Impact Of Information Technology On Banking Sector (A Case Study Of Union Bank Of Nigeria In Benin Metropolis)

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Impact Of Information Technology On Banking Sector (A Case Study Of Union Bank Of Nigeria In Benin Metropolis)


Abstract


Computers and telecommunication system have become very important as delivery systems and productivity tools of electronic data and information. Nigerian banks have now realized that banking today requires prompt delivery of services, efficiency and the ability of customers to be served in any of their branches any part of the country, without any encumbrance. As a result of this, banks embarked on the use of Integrated banking application that can help them to provide efficient, comprehensive and nation- wide services to their customers, through the use of WANs(wide area network). The focus of this study is on “The impact of information technology on banking sector, A case study was on union bank of Nigeria In Benin Metropolis. 34 staff was used for the study and Questionnaire drawn distinctly to suit the purpose of this study were administered to various respondents in a 2 point scale of AGREED or DISAGREED. The chi-square statistical tool was used in testing the hypothesis by testing the “Goodness or Fitness” of the frequencies. Some of the major findings were: information technology is widely accepted by the banking sector, The contribution of information technology has brought about a new revolution in the economy and helps to reduce operational cost in the areas such as personal management, administration, maintenance and information technology which has enhanced efficiency in banking sector, through the use of ATM, smart cards reduction in the cost of doing business in banks and following recommendation with the intent that if adopted, would have positive effects on the banking sector. The banks should improve more on its information technology so as to enhance its productivity, the use of IT in the banking sector should not only be restricted to the cities alone, rural banking should also be improved upon from time to time. There should be enlightenment given to the general public through the various media on how to use some of the IT equipment like the smart cards, ATM, etc and its importance should also be made known to the public.


Table of Content


Chapter One:

Introduction

  • 1.1 Background of the Study
  • 1.2 Statement of the Problem
  • 1.3 Objective of the Study
  • 1.4 Research Questions
  • 1.5 Significance of the Study
  • 1.6 Scope of the Study
  • 1.7 Limitation of the Study
  • 1.8 Definition of Terms
  • 1.9 Organisations of the Study

Chapter Two:

Review of Literature

  • 2.1 Conceptual Framework
  • 2.2 Theoretical Framework
  • 2.3 Empirical Review

Chapter Three:

Research Methodology

  • 3.1 Research Design
  • 3.2 Population of the Study
  • 3.3 Sample Size Determination
  • 3.4 Sample Size Selection Technique and Procedure
  • 3.5 Research Instrument and Administration
  • 3.6 Method of Data Collection
  • 3.7 Method of Data Analysis
  • 3.8 Validity of the Study
  • 3.9 Reliability of the Study
  • 3.10 Ethical Consideration

Chapter Four:

Data Presentation and Analysis

  • 4.1 Data Presentation
  • 4.2 Analysis of Data
  • 4.3 Answering Research Questions

Chapter Five:

Summary, Conclusion and Recommendation

  • 5.1 Summary
  • 5.2 Conclusion
  • 5.3 Recommendation
  • References
  • APPENDIX
  • QUESTIONNAIRE

Chapter One


Introduction

1.1 Background to the Study

Today‟s business environment is very dynamic and undergoes rapid change as a result of technological innovation, increased awareness and demands from customers. Business organization, especially the banking industry of 21st century operates in a complex environment characterized by these changing condition and highly unpredicted economic climate. Information and communication technology(ICT) is at the centre of this global change. They point out that entire cash flow of most fortunate 500 companies is linked to information. The adoption of ICT is defined as a collective term for a wide range of software, hardware, telecommunications and information management techniques, applications and devices, that are used to create, produce, analyze, process, package, distribute, receive, retrieve, store, and transform information (Brady et al.,2002).

In essence the importance of information and communication technology banking is itemized through information technology industry. Effective service delivery in information banking brings about reduced frustration and Improve level of awareness in an organization (Ato,2004). Information technology has continued to change the way banks and their corporate Relationship are organized. worldwide and the variety of innovation device available to enhance the speed and quality of service delivery.

Ezeamama,(2010): reported that information and communication technology refers to the various technologies that enhance the creation, storage, processing, communication and dissemination of information. It involves the different infrastructure used in these processes, their application and numerous service, these infrastructure renders. In 1978 annual report, the Bank reported that the department made steady progress on its effort to effectively use of information and communication technology (ICT) to improve the efficiency and the quality of service delivery on financial sector. Information and communication technology is radically changing all over the world. The volume and speed of handling transactions has improved tremendously as a result of the growth of information technology which has created a lot of business opportunities. Application of information and communication technology is capable of enhancing optimal performance in service delivery if appropriately carried out. Optimal utilization of facilities might be achieved if the design is done based on clear understanding of how the service is to be measured. Such measurement include customer‟s service rate, traffic intensity and the average number of customers in the queue. All these assist to make decisions on the level at which information and communication technology can be applied for an optimal performance in Banking operation. What prompted this work was the various computerization activities going on in the banking sector which has been accredited to the use of information and communication technology(ICT) in running of activities in the banks. The study has also been considered worthy among numerous research work due to the contribution to the banking system and economy at large. The study is to look at the effect which ICT has on banking sector and also the threats it has created since the use of ICT which has been an increase. Also to find it out the information and communication technology has really improved the productivity of the banking sector compared to when it was not being used. As such the information technology banking makes use of modern satellite communication facilities and different modes of transportation technology Banking is thus high capital – based organisation which has network being spread by using modern sophisticated equipment: (Akunyili, 2004,)


1.2 Statement of the Problems

This Research work is a study of the impact of information technology(IT) on the banking sector. Many problems confronting the banks in Nigeria is in their use of information technology(IT). The problem associated with the study is to determine the true position of the banking system and what it should achieve if it will align with the global Information.

This however becomes a huge task as the study tries to,

  1. Identify the degree acceptance of information technology in banking sector.
  2. Examine the contribution of information technology to the growth of the banking sector.
  3. Know if information technology is enhancing efficiency in banking sector and the effects it will have on banks that have not fully adopted it in their banking system.

1.3 0Bjective of the Study

The main objectives of this study include the following;

  1. To identify the degree acceptance of information technology in the banking sector.
  2. To examine the contribution of Information technology to the growth of the banking sector.
  3. To know if Information technology is enhancing efficiency in the banking sector.

1.4 Research Questions

  1. Does the management of banks accept the degree of Information technology on banking sector?
  2. To what extent has Information technology contributed to the growth on Banking sector?
  3. To what extent has Information technology enhance efficiency on Banking sector?

1.5 Research Hypothesis

The following hypothesis will be developed and empirically tested, the result will be formed on the basis for recommendation and conclusion.

HO1: Information technology is not accepted by management in the Banks.

HO2: Information technology has not contributed to social infrastructural development.

HO3; Information technology has not led to improvement of Information in the Bank which has improved their efficiency.


1.6 The Significance of the Study

This study is expected to provide a better understanding of the impact of information technology in banking sector. It is expected to elaborate the present impact of information technology in banks to see the present stage of the banks and provide better solution to the challenges been faced by banks, as this study will help reveal possible challenges facing banks in Nigeria.

The outcome of this study will help to evaluate the adoption of information technology by Nigeria banks; it will also justify the application of information technology in banking service delivery in terms of profitability of banks.


1.7 Scope of the Study

This study covers the Impact of information technology on banking sector. All banks could have been covered but for time and cost constraints. So the researcher decided to pick Union Bank In Benin Metropolis.


1.8 Limitation of the Study

There are some of limitations of this study, despite the fact that Research would be successful. In any Research work, it may be impossible to take good care all problem involved, the only thing a Researcher can do is to consider those factors that are essential to Research. The actual limitation of the study is financial constraints as well as time constraints due to other academic pressure.


1.9 Definition of Terms

Information:

Information is data that has been processed through the computer system. Information is processed or analyzed data that informs a recipient about a situation.

Information Technology:

According to Mejabi (2008), information technology is a general term that describes any technology that helps to produce, manipulate, store communicate and or disseminate information.

Data:

Data are raw facts, figures, event from when information can be developed a data is a basic raw fact that can be processed and converted to a meaningful output called information

Communication:

It is the transfer of idea or information from data processing system to ultimate user the ulti purpose of communicating is to inform the recover.

Online:

It is a term used for a direct or immediate communication link between two devices online lines are contracted with offline links in which only direct communication is possible

Offline:

This is the term used for input devices and auxiliary equipment that are under direct control of the central processing unit

Disk Storage:

This is data storage on optional or magnetic disk in memory system. It is characterized by low cost and relatively fast access to data stored on it Longley and Shain (1998) .


1.10 Organization of the Studies

The study is categorized into five chapters. The first chapter presents the background of the study, statement of the problem, objective of the study, research questions and hypothesis, the significance of the study, scope/limitations of the study, and definition of terms. The chapter two covers the review of literature with emphasis on conceptual framework, theoretical framework, and empirical review. Likewise, the chapter three which is the research methodology, specifically covers the research design, population of the study, sample size determination, sample size, and selection technique and procedure, research instrument and administration, method of data collection, method of data analysis, validity and reliability of the study, and ethical consideration. The second to last chapter being the chapter four presents the data presentation and analysis, while the last chapter(chapter five) contains the summary, conclusion and recommendation.


Chapter Five


Summary, Conclusion and Recommendation

5.1 Summary of Findings

Information Technology has already become the nervous system of the banks the world over. As we move into the new Millennium, Nigeria banks will become uncompetitive if they do not have the means to deliver their banking services online and in real time across all their branches with the country and abroad. They need to Invest a lot more on Information Technology both in terms of Installed base, staffing and training of Information Technology staffs, as well as the training of all categories of the bank staff to become (ICT) literate.

This Research work was embarked upon in order to look into the Impact of Information Technology on Banking sector. However based on the data Analysis carried out in chapter 4 (Four)

To ascertain the degree of acceptance of information Technology in the banking sector which is widely accepted by management of the banks sector.

The contributions of information technology to the growth of the banking sector, which has brought about revolutions in the economy, since payments method which include the use of credit cards, electronic transfer of funds from one bank to another, smart cards widely used in supermarkets and other retail outlets contributions to the economy‟s growth and development and their contribution helps to reduces operational cost in Areas such as personal management, administration, maintenance etc

Information Technology has enhanced efficiency in Banking sector, through the use of ATM, smart cards, reduction in the cost of doing business in banks and speeding up or fasting up the whole banking process through the use of computerized machines.


5.2 Conclusions

Information Technology departments in banks also play some roles in the banking sector like helping in critical area such as End-user technical supports, Desktops management, Network management, voice and data communications, business applications and strategic technology planning. Information Technology(ICT) has helped in reducing the cost of doing business in banks, banks all over the world are involved in certain time consuming and routine task on a daily basis and it dependent on internet banking to ensure that such technology is not abused and not used to encourage fraudulent and unethical banking practices, various standards have been set in the guidelines to which such technology must conform.

Finally, banks must ensure that the Internet service provider(ISP) has implemented firewall to protect the banks website from unauthorized users and banks are also to ensure that they are properly configured and institute procedure for continued monitoring and maintenance arrangements.


5.3 Recommendations

Knowing full well that information technology cannot be separated from the banking sector due to its immense contributions to the banking sector, and based on the respective responses gathered from the sample and contribution from authorities, the researcher therefore makes the following recommendation with the intent that if adopted would have positive effects on the banking sectors.

The banks should improve more on its information technology so as to enhance its productivity.

The use of (ICT) in the banking sector should not only be restricted to the cities alone, rural banking should also be improved upon.

From time to time there should be enlightenment given to the general public through the various media on how to use some of the (ICT) equipments like the smart cards, ATM etc and its importance should also be made known to the public.

Staff should be used side by side with ICT rather than reducing human capital which will in turn lead to unemployment in the country.


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