The Impact Of Computer Application In Commercial Banking Operation (A Case Study Of Eco Bank Plc Owerri)

Project and Seminar Topics with material for Banking and Finance

Abstract

This study on “The impact of computer application in commercial banking operation” taking Eco bank plc as case study. As expressed in the purpose of the study under chapter one, the main objective of the study is to determine the problems of using the computer in funding the effects of these problem on the customer of the bank. A brief historical background of the bank was made hypothesis formulated for the purpose of this research.

A view of some related literature of the topic under study was done in chapter two. Chapter three is on how investigation into this work was conducted by the use of questionnaires for the staff and customers of Eco bank plc, Owerri. Other methods used in the investigations were personal interview and observation. In chapter four, the research presented and analyzed information and data gathered from the customers and staff of the bank.

However, the analysis of this information revealed problem encountered by the use of computer in Eco bank plc Owerri affect the customer’s satisfaction.

Finally, in chapter five, the researcher summarized and made useful recommendation on the employment and retention of well trained foreign computer experts to further train the bank staff on the latest technological advancement and procedures to prevent the problem of using computers like system down time which is one of the major causes of dissatisfaction to the customers.

Table Of Contents

Preliminary Page(s)

• Title page
• Approval page
• Dedication
• Acknowledgement
• Abstract
• Table of contents

Chapter One

1.0 Introduction

• 1.1 Background of the study
• 1.2 Statement of the problem
• 1.3 objective/purpose of the study
• 1.4 Research questions
• 1.5 Statement of Hypothesis
• 1.6 Significance of study
• 1.7 Scope of the study
• 1.8 Limitations of the study
• 1.9 Definition of terms

Chapter Two

2.0 Literature Review

• 2.1 Introduction
• 2.2 What is a computer? Types, operations and procedure in banks
• 2.3 Historical development of computer
• 2.4 Commercial banking services system and computerized accounting system
• 2.5 Computerization and the Nigeria commercial banking System
• 2.6 Limitations of computerization of commercial banks
• 2.7 Benefits of computerization in commercial banks
• 2.8 Impact of computerized banking on the economy
• 2.9 Some common application packages
• 2.10 Defining and illustration some of the package

Chapter Three

3.0 Research Design and Methodology

• 3.1 Introduction
• 3.2 Research design
• 3.3 Sources/method of data collection
• 3.4 Population and sample size
• 3.5 Sample technique
• 3.6 Validity and reliability of research instrument
• 3.7 Method of data analysis

Chapter Four

4.0 Presentation and Analysis of Data

• 4.1 Introduction
• 4.2 Presentation of data
• 4.3 Analysis of data
• 4.4 Test of hypothesis
• 4.5 Interpretation of results

Chapter Five

5.0 Summary, Conclusion and Recommendations

• 5.1 Introduction
• 5.2 Summary of findings
• 5.3 Conclusion
• 5.4 Recommendations
• Bibliography
• Appendix

Chapter One

1.0 Introduction

1.1 Background Of The Study

Banking in Nigeria has witnessed changes in the past few years. Bankers and industry analyst alike would agree that the challenges of economic regression increasing customer expectation and demand of technological advancement have made survival difficult for commercial banks. According to osah (1999), banks in Nigeria are increasingly coming under pressure to offer improved and constant available service in line with banking practices worldwide.
Badajide (2007) noticed that there is presently the growing international integration of financial services, which is rapidly and substantially altering the world economic landscape. And as global trade is increasing new opportunities also have emerged in terms of wider market for trade expanding away of tradable and larger private capital inflows, the need for improved technology is inevitable in the commercial banking sector and thus, the application of computer in commercial banks.

In the present dispensation that is with the use of computers in banks, customers can walks into computerized banks, conclude their transaction under a few minutes. In recent trend, with the use of ATM (Automated Teller Machine) many customer resort to the machine to withdraw cash easily without meeting the cashier any longer. Furthermore, many banks in Nigerian offer electronic banking service that enhance regional and international fund transfer and other transaction that would be discussed later.

The use of computer to swiftly up grade banks financial and 0ther social service to the public is not only the sector where the computer is used for advancement but it is also used in areas like process manufacturing and discrete manufacturing for accounting purchasing, inventory control etc. it is also used by federal government for tax reporting and auditing census analysis accounting and administration etc. the state and local government use it also for utility billing, tax record, keeping pay roll and school administration. It is also used by the transport industry for cost analysis, vehicle maintenance etc. the computer is used in school for upgrading the scoring, library cataloging, attendance for premium accounting reserve calculation etc. and in distribution for ware house control, inventory control, forecasting etc. The computer if well maintained and utilized will transform all the sectors that make use of it, to meet world class standard.

1.2 Statement Of The Problem

Limited skill and knowledge of the maintenance of the computer systems in commercial banks have misled their customers and other users of their accounting information resulting in customers’ dissatisfaction as in these cases of Eco Bank Limited Owerri. Despite the advantages of the use of the computer in commercial banks like convenience, (as there is no time constraint possibility of twenty four hours banking), variety of option due to easy access of information, lower transaction costs etc, some problem are still facing the use of computer in banks. The problem of “system down-time”, which stop most bank activities for sometime is one major problem this work will focus on when the system is down and customers and users of their counting information stored in the computer immediately it results on customer dissatisfaction.

Historical, culture and current phase of development in Nigeria has compounded this problem, the lack of maintenance culture in Nigeria has prevented the computer system from being well maintained as they should, the source of power, which is Enugu Electricity Distribution Company (EEDC) has not managed to transmit constant power which also lead to system failure. The skill required to maintain these system is not easily found and where vouched for is very expensive. The maintenance of the system is important so as to reduce and eventually stop system failure in other to satisfy customers and users of the accounting information. Other problem of security and privacy will also be curbed when the system are well maintained the problem of security could take the form of fraud and disaster. That of privacy could records, school record etc. this accessibility could cause the customer some kind of loss and thus he becomes dissatisfied with the computer application of the bank and the bank itself.

1.3 Objective Of The Study

This study is geared to:

1. Determining the problem of using the computer in the transactions of Eco Bank Plc, Owerri.
2. Finding the effects of these problems on the customer of the bank, the users of its services.
3.  Identifying the steps the bank will take in tackling these problems in order banks to maintain the confidence reposed in it.

1.4 Research Question

1. What are the problems your bank encounter on her liquidity management?
2. Does the computer application management enhance banks profitability?
3. How does your bank manage its computer application?
4. How much capital do your banks maintain annually?

1.5 Statement Of Hypothesis

The hypothesis formulated for the purpose of this study is;

Ho: The problem encountered by the use of computer in Eco bank plc, Owerri does not affect the customer satisfaction.

H1: The problem encountered by use of computer in Eco bank plc, Owerri affects the customer satisfaction.

1.6 Significance Of The Study

In many instances the computer performs, many functions to increase the level of productivity and accuracy of records compared to those attained by manual system. However there are still problem associated by its use, which affect the customer. These problems could be reduced to the barest minimum. These studies will therefore, draw attention to the effect of failure on their transaction and their and their customer decision makers who are the users of accounting information will also benefit from this study since they are affected when the system is down and information cannot be immediately accessed over the computer. These decision makers include management again, finance operation, production, marketing, human resource, information system and accounting.

Bank users with direct financial interest like investors and creditors users of accounting information such as tax authorities regulators (e.g) securities and exchange commission (SEC), labour union, Economic planners, Intending investors and customer will find these material useful in understanding the bankers operational better. More so, this work will serve as a reference tool to researchers and information seekers mostly those in the banking sector, computer science and accounting disciplines.

1.7 Scope Of The Study

The study is supposed to research into the problems of commercial banks in Imo state encounter by the use of computer but for reasons such as time, finance, increasing number of banks and other obvious reasons Eco Bank Plc was chosen as a case study. Eco bank has over three hundred branches nation-wild but its Owerri branch is going to be examined.

Banking activities of cheque processing proof and transit operations, cost control, online savings, money transfers, demand deposit accounting and other routine banking activities will be covered.

1.8 Limitation Of The Study

There were many obstacles that constrained the conduct of the research. They include the following:

Finance:

The high cost of transportation in running around to collect the necessary information hindered the wide collection of information.

Bureaucracy:

It was not really necessary for the researcher to collect all the necessary data and information relevant to the study because in most cases, the relevant information required was said to be “Classified matter”.

Time:

The researcher had difficulties in making out the whole time required to do the work. In some cases, the bank asked the researcher to go its regional office at Enugu and head office which was not possible due to the time and resources involved.

1.9 Definition Of Terms

Access:

To locate a particular record.

Accuracy:

The constancy of computer generated result.

Bank:

A place where money is lent or exchange or put for safety and or to acquire interest.

Banker:

Person who owns and manages a bank.

Computer:

An electronic tool that is used to collect, organize and communicate vast amounts of information with great speed.

Down Time:

A condition in which direct communication with a computer not possible. Also called off time.

Electronic Banking:

It is the totality of the employment of the application of modern of information technology and communication system to record transaction and financial services for the customers.

Information:

Data that has been organized and processed so that it becomes meaningful.

Integrated:

Multiple function or activities linked in such a way that performance on one can immediately affect any or all of he rest.

Net Work:

The linking together of several central processing units.

Outline:

A new dimension of banking services to the public which enable a customer to deposit or withdraw from any branch irrespective of which has eased cash carrying and tremendously enhance inter-state services.

User:

The recipient of computer services.

Chapter Five

5.0 Summary, Conclusion And Recommendation

5.1 Introduction

This study, which is on the impact of computer application in commercial banks, was carried out in order to further research on the problems of using computer in commercial banks. Eco bank plc, Owerri was used as a case study thus its historical background was discussed.

The problem, which is the limited skills and knowledge of the maintenance of the computer system in commercial banks has misled customer and users of accounting information resulting to customer classification, was discussed. This was followed by research question and research hypothesis. Next were the objective of the study, significance of the study, then the variable and relationship followed.

The second chapter contained a review of some related literature. Here, a review to the study was done. Therefore, the researcher reviewed extensively areas like the historical development of computers, commercial banking service and computerized accounting system and limitations and benefits of computerized, impact of computerization on the economy etc.

The third chapter, which is research methodology, spelt out the methodology adopted for the research. This was all about the method, system and manner by which materials data and pertinent information were gathered.

The questionnaire personal interviews, observations and desk research were used. The statistical techniques applied in the work were identified and explained with examples. However, these were discussed under subtopics of methodology, collection of data, source of data, instrumentation and statistical procedure.

Next was the fourth chapter, which is presentation analysis and interpretation of data. Here, the hypothesis was tested, questions contained in the questionnaire presented, analyzed in tables and discussed. Those helped the researcher to arrive at some researcher findings.

5.2 Summary Of Finding

In the course of this work, the researcher found out that the problems encountered by the use of computers in Eco bank plc, Owerri affect the customer despite all the benefit derived from computerization such as speed, easy operations storage and information retrieval, accuracy etc.

Limited skill and knowledge of the customers and computer system has misled the customers and users of the banks accounting information resulting in its customer dissatisfaction. The issue of system down time in the bank which is one of the problems caused by inadequate skill maintenance of the computer causes the customer’s losses since they cannot get the service they need from the bank when the system is down. This causes dissatisfaction among the customers of the bank. The bank is also normal banking activities cannot go on. Although the bank work cannot resort to using manual print outs to source for information, the risks which is involved by the use of it is one the bank never want to bear except for very few customers that are well known to the bank. The bank would not want to run into losses through dishonest or careless customers in a bid to render service to them since a customer might overdraw money from another branch of the bank which might not be aware of his current balance due to the use of printouts during the period of system breakdown. The customer can subsequently deny one of his withdrawing since it was not adequately recorded online and this is where the risk lies. Other similar cases of the type and fraud also exist and the bank has not found a solution of this problem.

Despite the short coming the computer application in commercial banks, customers and staff of the bank still deem it a necessity to use computers in banks and so they should be continued with adequate and constant improvement since the computer era is better than the manual era.

5.3 Conclusion

The computer systems have contributed greatly to the growth of the economy of Nigeria via the commercial banks. Customers of computerized commercial banks are of the view that the use of computer should be continued in the accounting of commercial banks with more attention give to its constant improvement since it has not fully been exploited. The management and employees of the banking sector should realize its social implication. Professional associations and the government need to formulate appropriate policies and strategies for optimizing its benefits.

The cost of maintenance for computers is commensurate with the benefits derived from it so fund where available should be invested in the maintenance, updating and security of computers.

The computer if well maintained and used will transform not only the banking sector but all other into competitive would class equivalent.

5.4 Recommendations

Based on the findings of the research, some recommendation to enhance computerized banking are being put forward. They include:

1. Recruitment of trained foreign computer experts to further train the bank staff on the latest technological advancement and computer maintenance procedure to prevent the problem of ill-management computer system that cause down time.
2. Training should be done on the most recent innovation within management information system, which is executive information (EIS)
3. This system provides executive with easy access to internal and external information required from decision making.
4. Alternative less risky methods of ascertaining current information needed for the transactions of the bank during a period of system downtime should be derived.
5. Behavioural scientists could come into the picture two. They can educate the management of the bank on ways to curb the lack of buying with the banking environment.
6. The hierarchical chain of command in Nigeria makes it difficult, if not impossible for employees must share or participate in management.
7. Employees must be given an active role in the system development since they come in contact directly with customers in the banking hall whom with bank is there to serve and therefore understand their problems better than them management.
8. The behavioural scientists also help curb the problem of fear of change among the employees. People are fearful of what they do not understand, particularly when it come to computers and technology.

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