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JOURNAL OF RESEARCH IN NATIONAL DEVELOPMENT VOLUME 8 NO 2, DECEMBER, 2010


 

 

THE IMPACT OF INFORMATION TECHNOLOGY ON THE OPERATIONS OF NIGERIAN BANKS

 

Akinyomi Oladele John

 Department of Financial Studies,Redeemer’s University, Redemption City, Ogun State

E-mail: delejohn21@yahoo.com

 

Abstract

This paper examines the impact of information technology on the operations of Nigerian banks five  banks were randomly selected for the study, while three hundred and fifty (350) questionnaires were distributed to respondents, but only two hundred and sixty (260) were retrieved.The study revealed that information technology has significant effect on the bank productivity, cashiers’ work, banking transactions, bank patronage, bank services delivery, customer services and bank services. These affect the growth and development of the banking industry positively. Customers can now withdraw cash through the ATM machines in any part of the country. Customers do not need to move about with large sums of cash anymore; customers are also being attended to within a short period of time.  The recommendation is that the power sector should be deregulated..

 

Keywords: Banks, productivity, information technology, customers

 

 

 


Introduction

Technology has become a powerful force that drives the world toward a converging commonality, (Levitt, 1992). Since the outset of the human era, technology has been one of the most essential and most important ingredients that facilitate the development of mankind. (Coombs et al, 1987). During the last two centuries, technological changes have often been related to economic growth in the form of new types of goods and services. Smith (1776) first wrote about technical changes in the form of new machines as one of the three important causes of increasing incomes more than two hundred years ago.

 

One question that easily comes to mind is “does the use of information technology has any effect on the operations of banks in Nigeria. The objective of this study therefore is to examine whether or not information technology has any effect on the daily operations of banks in Nigeria.  

 

Review of related literature

Information technology (IT) has been defined as the study, design, development, implementation, support or management of information systems, ICAN (2008). Information technology is a general term that describes any technology that helps to produce, manipulate, store, communicate, and/or disseminate information, Adelman (2000). Ige (1995) also defined IT as the modern handling of information by electronic means, which involves its access, storage, processing, transportation or transfer and delivery. Research shows that IT affects financial institutions by easing inquiry, saving time, and improving service delivery (Alu, 2002). IT also provides solutions to the needs of modern society in health care delivery, library services education and communication networks within organizations. 

 

Some available information technologies used by banks include telephone, facsimile, wireless radiophones, very small aperture terminal satellite (VSAT), telegraphy, and computer systems (Ugwu, 1999). Alu (2002) further reported that banks in Nigeria have Local Area Network (LAN) in most of their branches. Presently, banks most in Nigeria have Wide Area Network (WAN) connections.

 

Banking system in Nigeria

It is incontrovertible that the banking system is the engine of growth in any economy, given its function of financial intermediation. Through this function, banks facilitate capital formation, lubricate the production engine turbines and promote economic growth, (Adeyemi 2006). However, banks’ ability to engender economic growth and development depends on the health, soundness and stability of the system. The need for a strong, reliable and viable banking system is underscored by the fact that the industry is one of the few sectors in which the shareholders’ fund is only a small proportion of the liabilities of the enterprise

 

Due to increasing demand for customers’ deposits, Nigerian banks have realized the importance of good and prompt customer service. Furthermore, due to the fact that some customers lost their deposits in in the erstwhile distressed banks, customers have now become wiser, more discerning, alert and sophisticated with regards to choosing where it is safe to put their money, and where they would be services promptly, preferably in a pleasant, courteous and friendly environment. Thus, they have started looking at the level of service and professionalism of the banks before depositing their funds.

 

In Nigeria today, proximity to the bank is no longer the issue, as there are banks almost everywhere. The issue is that which concerns safety and level of service, with regard to quality, speed and efficiency. On the part of the banks, they have realized that one way in which they can provide quality service is through the use of technology. Hence, there is a growing rate of adopting new technologies in Nigerian banking operations.

 

Moreover, there is the growing evidence that customers have started associating quality service in a bank with the bank’s possession of an on-line, real-time system. As a matter of fact, possession of such a system is now judged to be sine qua non of a high quality service in Nigeria. So, for a bank to be perceived as providing high quality service, that bank has to have an IT system, which it uses to deliver services to customers in a more timely, friendly and considerate manner, at no extra cost to the customers.    

 

Methodology

The data, from which the information constitutes the findings, were collected from five banks, randomly selected in Nigeria. These include Oceanic Bank Plc, Union Bank, Zenith Bank, Diamond Bank and Bank PHB. Data were obtained from both the primary and secondary sources, which includes; interviews, structured questionnaire, journal publications, newspapers, internet facilities. Secondary data are used to complement the primary data as the primary data. A total of 350 questionnaires were administered to customers as they visited the banks. 260 questionnaires were retrieved, representing 74.29% of the total distributed. Furthermore, personal interviews were conducted with some of the banks’ managers and supervisors in the IT department so as to gain an appreciation of what types of IT systems were available in the banks. The responses were measured with a five-point Likert-type rating scale, where Strongly Agree (SA) = 4; Agree (A) = 3; Strongly Disagree (SD) = 2; Disagree (D) = 1; and Neutral (N) = 0. 

 

Data analysis

The analysis of the data collected will be descriptive in nature, it would include tabulation, frequency counts and percentages.


 

Table 1: Effects of IT on banking services

Question

SA

A

N

D

SD

Mean

IT/computer is really helping this bank

42.3

43.9

6.9

4.6

2.3

3.12

IT makes inquiry about the state of my account faster

54.2

36.6

6.9

0

2.3

3.29

IT/computer has a great positive impact on the services rendered by this bank

45.8

37.3

10

4.6

2.3

3.07

 


The effect of IT on an inquiry on a customer’s state of account, and services enjoyed by the customers from the banks as perceived by the banks’ customers, are shown in table 1 above. 86.2% of the 260 respondents agreed that IT was really helping the banks they patronized, while 90.8% agreed that IT had a positive impact on the services rendered by the banks. The means of 3.12, 3.29 and 3.07 respectively for the selected banks’ respondents confirmed that IT has a positive effect on the inquiry of customers’ state of account and services enjoyed by the customers from the various banks.

 


 

 

Table 2: Effects of IT on customer services

Question

SA

A

N

D

SD

Mean

I don’t think IT has any effect on services rendered

5.0

18.8

9.7

31.9

34.6

2.77

There is need to improve the services rendered by this bank

32.3

50.4

10.4

6.9

0

2.94

 


Table 2 above shows the responses of customers from the banks with respect to the effect of IT on customer services provided. About 66.5% disagreed that IT had no effect on the services rendered by the banks. Also, 82.7% agreed that there is need to improve on the services rendered by the banks. The means of 2.77 and 2.94 respectively confirmed that IT has effects on services rendered by these banks to their customers and about 83% of the respondents agreed that the banks need to improve on the services rendered to the customers. This shows that the services which the banks render presently are not the best they can offer to their customers and that banks should improve on these services.

 


 

 

Table 3: Promptness  and efficiency of services as perceived by the customers

Question

SA

A

N

D

SD

Mean

I enjoy prompt and efficient service delivery

36.9

37.7

9.2

16.2

0

2.93

I was once delayed in the bank because network was down

12.4

32.7

6.9

31.5

16.5

2.38

IT does not increase prompt and efficient service delivery

2.3

7.3

4.6

42.7

43.1

3.17

 


From Table # above, about 75% of the respondents agreed that they enjoyed prompt and efficient service delivery from the banks. The mean of 2.93 shows that IT enables the banks to provide prompt and efficient services to their customers. On the issue of delay due to network down times, only 44.9% of the respondents agreed that they were once delayed in the bank because network was down. The mean of 2.93 confirmed that most of the time, customers go to the bank when network services are not down.

 


 

 

Table 4: Influence of IT on patronage as perceived by the customers

Question

SA

A

N

D

SD

Mean

I can encourage my colleagues to patronize this bank

22.7

47.3

20.4

5.0

4.6

2.47

IT/computer encourages customers to patronize this bank

33.1

32.7

22.3

9.6

2.3

2.52

 


Table 4 above gives responses on the influence of IT on patronage as perceived by the customers. 70% of the respondents agreed that based on the efficiency and effectiveness of services rendered, they could encourage their colleagues to patronize the banks they use. The mean of 2.47 and 2.52 respectively show that IT encourages customers to patronize the banks. The use of internet computers, automated teller machines (ATM), telephone, VSAT, and EFT has contributed immensely to the growth of Nigerian banks.

 


 

 

Table 5: Perception of customers on the ease of conducting banking transactions

Question

SA

A

N

D

SD

Mean

Saving or withdrawing money is time consuming

2.7

31.2

7.3

36.9

21.9

2.63

IT eases banking transactions

35.8

50.0

9.6

2.3

2.3

3.10

 


Table 5 above shows that 58.8% of customers disagreed that savings and withdrawal of money is time consuming. Also, 85.5% agreed that IT eases banking transactions. The mean of 2.63 shows that some of the respondents agreed that saving and withdrawal of money is time consuming despite the use of IT in those banks.

 


Effects of information technology on the interaction between cashiers and customers

Table 6: Effects of IT on the interaction between cashiers and customers

Question

SA

A

N

D

SD

Mean

IT has reduced the interaction between cashiers and customers

9.6

27.3

17.7

30.4

15.0

2.15

 


Table 6 shows that 36.9% of the respondents agreed with the view that IT has reduced the interaction between cashiers and customers, 17.7% are indifferent to the question while 45.4% disagreed with the view, with a mean of 2.15.


 

Table 7: Effects of IT on cashiers’ work

Question

SA

A

N

D

SD

Mean

Computers really speed up cashier work

45.8

37.3

6.9

7.3

2.7

3.12

 


The rates at which cashiers in the banks attend to customers depend on the equipment available for the cashier to work with. From table 7 above, 83.1% agreed that computer speeds up cashiers’ work, while 10% disagreed and 6.9% are indifferent. The mean of 3.12 confirmed that IT/computer really affect the rates at which cashiers attend to customers. Generally, the use of electronic devices such as computers will go a long way to increase the speed of the cashiers’ work.

 


 

 

Table 8: IT and productivity of the banks

Question

SA

A

N

D

SD

Mean

IT increases banks’ productivity

44.2

37.3

13.8

4.6

0

2.98

 


From table 8 above, 81.5% of the respondents agreed that the use of IT increases bank productivity in that with the use of IT, the bank can attend to a lot of customers since IT speeds up cashiers’ work. The mean of 2.98 shows that IT has a positive effect on the growth and productivity of the banks.

 

Conclusion

This study has examined the impact of information technology on the operations of banks in Nigeria. It specifically considered the perceptions of bank customers on the impact of information technology on the banks. The study revealed that information technology has significant effect on the bank productivity, cashiers’ work, banking transactions, bank patronage, bank services delivery, customer services and bank services. These affect the growth and development of the banking industry positively. Customers can now collect or withdraw cash through the ATM machines in any part of the country. Customers do not need to move about with large sums of cash anymore; customers are also being attended to within a short period of time. 

 

Recommendation

The problem of epileptic power supply still remains a major challenge to all corporate organization in Nigeria. It is recommended that the power sector should be deregulated. This will promote the long awaited adequate power supply in the country.

 

References

Adelman, C. (2000): A Parallel Post-secondary Universe: The Certification System in Information Technology. Washington, D.C.: U.S. Department of Education

 

Adeyemi K. S ( 2006 ): Banking Sector Consolidation in Nigeria: Issues and Challenges

 

Alu, A. O (2002): Effects of Information Technology on Customer Services in the Banking Industry in Nigeria, M.B.A. Dissertation in Management and Accounting, O. A. U., Ife.

 

Coombs, R., Saviotti, P. and Walsh, V. (1987): Economics and Technological Change, London, Macmillan:

 

Ige, O. (1995): Information Technology in a deregulated Telecommunications Environment,Keynote address, INFOTECH 95. First International Conference on Information Technology Management, Lagos, November 16-17.

 

Levitt, T. (1992): The Globalization of Markets, in Transnational Management: Text, Cases and Readings in Cross-Border Management. Richard D. Irwin.

 

Smith Adam (1776): The Wealth of Nations

 

Ugwu, L. O. (1999): Assessment of Impacts of Information Technology on Selected Services Industries in South Western Nigeria, MSc Dissertation in Technology Management, O.A.U., Ife, Nigeria.