B.A.Sc. Thesis Abstracts - Year 1998

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Utilizing Data Envelope Analysis to Analyse the Efficiency of Credit Unions in British Columbia

Burcu Anadol and Eric Lou

his study applies Data Envelopment Analysis (DEA) techniques to 1991 financial data reported by 108 British Columbia (B.C.) credit unions. Credit unions in B.C. are important financial service providers in that province, with $10.4 billion in assets in 1990, and a customer membership of over one million. DEA allows efficiency to be measured without specifying a parameter driven functional form, thus it is ideal for mutual ownership co-operatives.

The analysis is conducted using the intermediation approach to measure the service flow of the credit unions. With the application of DEA, these credit unions are compared to a group of comparative credit unions that are in the same peer group, and the best practice credit unions are identified. The regression analysis of the efficiency scores and the size of the credit unions suggest that the credit unions with larger assets tend to perform better than the smaller credit unions. The comparison of efficiency scores and profitability of the credit unions suggest correlation between the two variables, where the profitability measurement of credit unions are directly proportional to their efficiency scores.

Knowing the relative efficiencies and behaviors of credit unions, the impact of management policies can be observed and they can be adjusted to reduce or further eliminate the inefficiencies in credit unions.


Merchant System Interface for the Toronto Dominion Bank

Alex Barnes

Toronto-Dominion Bank, like many large organizations has more opportunities for improvement than actual resources to handle them. One of these opportunities is the bank's merchant system interface. The system was first developed over 15 years ago to create preformatted reports and customized data files. Subsequent improvements to the system have been "one-of" efforts rather than general adaptations.

This thesis proposes a re-designed system that allows significantly more flexibility for the TD salespeople as they meet customer demands. Instead of the customer receiving "canned" reports or specifically tailored files, each customer has their own profile which can be easily updated in order to provide insight into the changing trends in the customer's business. Thus, the major benefits from implementation of this thesis are flexibility and expandability.


Authentication Technologies: A New Era in User Verification for Banking

Denise Ho

User fraud and increasing numbers of attacks on data protected by traditional passwords and magnetic stripe cards have presented a need for businesses, and specifically the banking industry, to investigate the deployment of more sophisticated forms of user authentication. This report gives an overview of available technologies, and discusses advantages and disadvantages of each type of technology. Evaluations of individual products are grouped by technology type.

Although software has played a significant role in user authentication to date, it is believed that reusable passwords are nearing the end of their life cycle due to their vulnerability to attack. Encryption, although useful for protecting data, must be combined with another technology in order to have applicability within the user authentication environment. Biometrics, a relatively young technology in user authentication, has great potential to be the solution of the future. However, current biometric technology is uneconomical to implement on a system-wide basis, and the sector is still in the process of producing new products that need time to mature. Hardware, such as smart cards and tokens, combined with PINs, and a Public Key infrastructure providing common, signed certificates, provide a more secure method of authentication while offering the opportunity to be integrated with biometrics in the near future.

The applicability of user authentication technologies within the Royal Bank varies depending on the environment. The smart card, combined with fingerprint technology, was found to have the highest potential for authentication of banking clients due to its high public acceptability, ease of deployment and use, and ability to be implemented system wide. Internet and telephone banking could be complemented with voice verification systems. Voice verification offers a method of identification that is effortless to deploy, and can be applied to many environments. However, for employee branch system access, facial recognition is flexible, economical, user4riendly and secure approach to workstation authentication.

Project Prioritisation

Susanna Iacobelli

Traditionally, information technology has been treated like any other capital investment. Cost benefit analysis, which encompasses return on investment, internal rate of return and net present value, however, alone is inadequate when dealing with information technology projects. These methods do not incorporate a project's inherent intangible benefits and related risks and uncertainties.

The purpose of this thesis is to present a project prioritisation system to ensure that the best projects receive funding. Project prioritisation is accomplished through several steps:

  • Set corporate goals and strategies
  • Apply the balanced scorecard
  • Screening proposed projects
  • Assigning weights to decision factors
  • Analysing screened projects
  • Applying the Information Economics Model
  • Selecting the project to be funded

The above system links business performance to information technology through the involvement of senior management and corporate vision. The thesis describes project prioritisation system in greater detail.


Royal Bank Daily Cash Management System for Small and Medium Sized Enterprises

Carey MacRury and Lucy Pegoraro

The purpose of this work is to analyze a new Cash Management Product prototype developed by the Royal Bank. This analysis contains two components. The first is to research the potential value of the system to clients, and to obtain feedback to further strengthen product development to meet client expectations. This is achieved through the development of an interview and questionnaire process. The second topic of research is to investigate the feasibility of interfacing the prototype system with client accounting systems, and to discuss any applicable interfacing issues.

Results of the market research, while only preliminary, indicate a positive response to the prototype. It is recommended that the process be continued to obtain sufficient feedback to draw statistically valid conclusions. Recommendations are also included about improving the interview process and the questionnaires.

Results from the interface research indicate that the accounting software market for SMEs has moved to Client/Server technology, which enable the use of open system standards. Interfacing based on Microsoft's ODBC is outlined as a feasible solution. Discussion on the value of the prototype is included and an alternative service is proposed.