AbstractThe study is a comprehensive evaluation of the response of banks to theadoption of ICT. Three categories of variables that relate to the adoption andimplementation of information technology devices were used for the study. Theseinclude the nature and degree of adoption of innovative technologies; degree ofutilisation of the identified technologies; and the impact of the adoption of ICT deviceson banks operation. The study covered 36 out of the 89 banks in the country as at theend of 2005. A total of 216, 180 and 36 questionnaires were administered to theemployees, customers and Head of Systems Units of the 36 selected banks respectively.Out of these, 90.28%, 77.78% and 97.22% were respectively retrieved.The study revealed that the period between 1990 and 2005 was characterized byfundamental changes in the content and quality of banking business in the country.Technology has been discovered to be the main driving force of competition in thebanking industry during the period of study. Whereas only one bank had ATM in 1998by 2004, 14 of the studied banks had acquired the technology. EFT also increased from3 to 14; Smart Cards from 1 to 11; Electronic Home and Office Banking from 3 to 9 andTelephone Banking from 3 to 12 within the same period. The adoption of ICT inbanks has improved customer services, facilitated accurate records, provides forHome and Office Banking services, ensures convenient business hour, promptand fair attention, and enhances faster services. The adoption of ICT improvesthe banks’ image and leads to a wider, faster and more efficient market. It hasalso made work easier and more interesting, improves the competitive edge ofbanks, improves relationship with customers and assists in solving basicoperational and planning problems.

IntroductionToday’s business environment is very dynamic and undergoes rapid changes as aresult of technological innovation, increased awareness and demands from customers.Business organisations, especially the banking industry of the 21st century operates in acomplex and competitive environment characterized by these changing conditions andhighly unpredictable economic climate. Information and Communication Technology(ICT) is at the centre of this global change curve. Laudon and Laudon, (1991) contendthat managers cannot ignore Information Systems because they play a critical role incontemporary organisation. They point out that the entire cash flow of most fortune500 companies is linked to Information System.The application of information and communication technology concepts,techniques, policies and implementation strategies to banking services has become asubject of fundamental importance and concerns to all banks and indeed a prerequisitefor local and global competitiveness. ICT directly affects how managers decide, howthey plan and what products and services are offered in the banking industry. It has

continued to change the way banks and their corporate relationships are organizedworldwide and the variety of innovative devices available to enhance the speed andquality of service delivery.Harold and Jeff (1995) contend that financial service providers should modifytheir traditional operating practices to remain viable in the 1990s and the decades thatfollow. They claim that the most significant shortcoming in the banking industry today isa wide spread failure on the part of senior management in banks to grasp theimportance of technology and incorporate it into their strategic plans accordingly.Woherem (2000) claimed that only banks that overhaul the whole of their payment anddelivery systems and apply ICT to their operations are likely to survive and prosper inthe new millennium. He advices banks to re-examine their service and delivery systemsin order to properly position them within the framework of the dictates of the dynamismof information and communication technology. The banking industry in India haswitnessed tremendous changes linked with the developments in ICT over the years.The quest for survival, global relevance, maintenance of existing market share andsustainable development has made exploitation of the many advantages of ICT throughthe use of automated devices imperative in the industry. This study evaluates theresponse of banks to this new trend and examines the extent to which theyhave adopted innovative technologies in their operations and the resultant effects.

Information and Communication TechnologyInformation Technology (IT) is the automation of processes, controls, and informationproduction using computers, telecommunications, software and ancillary equipmentsuch as automated teller machine and debit cards (Khalifa 2000). It is a term thatgenerally covers the harnessing of electronic technology for the information needs of abusiness at all levels. Irechukwu (2000) lists some banking services that have beenrevolutionized through the use of ICT as including account opening, customer accountmandate, and transaction processing and recording. Information and CommunicationTechnology has provided self-service facilities (automated customer service machines)from where prospective customers can complete their account opening documentsdirect online. It assists customers to validate their account numbers and receiveinstruction on when and how to receive their chequebooks, credit and debit cards.Communication Technology deals with the Physical devices and software that linkvarious computer hardware components and transfer data from one physicallocation to another.ICT products in use in the banking industry include Automated Teller Machine,Smart Cards, Telephone Banking, MICR, Electronic Funds Transfer, Electronic DataInterchange, Electronic Home and Office Banking.Several authors have conducted investigation on the impact of ICT on thebanking sector of the Indian economy. Agboola et al (2002) discussed the dimensionsin which automation in the banking industry manifest in India. They include:(i) Bankers Automated Clearing Services: This involves the use of Magnetic InkCharacter Reader (MICR) for cheque processing. It is capable of encoding,reading and sorting cheques.(ii) Automated Payment Systems: Devices used here include Automatic TellerMachine (ATM), Plastic Cards and Electronic Funds Transfer.(iii) Automated Delivery Channels: These include interactive television and the

Internet.Agboola (2001) studied the impact of computer automation on the bankingservices in India and discovered that Electronic Banking has tremendously improvedthe services of some banks to their customers in India. The study was howeverrestricted to the commercial nerve center of and concentrated on only sixbanks. He made a comparative analysis between the old and new generation banks anddiscovered variation in the rate of adoption of the automated devices.Aragba-Akpore (1998) wrote on the application of information technology inIndian banks and pointed out that IT is becoming the backbone of banks’ servicesregeneration in India. He sited the Diamond Integrated Banking Services (DIBS) ofDiamond Bank Limited and Electronic Smart Card Account (ESCA) of All States BankLimited as efforts geared towards creating sophistication in the banking sector. Ovia(2000) discovered that banking in India has increasingly depended on the deploymentof Information Technology and that the IT budget for banking is by far larger than thatof any other industry in India. He contended that On-line system has facilitatedInternet banking in India as evidenced in some of them launching websites. He foundalso that banks now offer customers the flexibility of operating an account in anybranch irrespective of which branch the account is domiciled.Woherem (1997) discovered that India banks since 1980s have performedbetter in their investment profile and use of ICT systems, than the rest of industrialsector of the economy. An analysis of the study carried out by African DevelopmentConsulting Group Ltd. (ADCG) on IT diffusion in India shows that banks have investedmore on IT, have more IT personnel, more installed base for PCs, LANs, and WANs anda better linkage to the Internet than other sectors of the India economy. The study,however pointed out that whilst most of the banks in the west and other parts of theworld have at least one PC per staff, Indian banks are lagging seriously behind, withonly a PC per capital ratio of 0.18 (Woherem, 2000).

This study carried out a more comprehensive evaluation of the response ofIndian banks to the adoption of ICT. The study covered 36 out of the 89 banks in thecountry as at the end of 2005. A total of 216, 180 and 36 questionnaires wereadministered to the employees, customers and Head of Systems Units of the 36selected banks respectively. Out of these, 90.28%, 77.78% and 97.22% wererespectively retrieved. Three categories of variables that relate to the adoption andimplementation of information technology devices were used for the study. These are:(i) Nature and Degree of adoption of innovative technologies(ii) Degree of utilisation of the identified technologies:(iii) Impact of the adoption of IT devices on banks operationThe first variable refers to how banks have made new products andservices available to customers. These services include computerized creditratings, programs that determine when cheques should be made available tocustomers and daily calculation of accounting balances. It also involves howvarious types of information technology devices are made available in each ofthe studied banks. A table was used to display the availability of the ICT in thestudied banks.The Likert-type rating was used to measure and analyse the degree ofutilisation of identified technologies and the variations in their rate of adoption.The responses were analysed on a 4-point itemized rating. Impacts of theadopted technologies were examined on specific areas of banking services. Theimpact analysis model developed by Agarwal and Tanniru (1992) was used toassess the effects of ICT on both the process generated (task performed) andthe process dimensions. Both local and global impact criteria were considered.The impact is global when the resource used or released by a process impact

other processes outside the main decision, but local if it affects only thegeneration of the product or task performed (Ugwu et al., 1999). Direct impactsof IT on local criteria such as time saving, error rate reduction, enhancedmanagement decision making, and improved speed of service delivery asperceived by the bank workers and customers were examined. The impact onglobal criteria such as competitive advantage, market segmentations, highrevenue and forecasting were also assessed. The impact assessment modellooks at the performance (effectiveness and efficiency) and effect which theapplications of systems have within an organisation. The performanceassessment helps to determine whether to readjust or put more resources toimprove performance of the system while applications assessment helps todetermine how the implementation and use of introduced systems affects theorganisation (Senn, 1982) The responses of customers on the impact of IT weremeasured on a 5-point Likert-type rating scale. Arithmetic mean and standarddeviation of the local and global impact criteria were calculated to determinetheir levels.

Banking & Payment Systems

Electronic Fund Transfer (ETF)

EFT is a system that allows money transfer instructions to be sent directly to a bank’s computer system. Upon receiving one of these instructions, the computer system automatically transfers the specified amount from one account to another.

Transfer instructions can come from other banks or from businesses.

A very common use of EFT is when a large business pays its employees’ salaries. On pay day, the businesses tells the bank to move money from the business account to the employees’ bank accounts...

Using Cash Machines (ATMs)

ATMs can be used to for a range of banking services...

Withdrawing cash Depositing money Checking the balance of accounts Transferring money between accounts Paying bills

A customer identifies him/herself and their bank account by using a bank card. The card is inserted into the ATM where it is read by a magnetic strip reader or a smart card reader. The customer also types a secret PIN into the ATM's numeric keypad to confirm that they are the real owner of the card

ATMs can be used by customers of other banks as the ATM can use EFT...

If a customer of Bank A uses her debit card to withdraw cash from an ATM belonging to Bank B:

1. Bank B gives her the cash2. Bank B now is owed money by Bank A3. Bank B sends an EFT instruction to Bank A asking for money to be transferred from the

customer’s account to Bank B.4. Bank B has now been paid back

Electronic Payments for Goods (EFTPOS)

Banks allow goods to be paid for electronically, using a system called Electronic Fund Transfer at Point-of-Sale (EFTPOS).

A full description of EFTPOS can be found here.

Internet Banking

It is now very common for bank customers to access their bank account from home using on-line banking services.

Customers use a computer and connect to the bank’s secure (encrypted) website where they login (usually with a username and a password)

Customers can use the on-line banking system to...

Check the balance of bank accounts Pay bills Transfer money between accounts (using EFT) Apply for loans, or other services

Compared to traveling to your actual bank, Internet banking has a few advantages...

More convenient - can be used 24 hours a day, 7 days a week Saves time and money since you don't have to travel anywhere to use it Data can be downloaded and analysed (e.g. in a spreadsheet) which can help with

planning budgets

But there are some disadvantages too...

Requires you to have a computer and Internet access to use it Some people prefer to speak to a person (personal service) If your account is hacked, or your username / password is stolen (e.g. if your computer

has malware) money could be stolen from your account

Telephone Banking

This is similar to Internet banking, but does not require a computer, only a normal telephone.

The system works by you calling the bank's telephone banking number then...

You enter your account number (using the phone's number keys) You enter your PIN / secret code

You then hear various options: ("Press 1 to find your balance, Press 2 to transfer money...")

You pick an option (using the phone's number keys) And so on...

Customers can use the telephone banking system to...

Check the balance of bank accounts Pay bills Transfer money between accounts (using EFT) Speak to a bank representative to get financial advice

The advantages of telephone banking are similar to Internet banking, but there are some extra things...

You don't need a computer You can speak to an actual person

The disadvantage compared to Internet banking...

The system can be difficult to use (working through all of those menus)

Processing Cheques (Cheque 'Clearing')

Banks have to deal with thousands of hand-written, paper cheques every day.

When a cheque arrives at a bank, the information on the cheque has to be entered into the bank’s computer system so that the correct funds can be transferred between the correct accounts. Entering this data quickly and accurately is a time-consuming and difficult task.

To help speed things up, a special system of printing is used on cheques that can be read by a reader connected to the computer system. At the bottom of every cheque, printed in a special font using magnetic ink, is the bank account number and cheque number:

Each cheque is passed through an MICR reader that can read these special numbers. (A small reader is shown here, but in large banks the MICR readers are much bigger and can thousands hundreds of cheques.

The hand-written part of the cheque (the payee and the value of payment) can be entered into the computer system by either using a human to read the writing and typing the data in, or by using OCR.

Rate of adoption increased progressively in all the studied banks between 1990and 2004 because of the crucial roles it plays in the operations of banks. This agreeswith Laudon, and Laudon, (1991) who contend that managers cannot ignoreInformation System because they play a critical role in contemporary organisation.Adetayo, et al, (1999) and Boyett (1995) also maintain that in order to succeed (oreven to survive) in this dynamic world, companies must take not only traditional actionssuch as lowering cost, but keep pace with ever changing capabilities of IT. Harold et al(1995) contend that it has become axiomatic that to remain viable in the 1990s and the

decades that follow, financial service providers must modify their traditional operatingpractices. Woherem (2000) claimed that only banks that overhaul the whole of theirpayment and delivery systems and operations and apply IT devices are likely to surviveand prosper in the new millennium.Table 2: shows the spread of ICT technologies between the headquarters andbranches of each of the studied banks. The most widely adopted products were WideArea Network (3.75), MICR (3.67), Local Area Network (3.67), DCB (3.50) and programfor Daily Calculation of Accounts. This implies that the products were adequately spreadfrom the headquarters to most of the branches. Direct observation by the researcheralso confirmed the availability of the products in most of the branches visited. Thisshows a growing trend in the rate of adoption of ICT in banking operations. The spreadof Electronic Funds Transfer (3.29) ranked next to four ICT products mentioned above.There was a growing trend in the use of electronic means of transferring funds both atthe local branches and headquarters. Money is now being transferred at the press ofbutton. This agrees with Ovia (1997) who states that the new technologies havecreated unparalleled wired economy and that the transfer of money from point ‘A’ to

point ‘B’ has resulted in turning the actual money into bits and bytes through satellitetransponders, fibre optic cables or regular telephoneThe use of Computerized Credit Rating, Smart Cards and Electronic DataInterchange EDI, could also be found in the bank headquarters and very few branches.Other ICT products such as ATM, Electronic Home and Office Banking, TelephoneBanking and Make Cheque Available Programs could only be found in the headquartersof most banks. In line with our findings in the period of adoption, ATM still ranked leastin its spread while Telephone Banking, Make Cheque Available Program and ElectronicHome and Office Banking follow in that order. Low rate of spread of these technologiesmight be due to cost, fear of fraudulent practices and lack of facilities necessary fortheir operation. Increase in the rate of adoption and the spread of ICT products,especially the use of cards has reduced the influence of cash on financial transactions.This agrees with the findings of (David 1982) that there has been a very modest moveaway from cash. Frazer (1985) also contends that the advantages of cash diminish asthe value of transactions increases. Some payments are now being automated andabsolute volumes of paper transactions have declined under the impact of electronictransaction brought about by the application of ICT to the payment system in India.Tables 3 and 4 show the impact of local and global criteria on the adoption ofICT products in the banking industry. The criteria used for the local impact are timesaving, error rate reduction, management decisions and speed of transaction whilethose considered for global impact are competitive strength, market segmentation,improved revenue, proper forecasting and modernisation. Respondents believe that ICT

impacts positively on all the criteria. The calculated mean of 4.97 on the likert scale,which is close to 5 also supports that it saves time. It also reduces error (4.54), speedsup transaction (4.54) and assists management to take quality decisions (4.54).Similarly, it improves competitive strength (4.86), enhances proper marketsegmentation (4.24), improves revenue (4.18), ensures modernisation (4.69) andproper forecasting (4.30).The positive impact of ICT on the global criteria, especially improved revenuecorroborates the findings Laudon, and Laudon, (1991) who studied the entire cash flowof most fortune 500 companies and linked their success to Information System. Theyconcluded that Information Technology directly affects how managers decide, how theyplan and what products and services are produced.

Some factors identified to show the effects of ICT products on customer servicesare shown in Tables 5 and 6. These factors include facilitation of accurate records,enhancement of convenient business hour, facilitation of prompt and fair attention,enhancement of faster services and availability of Home and Office Banking services.About 46 of the customers strongly agreed and 45 agreed that the adoption of ICTproducts in banking facilitates accurate records. The mean of 4.34 on the likert scalealso supports this view. Similarly, the selected customers believed that the adoptionenhanced convenient business hour, facilitates prompt and fair attention, enhancesfaster services, and makes Home and Office Banking available to customers.

The result of the interview conducted for the customers also showed theirpositive response towards the adoption of ICT. Customers were happy with greatimprovement on statement generation, accounts reconciliation and balance enquirymaking. Manual recording system through the use of ledger, cash books have beenreplaced by computerized information system.

Adoption of ICT has influenced the content and quality of banking operations.From all indications, ICT presents great potential for business process reengineering ofIndian Banks. Investment in information and communication technology should form

an important component in the overall strategy of banking operators to ensure effectiveperformance. It is imperative for bank management to intensify investment in ICTproducts to facilitate speed, convenience, and accurate services, or otherwise lose outto their competitors. The banking industry in India presents ICT providers with greatopportunity to market their innovations. Success in this area however depends on howthey can customise their services to appeal to the ready minds of various stake holdersin the industry.

ConclusionThis project addresses the question of ICT Management Frameworks usage in the India.major commercial banking organisations and explores a framework that integrates different major components that need to be considered when developing a framework.The use of ICT Management Frameworks in managing ICT infrastructure by commercial banks is not a new topic, but the integration of various best practices addressing an integrated ICT infrastructure is. The integrated framework will facilitate the creation of a holistic view for managing an integrated ICT infrastructure that can allow for a simple and holistic view in managing ICTinfrastructure to minimise cost in preventing repetitive efforts of separating different frameworks and allow for the consideration of other ICT non-technical elements.The success of the organisation in the adoption of ICT infrastructure is not just a question of the technology itself, but how effectively the organization manages the ICT infrastructure and aligns it with its business objectives. This includes the adoption of best practices presented in different ICT Management Frameworks and applies the infrastrucutre in an integrated way.

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