ABSTRACT
The benefits to be derived by financial institutions especially banks by investing in information technology cannot be over-emphasized. In this era of post consolidation, banks need to be continuously innovative and have a strong retail and e-business vision in order to stay ahead of competition. Today competition has compelled most banks to drop their age-long tradition of conservatism, slowness and long reaction time to business opportunities and customer requests. IT department will be driven by business imperatives; it will be pro-active, timely, flexible, simple, scalable and cost effective. For the purpose of this study, some selected banks in the industry were chosen. They include the staff and customers of United Bank of Africa Plc, Diamond Bank Plc and Guaranty Trust Bank Plc. Related literature was reviewed to ascertain other writers’ views concerning the subject matter. Questionnaires were used to elicit responses from the sample elements and were further analyzed with tables, percentage and test of hypothesis. Also interviews were conducted. Against this background, valuable and reliable discoveries were made. It was discovered that investment in IT and incorporation of its policies and programmers is a ‘sine qua non’ to the continuous existence and survival of most banks in the present millennium and reposition them to face competition in the industry in terms of:
• Speedy and timely reached management decisions both in opportunities exploration and corporate management.
• Delivering prompt services to their customers to meet customers’ expectations.
CHAPTER ONE
1.1 BACKGROUND OF THE STUDY
The requirement and need for information is constantly growing in every business application. In the past, following the Industrial Revolution of 1760, the success of enterprise tended to vary in relation to the combination of fixed assets and technology available to it. Today most successful companies are innovative, flexible and able to respond to the scope and depth of change seen in the shifting global environment (Senapalh, 2000).
As we move ahead in this 21st century, banks all over the world realize that only those that overhaul the whole of their payment and service delivery systems and operations are likely to survive delivery systems and operations are likely to survive and prosper in the new millennium. This is due to the pressure of globalization, consolidation, deregulation and rapidly changing technology as already stated above. Therefore in order to properly place themselves, particularly, Nigerian Banks in favourable positions, of competition and be one of the corporations to be reckoned with in the new millennium banks must make use of Information Technology (I.T).
Information Technology (IT) incorporates two main technologies or domains of study, viz; computers (PC) and Telecommunications. It is the technology of gathering, analyzing, manipulating, storing and communication data (Woheren, 1991 and 1993). Today, the world ‘DATA’ encompasses voice, text, numbers, fax, graphics, pictures, video and multimedia. We embark of the study of information technology because we need organized way of handling information for proper planning, proper decision-making, and proper management. This therefore save time, cost and minimizes the process of organizing and coordinating our big activities (Mbam, 2002).
According to Bill Gates (1995), “as a result of the convergence of the computer (PC), microelectronics and communications industries, we will have PDAS (Personal Digital Assistants) which will remind us of our meetings ands when to book or catch an aircraft”. He also noted that Tens of Thousands of business in the United States already exchange information via an electronic system call Electronic Document Interchange (EDI).
However, the present state of diffusion of IT in the Nigerian Banking sector as Woherem posit; that information Technology has already become the nervous systems of Banks worldwide.
As we move into the new century, Nigerian banks and non banks which constitute the Nigerian financial arena will become uncompetitive if they do not have the means to deliver their banking services and non- banking services online and in real-time cross all their branches, homes and abroad.
Moreover, of they do not have the backbone telecommunication’s infrastructure in the form of broad-band local and wider area networks, if they are not able to communicate and trade globally with the rest of the world through cyberspace; and if they do not invest substantially in IT and the training of their IT personnel, they will be left behind in the globalized banking playfield of the 21st century.
The emergence of information technology in Nigeria banking started in the 90s, which later developed a sub-system, which is well known today as electronic Banking (E-Banking) which is the use of electronic gadgets like the PCs. Punch cards, smart cards, Automated Teller Machines (ATMs) etc for exchanging data and consummating financial transactions by banks. This will lead to an improvement in their serviced delivery through the use of electronic or software packages/programmes like Electronic Document Interchange (EDI), client information filling (CIF), ATMs, File Transfer Protocol (FTP) and personal computer (PCs) through the internet, which is a global market for information exchange (Frenzel, 1996).
1.2 STATEMENT OF THE PROBLEM
Globalization and its offspring, hyper competition, uncertain environment, demand for quality services and above all rapid advances in technology have necessitated that organizations especially banks change their usual or traditional way of doing business.
In Nigerian banks today, the still exist considerable use of papers and files to consummate financial transactions instead of adopting the modern technology. The result is slow rate of banking operations, which will greatly affect the output. In that case, there are still congestion of customers at banks’ counters. Customers are still seen forming longer queue than necessary resulting in a lot of time being wasted by these cusotemrs, which has created negative impressions by the customers o nthe particular bank. Moreover, there are still high rate of fraudulent practices among bank employees and bank chief executives who have taken the advantage of inadequate availability or provision of Information Technology (IT) equipment or lapses in the system to perpetrate crimes in order to achieve their selfish desires to the detriment of the particular bank. Above all, poor
and slow management decision making and information dissemination still exist in the system and this has greatly affected output and will invariably affect the turnover as information that is timely or that is out of date is useless.
1.3 OBJECTIVE OF THE STUDY
The major objectives of carrying out this work is:-
• To examine how crucial information technology is, to the banking sector.
• To examine the reasons why the desired efficiency has not been achieved in the sector.
• To examine the factors responsible for the lapses experienced in the sector.
• To determine whether the banking sector realize the tremendous advantage that may accrue following investment on information technology (IT).
• To examine the constraints and challenges information technology
(IT) may face in the Nigerian Banking industry.
• To suggest solutions where possible to problems/lapses which may be encountered in using IT equipments.
• To determine low Information Technology (IT) will encourage proper planning, proper decision-making and proper management in the banking sector through systematic or formalized way of handling information.
1.4 RESEARCH QUESTIONS
In this research work, a study will be carried out to ascertain if information Technology is the basis for achieving efficiency in the banking industry thereby obviating inefficiency in the industry. Therefore, at this point, questions will be then asked:-
(a). Are there much benefit to be derived by banks by investing on Information Technology?
(b). How sound is the structure in complementing business performance roles?
(c). Does the Information Technology (IT) to be adopted have the capacity to completely or to a greater extent alleviate the numerous human efforts being wasted in he previous unorganized or non-systematic manner of running the industry or collecting information?
(d). Does the Information Technology (IT) to be adopted have the capacity to reduce complexities in the system by maximally utilizing available information to improve on the quality of production or services to its customers?
(e). Does it have the capacity to save time and cost via formalized procedures and to quicken services in the industry.
(f). How can the future of Information Technology (IT) equipment be secured in terms of maintenance and problem of constant power interruptions in Nigeria?
1.5 SIGNIFICANCE OF THE STUDY
This study is calculated to create an awareness of Information Technology (IT) a modern tool for effective and efficient business management. The researcher cast his mind back when most business activities went on without any knowledge of or exposure to Information Technology (IT). Certainly, the picture was good to the operators because there was nothing to compare their situations with. The picture under analysis portrays a sluggish, mutilated and unreliable network of business connections. Nobody will be in a better position to appreciate the significant of Information Technology (IT) in business than the executive who had the opportunity to span the two performances.
In summary, the study has broadened the horizon of the researcher on issues concerning information technology and its application in the business world especially the banking industry. This will help to educate management on the need to invest in Information Technology (IT) considering the tremendous advantages that may accrue from such investment.
1.6 SCOPE OF THE STUDY
At present, there are over twenty banks operating in Nigeria with their numerous branches scattered over Nigeria. Therefore, it will be cumbersome to carry-out a detailed study of all these banks or their branches nationwide.
The research work tries to streamline the task by focusing on Diamond Bank of Nigeria Plc, Okpara Avenue Enugu, United Bank for Africa Plc (UBA) and Guaranty Trust bank (GTB). These banks have made considerable efforts in investing on information Technology in their financial transactions. It needs to be emphasized that following the merger between the old UBA and Standard Trust Bank Plc (STB) in August 1, 2005, the new United Bank for Africa Plc (UBA) was formed.
Moreover, since time is very limited as to carry out a comprehensive study of the whole sections of the selected banks, attempt will be made to focus on its top management responsible for decision making, its operational departments rendering customer services like the cashiers, and how investment in Information Technology (IT) has enable them to improve on their service delivery.
I.7 RESEARCH METHODOLOGY
The procedures to accomplish the objectives of this research in order to ensure detailed and accurate result are as follows: a systematic and logical observation and experiment are to be employed for an optimum objectivity value. Such procedures include; taking a proper view of the banking industry through inquiries, interview and the use of questionnaire specially designed and formulated as to arrest the attention and prompt response from the bankers, customers and other professional bodies in the banking sector.
1.8 LIMITATIONS OF THE STUDY
In the course of carrying out this research, the researcher encountered, some constraints, which tends o limit and or retard the timely completion of this research work. The time available for this work was not enough top permit detailed and comprehensive collection of data and materials. Again some of the modern gadgets used in Banks in Nigeria were not readily made available to the researcher by the banks. The researcher therefore has to rely mainly on textbooks and journals to study how they are operated or how they ease the efficiency of operations of banks in the new millennium.
Lastly, the most contingent among the limiting factors is the financial involvement, most of which emanated from various sources; printing of questionnaires and other relevant costs attached to its execution such as traveling expenses and cost of photocopying relevant materials.
1.9 HYPOTHESIS
The following hypothesis designed will be tested in the study of this research:
Hi: There are tremendous advantages accruing to computerization as it facilitates effective and efficient performance.
Ho: There are no tremendous advantages accruing to computerization as it does not facilitate effective and efficient performance.
Hi: Information Technology does enhance management decision capability.
Ho: Information Technology does not enhance management decision capability.
Hi: Investment in Information Technology (IT) enable banks to improve on their service delivery and being able to compete favourably.
Ho: Investment in Information Technology (IT) does not enable banks to improve on other service delivery and unable to compete favourably with others.
1.10 DEFINITION OF TERMS
Information Technology (IT): It refers to technology that amalgamated computers (PCs) and telecommunication facilities for gathering, analyzing, manipulating, storing and communicating data for organizational executives for decision making.
Personal Computer (PC): It is an electronic device made-up of chips and micro-processors that enable it to accept instructions to process data and output information useful to solve a particular problem/s.
Data: It relates to a series of voices, texts, number, fax, graphics, pictures, video etc, which represent raw data input to the computer for processing to output useful information.
Smart cards: A smart card is a card made of plastic that looks like a credit card with an embedded microprocessor chip that can store and process information and transactions.
Internet: A network is a series of computers that are connected together electronically and that can share information digitally.
Decision Support System: It is a collection of computer programmes (software) and (hardware) that help management responsible for decision making, to make viable and reliable decisions that enable them to achieve corporate objective/s.
Management Information System: This is an information system that formalized procedure to provide management at all levels in all function with appropriate information from all relevant sources both internal and external to the organization which will enable them to make clear and more effective decisions for planning, for directing and for controlling the activities which they are responsible for.
This material content is developed to serve as a GUIDE for students to conduct academic research
INFORMATION TECHNOLOGY – A PREREQUISITE FOR ENSURING EFFICIENCY IN FINANCIAL INSTITUTION IN NIGERIA (A CASE STUDY OF SOME SELECTED BANKS IN NIGERIA).
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