study was designed to investigate the impact of Information Technology on
Banking Operations in Nigeria. Information Technology is the modern trend in
banking today. It is absolutely necessary for banks to access its impact
operational performance so as to justify the growing trend towards Information
Technology in banking sector and the huge capital invested on it, analyse their
problem and proffer possible solutions.
objectives of this study is to examine how the adoption of Information Technology
affects the operations of commercial banks in terms of effectiveness,
efficiency, competitiveness, customer base and globalisation of the bank.
main research instruments used are questionnaire and personal interview for
staff and customers of the bank. The simple frequency percentage was adopted as
the statistical measure and hypothesis testing was analysed using chi-square.
result obtained reveals that Information Technology has greatly improved the
growth and performance of the Nigerian commercial banks. The result equally
shows that Information Technology has led to increased customer satisfaction,
improved operational efficiency, saved transaction time, gives the bank a
competitive edge, saved the running cost and ushered in swift response in
research work also recommend Government support to local IT firms to foster
importation, lower tariff on importation of IT related equipment and their
agencies and regulatory bodies to upgrade their equipment as well. Government
should improve electricity supply in the country. The private sectors should
equally support by investing into improving electricity and the banks should
continuously implement customer centered IT products and services of
TABLE OF CONTENTS
1.1 Statement of problem
1.2 Research Questions
1.3 Objectives of the study
1.4 Justification of the Study
1.5 Scope & Limitation of the Study
1.6 Operational definition of terms
2.0 Information Technology
2.1 Evolution of Information Technology
2.2 Development of Information Technology
2.3 Information Technology & Nigeria
2.4 Information Technology & the
Globalisation of Nigerian
Commercial Banks Capital
2.5 Benefits of Applying Information Technology
2.6 Challenges facing the application of
In Nigerian Banks
2.7 Historical Background of First bank PLC
2.8 Analytical framework and methodology
2.9 Models Formulation
2.10 Hypotheses of the study
RESEARCH DESIGN AND METHODOLOGY
3.0 Research Design
3.1 Research Methodology
3.2 Research Methods
3.3 Source of Data
3.5 Sample & Sampling Procedure
3.6 Research Instrument
3.7 Validity of Instrument
3.8 Method of Data Analysis
DATA PRESENTATION AND ANALYSIS
4.1 Classification and analysis of responses
4.2 Discussion of Findings
SUMMARY, CONCLUSION AND
OF THE STUDY
recent times, Information Technology (IT), which basically involves the use of
electronic gadgets especially computers for storing, analyzing and distributing
data, is having a dramatic influence on almost all aspects of individual lives
and that of the national economy- the banking sector inclusive. The increasing
use of IT has allowed for integration of different economic units in a
spectacular way. This phenomenon is not only applicable to Nigeria but other
economies of the world, though the level of their usage may differ. In Nigeria,
IT usage especially in the banking sector, has considerably improved, even
though it may not been as high as those observed for advanced countries
(Adeoti, 2005; Adeyemi, 2006).
use of IT in the banking sector became of interest to this study due to the significant
role it plays in the economy. It helps in stimulating economic growth by
directing funds to economic agents that need them for productive activities.
This function is very vital for any economy that intends to experience
meaningful growth because it makes arrangements that bring borrowers and
lenders of financial resource together and more efficiently too than if they
had to relate directly with one another (Adam, 1998; Ojo, 2007). In essence,
the banking sector acts as a bridge that connects lenders and investors in the
economy. Hence, the need for reforms in theCentral Bank of Nigeria-CBN.
banking industry is one of the critical sectors of the economy whose
contribution to the pace of development and economic growth cannot be fully
quantified. Changes in today's modern world reveal
that the preponderance of natural factors cannot equip the banking
sector fully to grapple with the exigencies of global completion. According to
Hanna (1994), information, flexibility and fast response are the key new
factors for coping with global competition and information communication
technology plays a critical role in these areas for the purposes of quality
enhancement. Antholt (1993) has declared that information is just as important
as a production factor like land, labor and capital.
significance of IT in today's successfully organisation cannot be
underestimated. It plays a major role in the success of the organisation in
highly competitive world by providing easy andfast means of collecting,
storing, retrieving, processing transmitting and distributing information.
There can be various others factors that determine the success of a firm, and a
firm may use various strategies to pursue the path of success. However, fast
and easy access of information through the use of IT is very important to the
firm because, it influences all other success factors, and the competitive
strategies cannot be practically implemented without its support. Therefore, no
business firm that minimizes the use of IT can attain the topmost position in
its business. This is quite much true in the case of financial institutions,
which include commercial banks. Hence, commercial banks are highly information
intensive and the use of IT by them for easy and fast means of information
collection, storage, retrieval, processing, transmission and distribution of
information, should have extensive contribution to their performance.
evolution and recent developments in information and communication technology
has come to shape the way organisations operate and do business. The emergence .of the World Wide Web (internet) and mobile
telephony i.e. telecommunication system is the driving force behind this
development. Consequently, manual and traditional forms of doing business are
becoming things of the past as they give way to the sophisticated technology
that is based on automation and interconnection of computers and other
electronic devices vide electronic communication. For instance, ledger books,
paper invoice, printed materials and business trips are being replaced with
online billing and payments, elaborate website with product information and
real-time teleconferencing across
and time zones.
technology has radically changed how banking is done all over the world, the
volume and speed of banking transaction has improved tremendously as a result
of quantum growth in information technology which has created business
opportunities for banks. The positive impact of information technology IT on
the global criteria, especially improved revenue corroborates with the findings
of Laudon&Laudon, (1991) that
studied the entire cash flow of most fortune 500 companies and linked their
success to Information System. They concluded that Information Technology
directly affects how managers decide, how they plan and what products and
services are to be produced.
Technology (IT) is the automation of processes, controls, and information
production using computers, telecommunications, software and ancillary
equipment such as automated teller machine and debit cards. It is a term that
generally covers the harnessing of electronic technology for the information
needs of a business at all levels.
1980s, Nigeria banks have performed better in their investment profile and use
of ICT systems, than the rest of industrial sector of the economy. An analysis
of the study carried out by African Development Consulting Group Ltd. (ADCG) on
IT diffusion in Nigeria shows that banks have invested more IT personnel, more
installed base for Personal Computers (PCs), LANs and WANs and a better linkage
to the Internet than other sectors of the Nigerian economy. The study, however
pointed out that whilst most of the banks in the west and other parts of the
world have at least one PC per staff, Nigeria banks are lagging seriously
behind, with only a PC per capital ratio of 0.8, Woherem (2000).
and communication technology (ICT) is the modern handling of information by
electronic means which involves access to storage of, processing,
transportation or transfer and delivery (Ige, 1995). It refers to the
convergence of the computer and telecommunication system in a seamless flow of
information around the world. The fusion of computer and telecommunication and
their uses in obtaining relevant and purposeful management information system
is the main thrust of information technology. It is the acquisition,
processing, storage and dissemination of vocal, pictorial, textual and
numerical information by a micro-electronic based combination of computing and
telecommunications. The focus of ICT is on telecommunication and
computerization. It implies the convergence of computing and communication
(Telecommunication) technologies and its uses or application for global
Internet, Intranet, Extranet, World Wide Web (WWW), Visual reality,
Cyberspace-the New Digital Mentality and Culture (Uwaje, 2000). Communication
Technology comprises the physical devices and software that link (connect)
various computer hardware components and transfer data from one physical
location to another. Connectivity has facilitated the use of electronic
delivery channels. Distances and geographical locations are no longer barriers
to financial transactions.
online, real-time capabilities have revolutionized electronic transfer of
funds. Electronic fund transfer (EFT) is an electronic oriented payment
mechanism. It allows customers accounts to be credited electronically within 24
hours (Ugwu, et al., 1999). Mark (1975) classified the basic elements of EFT
system into three:
network characteristics, remote service or point of sale characteristics and
pre-authorized debit and/or credit characteristics.
fund transfer has also been various designed to ease international transfer of
money. In 1977, the international payment system known as SWIFT (Society for
Worldwide Inter-bank Financial Telecommunication) became operational. SWIFT
enables user banks to use electronic mode to transfer international payments,
statements and other banking messages. In Nigeria, First Bank's' Western Union,
Monogram of United Bank for Africa (UBA) among others performs international
technology is the term which generally covers the use of electronic technology
for the information needs of a business at all levels. It has made it possible
for banks to:
in service delivery with the availability of online, real-time transactions.
2. Funds transfer will be faster, more
accurate and cheaper in charges.
to process large volume of transactions which will require lower administrative
of cash transactions with long term prospects of minimal cash handling.
technology application by bank is centered on customer's service. Banks now
respond to customers for balance on their account, statement of account and
account activity enquiries.The work of front office teller (cashier) is at
minimal (ATM) Banks are able to serve customers outside the banking hall 24
hours on daily basis. Merchant customers are able to make local and
international business transactions online, they allow online payment via
online, telephone or mobile payment medium (Interswitch,
etranzactetc), with this payment switch, the merchant account holder's
customers can make payment for goods and service without necessarily seeing the
business merchant in person.
has become stiff; banks now do many things in different ways. Bank that has
concentrated its activities in the old media can invest in the new media by
recognizing its activities especially if it finds out, albeit painfully that it
is losing ground to those competitors utilizing sophisticated technology.
to Odubanjo (2000), Nigeria banks are responsible albeit at a snail speed to
the information technology revolution enveloping the universe. The deregulation
of the banking sector in Nigeria in 1986 brought far-reaching transformation
through computerization and improved bank service delivery. The watershed in
the computerization of the Nigerian financial sector started with the changing
policy environment enumerated with Structural Adjustment Programme (SAP) 1986.
advent of information technology in the operations of the commercial banks in
Nigeria among other sectors has brought about several noticeable developments
but at the same time, it brings about its attendant problems. The paradox
behind the information technology productively makes many managers to believe
that the huge investment does not commensurate with increase in productivity.
the high level of financial stakes involved, the investigation of the impact of
information technology on organizational and employee performance has been and
continues to be a major research concern for both academics and practitioners.
questions this research work intends to answer are as follows: -
How has information technology aid
are banks unable to strictly comply with the mission statement/corporate
mission? With information technology, some banks management does not adequately
plan to meet the services quality. For example, the required number of
customers to be attended to by a cashier within the daily working hours to
guide against long queues is neglected - this causes delay in service delivery
time leading to long queues in the banking hall.
is high incident of bank fraud borne out of information technology? This' fraud
ranges from ATM card fraud, internet banking fraud, email and text message
fraud, fund transfer to untraceable offshore accounts, among others.
the huge investment into information technology in banks have a proportionate
1.3 OBJECTIVES OF THE STUDY
project work is therefore, aimed at examining how the adoption of information
technology affects the operations of commercial banks in Nigeria. The specific
investigate how the adoption of information system has influence on the growth
and development in the banking sector;
investigate the extent at which effectiveness and efficiency in banking sector
after the advent of information technology.
examine the modes by which commercial banks can improve on their service
delivery in order to attract depositor's funds.
determine how information technology has assisted in the enhancement of
globalisation of Nigeria commercial banks.
1.4 JUSTIFICATION OF THE
dominant role that the banking industry plays in Nigerian economy cannot be
over-emphasized. Government, statutory corporations, corporate bodies,
businessmen, civil servants depend on the banks for the transaction of one
business or the other. The banking system is required as a catalyst for a rapid
macro-economic development of other sectors of the economy; hence, its
be the priority of the government most especially during the domestic
dispensation. Going by the recent distress in banking industry in Nigeria, the
level of public confidence in the sector has dwindled and this has led to the
instability syndrome in the sector and as such the public assurance and
confidence on efficiencyin the private
sector in decaying, (Akpoyibo, 2006; Soludo, 2007).
major cause of this syndrome can be traced to the problems inherited in the
banks operational system.
quest for globalization and commercialization has brought about innovations in
technology. The digital age and the
potential threat posed by non-traditional competition which necessitates
innovation has made it inevitable for Nigerian commercial banks to improve upon
their operation as they face evolving revolution are being confronted with
increasingly sophisticated customer base compelling them to offer today what
their customers would be expecting tomorrow. Banks have to deviate from just being a profit
making minded to a more conscious customer centered institution.
research will enable banks to identify ways of remaining competitive in the
global and domestic financial industry.
It also helps prepare banks repositioning towards meeting the challenges
imposed by global banking.
is also expected that the work will contribute to the bank’s future projections
on strategies to be used in attracting depositors’ funds, reduce queues in the
banking hall, the bank’s management policies.
finally, this research work intends to contribute to knowledge in academic
field and serve as a source of reference to researchers who would carry out
research on similar study in the future.
1.5 SCOPE AND LIMITATION OF THE STUDY
study would only focus on the impact of information technology on the banking
operations of Nigeria.
the extent of this research would be limited due to time constrains, class
academic work and the nature of its kind - a first degree research exercise,
thereby limit its scope and intensity. Emphasis is laid on activities in the
First Bank PLC. The period covered by this research study is 2005 - 2010.
1.6 OPERATIONAL DEFINITION OF TERMS
refers to a processed/analysed data through the computer system that informs a
recipient about a situation. It is the meaning assigned to data within some
context for use of data, Walters, (1992).
are raw, unanalysed facts, figures, events from which information can be
developed. A data is a basic raw fact that can process and converted to a
meaning output called information. It is the encoded representation of facts,
ideas and instructions such that the representations can be processed,
communicated and interpreted by computers and/or people, Walter (1992).
computer is a programmable, multi-purpose use machine that accepts data (raw
facts and figures) and processes or manipulates it into information that we can
understand and utilize (Microsoft Encarta (2009).
often called telecommunication allows data and information to be transmitted
from one point to another electronically. It is the transfer of idea or
information from data processing system to ultimate users. The ultimate purpose
is to inform the recipient.
is a term used for a direct or immediate communication link between two
devices. Online links are contrasted with offline links, in which only direct
communication is possible. Thus, a telephone link is online, whereas, a
telegram link is offline. The term online and offline are further used to
denote the difference in time between when data in input into the system and
when it is processed. A computer works online if input data is processed
immediately (real-time processing operating mode)and offline if there is a
significant time period between input and processing time, Clems&Sachwill (1992).
is data storage on optical or magnetic tape/disc in memory system. It is
characterized by low cost and relatively fast access to data stored on it.
Longley &Shain (1989). External
memories such as CD ROMS, DVD ROMS, Flash drives, external hard drive etc are
capable of storing and retrieving billions of information in a small portable
is also known as the net is a massive connection of networks linking millions
of computers via protocols, hardware and communication channels. It enables the
automation of several tasks which have been carried out manually in t he past.
Internet is the term used to describe the collection of international computer
networks which form a vast global network of computer network based communication,
Fisher (1995). Those who have access to the internet can send messages to other
internet connected people at any part of the world within the twinkle of an
eye. Some of the services available on the net include e-mail, bulletin boards,
electronic journal, mailing lists and many more.
view of the above concepts, we can therefore say that the information technologyis of utmost relevance to
individual performance within the organisation.
truth is that information and deployment of information technology has changed
the nature of work, approach to work and service delivery; this has resulted in
various outcomes for the individual employee and the organisation at large. For
instance the mobile phones have allowed managers to stay in touch with their field
personnel no matter how far the distance may be. Luthans (2002), corroborated
to this by stating that the text compatibilities of the cell-phones have also
enabled formal communication amongst individuals of the same organisation with
several distances apart.
portable laptops and palmtop that can handle banking transactions of the day,
report presentations, share data and other critical tasks help employees
communicate with each other via the email and the internet. More recently, the
Persona Digital Assistant (PDA) which are wireless handheld and connected to
the internet have made virtually all information available, anywhere, anytime.
permits the transmission of letters, memos and other documents from one
terminal or computer to another in a different office, city, state or country,
Fuori and Gioia (1991). E-mail uses a central switching centre which is
responsible for renting mailboxes to subscribers and- acting as the public
telephone network link. Anderson (1990). When a message is created on the
sender's system, it is addressed to a remote mailbox and it's transmitted by
telephone line or wireless network to the mailbox services operator and
forwarded to the receiver. The receiver enters a personalised code (password) via
the keyboard in the terminal/computer whichallows him to read the messages on a
visual screen. The transmitted messages are stored in an electronic mailbox on
the receiving computer until the recipient is ready to read them and/ or print
as hard copy on paper. The advantage of this is that, it is fast and saves time
is possible when a group of people decides to meet without coming together in a
single location. Teleconferencing is done electronically by various media
including the computer. This service is relatively inexpensive, there is no
travel cost and the times spent outside office for meeting are grossly
system permits group of people in different geographical locations to see as
well as hear one another. The technology utilizes satellite links for
IT - Information Technology
ICT - Information Communication Technology
MICR - Magnetic Ink Character Reader
ATM - Automated Teller Machine
PC - Personal Computer
WWW - World Wide Web
EFT - Electronic Fund Transfer
POS - Point of Sale Terminals
EFTPOS - Electronic Fund Transfer at the Point of
SWIFT - Society
for Worldwide Inter-bank Financial