ bank was established in Taunggyi, in the southern
part of Shan State, on 1 July 1994. Originally, the bank catered to Taunggyi's local
population. Our current management purchased the organization from previous
owners who were professors and oversaw the growth of the organization into one of
Myanmar's largest private commercial banks with more than 500 branches, KBZ
Bank is now Myanmar's largest private bank. The mission of KBZ Bank,
headquartered in Yangon, Myanmar, is to improve the quality of life through banking
in Myanmar. Today, KBZ Bank accounts for about 40 percent of the country's retail
and commercial banking market share. The bank leads the way for Myanmar's rapidly
developing financial services industry, particularly in digital and technology, through
an approach that understands innovation opportunities, Myanmar's people's needs,
and the unique context of the country's economy. KBZ Bank sees exciting
opportunities to work with international investors as Myanmar's economy grows and
opens up, offering an important and vital link to the fast-growing cities, entrepreneurs
and local communities of Myanmar. KBZ Bank changed Core Banking System at
2012. (KBZ website)
Co-operative Bank Ltd. (CB): CB bank is one of the oldest and largest commercial
banks in Myanmar. It became Myanmar's first bank to issue credit cards and ATM
cards. The bank has more than 200 branches across the country. The CB Bank was
founded with the permission of Myanmar's Central Bank on 21 August 1992. It
started as a small bank with 33 employees and in 2016 it has about 7000. It became a
public company in 2004. The head office of CB Bank is situated in Yangon's
township district of Botahtaung. Co-operative Bank Ltd Changed Core Banking
System at 2012. (CB website)

United Amara Bank (UAB): UAB bank is Myanmar's leading bank. Established in
2010, we now serve our customers through a growing network of more than 78
branches in 47 Myanmar townships. UAB offers a wide range of financial services
including consumer banking, big banking, small and medium-sized banking,
corporate banking, commercial finance and treasury services. They also provide
brokerage services, corporate and financial advisory services, investment banking and
capital market operations through their subsidiary, UAB securities. They believe in

25
leading the way to a better Myanmar at UAB bank, humanizing banking, connecting
people, creating opportunities, and changing lives. UAB unveiled the campaign "Be
the Change Myanmar" in December 2017, which reflects our commitment to drive
change for a better Myanmar, focusing specifically on empowering women and
children. They agree that UAB must act responsibly and be committed to the culture
in which they are. United Arab Emirates. UAB Bank changed Core Banking System
at 2013. (UAB website)

3.4 Products and Services for Selected Banks

Kanbawza: KBZ provides Online Banking, Accounts, Cards, Loan, Remittance,

Cash Management, Trade Finance, Trust Services and other Services. In Accounts
service, there are Current Account, Saving Deposit Account, Fixed Deposit Account,
Call Deposit Account, Foreign Currency Account, Children’s Saving Account, and
Future Plus Deposit Account. In Cards service, it includes Debit Card, Prepaid Card,
Teens Card, International Card Acceptance, KBZ UnionPay Credit Card, and KBZ
VISA Credit Card. In Loans service, customers can apply Shopper Installment Loan,
Hire Purchase, Overdraft and Home Loan. In Remittance, there are Local Remittance
and International Remittance. In Cash Management, there are Payroll Services,
Payment Services and Collection Services. In Trade Finance, there are Import
Documentary Credit, Export Documentary Credit, Documents Collections, and Bank
Guarantee. In Trust Services, there are Escrow Services, Onshore Security Agent
Services. Other Services are Safe Deposit Locker, Gift Cheques, KBZ Quick Pay,
Currency Exchange, E-Commerce, and Bank Certificate. (KBZ website)

Co-operative Bank Ltd.: CB Bank provides Consumer Banking, SME Banking,

Corporate Banking and Prestige Banking. In Consumer Banking, there are Deposit
Accounts, Cards & Payment Services, Loan, Daily Banking and Channels. In SME
Banking, there are Government Assisted loan, Standard loan, Working Capital

26
Financing, Asset Financing. In Corporate Banking, it includes International Trade and
Treasury. In Prestige Banking, there are Advisory and Consultation, Exclusive
Services and Prestige Cards. (CB website)
United Amara: UAB Bank provides Detail Banking and Investment Banking. In
Detail Banking, there are Deposit, Loans, Cards, Digital and Fund Transfer. In
Investment Banking, there services are SME Loans, Trade Finance, Security Trading
and FX Treasury & Markets. (UAB website)

CHAPTER IV

Analysis of Influencing Factors on Effectiveness of Core Banking

System in Private Banks in Myanmar

In this chapter describes the analyses of influencing factors on Effectiveness

of Core Banking System in Private Banks in Myanmar. The data from survey is
presented with two sub sections. The first one is demographic characteristics of
banks’ employees. The second one includes the analysis of influencing factors on
effectiveness of Core Banking System in private banks in Myanmar.

4.1 Survey Design

In this study, the required data were collected through multistage area
sampling method survey. The sample size is 120 employees with 20 persons per
selected bank from the target population who are using international Core Banking
System in private banks. And then finding the factors influencing the effect of Core
Banking System in private Banks.

As a survey instrument, a structured questionnaire was used and it organizes

into two sections such as personal profile of the participants. The first section of the

27
questionnaire asked the respondents regarding gender, age, occupation, and banking
experience level. The second section of the questionnaire the rate the relative
influencing flexibility, cost, reliability, speed and awareness factors such as factors
while effectiveness of Core Banking System. They were measured by five point
Likert scale rating method in this survey that reveals the influence factors ranging
from 1 being least satisfied to 5 being the highest. These factors were adapted from
the relevant literature, age surveys, occupation and banking service experience who
are knowledgeable and have deeper experience in this area. The last section asked the
respondents to rank among current local banks and to find out the most important
factors among the given factors as per second section, it was also used Likert scale
rating method.

The study findings were analyzed by Statistical Package for the Social
Science (SPSS version 22 for windows). It was used for descriptive data to compute
the mean score of factors in order to find out the significant factors influencing
effectiveness of Core Banking System. From a total of 120 questionnaires distributed
by various ways to bank members and all were completed answers so it was high
response rate to analyze and some respondents wrote their own comments on answer
sheet.

4.2 Demographic Factors of Respondents

The demographic characteristics of the respondents for the random sample 30
from KBZ (Kanbawza Bank), CB (Co-Operative Bank Ltd) and UAB bank (United
Amara Bank). These characteristics include Gender, Age, Education, Occupation and
Banking and Finance Experience Level.

Number of Respondents by Gender

The respondents are not only males, but also females. Table (4.1) and shows
the gender of respondents.

Table (4.1) Number of Respondents by Gender

Gender Number of Respondents Percentage

Male 35 29.2
Female 85 70.8

28
Total 120 100.0
Source : Survey Results 2019
Figure (4.1) Number of Respondents by Gender

85

100

80 35
60

40

20

0
Male Female

Source : Survey Results 2019

As shown in Table (4.1) and figure (4.1), the sample consist of 35 (29.2 %)
males and 85 (70.8 %) females. According to the results, female respondents are
higher than the male respondents. Therefore, most of CORE banking members
working for local banks in Myanmar are female.

Number of Respondents by Age Group

Ages of respondent are divided by five categories. They are under 30, between
31 and 40, between 41 and 50, between 41 and 50, between 51 and 60.
Table (4.2) Number of Respondents by Age Group

Age (in year) Number of Respondents Percentage

between 20 and 30 48 40.0
between 31 and 40 49 40.8
between 41 and 50 17 14.2
between 51 and 60 6 5.0
Total 120 100.0
Source : Survey Results 2019

Figure (4.2) Number of Respondents by Age Group

29
 48 49

50
45
40
35
30
25
17
20
15
6
10
5
0
20-30 31-40 41-50 51-60

Source : Survey Results 2019

According to the table (4.2) and figure (4.2), 48 CORE banking members fall
in the age group between 20 and 30 years, followed by 49 employees fall between 31
and 40 years, and 17 employees fall between 41 and 50 years, 6 employees fall
between 51 and 60 years. One would observe from the table that most of the
employees were young adulthood.

Number of Respondents by Occupation

In this study, there are five levels for occupation in questionnaires. They are
Executive Officer, Manger, General Manager, Chief Officer and Other.
Table (4.3) Number of Respondents by Occupation

Occupation Number of Respondents Percentage

Executive Officer 25 20.8
Manager 46 38.3
General Manager 22 18.3
Chief Officer 3 2.5
Other 24 20.0
Total 120 100.0
Source : Survey Results 2019

Figure (4.3) Number of Respondents by Occupation

30
 50 46
45
40
35
30 25 24
22
25
20
15
10
3
5
0
Executive Manager General Chief Officer Other
Officer Manager

Source : Survey Results 2019

From table (4.3) and figure (4.3), 20.8 % of CORE banking members are
Executive Officer, 38.3 % of these members are Manager, 18.3 % are General
Manager, 2.5 % are Chief Officer Level and 20 % of these members are Other
occupation. Therefore, the majority of sampled employee of Core banking member of
these selected Private Banks are Manager.
Number of Respondents by Banking Experience
In this survey, there are three banking and finance service experience in years
such as less than 3 years, between 3 and 6 years, between 6 and 9 years, between 9
and 12 years, and above 12 years.

Table 4.4 Number of Respondents by Banking Experience

Experience (in Years) Number of Respondents Percentage
Less than 3 18 15.0
3–6 28 23.3
6–9 34 28.3
9 – 12 15 12.5
Above 12 years 25 20.8
Total 120 100.0
Source : Survey Results 2019

Figure (4.4) Number of Respondents by Banking Experience

31
 34
35
28
30 25
25
18
20 15
15
10
5
0
Less than 3 3–6 6–9 9 – 12 Above 12
years

Source : Survey Results 2019

According to table 4.4 and figure (4.4), Core banking members fall in year of
experience between 3 and 6 year by 29 members, between 6 and 9 year by 34
members, between 9 and 12 year by 16 members, above 12 years by 25 members and
below 3 year by 18 members respectively. One would observe from that table that
most of core banking members have banking and finance experience between 6 and 9
years. Therefore, they have some enough experience to analysis of Core Banking
System. The researcher used five parameters based on reviews literature to measure
the influencing factors on effectiveness of Core Banking System, namely; flexibility,
cost, reliability, speed and awareness. This study had two extreme ends for Core
Banking System as respondents’ perception which are ‘1’-is strongly disagree and ‘5’
is -strongly agree.

4.3 Analysis of Influencing Factors on Effectiveness of Core Banking System

in Selected Private Banks

In this section, interval scale measurement is employed to measure the study

variables. All the respond variables are measured via five-point Likert scale ranging
from strongly disagree (1) to strongly agree (5). The mean of the answers to the
questionnaires based on general perceptions level of effectiveness of Core Banking
System in term of six dimensions. They are flexibility, cost, reliabilities, speed,
awareness and effective.

32
 The sampled employees who are working in KBZ, CB and UAB bank were
enquired to rate on the statements that describe their perception of use of Core
Banking System in terms of flexibility, cost, reliabilities, speed, awareness and
effective. A Likert scale is composed of a series of four or more Likert-type items that
represent similar questions combined into a single composite score. Likert scale data
can be analyzed as interval data, i.e. the mean is the best measure of central tendency.

4.3.1 Flexibility
Regarding to the CBS flexibility factors, respondents are required to respond
to six statements which are basically measured to find out the level of attractiveness
through with flexibility factor.
To rate the fact, these six relative statements are making transfers to the
multiple currency accounts, defining various interest rates, creating easily to new
products, flexibility than traditional system, easy to move technological innovation
and consolidating technology platform across function.

Table (4.5) Flexibility

Std.
No Statement Mean
Dev
1 International Core Banking System can be used to make 3.86 .770
transfers to the multiple currency accounts.

2 Core banking can be used to define various interest rates 4.15 .741
for various products.

3 Core Banking System can be created easily to new 4.18 .799

products as per business requirement in time.

4 International Core Banking System is more flexible than 4.07 .941

traditional or local system.

5 Core Banking System easy to move Technological 4.04 .738

Innovation.

6 Core Banking System enables banks to consolidate 3.90 .824

technology platform across functions.

Total Average Scores 4.03

Source : Survey Results 2019

Table (4.5) reports the individual mean score of the six statements of
flexibility factor. The maximum mean scores 4.18 and standard deviation 0.799 was
33
found in the statement of Core Banking System can be created easily to new products
as per business requirement in time.
The minimum mean score is 3.86 and standard deviation 0.77 was found on
the statement of international Core Banking System can be used to make transfers to
the multiple currency accounts.
The overall mean score of flexibility factor is 4.03. It can be concluded that
there is more effectiveness using Core Banking System in terms of flexibility
according to the results of respondent average agreement level.

4.3.2 Cost
Regarding to the CBS cost factors, respondents are required to respond to five
statements which are basically measured to find out the level of attractiveness through
with social influencing factor.
To rate the fact, these five relative statements are reducing transaction cost,
reducing operation cost, manage multiple server, slight bandwidth and more compact
resource than traditional banking system.
Table (4.6) Cost
No Statement Mean Std. Dev
1 Core banking reduces transaction cost. 3.53 1.020

2 They can reduce their operation cost by using Core 3.70 1.029
Banking System.

3 They do not need to manage multiple server. 3.53 1.028

4 Customers save travel cost by using Core banking 3.91 0.944

services anywhere.

5 Customers don’t need to carry cash for their business 3.95 0.995
as; they can use Core banking service to transfer
money.

6 Core Banking System don’t need to use the wide 3.18 0.922
bandwidth.

7 Customers can manage their money at any time via 3.79 1.003
Core banking

8 Customers use Core Banking services; they can 4.00 0.926

reduce the time spent in the bank

34
 9 International Core Banking System has more compact 3.66 0.948
resource than traditional banking system.

Total Average Scores 3.69

Source : Survey Results 2019

Table (4.6) reports the individual mean score of the nine statements of cost
factor. The maximum mean scores 4.00 and standard deviation 0.926 was found in
the statement of customers use Core Banking services; they can reduce the time spend
in the bank.
The minimum mean score is 3.18 and standard deviation 0.783 was found in
the statement of Core Banking System use slight bandwidth.
The overall mean score of cost factor is 3.69. It can be concluded that there is
more effectiveness using Core Banking System in terms of cost according to the
results of respondent average agreement level.

4.3.3 Reliability
Regarding to the CBS reliability factors, respondents are required to respond
to eight statements which are basically measured to find out the level of attractiveness
through with reliability factor.
To rate the fact, these eight relative statements are applying to IFRS, reducing
error on transaction, promise at the time indicated, provide the banking services 24/7,
support and reliable the SWIFT message format, solve the customer’ problems we
can rely to Core banking, provide right service at right time and more compact
resource than traditional banking system.

Table (4.7) Reliability

No Statement Mean Std. Dev
1 Core Banking System is applying to IFRS. 4.06 0.863

2 Core banking reduces error on transaction. 3.53 0.961

3 International Core Banking System is reliable the 3.52 0.788

SWIFT message format.

4 Core Banking System can provide the banking 4.00 0.810

services 24/7

35
5 Banks fulfil its promise at the time indicated. 3.75 0.882

6 If we have to solve the customer’ problems, we can 3.78 0.712

rely to Core banking.

7 Core Banking System provide right service at right 3.82 0.778

time.

8 Core Banking System enhances system security and 3.94 0.725

user management

Total Average Scores 3.8

Source : Survey Results 2019

Table (4.7) reports the individual mean score of the eight statements of
reliability factor. The maximum mean scores 4.06 and standard deviation 0.863 was
found in the statement of applying to IFRS.
The minimum mean score is 3.52 and standard deviation 0.788 was found in
the statement of international Core Banking System is reliable the SWIFT message
format.
The overall mean score of reliability factor is 3.8 . It can be concluded that
there is more effectiveness using Core Banking System in terms of reliabilities
according to the results of respondent average agreement level.

4.3.4 Speed
Regarding to the CBS speed factors, respondents are required to respond to
five statements which are basically measured to find out the level of attractiveness
through with speed factor.
To rate the fact, these five relative statements are easy setup payment service,
process fast payment, quick transfer of fund, getting dissemination of required
information and facilitate speed of service.

Table (4.8) Speed

No Statement Mean Std. Dev

36
1 Core Banking System is easy setup payment service. 3.93 0.775

2 Core Banking System can process faster payment 3.91 0.767

through mobile or internet banking.

3 Core Banking bring quick transfer of fund. 3.83 0.702

4 They get Core banking services dissemination of 3.88 0.784

required information or data at faster rate.

5 Core Banking System facilitates speed of reports. 4.14 0.665

Total Average Scores 3.93

Source : Survey Results 2019

Table (4.8) reports the individual mean score of the five statements of speed
factor. The maximum mean scores 4.14 and standard deviation 0.665 was found in
the statement of facilitates speed of reports.
The minimum mean score is 3.83 and standard deviation 0.702 was found in
the statement of quick transfer of fund.
The overall mean score of speed factor is 3.93. It can be concluded that there
is more effectiveness using Core Banking System in terms of speed according to the
results of respondent average agreement level.

4.3.5 Awareness
Regarding to the CBS awareness factors, respondents are required to respond
to five statements which are basically measured to find out the level of attractiveness
through with awareness factor.
To rate the fact, these five relative statements are computer skills, the
knowledge to answer from customer, awareness of applying technologies and staffs,
knowledgeable for security and required information about CBS.

Table (4.9) Awareness

No Statement Mean Std. Dev
1 They need the knowledge to answer all questions 4.02 0.879
from customers.

2 Bank’s staffs have basic computer skills to use Core 4.20 0.826

37
 Banking System.

3 Core Banking System is intelligence so they must 4.06 0.813

have awareness of applying technologies and staffs.

4 Core banking can use anywhere so they are 3.88 0.780

knowledgeable for security.

5 They have the required information about Core 3.92 0.894

Banking System.

Total Average Scores 4.02

Source : Survey Results 2019

Table (4.9) reports the individual mean score of the five statements of
awareness factor. The maximum mean scores 4.20 and standard deviation 0.826 was
found in the statement of staffs have basic computer skills to use Core Banking
System.
The minimum mean score is 3.88 and standard deviation 0.78 was found in
the statement of knowledgeable for security.
The overall mean score of awareness factor is 4.02. It can be concluded that
there is more effectiveness using Core Banking System in terms of awareness
according to the results of respondent average agreement level.

4.3.6 Effectiveness
Regarding to the CBS effectiveness factors, respondents are required to
respond to five statements which are basically measured to find out the level of
attractiveness through with effectiveness factor.
To rate the fact, these five relative statements are easy move to digital
transform, don’t define work place, improves the way of doing business, faster
decision making through reports and intelligent need to security.

Table (4.10) Effectiveness

No Statement Mean Std. Dev
1 Core Banking System is easy to move digital 3.97 0.809
transform.

2 Core Banking System can be used everywhere, don’t 4.02 0.826

38
 define work place.

3 Use of core banking improves the way of doing 3.88 0.780

business.

4 Core Banking System can make faster decision 4.06 0.813

making through reports.

5 Core Banking System is intelligent need to security. 4.20 0.879

Total Average Scores 3.78

Source : Survey Results 2019

Table (4.10) reports the individual mean score of the five statements of effectiveness
factor. The maximum mean scores 4.20 and standard deviation 0.879 was found in
the statement of intelligent need to security.
The minimum mean score is 3.88 and standard deviation 0.78 was found in
the statement of improves the way of doing business.
The overall mean score of effectiveness factor is 3.78. It can be concluded that
there is more effectiveness using Core Banking System in terms of effectiveness
according to the results of respondent average agreement level.

4.4 Influencing Factors on Effectiveness of Core Banking System

The below Table 4.11 explained that Pearson correlation is a statistical test
that assesses the strength of the relationship between two numerical data variables
(Saunders et al., 2009). Therefore, the relationship of independent variables and
dependent variable is measured via Pearson Correlation. The significance level is
0.05 in the Pearson Correlation test, which means there is 95% of confidence level.
Therefore, the hypotheses only can be accepted if the significant p-value is less than
0.05 (Malhorta, 2010).

Table (4.11) Relationship of the operational performance and effectiveness of

Core Banking System
Determinant Effectiveness of CBS
Flexibility Pearson Correlation .605**
Sig. (2-tailed) .000
Cost Pearson Correlation .684**
Sig. (2-tailed) .000

39
 Reliabilities Pearson Correlation .671**
Sig. (2-tailed) .000
Speed Pearson Correlation .655**
Sig. (2-tailed) .000
Awareness Pearson Correlation .647**
Sig. (2-tailed) .000
Source: Survey Results
By analyzing with the statistical, the strength of the relationship between
numerical data variables, influencing factors; flexibility, cost, reliabilities, speed and
awareness factors are correlated with effectiveness of Core Banking System. The
significance level is 0.01 in the Pearson Correlation test and 99% of confidence level.

4.5 Regression Analysis of influencing factors on Effectiveness of Core

Banking System
In this study, the relationships between operational influencing factor and
effectiveness of Core Banking System by the use of Linear Regression model. The
result of estimated regression has shown in table 4.13, as follow

Table (4.12) Analysis of Operational Influencing Factors on Core Banking System

Variable Unstandardized Coefficients Standardized t Sig. VIF

Coefficients
B Std. Error Beta
(Constant) .419 .296 1.415 .816
Flexibility .035 .115 .031 .303 .762 2.897
Cost .241 .086 .269 2.797 .006 2.643

40
 Reliabilities .215 .108 .216 .1988 .049 3.366
Speed .181 .100 .177 1.811 .073 2.707
Awareness .269 .082 .269 3.260 .001 1.935
N 120
Adjusted R2 .583
F value 34.209** (.000)
Durbin Watson 2.146
The individual operational factors of each predicator, factors to find the effect
of variables on core banking system. The R Square value is 0.583 which indicates
58.3 percent of variation is due to independent variables. To determine the
effectiveness of Core Banking System in selected Private Banks in Myanmar, the
multiple regression analysis is conducted, and the results are reported in Table 4.13.
These results show that the coefficients for awareness, cost and reliabilities
factors are significant. These results show that the coefficients for awareness and cost
factors are significant at 1% level since the results p value are less than 0.01 and
reliabilities factors is significant at 5% level since the results p value are less than
0.05. Remaining factors such as flexibility and speed factors are not significant.
Additionally, the awareness, cost and reliabilities factor are highly significant
on effectiveness of core banking system and positive relationship of this variable
therefore the advancement of awareness and cost is rapidly increasing the
effectiveness of core banking system in private bank.
According to the result, the influencing of awareness and CBS are statistically
significant at 1% level (t=3.260; p<0.10). It has effect on CBS where awareness goes
up one unit, effectiveness will increase 0.269 unit where all other variables hold
constant.
As per the result, the influencing of cost and CBS are statistically significant
at 1% level (t=2.797; p<0.10). It has effect on CBS where cost goes up one unit,
effectiveness will increase 0.269 unit where all other variables hold constant.
As stated by the result, the influencing of reliability and CBS are statistically
significant at 5% level (t=0.199; p<0.05). It has effect on CBS where reliability goes
up one unit, effectiveness will increase 0.269 unit where all other variables hold
constant.

41
 CHAPTER V
CONCLUSION

The conclusion section has three parts. Firstly, findings which represent why
the research was conducted, what aspect of the problem were considered, what the
outcome and it consists of the findings of the demographic factors. The second,
presents suggestion, and the last part is need for future research.

42
5.1 Findings and Discussion

This study determines the influencing factors on effectiveness of Core

Banking System in selected private banks in Myanmar. The Core Banking System
and operational objective identify the distribution of performance such as flexibility,
cost, reliability, speed and awareness and thus, study is made on the current practices
and efficiency relationship of the Core Banking System on the Private Banks in
Myanmar. To be more data consistency, reliabilities analysis of the variables is tested.
Because of the higher numbers from these statistics, it reveals internal consistency of
items in the factor and thus, the concept is said to yield good result.

Regarding to the analysis on flexibility, highest mean score is found in the

statement of Core Banking System can be created easily to new products as per
business requirement in time. The overall mean for flexibility factor is higher this
international Core Banking System easy to setup for new products in time. So, the
effectiveness of Core Banking System is easy to move to digital transform.

Concerning with the analysis on cost, highest mean score is found in the
statement of Customer use core banking services; reduce the time spend in the bank.
The overall mean for flexibility factor is over the average mean value, this Core
Banking System can be used everywhere, don’t define work place. Therefore, they
have spent the cost to communication for using banking software, the Core Baking
System is more effective to the Private banks.

As to the analysis on reliability, highest mean score is found in the statement

of Core Banking System is applying to IFRS. At 2020 all of financial industries
follow the IFRS. The overall mean for reliability factor is mover the average mean
value, thus Core Banking System easy to define international messaging format. As
per above facts, Core Banking System is the effectiveness.

Regarding to the analysis on speed, highest mean score is found in the

statement of Core Banking System facilities speed of reports. The overall mean for
speed factor is higher, this Core Banking System can make faster decision making
through reports. Therefore, Core Banking System is effective software, generated the
consolidated reports to the decision maker.

43
 Apropos of the analysis on awareness, highest mean score is found in the
statement of bank’s staff need the knowledge to answer all questions from customers.
The employees know all of bank service function to explain the customers, they get
more loyal customer. Because international core banking software can create new
products. The overall mean for flexibility factor is higher, this Core Banking System
is intelligent need to security. It can be concluded that effectiveness using Core
Banking System in term of security are high.

As per result the female respondent is more than male, so most of female are
working in private bank. And then the responds number of occupations is manager
rank is higher and banking experience are between six to nine years. So, this study
result is approximately reality report.

5.2 Suggestion
Based on the finding from the observed data in the previous section, the
suggestions will be presented for influencing factors on effectiveness of Core
Banking System. The minimum mean score of flexibility factor is international Core
Banking System can be used to make transfers to the multiple currency accounts,
some business process is restricted. It is suggested that this business process meets to
change the current situation.

The minimum mean score of cost factor is Core Banking System don’t need to
use the wide bandwidth. The international core banking needs to get the stable
connection. But in the developing country the internet connection is trying to cover
the whole region, they don’t survey on the volatile connection. It is suggested that
need to get different ISP for use of CBS.

The minimum mean score of awareness factor is they are knowledgeable for
security. Assumed that the employee is intelligence they return of effectiveness of
Core Banking System.

Moreover, the influencing factors on effectiveness of Core Banking System,

there has higher awareness. They give the training to employee, new and existence
staffs, the Core Banking software is more effectiveness. As per significant result the
reliability factor is 1% significant hence the Core Banking System is easy to generate

44
the report, that system is effectiveness. And then the cost factor significant is 5% so
they are reduced the cost that Core Banking System is effective. In this study
operational performance factors, flexibility, cost, reliability, speed and awareness,
related to effectiveness of Core Banking System by positive fairly correlation. So,
they should maintain flexibility factor for sustainable effectiveness of Core Banking
System.

5.3 Needs for Further Research

This study is only cover exploring the influencing factors on effectiveness of

Core Banking System in KBZ, CB and UAB banks by the five factors flexibility,
cost, reliability, speed and awareness dimension. The study could not present all
effects of Core Banking System in Myanmar banking sector because of time
limitation. And this study is online survey on ICT department only do not survey to
operation user. Furthermore, the scope of survey question is only employee, need the
questionnaires to consumer. Therefore, influencing factors on effectiveness of Core
Banking System in the whole Myanmar banking sector should be needed to observe.

REFERENCES
Alemayehu Geda, 2011,” Capacity building in fragile and post-conflict states in
Afric”, World journal of Entrepreneurship, Management and Sustainable
Development, Vol 7(2,3).

Akinci S, Aksoy S, Atılgan E.,2004,” Adoption of internet banking among

sophisticated consumer segments in an advanced developing country”,
International Journal of Bank Marketing, Vol 22(3): 212-32.
Biju K, Devandhiran D, Sreehari R. Customers, 2012, ‟ A study with special
reference to a nationalized bank in Thirunelveli.”

45
Essayas Taye, 2016, “Core Banking System Effectiveness in Ehiopia: The Case of
Buna international Bank (BIB)”, International journal of Management
Research & Review, 267-276.

Kaur R., 2012, “Impact of information technology on customer service with reference
to selected banks in Chandigarh”, International journal of engineering and
management science. vol.3 (4), 444-449.

Swaminathan J, Ananth A, 2011, Customer satisfaction on e-banking: a study with

special reference to mayiladuthurai: Share Journal of Multidisciplinary
Research and Studies, Vol 2(1).

Han Thar Oo , 2016, “Effect of Corpporate Governance Practices on Performance of

Myanmar Citizens Bank”.
Nang Myat Mon, 2016, “The Effect of Core Banking System on Services of KBZ
Bank”

Pyae Pyae Phyo, 2017, “Employee Perception on Implementing new International

Core Banking System in AGD Bank”.
Web links:

https://www.kbzbank.com/en/
https://www.uab.com.mm/
https://www.cbbank.com.mm
https://whatis.techtarget.com/definition/core-banking-system
http://www.giz-banking-report-myanmar-2018.com
APPENDIX

Analysis of Effectiveness of Core Banking System in Private Banks

in Myanmar
(Questionnaires)

This questionnaire is for my research effectiveness of Core Banking system in Private

bank in Myanmar. All responses are anonymous and will be used for academic
purposes only. Thanks for taking part. I am a master student at Yangon University of
Economics.

46
 Section : A

Demographic Factors

Please Tick “ √ ” in the box that best describes you.

(1) Gender
a. Male
b. Female

(2) Age
a. Between 20 and 30
b. Between 31 and 40
c. Between 41 and 50
d. Between 51 and 60
e. 61 and above

(3) Occupation
a. Executive Officers
b. Manager
c. General Manager
d. Chief Officers
e. Others

(4) Banking and Finance Service Experience Level

a. Less than 3 Years
b. 3 - 6 Years
c. 6 - 9 Years
d. 9 - 12 Years
e. Above 12 Years

Section : B

Analysis on Core Banking System’s

Please Tick “ √ ” in the box that best describes you.

(1) Strongly Disagree (2) Disagree (3) Neither Agree or Disagree (4) Agree (5)
Strongly Agree

Flexibility

No Statement 1 2 3 4 5

47
1 International Core Banking System can be used to make
transfers to the multiple currency accounts.

2 Core banking can be used to define various interest rates for

various products.

3 Core Banking System can be created easily to new products as

per business requirement in time.

4 International Core Banking System is more flexible than

traditional or local system.

5 Core Banking System easy to move Technological Innovation.

6 Core Banking System enables banks to consolidate technology

platform across functions.

Cost

No Statement 1 2 3 4 5

1 Core banking reduces transaction cost.

2 They can reduce their operation cost by using Core Banking

System.

3 They do not need to manage multiple server.

4 Customers save travel cost by using Core banking services

anywhere.

5 Customers don’t need to carry cash for their business as; they
can use Core banking service to transfer money.

6 Core Banking System don’t need to use the wide bandwidth.

7 Customers can manage their money at any time via Core

banking.

8 Customers use Core Banking services; they can reduce the

time spent in the bank.

9 International Core Banking System has more compact resource

than traditional banking system.

Reliability

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No Statement 1 2 3 4 5

1 Core Banking System is applying to IFRS.

2 Core banking reduces error on transaction.

3 International Core Banking System is reliable the SWIFT

message format.

4 Core Banking System can provide the banking services 24/7

5 Banks fulfil its promise at the time indicated.

6 If we have to solve the customer’ problems, we can rely to

Core banking.

7 Core Banking System provide right service at right time.

8 Core Banking System enhances system security and user

management

Speed

No Statement 1 2 3 4 5

1 Core Banking System is easy setup payment service.

2 Core Banking System can process faster payment through

mobile or internet banking.

3 Core Banking bring quick transfer of fund.

4 Customers save travel cost by using Core banking services

anywhere.

5 Customers don’t need to carry cash for their business as; they
can use Core banking service to transfer money.

6 They get Core banking services dissemination of required

information or data at faster rate.

7 Customers can manage their money at any time via Core

banking.

8 Customers use Core Banking services; they can reduce the

time spent in the bank.

9 Core Banking System facilitates speed of reports.

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Awareness

No Statement 1 2 3 4 5

1 They need the knowledge to answer all questions from

customers.

2 Bank’s staffs have basic computer skills to use Core Banking

System.

3 Core Banking System is intelligence so they must have

awareness of applying technologies and staffs.

4 Core banking can use anywhere so they are knowledgeable

for security.

5 They have the required information about Core Banking

System.

Effectiveness

No Statement 1 2 3 4 5

1 Core Banking System is easy to move digital transform.

2 Core Banking System can be used everywhere, don’t define

work place.

3 Use of core banking improves the way of doing business.

4 Core Banking System can make faster decision making

through reports.

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5 Core Banking System is intelligent need to security.

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