Given the facts of the case, describe the IoT concept and explain the different layers of IoT. Distinguish between big data

Big data and Internet of Things (IoT) technologies in Omani banks: a case study

Stuti Saxena and Tariq Ali Said Mansour Al-Tamimi

Stuti Saxena is based at the Department of Political Science, Central University of Haryana, Mahendragarh, India. Tariq Ali Said Mansour Al-Tamimi is based at the Department of Statistics, Sultan Qaboos University College of Science, Muscat, Oman.

Abstract Purpose – The purpose of this paper is to underline the significance of invoking Big Data and Internet of Things (IoT) technologies in Omani Banks. Opportunities and challenges are also being discussed in the case study. Design/methodology/approach – Four Omani banks representative of local, international, Islamic and specialized banks are being studied in terms of their social networking presence on Facebook and their e-banking facilities. Also, impetus is laid upon the aggregation of internal data and vast amounts of semi-structured external data from public sources, including social media. Findings – The case study shows that Big Data analytics and IoT technologies may be utilized by the Omani banks for facilitating them in “forecasting” and “nowcasting”. Besides, customers may be better managed with better and efficient services. However, there are challenges in tapping these technologies such as security, infrastructure, regulatory norms, etc. Practical implications – Banks in Oman need to appreciate the utility of Big Data and IoT technologies, and for this, a robust IT infrastructure should be institutionalized. Originality/value – The case study is a major step in integrating Big Data and IoT technologies in Omani banks across four variants of national, international, Islamic and specialized banks. This is the first study where such integration has been emphasized in the Omani banking sector.

Keywords Big data, Information management, Banking, Technology-led strategy, Internet of things

Paper type Case study

1. Introduction

The significance of IT in banking and financial services may be witnessed by the changing technology landscape over the years. Therefore, banking sector has been harnessing the potential of IT in providing services to the customers. Besides tapping the electronic channel for providing services and improving customer relationship, banks have been invoking social media networking for improving their relationship with the customers (Ozdora-Aksak and Atakan-Duman, 2015). On the one hand, self-service technologies like the ATM are providing services to the users and generating a large amount of data regarding the transactions, and on the other hand, the utilization of social networking media has been instrumental in the accumulation of data regarding the responses and feedback from the users. Voluminous data are being exchanged during banking transactions internally as well as externally. Besides, Internet of Things (IoT) technologies are useful in channelizing the data collection and processing stages for an organization. The present case study seeks to address this call by proposing the integration of Big Data and IoT technologies in Omani banks by substantiating our argument with a case study of four Omani banks which are deploying self-service technologies and social media (Facebook, for instance) with the objective of providing better customer services. Elsewhere, banks have adopted Big Data analytics for processing the humungous data stored with them

Received 18 March 2017 Revised 13 May 2017 Accepted 15 May 2017

DOI 10.1108/FS-03-2017-0010 VOL. 19 NO. 4 2017, pp. 409-420, © Emerald Publishing Limited, ISSN 1463-6689 Foresight PAGE 409

about the customers and transactions. For instance, banks in England (Bholat, 2015) and Singapore (Ng, 2012) have integrated Big Data analytics in their operations for providing efficient customer services. Likewise, research has laid emphasis upon invoking IoT technologies for streamlining performance. IoT implies that “individual, man-made or natural, objects and interrelated collections of objects, e.g. in homes and cars, can be made uniquely identifiable by radio tags, sensors and actuators, and thereby become virtually represented in wireless and wired internet structures” (Andersson and Mattsson, 2015, p. 85). We posit that Omani banks have the potential to harness the Big Data sourced from self-service technologies and their social media platforms and apply sophisticated tools and technologies for providing customer-centric solutions on a real-time basis as well as “nowcast” and “forecast” solutions for unforeseen problems. Further, we emphasize upon the utility of IoT for the banking sector in Oman for ensuring efficiency and effectiveness in services.

The paper is structured as follows: Section 2 shall provide a brief about Big Data; Section 3 shall provide a review of IoT; Section 4 shall provide a brief about the significance of Big Data and IoT for the banking sector; Section 5 shall discuss about the banking sector in Oman; Section 6 shall provide a case study example of how four banks in Oman are using social media for customer management; Section 7 shall provide a brief about the integration of Big Data analytics and IoT in the four banks and provide an overview of the challenges and prospects which may result by integrating Big Data analytics and IoT in the banking sector in Oman; Section 8 shall provide summary remarks followed by a section on limitations of the study and further research directions (Section 9), and the paper shall conclude with social and practical implications (Section 10).

2. Big Data

Big Data pertains to the five “Vs” which imply volume, variety, velocity, veracity and value. Volume of data implies that there is a lot of data which need to processed, variety denotes different formats in which data are made available and stored, velocity indicates the speed with which data are generated on a real-time basis, veracity implies truthfulness and credibility of the data thus collected and finally, value implies the utilitarian aspect of the data. Even in the banks, the data which are generated is of high volume, high velocity and diverse in form (Bholat, 2015).

In the corporate sector, organizations like Amazon, IBM and Hewlett-Packard have been deploying Big Data analytics for processing the humungous data generated by them every moment. Also, other sectors like public sphere, healthcare, education and environment are gradually moving forward to integrate Big Data in their operations. Big Data, provided that are analyzed properly, might be a very useful tool for business decision-making. Nevertheless, combining and processing them is not possible using traditional analytical tools, and thus requires the development of the sophisticated software solutions. As the term “Big Data” generally refers to data sets so large and complex that traditional tools are no longer sufficient to process them, appropriate IT infrastructure and dedicated software are prerequisites to analyze such data properly.

3. IoT: a brief

IoT may be defined in simple terms as “(envisaging) a society where all members have access to a full-fledged Internet environment populated by self-configuring, self-managing, smart technology anytime and anywhere” (Nolin and Olson, 2016, p. 362). “Things” are categorized as a hierarchy of five domains (Sundmaeker et al., 2010). The lowest domain corresponds to domain 1 where there are real-world entities or virtual entities which interact with each other as well as with the infrastructure supporting these entities; domain 2 corresponds to the level where the things are imbued with sensors, and they are able to interact with the environment; the third level is domain 3 wherein the virtual entities engage

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in collaboration and networking with other entities; domain 4 is an advanced level wherein the entities are able to exchange communication with the environment and reason out different aspects; and domain 5 corresponds to the most sophisticated level wherein things are able to self-replicate themselves besides monitoring, managing or preempting other things.

The term – IoT – was propounded in a crude form in 1999 (Ashton, 2009), and it refers to “information-sensing devices and technologies, such as global positioning system, radio-frequency identification devices (RFIDs), infrared sensors, laser scanners, gas inductors, etc. [. . .]. It is a real-time internet-based network” (Dweekat et al., 2017, p. 270). Furthermore, IoT helps in linking objects or processes which enable better monitoring and interaction. There are four layers of IoT architecture:

1. the sensing or perception layer (collects and transmits data with the help of object identification properties and reader tools);

2. the gateway and network layer (connects objects or things and allows them to share and exchange information with the help of a gateway, an internal network or a local area network and an external network or wide area network);

3. the management service layer (in-charge of information analytics, security control, process modeling and device management); and

4. the application layer (collected and transitioned data are reserved, processed through certain techniques to be used for a plan and objects or things are managed and controlled).

IoT technologies are useful in supply chain management, logistics, manufacturing (Zelbst et al., 2012), food chain industry (Grunow and Piramuthu, 2013), healthcare sector (Chong et al., 2015), etc. (For an extensive review of IoT, please refer to Mishra et al., 2016).

4. Big Data and IoT for the banking sector

Banks and financial institutions are yet to invoke Big Data in their operations (Bholat, 2015; Frizzo-Barker et al., 2016). There are many ways in which customer relationships are forged via banks. For instance, the most commonplace means of customer relationship management is through the offline banking mode wherein the customer visits the bank or other customer touch-point physically. The other popular means of transacting with the customer is via online modes. For instance, electronic banking or virtual banking is invoked wherein internet banking, telephone banking, ATM, WAP-banking and other means are being invoked (Cheng et al., 2006). Likewise, m-banking or mobile banking is utilized to provide customer services over mobile networks and devices (Lee et al., 2015; Yadav et al., 2015). All these offline and online channels act as potent sources of Big Data for the banks.

Besides, banks indulge in customer relationship management (CRM) activities through their activities on social networking media like Facebook or Twitter. This dimension of banking is known “social banking”, wherein banks may “engage the customers and predict their behaviors using insights from social data” (Ghazinoory et al., 2016). Thus, these social banking activities are again a potent source of Big Data, in the sense that banks are apprised of the needs and requirements as well as feedback and grievances regarding various issues.

Likewise, with the issuance of plastic cards (credit cards and debit cards) and other customer products where sensing technologies are involved, IoT technologies are being harnessed by the banks for generating customer data and drawing meaningful insights from the same. This is also implicative of the security of confidential data (personal information of the customers) against cyber crimes. IoT technologies generate Big Data in their own turn, and they are useful in helping the banks “to understand customer needs, market dynamics, and strategic issues with unmatched precision” (McKinsey Quarterly, 2015). Identification may be made easier, and

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smartphone users (i.e. customers) may benefit from global positioning systems (GPS), sensors and electronics to identify their location. In case of theft or misplace of the plastic currency, IoT technologies come in handy to find the lost objects. Finally, IoT technologies are useful in social networking as they help in taking count of the social networking activities of the users.

5. Banking sector in Oman

The Sultanate of Oman borders the Republic of Yemen, the Kingdom of Saudi Arabia and United Arab Emirates. The area of Oman is about 309,500 km2. The population of Oman has been growing over the years, and the government is in the process of releasing its latest census figures in 2020 (www.omansultanate.com/demographics.htm). The internet usage is on the high in Oman which is attested by 2,584,316 internet users as in December 2014, which amounts to 78.6 per cent penetration[1]. Until recently, the country was gearing its economy through oil and gas resources. However, with the push on diversification of the economy, the country is envisaging itself into fortifying other sectors like logistics, fisheries, mining, tourism and hospitality (Ninth Five Year Development Plan, 2016-2020).

The banking sector in Oman is progressing at a slow rate (Al-Hajri and Tatnall, 2007; Al-Muharrami, 2016). The banking sector saw its inception in 1948. Broadly, the banking sector remained fragmented until 1970s when the Central Bank of Oman was established. The banking sector witnessed an upswing as a consequence of the banking law of 1974 which allowed entry of foreign banks in Oman. Going by the figures of 2016, there are seven local banks, two specialized banks, two full-fledged Islamic banks and rest are foreign commercial banks. A list of Omani banks is provided in Table I. The total (gross) assets of banking sector of Oman crossed RO26bn at the end of Financial Year 2014 (FY-14) registering a growth rate of 13.5 per cent over FY-13, and both domestic and foreign banks have been contributing to increasing lending growth rates (Central Bank of Oman, 2015). Implicitly, the banks have garnered a large customer base over the years.

Table I List of banks in Oman (Source: Central bank of Oman)

Bank Year of establishment Website

Local banks National Bank of Oman 1973 www.nbo.om Oman Arab Bank 1973 www.oman-arabbank.com HSBC Bank Oman 1979 www.hsbc.co.om Bank Muscat 1981 www.bankmuscat.com Bank Dhofar 1990 www.bankdhofar.com Sohar Bank 2006 www.banksohar.com Ahli Bank 1998 www.ahlibank-oman.com

Foreign banks Oman Arab Bank 1973 www.oman-arabbank.com Habib Bank 1974 http://globalhbl.com/oman/ Citibank 1975 www.citibank.com/tts/global_network/emea/middle_east/oman.html Bank of Baroda 1976 www.bankofbaroda.co.in/oman.asp Bank of Beirut 2006 www.bankofbeirut.com/Oman National Bank of Abu Dhabi 1976 www.nbad.com/en-om/personal-banking.html Qatar National Bank 2007 www.qnb.com/cs/Satellite/QNBOman/en_OM/enQNBWelocmemessageOman Sarasin Alpen LLC 2008 www.alpencapital.com/ State Bank of India 2004 www.sbioman.com/

Specialized banks Oman Housing Bank 1977 www.ohb.co.om Oman Development Bank 1977 www.odb.com.om

IBs Bank Nizwa 2012 www.banknizwa.om Alizz Islamic Bank 2013 www.alizzislamic.om

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In the Organization of Islamic Cooperation (OIC), the Islamic banks (IBs) are witnessing an increase in their market share over the years to about 40 per cent in 2014-2015 (Sun et al., 2017). IBs have been contributing toward financial inclusion besides providing avenues for diversification of banking services. As an OIC member, Oman has been witnessing a growth of IBs too. This is attested by the fact that, despite being recent entrants in the banking sector, the total customer deposits held with IBs and windows registered a significant increase to RO1.3bn in September 2015 from RO0.4bn as at the end of September 2014, while the total assets of IBs and windows combined amounted to RO2bn as at the end of September 2015 which constituted about 6.5 per cent of the banking system asset base (Central Bank of Oman, 2016).

6. Case study of four Omani banks

To substantiate our case study’s intent, we will take four Omani banks, namely, Sohar Bank, Bank of Beirut (Oman), Oman Housing Bank and Alizz Islamic Bank as a representative of local banks, foreign banks, specialized Banks and IBs, respectively. The purpose of selecting these banks is twofold. One, each of them is a well-acclaimed bank, and one of the authors has informal contacts with the management of these banks. Second, these banks have extensive branching network in Oman besides being active on social networking sites. In this section, drawing evidence from their websites, we will capture some information from their annual/quarterly reports and specifically probe into their Facebook pages as well as the viability to utilize voluminous data generated from self-service technologies like electronic banking or internet banking, for instance, to ascertain the voluminous Big Data which is likely to emerge from these sources which would provide a plethora of opportunities to these banks to strategize their products and services using Big Data analytics. Specifically, with focus on Big Data, Sub-section 5.1 shall deal with a case study on the Facebook activities of these banks and the subsequent sub-section shall provide a brief description to underscore how self-service technologies may be better harnessed. Both social media and self-serving technologies may be extracted by IoT technologies for yielding valuable insights.

6.1 Alizz Islamic bank

Alizz Islamic bank (www.alizzislamic.com) started off its operations in 2012 in line with the Royal Decree No. 69/2012 which laid the foundation of Islamic banking in Oman. The bank provides retail and corporate finance products and services in line with Sharia through its branches, online and mobile devices. The bank is headquartered in Ruwi. Other branches are at Al Khoudh, Nizwa, Salalah, Sohar and Wattaya. As per the latest Annual Report of 2014, the bank holds assets worth OMR119.6m and customer accounts and equity of unrestricted investment account holders totaled OMR15.2m. The bank’s IT department has implemented “Oracle FLEXCUBE Universal” core banking system and seeks to provide better services by building upon its IT infrastructure in the coming times. Among the e-banking services are included online banking, mobile banking, interactive teller machine and phone banking. For instance, “alizz Connect” is an online banking portal which helps to check account balances, view and pay card bills, transfer funds locally and internationally, view account statements online, set up, amend or cancel standing orders and create term investment deposits. For ensuring security for online transactions, encryption methods are used. Through mobile banking, customers may avail services like money transfers, view transactions history, view balance and transactions on credit cards, financing or deposits, make online credit card payments, locate bank branches, request cheque books and create beneficiaries from mobile devices. For ensuring security through mobile banking, passwords need to be entered every time a user logs in the account. A multi-layered approach is followed for user registration and authentication. Through alizz Live, an interactive teller machine (ITM), customers may conduct transactions and banking services via a video-based interactive technology which ensures real-time video/audio

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interaction. However, alizz Live is only installed at the Muscat Grand Mall (MGM). Through alizz Live, customers may carry out transactions like cardless cash withdrawals of up to OMR10,000 in any customer denominations, cash deposit to any alizz Islamic bank account, cheque deposit and encashment, opening term deposit, pay-off credit card dues, making local and international transfers and setting up standing instructions. For security purposes, all the transactions are recorded and ID as well as a digital signature are used for authorization and verification purposes. Finally, through phone banking, SMS alerts may be activated to provide details regarding withdrawals and deposits, ATM and internet transactions, salary credits and deposits made through CDM. Through the call centre of the alizz bank, queries, information and grievances may be redressed easily. Lastly, ATM branches are available at various locations to assist the customers to avail multiple banking services.

6.2 Bank of Beirut

The Bank of Beirut is a Lebanon-based bank which has its four branches in Oman (www.bankofbeirut.com/Oman/en/Home) at Muscat, Sohar, Ghubrah (Muscat) and The Wave (Muscat). The first branch was opened in 2006. The Bank of Beirut, Oman, focuses on corporate banking, retail banking and international banking. The bank provides online banking, internet banking and mobile banking besides customer call centre facility. However, the details are strikingly unavailable at the website. As per the latest annual report of the bank, income of the bank has witnessed an increment of 26.11 per cent over the preceding FY. An analysis of customers’ deposits reveals that the Middle East and North Africa (MENA) region, inclusive of Oman, has witnessed a steep rise by 5.04 per cent between 2013 and 2014. Likewise, the loans made to customers increased by 20.27 per cent over the same period.

6.3 Sohar Bank

Sohar Bank (www.banksohar.com) was established in 2007 as a public joint-stock company and is engaged in commercial, investment and Islamic banking through its well-networked branching system at Muscat (10 branches), Al-Batinah (seven branches), Al-Dakhliyah (two branches) and Al-Sharqiyah (four branches) and Dhofar (one branch). The bank’s Annual Report, 2014, attests that the bank made a net profit of OMR29.878m for the year, which was 11.19 per cent higher than the previous year’s net profit of OMR26.871m. Further, customer deposits grew 11.49 per cent to OMR1,552m during 2014, as compared to OMR1,392m in 2013. The bank provides easy access to banking via “e-channels” facility which helps customers to access bank account through ATMs, internet and phones. For personal internet banking, the bank has launched “Al-Mumayaz” which provides customers with real-time access to their bank accounts. For ensuring data privacy and security of customers’ transactions, the bank has maintained modern security infrastructure platforms. Thus, customers may avail services related to account balance enquiry, transaction history, transfer of funds, remittances, service requests, interaction with account manager, tracking financial and non-financial activities through new banking and online bill payment for utilities. For corporate customers, the “Al-Mumayaz” platform provides facilities related to real-time account balance enquiry, transfer of funds, trade finance, payroll, bulk files upload, procurement of services of a corporate administrator, processing service requests, interaction with account management for resolution of queries and net banking. As in the case of non-corporate customers, the bank ensures security and privacy of data through encryption and other tools. Lastly, phone banking through SMS services may be availed by the customers. To ensure safe and secure transactions, the bank’s Information Technology & Alternate Channels Division has been gearing toward providing hassle-free services to users.

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6.4 Oman Housing Bank

Oman Housing Bank (www.ohb.co.om) was established in 1977 as an Omani stock company in line with the Royal Decree No. 51/77 with a capital of OMR10m. Oman Housing Bank is regarded as the successor of Oman National Housing Development Co. which was involved in providing housing finances since 1974. The term of the Bank has been extended under Royal Decree 36/2010 for 20 years commencing from August 2007. The government of Oman is a major shareholder with more than 60 per cent stake. It has branches in Ali Ibrahim Al Raisi (main branch), Sur, Salalah, Sohar, Nizwa, Khasab, Buraimi, Rustaq and Ibra. The bank provides lending services for house construction, purchase of a completed house, purchase and completion of an unfinished house, completion of an unfinished house, expansion of an existing house, repayment of loan arising of (construction/purchase) of a house and maintenance of a house. As per the Annual Report, 2014, the number of approved loans stood at 1,887 which amounted to OMR80m and the bank earned net profits amounting to OMR14.5m in 2013-2014 FY which was an increase by 17.9 per cent over the preceding FY. The Annual Report, 2014, is a testimony of the fact that the bank is not much active in internet banking or other services and not much is being invested in developing the IT infrastructure; however, the bank does make allocations for training of the employees.

6.5 Facebook page activities of four Omani banks: are the banks tapping social media adequately?

Glancing through the relevant indicators derived from the Facebook pages of these four banks from the period April 15, 2015, till March 15, 2016 (Table II), a lot of vital information is revealed. The selection of the period was in line with our assumption that, with increasing social media usage in Oman and growing utility of internet-enabled tools and technologies, Omani banks would have enhanced their activities over time, given the competition in the banking sector and the growing emphasis upon the economic diversification post oil prices crash after mid-2014. Secondly, Facebook posts for this period were easily available.

An empirical investigation conducted on 667 e-banking customers regarding their views on their bank’s Facebook page revealed how banks may differentiate their products and services based on age-based segmentation (Durkin et al., 2015). Contextualizing this study in the present study would yield useful results for the Omani banks. It would help the Omani banks to chalk out strategies for serving the customers based on their age and occupation. For instance, Sohar Bank and Bank of Beirut, Oman, have been conducting competitive events from time to time. Alizz Islamic Bank and Oman Housing Bank have not picked up the strings. Further, real-time information is missing on all the four banks’ “pages”. Thus, all the four banks need to work upon this dimension. For instance, for the present, these banks are providing information about various schemes, achievements, motivational thoughts and festival greetings only (Table III). Mostly, there is repetition of the posts. Although the Bank of Beirut, Oman, is in the forefront in terms of the number of “Likes” per post, the common trend is that these “Likes” vary from post to post and do not show a pattern of increase or decrease.

A study conducted on South African banks underscored the significance of tapping social networking media by the banks (Chikandiwa et al., 2013). This study is pertinent for the present purpose in the sense that besides providing information about the opening of a

Table II A snapshot of Omani banks’ Facebook “pages”

Bank Facebook “page” “Likes” for the page

Average posts per month

Average “likes” per month

Oman Housing Bank www.facebook.com/OmanHousingBank 807 8 10 Sohar Bank www.facebook.com/excel.banksohar 32,503 12 190 Bank of Beirut, Oman www.facebook.com/BankofBeirut.Oman 54,922 9 11,107 Alizz Islamic Bank www.facebook.com/alizzislamicbank 7,280 10 240

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new branch, all the four banks have not been providing innovative steps in furthering customer experience. Furthermore, visitors post very few comments on the posts. This is attested by the fact that Sohar Bank has got a maximum of 12 comments or Oman Housing Bank gets only one comment for few posts. However, Bank of Beirut got a maximum of 98 comments on a post pertaining to a general question on shopping behavior. Lack of comments is indicative of decreased interest in the post. For instance,

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