2007:016 MASTER'S THESIS E-pawnshop Investigating the possibility to incorporate the usage of Internet for pawnshop specific processes Lina Lanäs Marcin Nowak Luleå University of Technology Master Thesis, Continuation Courses Computer and Systems Science Department of Business Administration and Social Sciences Division of Information Systems Sciences 2007:016 - ISSN: 1653-0187 - ISRN: LTU-PB-EX--07/016--SE Acknowledgements This thesis completes our studies for a Master of Science degree in e-Commerce at Luleå Technology University in Sweden. The thesis was carried out in Luleå during the autumn 2006. First of all, we would like to thank our directing teacher Svante Edzén who made us think through our decisions carefully and for guiding us back on track when we lost direction. We would also like to thank our respondents who willingly shared their experiences, a great deal of information and patiently answered all our questions. Last, but not the least, we like to thank our families and friends for their support. Luleå University of Technology, 2007-05-15 Lina Lanäs Marcin Nowak “Sic itur ad astra.” - Vergilius Abstract The pawnshop industry is a considerable business today. There is an obvious and even growing demand for small short term loans. These kind of loans are something that traditional banks are generally not interested in offering due to high costs to initiate a loan. Pawnbroking is the oldest method of lending money and the way of conduct is virtually still the same. This means that most processes at a pawnshop are manual. Owners of SMEs (Small and Medium sized Enterprises, pawnshops included) often assume that their business is unique and not fitted for incorporating informational technology such as Internet. This belief often proves to be incorrect making the business less effective and therefore less competitive. The purpose of this thesis is to investigate and, if possible, suggest possible improvements for the pawnshop business. By studying Swedish laws and legislation and examining solutions that a few Swedish pawnshops are using, a detailed description of work processes were made. These were used to create a new and improved work processes focusing on lowering manual workload, in other words reducing the demand for human input and involvement. This research shows that the processes at a pawnshop are actually very fitted for Internet. A big portion of the manual work can be made more effective and in some cases even automatic. These mostly concern CRM (Customer Relationship Management) which is an major part of the workload. An interesting detail that appeared was that the pawnshop business, when deconstructed into processes, was not that unique or complicated as it might seem. Table of contents 1 INTRODUCTION ...................................................................................................................................4 1.1 BACKGROUND ..................................................................................................................................4 1.1.1 History of pawnbroking...............................................................................................................4 1.1.2 Pawnbroking today .....................................................................................................................5 1.2 PROBLEM DISCUSSION ......................................................................................................................7 1.3 RESEARCH PURPOSE..........................................................................................................................9 1.4 RESEARCH QUESTION........................................................................................................................9 1.5 LIMITATIONS ....................................................................................................................................9 1.6 THESIS OUTLINE..............................................................................................................................10 2 THEORETICAL REVIEW..................................................................................................................11 2.1 PAWNBROKING BUSINESS AND LEGISLATIONS ................................................................................11 2.1.1 The lending process...................................................................................................................11 2.1.2 The pawnshop law.....................................................................................................................11 2.2 SWOT ............................................................................................................................................13 2.3 CONCEPTUAL FRAMEWORK ............................................................................................................15 3 METHODOLOGY................................................................................................................................16 3.1 RESEARCH PURPOSE........................................................................................................................16 3.2 RESEARCH APPROACH ....................................................................................................................16 3.3 RESEARCH STRATEGY.....................................................................................................................17 3.3.1 Case study .................................................................................................................................17 3.4 DATA COLLECTION .........................................................................................................................18 3.5 SAMPLE SELECTION........................................................................................................................18 3.6 DATA ANALYSIS .............................................................................................................................19 3.7 RELIABILITY AND VALIDITY ...........................................................................................................20 3.7.1 Reliability ..................................................................................................................................20 3.7.2 Validity......................................................................................................................................20 4 EMPIRICAL DATA PRESENTATION .............................................................................................22 4.1 EMPIRICAL DATA FOR JEMTLANDS PANTBANK AB.........................................................................22 4.2 EMPIRICAL DATA FOR ANONYMOUS PAWN SHOP.............................................................................27 4.3 COMMENTS ON COLLECTED EMPIRICAL DATA.................................................................................28 5 ANALYSIS.............................................................................................................................................29 5.1 FLOWCHART ANALYSIS...................................................................................................................29 5.1.1 Analysis of Jemtlands Pantbank AB..........................................................................................29 5.1.2 Analysis of anonymous pawnshop.............................................................................................36 5.1.3 Flowchart comparison ..............................................................................................................41 5.1.4 Process elements .......................................................................................................................42 5.2 SUGGESTIONS FOR IMPROVEMENT ..................................................................................................42 5.3 SWOT-ANALYSIS OF SUGGESTED IMPROVEMENTS .........................................................................43 5.3.1 Electronic data storage and automated information flow.........................................................43 5.3.2 Using standards and options.....................................................................................................45 5.3.3 Automatic activities...................................................................................................................46 6 CONCLUSION......................................................................................................................................49 6.1 RESULT...........................................................................................................................................49 6.2 DISCUSSION ....................................................................................................................................49 6.3 FUTURE RESEARCH .........................................................................................................................49 REFERENCES................................................................................................................................................50 APPENDIX 1 – SWEDISH PAWNSHOP LAW..........................................................................................52 APPENDIX 2 - INTERVIEW GUIDE..........................................................................................................58 APPENDIX 3 - INTERVIEW WITH BJÖRN MARKSTRÖM AT JEMTLANDS PANTBANK AB ...62 APPENDIX 4 - INTERVIEW WITH