The Impact Of Computerised Foreign Exchange Transaction In Banking

The Impact Of Computerised Foreign Exchange Transaction In Banking

Abstract

The research topic of this study is the impact of computerised foreign exchange transaction foreign exchange transaction in banking. The purpose is to know The objective of this study is to carry out a thorough analysis of effect of computerization of foreign exchange transaction on the Nigerian Banking Industry, advantages of computerization of foreign exchange transaction such as: Speed, efficiency, reliability and accuracy will be thoroughly analyzed. The proper management of the computerization of foreign exchange transaction process aimed at cushioning its traumatic effect like job losses will also be delved into. The study population is 70 persons who are the members of the staff of United Bank of Africa and the sample size calculated gave (34). The formulated hypothesis was tested using the analysis of variance (ANOVA) statistical technique at 5% level of significance. The researcher also made use of primary methods of data collection which included questionnaire and personal interview. Also the secondary method of data collection used was gotten from official documents of the banks, various research work on computerized Foreign exchange transaction, accounting journals and textbooks. Based on these, the researcher recommended that banks in Enugu Metropolis should channel most of their resources in the training and development of bankers and Accountants personnel in computerized Foreign exchange transaction related technology such as I.C.T to boost performance in their banking operations and their personnel. Also due to the widespread of computer trends and its dynamics nature, it is recommended that banks who are still battling with manual system should adopt specifically the Computerized Foreign exchange transaction.

Chapter One

Introduction

1.1 Background of the Study

According the Oxford English dictionary (6th edition), “computerization is an act of providing computers to do identified operations”. Before the advent of computers, the rule of thumb adopted in data-handling led to incompetence and huge loss of resources.

According to Rob Kling (1994), “In the early twentieth century, the organization of office work underwent substantial change-firms began to adopt telephones and typewriters. By 1930s and 1940s, many manufacturers had devised electromechanical machines to help manipulate, sort and tally paper records automatically.”

In the early 1960s, business firms such as insurance companies and banks adopted computer-based information systems on a large scale.

During the 1980s and early 1990s, virtually every business organization had bought the personal computer (PC). The PC revolution did not only change the nature of office work but, also expanded the range of people who used the computer.

In the last decade, many larger organizations that imbibed computerization of foreign exchange transaction and saw their profit rise astronomically concluded that “computerization of foreign exchange transaction is the currency to be spent in the new millennium” Dixon-Ogbechi B. N (2002).

In an evolving Nigerian banking industry, strategies are being adopted by the major players in order to achieve their long-term organizational goals- profitability and survival. In the light of this belief, much emphasis is being laid on the computerization of foreign exchange transaction of their banking operations. Within the last decade, the Nigerian banking industry has been at the forefront of computerization of foreign exchange transaction. This is with the aim of: improving their information system, delivery of efficient and high quality service to their customers.

In the advent of computerization of foreign exchange transaction, old generation banks in the industry were force to wake up from their slumbers and face reality. The new generation banks came into the industry with innovation, research and development, in order to push these less competent old ones out of business. This revolution was aided by computerization of foreign exchange transaction. It’s very pertinent to state that computerization of foreign exchange transaction is a very powerful weapon which can be employed to annihilate competitors. The Nigerian banking industry ensures that their data base is updated as at when due. With the 2004 banking reform in Nigeria, the industry has persistently remained vibrant. The overall aim of this sanitations effort by Professor Charles Chukwuma Soludo was to achieve some macroeconomic objectives, which include the following :

1. To create a world of banking groups through mergers and acquisitions aimed at avoiding bank distress.
2. To consolidate Nigerian banks to manage the country’s external reserve deposited in foreign banks
3. To ensure that there is zero-tolerance in the regulatory framework.

According to Rob Kling (1996), “when a specialist discusses computerization of foreign exchange transaction and work, they often appeal to a strong implicit image about the transformation of work in the last one hundred years and the role that technology has played in some of these changes.” In view of this, it’s quite imperative to analyze this information with the Nigerian banking industry, and to take actions aimed at guiding against the problems associated with computerization of foreign exchange transaction.

1.2 Statement of the Problem

The twenty-first century business-world has been marked by the rise of service job in such areas as: banking, insurance, advertising, transportation and health. Many of the earliest commercial computers were bought by large service organizations such as: banks and insurance companies.

Edward Amoroso (1994), One of the basic problems of this research work is to critically look at the banking industry vis-à-vis the heavy investment made by these institutions in the acquisition of computer technology. This will be geared towards assessing the effect of this computer technology on foreign exchange transaction.

With computerization of foreign exchange transaction, jobs that would have taken hours and a lot of manpower, can conveniently be done by few hands in just a jiffy. The concomitant effect of this will inevitably be lay-off of workers. In the case study of this research work United Bank for Africa Plc- about 4000 workers were made redundant as a result of technological innovation. According to Shankar K. (1997) “as society becomes more dependent on computers, computer crime is becoming not only more disastrous, but also more attractive to the criminally-minded people: the disclosure threat, which is the dissemination of information to an individual for whom that information shouldn’t be seen.

In the context of computer security, Olowe, R.A (2008) said the disclosure threat occurs whenever some secret information that is stored in a computer is divulged to somebody who shouldn’t have seen it.

Fraudulent people have devised a clever way of guessing at people’s passwords.

These could take the following forms: a user’s role model, surname, best movie, spouse’s name, street name, best drink.

Another major problem associated with computerization of foreign exchange transaction is obsolescence. Technology, which is one of the external threats in the business environment, changes very rapidly. What was impossible yesterday has been made possible today. With technological changes, huge investments made by banks in the acquisition of contemporary computer devices are lost. This has a very high cost implication on the resources of these banks.

1.3 Objective of the Study

The objective of this study is to carry out a thorough analysis of effect of computerization of foreign exchange transaction on the Nigerian Banking Industry. The positive side of it will be fully look at, and the problems associated with it will be brought out in details. This study is also aimed at taking a holistic view of computerized banking operations in order to help identify clearly those beneficial aspects of computerization of foreign exchange transaction on the Nigerian banking industry. Advantages of computerization of foreign exchange transaction such as: Speed, efficiency, reliability and accuracy will be thoroughly analyzed. The proper management of the computerization of foreign exchange transaction process aimed at cushioning its traumatic effect like job losses will also be delved into. The use of computers in the Nigerian Banking Industry has been necessitated by the large volume of bookkeeping and their multifarious scale of operations. In studying the effect of computerization of foreign exchange transaction in the Nigerian banking industry, efforts will be made towards analysing issues such as:

1. Computer fraud
2. Job-losses
3. Obsolescence of computer systems.

1.4 Research Questions

Data analysed should be able to answer the following questions that will be used in appraising the effect of computerization of foreign exchange transaction in the Nigerian banking industry:

1. Has computerization of foreign exchange transaction increased service delivery in the Nigerian banking industry?
2. Does computerization of foreign exchange transaction escalate the incidence of fraud in the Nigerian banking industry?
3. Can job-losses be the end-product of computerization of foreign exchange transaction in the Nigerian banking industry
4. Can computerization of foreign exchange transaction bring about less fatigue in the Nigerian banking industry?
5. Can computerization of foreign exchange transaction affect the internal control system in the banking industry?
6. Can data be secure in the computer systems?

1.5 Research Hypothesis

• H0: Computerization of foreign exchange transaction has improved service delivery in United Bank for Africa Plc.
• H1: Computerization of foreign exchange transaction has not improved service delivery in the United Bank for Africa Plc.

1.6 Research Methodology

Data for this research will be obtained through the following:

a. Questionnaire:

This will be administered on the staff of UBA, who are incharge of information technology. This will involve, close-response questions with only ‘yes’ or ‘No’ answers to assist in carrying out the study.

b. Library Research:

This will be carried out with the aim of consulting relevant literature already written on the subject matter.

c. Personal Interview:

This will be employed to obtain response to question of every technical nature.

1.7 Scope and Limitation of the Study

A research on the effect of computerization of foreign exchange transaction on the Nigerian banking industry is a very vast one. It involves an extensive study and understanding of the total effect of computerization of foreign exchange transaction on the Nigerian banking industry, considering its merits and demerits. In view of the large size and scale of operation, it is a very painstaking and excruciating one. In a bid to keep the work within a manageable limit in terms of time and financial constraints, the research will be limited to United Bank for Africa Plc.

It’s quite pertinent to state that banks have a discreet nature of not divulging sensitive information about their scale of operation. And, this has served as a limiting factor. The problem of bias on the part of the respondents might serve as a limiting factor.

Despite these factors, efforts will be made to obtain the much-needed information to carry out this research work and the conclusion drawn to be incisive.

1.8 Significance of the Study

The significance of the study of the effect of computerization of foreign exchange transaction on the Nigerian banking industry could be established from the point of view that one of the important benefits which a computer system could bring to an organization is speed and accuracy of information. The study is further justified by the need to guide the banks in their quest to computerize their operations, thereby bringing out the cost implication of doing so.

The need to take a critical look at the Nigerian banking industry which is the lifeblood of the Nigerian economy makes this study very important.

In view of the fact that no economy can make headway without a sound and vibrant financial system makes this study very important.

1.9 Definition of Terms

Computerization of Foreign Exchange Transaction:

This is the act of providing computers to perform identified operation.

Reform:

A change that is made to an organization or a social system in order to improve it.

Obsolescence:

The state of becoming old-fashioned and no longer modern.

Fraud:

A crime of deceiving somebody in order to get money or good illegally.

Data Base:

An organized set of data that is stored in a computer and can be accessed and used in various ways.

Chapter Five

Research Findings, Recommendation and Conclusion

5.0 Introduction

The research on the effect of computerization of foreign exchange transaction on the Nigerian banking industry was carried out by the researcher with the aim of making informed and encyclopaedic reference on the effect of computerization of foreign exchange transaction on the Nigerian banking industry, bringing out succinctly its pros and cons, and to find out what could be done to gain the utmost advantage from this wonderful electronic device which has changed the face of banking in Nigeria and beyond.

In the process of this research, a lot of people were interviewed, questionnaires were distributed to both programmers and computer users and the following is the synopsis of the finding of the study.

5.1 Research Finding

The research was focused on the effect of computerization of foreign exchange transaction on the Nigerian banking industry, with particular interest in the United Bank for Africa Plc, which is considered representative of the happenings in the industry.

In order to make an informed inference, on the study, various relevant literatures were consulted and field study carried out to obtain relevant data. The data collected were analyzed and various hypotheses formulated were subjected to test and verification.

The study revealed the following:

1. United Bank for Africa Plc is fully computerized.
2. Computerization of foreign exchange transaction fully and effective supports the operation of the United Bank for Africa Plc, and enables the bank to meet its customers’ demand.
3. The study revealed that a good percentage of the staff of United Bank for Africa Plc is computer literate, while others need further training.
4. The staff appreciates computerization of foreign exchange transaction and see computer as a device meant to assist them in carrying out their job effectively, as against seeing it as a replacement for manpower.
5. Computerization of foreign exchange transaction is fully embraced by the entire staff and management of the bank.
6. The study revealed that the bank uses on-line and real-time instead of batch processing.
7. The computer hardware and software being used by the bank are highly reliable.
8. The study revealed that the computer department of the bank requires further staffing.
9. The level of training given to computer users and operators is just adequate with equal room for further improvement.
10. The respondents were fully of the opinion that computerization of foreign exchange transaction has greatly improved service delivery in the bank.
11. With computerization of foreign exchange transaction, the services of the bank have been quite timely, efficient and effective.
12. The study revealed that internal control has not been negatively affected by computerization of foreign exchange transaction.
13. The study revealed that computerization of foreign exchange transaction has greatly reduced the incidence of fraud in the bank.
14. The respondents want computerization of foreign exchange transaction encouraged in the Nigerian banking industry.
15. The study revealed that the major set-back of computerization of foreign exchange transaction is the heavy cost implication of the process, and the need for adequate and continuous training of staff which is quite expensive.
16. Computerization of foreign exchange transaction has reduced the transaction-processing time in the Nigerian banking industry.

5.2 Recommendations

Having carried out the research on the effect of computerization of foreign exchange transaction on the Nigerian banking industry diligently, the researcher hereby recommends that:

1. Banks should embrace computerization of foreign exchange transaction fully, considering the immense benefits that accrue from its use.
2. Banks should study extensively the systems available before choosing the one to adopt in order to avoid the huge cost implication of changing from one computerization of foreign exchange transaction system to another.
3. Banks should map out a good training program for their staff to help them keep abreast of developments in computer technology, as it relates to banking operations
4. Banks should ensure availability of trained personnel to man their computer departments.
5. Banks should ensure adequate back-up procedures as regards the availability of computer spare parts, hardware and software.

5.3 Conclusion

The introduction of computers into the Nigerian banking industry, though spanning over a relatively short period of time have had a great and beneficial impact on the industry. Transactions now take very short time to be processed, customers’ expectations are being met, and volume of business transaction has increased tremendously, both for the banks and its customers.

Considering the above positive scenario, the researcher is of the opinion that computerization of foreign exchange transaction should be encouraged and advises that banks go the computer way. Government should monitor development in the industry to avoid dumping of outdated computers ina the banking industry.

Furthermore, the researcher is of the opinion that further researcher work should be encouraged in this direction using the work already done as a basis and a guide.

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