The Role Of Information Technology In The Liquidity And Profitability Of Money Deposit Banks In Nigeria (A Case Study Of First Bank And Fidelity Bank Plc)

Project and Seminar Topics with material for Banking and Finance

Abstract

This research work is designed to look on the role of information technology in the liquidity and profitability of money deposit banks in nigeria . A critical assessment of Fidelity Bank Plc and first Bank Plc. prior to this time, there has been unprecedented explosion of Communication and Information deficiencies in banking operations.

But in line with technological innovation and increased awareness of customers, the Money Deposit banks has imbibed the application of Information and Technology Concepts, techniques, develop ICT products in order to operate in these competitive environment characterized by these changing conditions.

The data used in this research were collected from various sources which include textbooks, Journals, Internet. Questionnaires were also administered to bank staff and customers so as to obtain the required information. The sample size used was forty five (45) and 45 questionnaires were distributed while forty (40) were properly filled and returned; the responses from the questionnaires were critically analyzed and tested using Chi-Square (x2).

Since effective Information Technology is an essential tool for the proper actualization of organizational goals, which is maintaining high liquidity and profitability standards without effective Information Technology, there will no common understanding between staff and customers.

Hence Recommendations were made to the banks selected on difficulties that can hamper effective Information and Communication Technology which includes: Untimeliness and Inaccuracy, use of technical words, making use of ambiguous words and installing the right caliber of management. These difficulties if properly addressed will increase efficient banking operations.

Chapter One

1.0 Introduction

This is the introductory chapter of the chapters. is briefly explains the background of the study, statement of the problem, objectives of the study, research questions, statement of hypothesis, significance of the study, scope of the study, limitations of the study and definition of terms.

1.1 Background Of The Study

Arunma et al (2008) stated that the last century has witnessed an unprecedented acceleration in the pace of technology development. New technologies, including information technology, biotechnology, materials technology and Nanotechnology are pervasive and have become important engines of growth. Social and political changes.

The applications of knowledge and innovation are widely recognized as the drivers of these new technologies and have played a crucial role in the creation of wealth and the rise in the quality of life in both developed and developing countries.

Akinlolu (2005) also stated that people in an organization typically spend over 75% of their time in an interpersonal situation. Thus, it is not surprise to find that at the root of a large number of organizational problems is poor information technology. Effective communication is an essential component of organizational success whether it is at the interpersonal, inter-group, organizational or external level. Today’s business environment is very dynamic and undergoes rapid changes as a result of technology innovation, increased awareness and demand from customers.

Business organizations, especially the banking industry of 21st century operates in a complex and competitive environment characterized by these changing conditions and highly unpredictable economic climate. Therefore the application of information technology concepts, techniques, policies and implementation strategies to banking services has become a subject of fundamental importance and concerns to all banks and indeed a prerequisite for local and global competiveness.

Information technology directly affects how managers decide how they plan and what products and services are offered in the banking industry. It has continue to change the way banks and corporate relationships are organized worldwide and the variety of information devices available to enhance the speed and quality of services delivered.

1.2 Statement Of Problem

For there to be a valid research work, the following problems were stated.

1. The problem associated with ineffective information and communication technology hinders the efficient banking operation.
2. The problem of ineffective communication technology which has resulted into loss of confidence from the customers/depositors.
3. Problem of inadequate information and communication technology in the banking industry.
4. Banks in Nigeria render substandard and non qualitative services to their customers, and their delivery systems are antiquated and poor.
5. Many banks in Nigeria have failed and liquidated as fraud and related financial crimes is being committed daily in our banks and financial institutions.

1.3 Objective Of The Study

This research work seeks to achieve the following objectives.

1. To measure the effectiveness of information technology in the operations of money deposit banks.
2. To evaluate the response of Nigerian banks to this new trend.
3. To ascertain the resultant effects of effective information technology in money deposit banks.
4. To examine the extent to which they have adopted innovative technologies in their operations.
5. To ascertain whether information technology has contributed in minimizing fraud and other financial crimes in Nigerian money deposit banks.
6. To examine the effect of information technology on the profit and liquidity position of Nigerian money deposit banks.

1.4 Research Questions

1. What is information and communication technology?
2. Does ineffectiveness of information communication technology constitute a major difficulty for efficient banking in commercial banks?
3. Has there been any remarkable impact on the growth of Nigeria economy as a result of effective information technology?
4. What products does bank able to produce for her customers as a result of information technology?
5. Has the introduction of information technology in banking
   operations enhanced the efficiency of Nigerian banks?
6. Has the implementation of information technology increased the level of customers satisfaction?
7. Has the rate of financial anomalies and impropriety reduced in Nigerian money deposit banks since the adoption of information technology?
8. Are bank employees comfortable with the introduction of information technology in Nigerian Money deposit banks?

1.5 Statement Of Hypothesis

• H1: Effective information technology increased the level of customer’s satisfaction
• H2: Effective information and technology increases bank profitability and liquidity.

1.6 Significance Of The Study

This study will provide the following significance such as:

1. It will benefit those that will make use of this research work especially students who may find pleasure in delving into a similar research in future.
2. To prescribe measures that could be adopted for effective communication technology.
3. The research work will recommend solutions on how information will be passed though the top level management as well as their numerous customers.
4. It will throw more light on how information technology has assisted money deposit banks in meeting up with the high expectations of customers.
5. It will unveil new products and services information technology has provided to Nigerian banking sector which had enabled them to maintain high level of efficiency and productivity.
6. It will reveal new customer services Nigerian banks renders to their customers via information technology.

1.7 Scope Of The Study

For the purpose of solving these problems, this research will center itself to the effectiveness of information technology in money deposit banks. Also this study will widen itself to accommodate and addresses the complex problems surrounding effective communication technology in Nigerian money deposit banks. Emphasis is on Fidelity bank Plc and First Bank Plc.

1.8 Limitations Of The Study

In this study, they course of carrying out this research encounters a lot of difficulties and was constrained in many areas among which are:

Data from banks:

The problem of getting the managers, staff and customers of the two banks to answer questions in the proposed questionnaire, in many cases, information given by both banks and the ones from internet were not simplified. That is, they are very difficult to understand.

Time Constraints:

in the aspect of theoretical and practical of this work, the researcher being a student had to apportion her time so as to carry out concurrently with other academic assignment.

Financial Constraints:

the research was constrained by cavity of materials and other expenses. However, in spite of the limitations, effort were made by the researcher to utilize the limited resources at her disposal to ensure that the work is successfully completed

1.9 Definition Of Terms

For the purpose of this research the following terms means:

(1) Information And Communication Technology:

This is the automation of processes, controls and information production using computers, telecommunications, software and ancillary equipment such as ATM, Debit cards.

(2) Communication:

Basically, communication is social interaction that is actualized through the exchange of messages and their ascribed meanings.

(3) Information:

It consists of facts providing knowledge relating to a specific event which may be used as a basis for making a decision to modify a course of action that would otherwise be implemented.

(4) Unprecedented:

Something that has never happened or been known before.

(5) Revolutionized:

This involves a great change of something.

(6) Product:

These are bank services that are available to their customers.

(7) Data:

A raw material input in the production of information.

(8) Effective:

Producing the result that is wanted.

(9) Unpredictable:

Something that cannot be predicted.

(10) Indispensable:

Something or doing something too important to be without.

(11) Bureaucracy:

This is complicated official rules used by government or organizations.

(12) Critical:

Expressing disapproval of something and saying what is bad about them.

(13) Vital:

Necessary or essential that help something to succeed.

(14) Transparency:

The quality of something that makes it easy to understand.

(15) Hypothesis:

A guess or assumption about a certain problem or set of circumstance reasonable supposition that may be right or wrong.

(16) Chi-square:

A test of statistical significant which test one of how well your model of expected distribution fits the observed distribution.

(17) Validity:

The state of being logical and true.

Chapter Five

5.0 Summary Conclusion And Recommendations

5.1 Introduction

This chapter focuses on summary, conclusion and recommendations. In this research, an attempt has been made to assess the impact of effective information technology on Deposit money banks operation so as to attain efficiency.

5.2 Summary

This research work examines how effective Information Technology has contributed to the efficient banking operation of money deposit banks.The following findings were made by the researcher at the end of the study;

1. The level of customers’ satisfaction has increased tremendously since the implementation of information technology in Nigerian banks.
2. The introduction of information technology has enhanced the efficiency and effectiveness of Nigerian banks.
3. The adoption of information technology by Nigerian banks has contributed in no small measure in curtailing fraud and other financial crimes in Nigerian banking sector.
4. Information technology has boosted the turnover and profit-base of Nigerian banks.
5. Bank employees and customers are comfortable with the introduction of information technology in Nigerian banking sector.
6. Information technology has increased the productivity of Nigerian banks.

This effectiveness comes in form of transparency in carrying out her operations. Also the result proved that customers and banks have benefited a lot, as it reduces delay in banking operations, provides quick service delivery to customers. And to the bank more customers which in turn increase deposits/patronage.

5.3 Conclusion

The study dealt with the impact of information technology in the growth and development of Nigerian banking industry as perceived by customers, staffs and management of selected commercial banks in Nigeria which make use of information technology in their operations. The study revealed that information technology ha appreciable positive impact on bank productivity, cashiers work, banking transactions, bank patronage, bank service delivery, customers services, and bank services. This has affected the growth of Nigerian banks positively because customers can now collect money from any branches of their bank. Also, customers do not need to move about with large sum of money, and customers are being attended to within a short period of time. From the study, the major hindrance to the use of information technology in Nigerian banking industry is inadequate power supply. The federal government is finding it difficult to equip the power holding company of Nigeria (PHCN) in order to enable them meets up with the demand for electricity supply. For this nation to be effective in the application of information techno1o in its banking industry and to make its banking industry more efficient there is need for the federal

5.4 Recommendations

The application of information in Nigerian banking industry is faced with a lot of challenges. In the light of the study, questionnaires, discussions and observations, the researcher is able to make the following recommendations.

Adaptation

In the light of how rapidly technology is changing and what the changes mean for banking activities in Nigeria, keeping regulators up to date has been and continue to be a far reaching, time-consuming and complex task. The board of directors and senior management of banks in Nigeria should review and approve the key aspects of .the security control process, which should include measures to authenticate the identity and authorization of customers, promote non- repudiation of transactions, protect data integrity and ensure segregation of duties within e-banking systems, dat abases and applications. Regulators and supervisors must also ensure that their staffs have the relevant technological expertise to assess potential changes in risks, which may requir
e significant investment in training and in hardware and software.

Legalization

New methods for conducting transactions, new instruments and new service providers will require legal definition, recognition and permission. For example it will be essential to define an electronic signature and give it the same legal status as the hand-written signature. Existing legal definition of a bank and the concept of a rational boarder will also need to be rethought.

Harmonisation

International harmonization of electronic banking regulation must be a top priority. This means intensifying cross— boarders supervisory and coordinating laws and regulatory practices internationally and domestically across different regulatory agencies. Each country should decide who has jurisdiction over electronic banking involving its citizens. The take of international harmonization can be viewed as the most effective tool for addressing the problem of electronic banking.

Integration

This is the process of including information technology issues and their accompany operational risks in bank supervision, safety, and soundness evaluations. In addition to the issue is the issue of privacy and security. For example, bank examiners will like to know how well the bank management has elaborated its business plan for electronic banking.

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