The need for ICT induced Organizational Transformation among the Public Sector Banks in Sri Lanka Selvarajan, P. Faculty of Business Studies, Vavuniya Campus of the University of Jaffna, Sri Lanka pselvarajan@mail.vau.jfn.ac.lk Abstract This paper focuses the need for the organizational transformation in the public sector banks in Sri Lanka. Bank of Ceylon and People’s bank are the two major public commercial banks in Sri Lanka. The author investigated the need for the ICT induced organizational transformation in these banks as a case study. Further the five levels of ICT induced Organizational Transformation process identified by Venkatraman (1990) has been compared with the Sri Lankan public sector banks and recommended possible ICT strategies to be implemented in future in order to reduce the customer traffic and sustain in the competitive market. Key Words: Information and Communication Technology, Organizational Transformation, Business Process Redesign, Business Net work redesign, Business scope redefinition 1. INTRODUCTION 1.1 Background The evolution and revolution of Information Technology (IT), which is called as Information and Communication Technology (ICT) opened up several avenues for individuals and organizations to utilize limited resources in an efficient and effective manner. ICT is becoming an increasingly important field in the development and the growth of every organization. The availability and usage of adequate ICT components in the operation of organizations are inevitable in the current competitive business environment, since organizations want to capture the market share and sustain in the market. In Sri Lanka the impact of ICT on various organizational activities in public and private sector has been identified. In this context the adoption of ICT and its consequences have been influencing in various levels and various eras in organizations based on its sophistication. In Sri Lankan context, banks and financial sector has undergone rapid changes due to ICT and is one of the fast growing industries. (Central Bank of Sri Lanka, 2003). According to Mutsaers, et.al., (1998) financial institutions were the early adopters of IT. Kumara (2006) argued that technology will take over banking in near future. In Sri Lanka, since the banking industry is considered a very competitive and profit motive one than the other sectors, the adoption of ICT in banks also at a higher level. Moreover, the public sector banks have to compete with the private sector banks and other financial institutions in a competitive business environment. Therefore there is a need for ICT induced Organizational Transformation (OT) among the public sector banks for their survival. The above reasons encouraged the researcher to choose this topic for the research. 1.2 Problem Statement In the Sri Lankan banking financial sector there are two major public sector commercial banks – Bank of Ceylon and People’s Bank, with largest branch networks and a higher number of deposit accounts. They are not fully computerized and networked. Electronic fund Transfers received by state – owned banks frequently required physical delivery by messengers or a telephone transfer – to reach a customer account (ADB,2005). Since there is inadequate ICT infrastructure in public sector banks and, since the word of mouth communication has been considered as a powerful tool among the public in Sri Lanka, the number of customers for public banks is very high. Especially in northern part of Sri Lanka, during the recent past (latter part of 2009) the number customers have increased in public banks due to the displacement of huge amount of public from Vanni region and, the branches of these banks were not functioning on the account of the civil war. More over since Public sector organizations have the obligation to maintain their accounts in the public banks and these banks are willing to cater all kinds of customer groups, the banks have been facing problems in managing their customer traffic as well as providing efficient & effective services to their customers by the adoption of ICT and sophisticated Information Systems. Therefore these two banks are in a position to adopt Annual International Conference on Data Analysis, Data Quality and Metadata Management (DAMD 2010). Copyright © GSTF 2010. ISBN: 978-981-08-6308-1. doi:10.5176/978-981-08-6308-1 D-014 94