Investigating IT Governance Practice and Its Application, Benefits, and Administrative Implications in the Banking Sector, Saudi Arabia

Mohammed Frag Alaqla

doi:10.5539/ibr.v14n3p15

Abstract

Governance is one of the most effective tools to stimulate investments because it encourages the growth of financial markets. IT governance is a fundamental part of corporate governance. It helps achieve many advantages and benefits for companies. This study aims to examine the level of IT governance practice and its application, benefits, and administrative implications in the private banking sector in Saudi Arabia. To achieve the research objective, the inductive and deductive research approaches are employed to address the questions and collect the data. A 5-point Likert scale questionnaire was administered to three categories of employees in the selected Saudi banks. The findings revealed that IT governance contributed to creating a competitive advantage and adding real value to the banks through improving their reputation, increasing the market share, and enhancing customer satisfaction, which resulted in an improvement in the value of the banks. However, it is recommended that the rules of control and the principles of IT governance are considered in the future policies of Saudi banks, their mission, structures, and decision-making.

Highlights

Giant businesses in different countries worldwide have collapsed and notorious scandals of financial crime and fraud, as well as administrative corruption, have rocked the financial markets
The results showed that there is agreement among the study groups that the application of information technology governance can lead to achieving several benefits/advantages for the bank
The results showed total agreement among the respondents regarding the influence of leadership and organizational culture on Information Technology (IT) governance

Summary

Introduction

Giant businesses in different countries worldwide have collapsed and notorious scandals of financial crime and fraud, as well as administrative corruption, have rocked the financial markets. The WorldCom scandal in 2002 following a massive accounting fraud, the stakeholders’ huge losses of Enron in the United States, and the collapse of Robert Maxwell's business empire in the United Kingdom were not just the biggest accounting scandals in history; they were the biggest corporate bankruptcies of all time These incidents have made the international community realize that the rules, which governed the performance of companies, have proved to be inadequate and ineffective (Markham, 2015). The financial industry, the banking sector was seriously affected throughout the last two decades by rapid advancements in information and communication technology, which has changed the way banks are organized, their business strategies, and relationships with customers (Mehdiabadi et al, 2020) In this regard, Duffy (2004) emphasized that governance is one of the most effective tools to stimulate investments in countries because it encourages the growth of their money markets. The wrong IT application results in incurring enterprises significant financial losses that may sometimes push them to lower their competitiveness or affect the reputation and value of the enterprise, thereby ending up out of the market entirely (Fletcher, 2006)

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