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Informatics Computer & Technology
Transcript of WP ICT Nigerian Banking
Electronic copy available at: http://ssrn.com/abstract=2325163
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THE EFFECTS OF ICT ON THE GROWTH OF NIGERIAN BANKING INDUSTRY: (A CASE STUDY OF FIVE QUOTED BANKS IN NIGERIA)
By Alawiye-Adams Adewale (Ph.D) 08033900620
[email protected] Associate Professor of Banking and Finance, at Afe Babalola University, Ado Ekiti. Nigeria
And Babatunde Afolabi (Ph.D) 08035029400
Lecturer at Afe Babalola University, Ado Ekiti. Nigeria
ABSTRACT Information communication technology has become the engine block of every banking institution worldwide
and Nigerian banking institutions are not exempted. In an attempt to meet up with the global challenges,
commercial banks are not left out in the bid to improving banking system efficiency. For the purpose of this
research, the historical and survey research methods were adopted. Data were collected from both primary
and secondary sources.
Hypothesis formulate were tested using chi-square and regression analysis. The study finds that the traditional
banking system is not in line with global trends and that the application and usage of information technology
in the banking system is necessary for efficient service delivery. It also reveals the use of electronic banking
as significantly revolutionizing service delivery to improve customer satisfaction through the various
electronic fund transfer and payment services such as the automated teller machine (ATMs), and other cards
services, internet banking, mobile banking and all sorts of banks and financial institution services to speed up
service delivery for and to stimulate efficiency in the entire financial system.
The study recommends that banks and other financial institutions should embark upon training programme for
all operational staff of all banks and public awareness should be instituted to improve the knowledge of
information communication technology and for performance adequacy to support the much needed efficiency
and operational effectiveness and also to control the regular system failure that customers face. The study
recommends how banks and government can streamline the problem of infrastructure in the economy. Banks
should come together and form partnerships in the sharing and use of technological equipment to increase
their efficiency and cost effectiveness.
KEYWORDS: INFORMATION, COMMUNICATION, TECHNOLOGY,
BANKING AND PERFORMANCE
Electronic copy available at: http://ssrn.com/abstract=2325163
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INTRODUCTION
Information technology can be seen as the acquisition, processing, storage and dissemination of
vocal, pictorial, textual and numeric information by micro- electronics based combination of
computing and telecommunications devices. Whereas, in the past, information handling involved
massive dependence on paper, the emphasis now has shifted to the creation, storage and
transmission of information through tiny electrical impulses, synchronized through micro chips.
Today, the amount of information contained on a pair of floppy disks could fill an average-size
book. Paper will doubtless continue to be important as a tangible product of the interchange of
information between human beings in the form of (“hard copy”). However, when storage of
information is the main consideration, then disks and magnetic tapes are likely to dominate the
scene, even more compact devices are continually being adopted in common use, involving, very
high level information storage.
According to Matherley, (2008) with the advent of automated office, technologies in today‟s
office have conquered fear and anticipation of a brave new office world. Management has
opened the door to the electronic office equipment in anticipation that computerized equipment
can improve the efficiency of office operations but whose jobs are affected by the adoption of
modern sophisticated accumulation of relevant Information and Communication Technology
hard and software.
INFORMATIONANDCOMMUNICATION TECHNOLOGY AND THE BUSINESS OF
BANKING.
However, the 1982 U.K. bills of Exchange Act defined bank as including a body of persons
whether incorporated or not who carry on the business of banking, further still, the Banking Act
of 1969 describes banking as the business of receiving money from outside sources which is
deposited irrespective of the payment of interests and granting of money loans and acceptance of
credits or the purchase of bills and cheques for the obligation to acquire claims in respect of
loans prior to their maturity or the assumption of guarantees and other warranties for others or
the affecting of transfers and clearing and such other transaction as the commissioner may on the
recommendation of the Central Bank by order publish, in the Federal Gazette.
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An immediate effect of computerization in the banking industry is the dramatic speed in the
processing of banking transactions. Computer based systems now undertake typical banking
operation like withdrawal, clearing of cheques, interbank transfers and transaction in many
financial institution thereby reducing customers waiting time in the banking hall, to the barest
minimum, Furthermore, computerization enable several banks to develop new products flexible
enough to overcome the traditional constraints of customers. Chief among these new products
are the Automated Teller Machine (ATM) which enables customers to withdraw money from
designated cash points at anytime and the Electronic Fund Transfer (EFT) through which funds
could be moved from one account to another without physical cash flow, and the Automated
Signature Verification, which allows clerks to verify signatures at the counters. The increasing
popularity of plastic credit cards issued by banks is also an indication of the relatively high
degree of computerization and the fast growth in Nigerian Bank business transactions.
Adebowale (2005) enumerated the place of automation in the delivery of financial services as
“manipulation” of data for the purpose of monitoring performance and producing his5torical
reports which may be used for the purpose of future planning and mobilizing saving through the
improvement of counter services so as to encourage the development of the “banking habit”.
Adebowale believes that computerization will become completely integrated into banking
practices in the near future and that it is the duty of the bank, to cultivate continuous investment
in IT hard and software to facilitate improved performance and services to ensure quality
profitability.
Computerization is very expensive since it entails the acquisition of imported high technology. It
involves a careful consideration of many factors in taking a decision to enlarge the IT system and
as such is much more than just a sizeable capital for a few items of computer hardware.
Finally, with the spread of information technology to all aspects of business, there can be no
doubt that computerization represents continued progress for business growth in the Nigerian
banking industry. However, this study advocates emphasis on the acquisition of modern ICT
equipments in the banking sector. Also to find out the relationship between information
technology, business growth and development in the banking sector.
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Statement of the Problems
In this age of globalization, every nation, strives to improve its technology and consequently its
economy. In the absence of indigenous technology a nation is left with no option5 than to
acquire imported ones.
The following are the statement of the problems identified for this research work.
1. Refusal or unwillingness of banks and other financial institutions to commit an adequate
level of their resources in acquiring up to date information technology, hard and soft
ware‟s to cope with the current challenges in standardized banking services has hindered
efficiency and adequacy in productivity for financial institution in Nigeria.
2. There is the problem of sourcing for the appropriate personnel that will operate the
technological equipment and the cost of training them, when a new technology is
acquired, or an upgrade in the existing level of technology. There is definitely a dearth of
competent human resources in the area of information technology to cope with the needs
of the banking and financial institutions in Nigeria.
3. As banks and other financial institutions are not individually willing to invest sufficiently
in information technology to meet their operational requirements, the practice of coming
together in a consortium to own and share information technology equipment as practiced
in civilized ,developed countries should be given a trial by Nigerian financial
institutions, but for selfish reasons, management of Nigerian banks have failed or refused
to embrace this great opportunity to improve their performance and reduce investment
costs on ICT to the barest minimum.
The above problems connected with inadequate ICT installations in the entire banking system
have hindered the ability of banks to provide very efficient and qualitative services that will
support economic growth and development in the Nigerian economic system. The above
problems therefore constitute the centre focus of this very important research effort.
Objectives of the Study
The study is aimed at measuring the level of efficiency and productivity achievable through the
use of information technology in the banking Industry, Information technology as the bedrock of
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growth and development in operations, is equally vital and indeed, central to the development of
the economy as a whole. This study therefore intends
i. To ascertain why banks and other financial institutions are reluctant to commit a
sufficient proportion of their resources to acquire up to date information technology
equipment to enhance their business performance efficiency and productivity.
ii. To ascertain why there is inadequate human resources in the field of information
technology to meet the needs of the banks and financial institutions and to proffer
solution to solve this critical problem.
iii. To explore the opportunity of sharing the use of information technology among consortium
of banks and other financial institutions within the country, to harmonize operational
activities and save costs among sharing institutions like we have in developed countries
and presently adopted in the inefficient and epileptic ATM management operations, by
inters-witch Nigeria limited.
Research Questions
The following are the research questions that have been identified for the purpose of the study.
i. why have banks and other financial institution been reluctant to commit more of their
resources to acquire up to date and relevant technological equipment‟s to improve their
efficiency and productivity?
ii. Trained personnel with sufficient expertise in the operations and management of
information technology have been inadequate to support the operation and efficiency of
banking and other financial institution, what can be done to solve this problem of
insufficient manpower in information technology for the financial system?
iii. why have banks and other financial institution in Nigeria not considered forming
themselves into consortium for the purpose of sharing information technology
facilities(as it is done in developed countries)to improve efficiency and save cost?
Research Hypotheses
The following hypotheses were formulated.
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1. Ho: There has been no significant commitment on the part of the bank and other
financial institutions, in the acquisition of up-to-date technological equipment.
Hi: There is a significant commitment on the part of the bank and other financial
institutions, in the acquisition of up-to-date technological equipment.
2. Ho: The inadequacy of trained personnel in the operation and management of
information technology has a negative impact on the banking industry in Nigeria.
Hi: The adequacy of trained personnel in the operation and management of information
technology has a positive impact on the banking industry in Nigeria.
3. Ho: The banks and other financial institutions in Nigeria are not willing to form
consortium/partnership to enhance their productivity of service and reduce the cost of
production.
Hi: The banks and other financial institutions in Nigeria are willing to form
consortium/partnership to enhance their productivity of service and reduce the cost of
production.
LITERATURE REVIEW
THE MORDERN APPLICATION OF INFORMATION TECHNOLOGY.
The phrase “Information Technologies” is used to encompass a range of new technologies and
their applications including all aspects of the use of computers, microelectronic devices satellite
and communication technologies (common wealth secretariat 1991) Adebowale (2005) explain
information technology “as a term which encompasses the conglomeration of the application of
technologies information handing, while Adeoti (2000) simply defined Information Technology
“as electronic based technology generally used to collect, shore, process and package
information as well as provide access to knowledge. “He further described information
technologies as the application of computers and other technologies to the acquisition,
organization, storage, retrieval and dissemination of information. Information Technologies are
about manipulating and packaging information for delivery. It is the ability for any individual to
create, access manipulate and transmit information in the form of data, text, images and voice by
the applications also imply that information technologies are restricted systems dependent upon
microelectronic based combinations of computing and telecommunication technologies.
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Etim and Matthew (2001), Information Technologies commonly discussed includes: internet,
World Wide Web (WWW), databases, CD Rom, internet, E-mail etc. Uhogu‟s (2002) paper on
the concept of paperless society was very interesting and though provoking. The arguments
centers on whether the impact of Information Technology will lead to a paperless society or not.
He concluded that we are now in an era dominated by digital information, which will continue to
be converged by analogue and digital media. He ended his own argument with a question. Will
the paperless promised handover be reached? Daniel (2007) discusses the potential impact of
digital libraries in Africa while highlighting the prospectus. This paper promotes the view of a
digital library to include electronic databases on the Internet. His worldwide web (www), CD-
Rom and proprietary services such as dialog lexis, STN, west low, into America, CDB-infotek
etc.
Ajibero, (2000) discussed the revolution in information technology and the great impact it makes
in all fields of knowledge especially in the field of library and how it helps to accomplish library
goal. Koontz and Douell (2007) highlight how the electronic revaluation affect traditional roles
of the academic library as an institution that collects and store information and make it available
to user like similar studies Akinyosoye (2000) the CD-Rom technology and its application in
university Libraries, highlighting the constraints and offering suggestions for the promotion of
CD-Rom services and also discussed on library networking in Africa in which, he identifies
computer technology, communication technologies and information technology as necessary for
the existence of library networks. He further discussed in details, experience gained by the
impact of information technology in library networks in several African countries. Formson
(2002) highlight the impact of information technology on the Botswana library, demonstrating
how tie has increased the efficiency of cataloguing process, which in turn has resulted in
increased productivity.
Daniel, (2007) study the information technology faculties and their applications in some Nigeria
research and university libraries and result indicating versatile impact of modern Information
Technologies.
The impact of CD-ROM technology application in developing countries had earlier been
discussed by Akinyosoye (2000) information technologies impact in Zambia libraries. According
to him, the impacts of information technologies have been felt in the home finance and
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commerce, the industry and in the officer. All the literature reviewed so far focused on the
impact of information technologies on libraries.
Chisenja, (2008) was however more general in his study on the role of Information Technology
in developing countries noting that the recent advances of information technologies that has
given the impacts the world wide information revolution are impressive. Stressing the impact of
information technology on the society.
Chisenja emphasizes that developing countries should be concerned about computers and
information technology in industrialized countries and increasing number of newly industrializes
nation was highlighted by Etim and Matthew (2001) they are in the areas of health-care,
manufacturing and publishing, energy conservation and environmental management. Some
economic historians assert that the impact of information technology on banking industry is
tantamount to a second industrial revolution. (Etim and Matthew (2001).
IMPACT OF INFORMATION TECHNOLOGY ON BANKING OPERATIONS.
One area Information Technology has impacted heavily on the banking industry is the mobile
cellular communication also known as global system of mobile communication (GSM) to assess
account balance. The Global boom in mobile cellular communication has been outstanding.
According to International Telecommunications Union (ITU) (2002) at the end of 1998, there
were more than 3000 million subscribers around the world up from just 1 million in 1990. It is
estimated that by the end of this decade, there will be more than a billion mobile users. Mobile
cellular already account for almost one third of all telephone connection. The likelihood is that
the number of mobile cellular subscriber will surpass conventional fixed lines during the decade
of the next millennium. Both developed and developing countries are sharing in the information
technologies revolution, in developed countries, user are flocking to mobile cellular as a
complement to existing as substitute for shortages of fixed lines. Developing countries are now
experiencing the highest level of mobile growth and it has entered into a new mass- market
phase. The magic of mobile pre-paid is that it has turned telephone services into a mass-market
commodity. Mobile has emerged as a mini-industry in its own right with 1998 services reverence
of $155 billion (International Telecommunications Union (ITU, 2002).
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FINANCIAL SERVICES IN THE NIGERIAN BANKING SYSTEM
The financial services obtainable in Nigeria banks can be seen in two broad categories. These are
retail banking and wholesale banking.
A. Retail banking
This is usually carried out by commercial banks. The services include:
I. Acceptance of deposit: Commercial bank accepts deposit from customers and keeps
them using an account. This account could be saving, current, time or fixed deposits.
They change or pay interest depending on the type of account
II. Lending of loans and overdraft: they grant short term loan to their customers based on
agreement and interest are charged on loan. They also allow customers to withdraw in
excess of their deposit referred to as overdraft.
III. Discounting of bill of exchange: they collect immature bills of exchange and pay the
bearer the face value of his money before the bill of exchange matures.
IV. Act as agent of payment: they provide services that allows the customer to pay debt,
preserve goods or services through the bank, they also transact in stock of exchange
and international money transfers.
B. Wholesale Banking
Wholesale banking is usually carried out by merchant and specialized banks. They
include financing international trade association, risk management control, corporate
banking. They also specialize in stock exchange and bills of exchange transaction.
The Nigerian Banking Industry
The structure of the Nigerian financial services industry changed drastically during the period
under review, bringing about significant changes in the market. Within the context of current
developments and with increased breadth and depth of competition, the task of identifying the
unique characteristics that will enable any bank out perform its peers is becoming more
challenging. The industry is now characterized by the following interesting dynamics:
Developing Business Models
Nigerian banks are rapidly internationalizing; a trend most visibly demonstrated by the number
of Nigerian banks opening branches across West Africa while new players, especially foreign
banks may soon emerge. Many banks have returned to the capital market to shore up their
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shareholders‟ funds beyond the required minimum level, to enable them play more actively in
the international area.
Customer Sophistication
The gradual re-emergence of the Nigerian middle class has given rise to a class of
knowledgeable and in financial customers. Their benchmarks for service quality have also
risen, aided by the intense competition among financial service providers to attract new
customers. It is no longer just sufficient to provide products, but to align these closely with
specific customer segments and their identified expectations.
Technology
In response to the demands for quick, efficient and reliable services, industry players are
increasingly deploying technology as a means of generating insights into customers‟ behavioral
patterns and preferences. Well developed outsourcing support functions (technology and
operations) are increasingly being used to provide services and manage costs (e.g. Automated
Teller Machine networks, Cards processing, Bill presentment and Payments, Software
Development, Call centre operations and Network management).
Regulation and Supervision
Regulators are also moving towards global best practices, as they gain a visibly improved
appreciation of Basle II plus Compliance. The larger and more complex the bank, the greater the
range of risks it faces, which is why at United Bank for Africa (UBA) for instance, have adopted
self-regulatory operational methods have been adopted addressing risks through a rigorous
enterprise-wide risk management framework.
However, the scope and dimension of financial services in the foreseeable future will be different
from the present, in terms of the character of players, dynamism of business models,
competitiveness, customer‟s expectations, the degree of internationalization, adjustment to
technological trends and innovations, as well as the standards of the underlying infrastructure.
UBA have positioned themselves in line with these emerging trends. Specifically, the bank is
looking beyond Ghana (the most popular destination for most Nigerian banks right now), and
consider other virgin territories in sub-Saharan Africa which hold great potential, in view of the
expected inflow of donor reconstruction funds, oil exploration funds and increased regional
trade. For some time now, the bank‟s management has been re-inventing the institution as a
dynamic, people driven, customer-focused institution and above all, as a place where customers
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are not just happy to bank, but employees (including out-sourced staff ) are happy to work with
adequate provision and implementation of the current information technology support systems.
Technology and Banks Transformation
Computers are getting more sophisticated. They have given banks a potential they could only
dream about and have given bank customers high expectations. The changes that new
technologies have brought to banking are enormous in their impact on officers, employees, and
customers of banks. Advances in technology are allowing for delivery of banking products and
services more conveniently and effectively than ever before - thus creating new bases of
competition. Rapid access to critical information and the ability to act quickly and effectively
will distinguish the successful banks of the future. The bank gains a vital competitive advantage
by having a direct marketing and account able customer service environment and new,
streamlined business processes. Consistent management and decision support systems provide
the bank that competitive edge to forge ahead in the banking marketplace. The advantages
accruing from computerization are three-directional - to the customer, to the bank and to the
employee.
a) To the customer. Banks are aware of customer's need for new services and plan to make
them available. IT has increased the level of competition and forced them to integrate the
new technologies in order to satisfy their customers. They have already developed and
implemented a certain number of solutions among them:
Self-inquiry facility: Facility for logging into specified self-inquiry terminals at the
branch to inquire and view the transactions in the account.
Remote banking: Remote terminals at the customer site connected to the respective
branch through a modem, enabling the customer to make inquiries regarding his
accounts, on-line, without having to move from his office.
Anytime banking- Anywhere banking: Installation of ATMs which offer non-stop cash
withdrawal, remittances and inquiry facilities. Networking of computerized branches
inter-city and intra-city will permit customers of these branches, when interconnected, to
transact from any of these branches.
Telebanking: A 24-hour service through which inquiries regarding balances and
transactions in the account can be made over the phone.
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Electronic Banking: This enables the bank to provide corporate or high value customers
with Graphical User Interface (GUI) software on a PC, to inquire about their financial
transactions and accounts, cash transfers, cheque book issue and inquiry on rates without
visiting the bank. Moreover, LC text and details on bills can be sent by the customer, and
the bank can download the same. The technology used to provide this service is called
electronic data interchange (EDI). It is used to transmit business transactions in
computer-readable form between organizations and individuals in a standard format.
As information is centralized and updates are available simultaneously at all places,
single-window service becomes possible, leading to effective reduction in waiting time.
b) To the bank: During the last decade, banks applied IT to a wide range of back and front
office tasks in addition to a great number of new products. The major advantages for the
bank to implement IT are:
Availability of a wide range of inquiry facilities, assisting the bank in business
development and follow-up.
Immediate replies to customer queries without reference to ledger-keeper as terminals are
provided to Managers and Chief Managers.
Automatic and prompt carrying out of standing instructions on due date and generation of
reports.
Generation of various MIS reports and periodical returns on due dates.
Fast and up-to-date information transfer enabling speedier decisions, by interconnecting
computerized branches and controlling offices.
c) To the employees. IT has increased their productivity through the followings:
Accurate computing of cumbersome and time-consuming jobs such as balancing and
interest calculations on due dates.
Automatic printing of covering schedules, deposit receipts, pass book / pass sheet, freeing
the staff from performing these time-consuming jobs, and enabling them to give more
attention to the needs of the customer.
Signature retrieval facility, assisting in verification of transactions, sitting at their own
terminal.
Avoidance of duplication of entries due to existence of single-point data entry.
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A search of the banking literature reveals that banks are moving rapidly to take advantage
of recent and new customer service and cost reduction opportunities that new
technologies offer. A sampling is in the table below:
Internet: Riding the tiger. The Internet is rapidly becoming the information superhighway of a
global electronic marketplace. The rising commercial interests in the Internet are especially
evident in "frontend" applications such as electronic catalogs, yellow pages, storefronts, malls,
and customer support centers. All these applications are based on the World Wide Web (WWW)
-- the fastest growing segment of the Internet. Although "back-end" applications such as
electronic data interchange (EDI) are equally important, their adoption has not been as rapid.
One major concern is security: the Internet is generally perceived as not secure enough for
transmitting sensitive data such as payments. Upon a closer look, however, this view is not
warranted, since technologies such as public key encryption and firewalls address essential
security concerns. Moreover, such technologies are already available. The only remaining barrier
is the lack of real world users of those technologies.
Technology Current Use Use in Next 3 Years.
Infrastructure
PC Networks: Tellers 48% 80%
Sales Tracking Software 44% 80%
Relational Data Base 36% 76%
Automated Credit Scoring 8% 48%
E-mail 60% 95%
Equipment Management Software 33% 57%
Imaging Checks / Statements 12% 72%
Imaging Documents 7% 45%
Delivery Systems
Internet Banking Home Page 3% 25%
Internet Electronic Office 1% 15%
Telebanking 56% 88%
Smart Cards Debit Cards 35% 70%
Electronic Banking 12% 76%
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How to survive. The key to survival is customer service. Customer loyalty will be determined
by convenient and innovative delivery of products and personalized services. In the '70's and
'80's, banks were marketing to a generation raised on old style banking: personal interaction at a
banking office. That generation was disdainful of "impersonal" service and afraid of computers.
Convenience was having a "branch" in one's neighborhood. Today, personal service and
convenience are still the critical factors in the banking relationship, but they are defined
differently. Consumers still want to bank with a financial institution they "know," and one who
"knows" them, but they do not necessarily want to go to the bank. They are not afraid of
computers and technology; they embrace them. Convenience is doing their banking when they
want, and where they want. They are now comfortable with personal computers and other
electronic devices. They expect fast, efficient, and accurate service And the only way to cost
effectively provide the instant, quality service that customers demand, and that the competition
provides, is through intensive use of the most advanced information technologies and through
good people trained in the use of these technologies. For all these reasons, the banks delivery
systems are completely changing.
The new Delivery Systems. The increasing cost of building brick-and-mortar branches,
decreasing cost of computers, high delivery costs and slow revenue growth force a relook at the
conventional delivery systems. Moreover, growing comfort of technology usage by the customer
is rapidly fostering usage of non-branch channels for routine transactions.
The new strategy changes the focus of the branch from being a high cost transaction center to a
provider of a wide range of services like Tele banking, customer service kiosks, ATMs, and
remote electronic banking.
New Marketing Opportunities. As the new technology is so expensive banks need to use the
new systems to do more than deliver information and basic services. Banks need the ability to
also sell insurance and investment products to get a better return on this investment. Telephone
banking can bring financial services to the home or office, especially if they are affordable
screen phones. By noticing how much interest the customer expresses, the bank can market stock
quotes and insurance quotes. Interactive videos are new technology that banks can make
available to the customer to maintain personal contact while still lowering the expense of
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delivery service. With an interactive video an expert employee is not needed in each branch.
Complex life insurance products, open brokerage accounts, customized product illustrations can
be widely available where needed. The interactive videos will be cost effective expertise. The
internet is a medium to allow banks to offer products to customers outside the normal customer
base of a branch. Banks are aware of the customer's need for these services and plan to make
them available before other sources do.
EVOLUTION OF ELECTRONIC BANKING IN NIGERIA
Electronic banking can be described as the act of carrying out the business transaction of a bank
using electronic devices. Examples of electronic devices that are used include Computer
Systems, Global System for Mobile Communication (GSM) phones, Automated Teller machine
(ATM), Internet facilities, Optical Character Recognition (OCR), Smart Cards, etc. E-banking is
about using the infrastructure of the digital age to create opportunities, both local and global. E-
banking enables the dramatic lowering of transaction costs, and the creation of new types of
banking opportunities that address the barriers of time and distance. Banking opportunities are
local, global and immediate in e-banking.
The evolution of e-banking dates back to 1986 when the banking sector in Nigeria was
deregulated. The result of this deregulation brought far-reaching transformation through
computerization and improved bank service delivery. Competition with new products became
keen within the system while customer sophistication posed a challenge for them, hence the
reengineering of processing techniques of business activities encourage the automation of
financial services especially among new generation of commercial and merchant banks.
In effect, the emergence of a crop of new generation banks following the liberalization of bank
licensing motivated the introduction of high technology in the Nigerian banking system.
Some of them considered the ‚arm-chair‛ brick and mortar approach to banking of the old
generation banks as having no regard for the customers and therefore an identified weakness they
can exploit on.
These new banks discovered that the evolving technology at the global level could be
applied to greater advantage in the Nigerian financial landscape. That indeed paid off for some of
them, as customers, who ordinarily would have found it almost impossible to leave the banks
they were already familiar with for a new one that was yet to find its feet, quickly noticed the
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difference in the available products and service delivery systems of the two categories of banks
(old and new generation). The customers without hesitation opted to pay for the extra values that
would satisfy the extra-personalized product services and the attendant personalized marketing.
They therefore demonstrated their preparedness to switch from one bank to the other, the old ties
notwithstanding; as they identified gaps in the service delivery of their original banks. E-banking
makes use of certain identification features before access/permission is granted by the bank to its
users. A widely used identification feature today is the use of personal identification number
(PIN). These are usually a series of codes which is only known to the customers who owns the
account or anyone else the person(s) wished to have access to his account. Permission to perform
financial transactions is immediately granted by the banks once this PIN is quoted.
Electronic banking is also known as electronic fund transfer which use computer and other paper
transaction (Neil, 1998) Electronic banking refers to electronic connection between banks and
their custom in order to prepare, manage and control financial transaction.
Ovia (2002) state that electronic banking is the delivery of banking service and products through
the use of electronic device to customers irrespective of place, time and distance.
There are various electronic banking services offered by banks in Nigeria. These include,
Automated Teller Machine (ATM)
Telephone banking
Personal computer
Internet banking
Television banking
AUTOMATED TELLER MACHINE (ATM)
An automated teller machine is a machine built into a well with a computerized system
connected to the bank that is providing it.
The automated teller machine tellers are self service terminals located at viable locations
principally to perform the function of a cashier and customer services during and after working
hour. It performs the commonest banking services required by the average customer with the use
of electronically encoded cards and personal security access modes known to account holder.
The machine enables customer‟s access to banking services 24 hours a day and 7 day in a work.
The ATM is popularly referred to as a cash-dispensing machine.ATM enables cardholders to
withdraw cash, make deposits or transfer funds between accounts, To use the ATM, a smart card
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is inserted and a pin(personal identification number)is entered to give the customer access to
cash.
The Card System
Cards are key tool electronic banking it provides authentication and access to banking services.
The most common card in Nigeria is the smart card.
A smart card is a plastic card with an embedded microchip with an interface that allows it to
receive power and communicate with suitable terminals. The smart card contains one or more
integrated circuit ships supporting multiple applications. Smart cards offer a variety of service
depending on the requirement of the issuer. A smart card can be any of the following:
a. Credit Card: these are card that give credit to the holders for a specified period of time
an amount of money .the holder does not need to have money in his/her account to
qualify for a credit card and bank charge interest on such credit.
b. Charge Card: the charge card is similar to credit cards. It allows cardholder to purchase
goods and services up to a pre-agreed limit.
c. Debit Card: Debit card allow a cardholder to purchase goods and services to whatever
extent he wants as long as his bank balances cover the amount.
Smart cards are also known as electronic purse. When used as electronic purse, money values are
transferred to the card which diminishes as the card is used at designated merchant terminals.
TELEPHONE BANKING
Telephone banking is a new initiative in the Nigerian banking industry. It entails the provision of
basic banking services to the customer through the telephone. It enables customers to access
banking services through the telephone anywhere, anytime and in whatever manner they want.
Telephone links are used for direct connection either as private network such as direct dial in
using leased or dedicated telephone lines or public networks. Customers are able to dial into the
banks system through an access code and then enquire for balance, transact or request for a
statement to be sent by fax to him/her.
The improved telecommunication infrastructures and the increasing usage of personal computers
in homes and office have allowed banks to take the initiative of giving customers access to their
system.
The PC banking is a form of online banking that enable customers to execute bank transactions
from; a „PC via a modem. In most PC banking venture, the banks offer customer a proprietary
18
financial software program that allow customers to perform financial transaction from his or her
home computer.
The customers dial into the bank with his or her modem and then download data and run
programs that are resident on the customer computer. Currently most banks offer PC banking
system that allow customers obtain account balance and credit statements, pay bill and transfer
funds between the account.
INTERNET BANKING
Internet banking is an outgrowth of personal computer banking.
Internet banking uses the internet as its delivery channel.
The internet enables electronic banking through connection to the bank for a wide variety of
services. At the basic level, internet banking means the setting up of a webpage by a bank to give
information about its product and services. with the internet customers are able to access their
account from a browser software that runs internet banking programs resident on the bank‟s
world wide web server.Net banker (2003) define “true internet banking as one that provides
account balances and some transactional capabilities to retail customer over the world wide web.
The internet banking is also known as virtual banking.
AUTOMATED CHEQUE CLEARING SYSTEM
A cheque is a paper based payment instrument whose usages are still gaining ascendancy. The
Automation focus on this instrument is to reduce the number of clearing days and improve on
security arrangement is the course of settlement and collection. For example, in Nigeria the
central bank of Nigeria (CBN) has just been embarked upon online clearing and Nigeria has
signified interest and signed path to this project (Johnson, 2005).
IMPACT OF IT IN NIGERIA’S BANKING INDUSTRY
The following include some of the major impacts of information technology in Nigeria‟s banking
system:
GSM BANKING
This mode of e-banking makes use of the Global System for Mobile communication (GSM)
phones as the primary electronic device. GSM has improved the operational efficiency of many
banks in the country. The mobile banking services basically allow customers to operate their
accounts with the operating banks from mobile phones to a large extent as long as their phones
19
and network support SMS (short messaging service). The user could be able to check account
balance up to his two last transactions.
AUTOMATED TELLER MACHINES (ATMs)
Worldwide, the use of paper cash still remains the most widely used and acceptant able means of
settling financial transactions and obligations. However, the proportion of cash transactions is
increasingly on the decline, especially in advanced economics (Amedu, 2005). In USA, where
the use of cash is still prominent, compared with European countries, it represents 50 percent or
more of the total transactions of course; cash is a non-electronic payment method. However, the
physical carriage of cash as well as the visit to the bank branches is being reduced by the
introduction of an electronic device,
ATMs are a computer-controlled device that dispenses cash, and may provide other services to
customers who identify themselves with a Personal Identification Number. ATM dispenses cash
at any time of the day and night, unlike the traditional method where customers have to queue for
a very long time in order to withdraw cash or transfer funds.
ADOPTION OF THE ICT INTEGRATED PROJECT
Banks in Nigeria have successfully completed information and communication technology
integration project which enables them to communicate easily across as many employees as
possible within and outside the country to deliver radically-enhanced customer-centric services.
FUNDS TRANSFER
Customers can now electronically transfer funds across the globe without any problem or delay
as compared to the traditional method before the advent of information technology when funds
are seriously delayed before they are delivered to the recipients.
ON-LINE BANKING
With the aid of information technology, online banking provides the opportunity of paying bills
and performing transactions of any kind electronically. Electronic payments can be credited or
debited the same day. Customers can make payments for goods or services without necessarily
coming in contact with physical cash and running the risk of handling a large amount of money.
ELECTRONIC MAIL
Information technology has given rise to electronic mail which improves communication
between individuals, external parties and the bank within or across various geographical regions
20
or boundaries. The availability of online information provides bankers and customers with a
powerful vehicle for research.
BANKERS AUTOMATED CLEARING SERVICES
This involves the use of Magnetic Ink Character Reader (MICR) for cheque processing. It is
capable of encoding, reading and sorting cheques. Also, request for cheque books or purchase of
draft can be made and granted via electronic devices that are web-enabled.
Summarily, the impact of information technology in banking industries in Nigeria cannot be
over-emphasized. It has provided flexible and convenient services to customers. Most current e-
banking applications make use of the Internet which allows customers to obtain current account
balances at any time. Customers do not need to bother themselves once money have been
deposited or withdrawn from their accounts as most banks in Nigeria employs the use of short
message service (SMS) to intimate customers of their balances immediately the transaction is
performed
CATEGORIES OF INFORMATION TECHNOLOGIES
The Information Technology‟s found in any society today can be divided into five categories.
Computers, storage media, database, software and communications. Computers are hardware
having configurations that consist of input device, output device and memory and storage device.
Other paraphernalia of computer system include Cathode Ray Tube (CRT) or screens mouse,
keyboard, speakers, scanners and UPS. Computer also exists in various types: mainframe
minicomputers, microcomputers. Laptop and notebook storage media are also in various types.
They include: internal, backing and archival, magnetic media, tape devices, magnetic, risks,
optical media and microform.
Database is just a collection of file of information but organized in such a way that the same
information can be accessed from different computer in different locations. Closely allied to
database, is a data dictionary. A data items used in a computer system, with details of their size
and where they are stored and used. This help to prevent anomalies and duplication of
information. Databases are also in types, local, corporate and public / subscribes. Software is the
most important part of any information technology system. It is a tool, which enables the
effective use of the computer. Information technologies are mixtures of solid-state technologies
(hardware) and embedded software. Software is a set of instruction with which the computer can
21
operate and each individual‟s set of instruments is called a program. Types of software include
system software, application software and general-purpose software.
DEVELOPMENT OF INFORMATION SUPER HIGH WAY AND INTER-
CONNECTIVITY
With advances in technology and information/communications systems, the banking industry
will surely devote attention and resources to the acquisition of modern communications gadget to
evidence intra-connectivity and inter-connectivity.
The inter-connectivity system will enable banks to move funds around quickly and surely.
Besides, it will assist in packaging and delivering the range and diversity of product that would
be on demand now and in future.
ICT AND PRODUCTIVITY IN THE BANKING INDUSTRY
The internet offers an incredible and unprecedented communication and transactions to the banks
connected to the Web. Most banks in Nigeria are now internet connected, advancing their
objectives of creating new ideas, new product lines and expanding markets. Starting as a new
medium for communications and information, the internet has quickly metamorphosed into a
lace of learning and transactions. Accordingly, its initial impact in the banking industry in
Nigeria has been on increasing productivity. (Ekanem, 2003).
Ishaq (2002) states that the full promise of the digital revolution lies in the blossoming of a
creativity revolution world wide”. The development of new creative capacities should be the
challenge of all personnel and banking organizations. With universal access and an internet –
literate work force, the digital revolution can be the engine of growth in the banking industry and
the economy as a whole. In the industry, the efficiency and ingenuity that separate them from
their counterparts in the advanced nations of the world are being bridged. It is advisable that all
banks should be Internet Connected. This vital link results in a new and potent avenue for
exchange of ideas, expedition of transaction and foster world-wide collaboration in the industry.
22
RESEARCH METHODOLOGY
Method of Data Analysis
In the course of this study, the entire questionnaire will be collected and analyzed based on
simple percentages. After all these, the hypothesis formulated will be tested with the chi-square
and the regression distribution method, which is an estimation of hypothesis testing normally
used when comparing the observed distribution of data with expected distribution.
Analysis of the Primary Data through the Research instrument
BANK Total questionnaire distributed Total questionnaire received
Eco Bank Plc.
Diamond bank Plc.
Access bank Plc.
First bank Plc.
United Bank for Africa
20
20
20
20
20
20
17
18
20
16
Total 5 100 91
Source: Field survey, 2013
Section A: Distribution of Research Question According to Demographic Characteristics of the Respondents
Distribution of Respondents According to Gender
GENDER
Frequency Percent Valid Percent Cumulative Percent
Valid Male 50 54.9 54.9 54.9
Female 41 45.1 45.1 100.0
Total 91 100.0 100.0
Source: Field survey, 2013
Table one above depicts the distribution of respondent according to gender. About 50
respondents representing 54.9% are male respondents, while the remaining 41 of the total
respondent representing 45.1% are female respondents. This is a fact that the activities
performance in the bank is both male and female job. Also the information is represented on a
pie chart to indicate the gender or sex structure in the banking industry.
23
Pictorial representation of the Gender Structure in the Banking Industry
Table 2: Distribution of Respondents According to Age
AGE
Frequency Percent Valid Percent Cumulative Percent
Valid 18 - 25 years 35 38.5 38.5 38.5
26 - 35 years 38 41.8 41.8 80.2
36 - 45 years 18 19.8 19.8 100.0
Total 91 100.0 100.0
Source: Field survey, 2013
Table two shows the distribution of respondents according to age. A majority of 38 respondents
of the total population representing 41.8% fall between 26-30 years, followed by 18 respondents
representing 19.8% fall above 46 years. The remaining 35 respondents representing 38.5% are
above 26 years. This is also depicted on the below bar chart.
24
Age Distribution of the Respondents
Table3: Distribution of Respondents according to Educational/Qualification
EDUCATIONAL.BACKGROUND
Frequency Percent Valid Percent Cumulative Percent
Valid Post -Primary Education 6 6.6 6.6 6.6
OND/NCE 13 14.3 14.3 20.9
BSC. 54 59.3 59.3 80.2
Others 18 19.8 19.8 100.0
Total 91 100.0 100.0
Source: Field survey, 2013
Table three shows the distribution of respondents according to educational qualification.
Indicating that about 6 respondents representing 6.6% are post-primary education (i.e. W.A.E.C
holders etc), the majority of 55 respondents representing 60.4% are degree holders 12
25
respondents representing 13.2% are ordinary national diploma holders(OND/NCE), while the
remaining 18 respondents representing19.8%are professional courses(i.e. CIPM,
ICAN,MBS,PHD holder). It may suffice to say that all respondents are educated in vary degrees.
With this analysis the pictorial representation is analyzed below with the aid of a pie chart.
Educational Distribution of the respondents as obtained from field survey.
Table 4: Distribution of Respondents according to Staff position in the
Bank Position Held in the Bank
Frequency Percent Valid Percent Cumulative Percent
Valid Bank Officer 30 33.0 33.0 33.0
Relationship Officer 25 27.5 27.5 60.4
Account Manager 30 33.0 33.0 93.4
Others 6 6.6 6.6 100.0
Total 91 100.0 100.0
Source: Field survey, 2013
Table four also depicts the distribution of respondents according to the position held in the bank
by workers. The table further explains that about 30 respondents representing 33% have worked
26
with the banks as banking officers, 6 of the total respondents which constitute the minor workers,
representing 6 (6.6%) have worked with the bank as other positions not stated above(cash
supervisors ,executive trainee etc.) , 30 respondents representing 33.0% have also work as
account manager. While 25 represents the relationship officer with a percentage of 27.5%. This
is also represented on the on a bar chart.
Table Nine
Table 5: Distribution of Respondents according to Length of Services
Length of Service
Frequency Percent Valid Percent Cumulative Percent
Valid Below 5years 30 33.0 33.0 33.0
6 - 10 years 25 27.5 27.5 60.4
11 - 15years 30 33.0 33.0 93.4
16 years and above 6 6.6 6.6 100.0
Total 91 100.0 100.0
Source: Field survey, 2013
Table five also depicts the distribution of respondents according to length of services. The table
further explains that about 30 of the total respondents which constitute the majority representing
33% have worked with the banks between 5years and below, 25 respondents representing 27.5%
have worked with the banks from 6-10years, 30 respondents representing 33% have also work
with them between 11- l5years, while the remaining 6 respondents representing 6.6% have
worked for 16 years and above. The graphical representation of the obtained information is
27
represented below.
Section Bi: Distribution of Research Questions on Financial commitment of Banks
management on information communication Technology.
CODE: SA=4, A = 3, D = 2 AND SD = 1
This section of the research experiment tends to relate those questions in the instrument
(questionnaire) on the commitment of banks management to obtain more resources of
information communication technology to enhance efficiency and productivity. However,
hypotheses one relates with these questions and will be tested based on the result of this analysis.
28
S/N RESPONSES SA % A % D % SD %
Q7
Q8
Q9
Q10
Q11
You are aware of the existence and relevance of information technology in
the banking system in Nigeria?
Information technology improved customer satisfaction in terms of effective
service delivery.
How effective is information technology in terms of prompt service
delivery?
Information technology has a great impact on the growth of the banks.
Adoption of information technology by banks has reduced customer‟s
service time-frame in the last decade.
50
31
30
60
70
54.9
34.1
32.9
65.9
76.9
30
55
30
25
20
32.9
60.4
32.9
27.5
21.9
10
3
20
4
1
10.9
3.29
21.9
4.4
1.1
1
2
21
2
0
1.1
2.19
23.1
2.19
0
Source: Field survey, 2013
Chi-Square Tests
Value df
Asymp. Sig. (2-
sided)
Pearson Chi-Square 110 12 .000
Likelihood Ratio 101.648 12 .000
Linear-by-Linear Association 13.758 1 .000
N of Valid Cases 91
a. 5 cells (25.0%) have expected count less than 5. The
minimum expected count is 3.16.
Based on the report of the chi-square analysis done through SPSS procedure, however, before the
hypothesis related to the objectives of this research is tested, the derived evidence will be
specified and analysis will be done through the non- parametric test of Chi-square;
X2
calculated = 110
Probability Value (p- Value) = 0.000
Degree of freedom (d.f) = 12
X2 table = 21.03
Level of Significance (α) = 0.005 or 5%
29
The X2 test is an important extension of hypothesis testing and is use when it is wish to compare
an actual/observed distribution with a hypothesized or expected distribution.
From the table above, the chi-square is calculated based on the following assumption:
Confidence interval of 95%
Significance level of 5%
Degree of freedom (n-1) (m-1)
Where n = number of rows
m = number of columns
:. Degree of freedom = (n-1) (m-1)
The result of the research evidence derived and stated above shows that the X2
calculated 110>
X2 table =21.03, however this result is not evident enough to reject or accept the null hypothesis.
The further test by the probability distribution P-value (0.00) also confirmed that the research
hypothesis (H0) should be rejected at 5% level of significance based on the fact that p-value
0.000≤ 0.005(α). Therefore the null hypothesis Ho (research hypothesis) will be rejected while
will accept the alternative hypothesis that there is a significant commitment on the part of the
bank and other financial institutions, in the acquisition of up-to-date technological equipment.
Section Bii: Distribution of Research Questions on whether inadequacy of trained personnel
in the operation and management of information technology has a negative impact on the
banking industry in Nigeria.
CODE: SA=4, A = 3, D = 2 AND SD = 1
This section of the research experiment tends to relate those questions in the instrument
(questionnaire) on the perspective inadequacy of trained personnel in the operation and
management of information technology and it effect on the operation in the banking industry in
Nigeria. However, hypotheses two relates with these questions and will be tested based on the
result of this analysis.
S/N RESPONSES SA % A % D % SD %
Q12
Q13
The developments of trained personnel contribute to service delivery in the
banking industry.
Adequate and up to date information technology through training of banks
staff will enhance cost reduction, time management and output performance.
Competitive advantages are possible through training of staff on positive
55
40
60.4
44
25
30
27.5
33
5
10
5.49
11
6
5
6.6
5.49
30
Q14
Q15
Q16
application of information communication Technology.
Training and development of employees on Information Communication
Technology are sources of long term benefit, skill and knowledge resources
to performing banks.
Performance based Banks in Nigeria embrace training of various staff on
handling of information communication technology to promote and enhance
the growth of their business.
60
40
20
65.9
44
21.9
20
35
25
21.9
38.5
27.5
6
9
20
6.6
10
21.9
5
7
26
5.49
7.69
28.6
Source: Field survey, 2013
Chi-Square Tests
Value df
Asymp. Sig. (2-
sided)
Pearson Chi-Square 89.668a 12 .000
Likelihood Ratio 90.158 12 .000
Linear-by-Linear Association 37.585 1 .000
N of Valid Cases 91
a. 0 cells (.0%) have expected count less than 5. The
minimum expected count is 8.90.
Analyzing the report of the chi-square analysis done through SPSS procedure, however, before
the hypothesis related to the objectives of this research is tested, the derived evidence will be
specified and analysis will be done through the non- parametric test.
X2
calculated = 89.668
Probability Value (p- Value) = 0.000
Degree of freedom (d.f) = 12
X2 table = 21.03
Level of Significance (α) = 0.005 or 5%
The X2 test is an important extension of hypothesis testing and is use when it is wish to compare
an actual/observed distribution with a hypothesized or expected distribution.
From the table above, the chi-square is calculated based on the following assumption:
Confidence interval of 95%
31
Significance level of 5%
Degree of freedom (n-1) (m-1)
Where n = number of rows
m = number of columns
:. Degree of freedom = (n-1) (m-1)
The result of the research evidence derived and stated above shows that the X2
calculated
89.668> X2 table =21.03, however this result is not evident enough to reject or accept the null
hypothesis. The further test by the probability distribution P-value (0.00) also confirmed that the
research hypothesis (H0) should be rejected at 5% level of significance based on the fact that p-
value 0.000≤ 0.005(α). Therefore the null hypothesis Ho (research hypothesis) will be rejected
while will accept the alternative hypothesis that: The adequacy of trained personnel in the
operation and management of information technology has a positive impact on the banking
industry in Nigeria.
ANALYSIS OF THE SECONDARY DATA
In order to verify the relationship that exists between the application of information and
technology on the business growth in the banking industry in Nigeria. Some variables were used
to address the research problems, these include; Profit after tax, total asset and financial
commitment on information communication Technology on the part of these banks. These
variables were identified sourced from the banks‟ annual and financial reports among others.
Model Specification and Definition
The research trend is based on one model structure in relation to the third hypothesis specified in
the previous chapter. However, variables that capture bank5ing business growth and information
communication technology were used to design the model. The model is design in pooled form,
since it tends to use cross sectional data from various banks from year 2001 - 2011.
Profit after Tax = f (Total Asset, Information Communication Technology)
PATit = f (TAit, ICTit) ……………………………eq1
32
The econometric model becomes;
PATit = 0 + 1TAit + 2 ICTit +Uit
Where;
PATit = Profit after tax of the Banks per period
TAit = Total Asset of the Banks per period of time
ICTit = Information Communication Technology per period of time.
Uit = error term or disturbance effect related to the independent variables.
0 = constant term
1 - 2 = Coefficient of the independent variables ((PATit, ICTit)
A priori specification: it is expected that the independent variable should influence the dependent
variables in the model (Positive expectations in signs of the dependent variables). A priori
specification: 1 >0 2>0
33
Bank YEAR PAT TA ICT
_ACCESS 2001 77743 8027957 221456
_ACESS 2002 -55245 11342941 -323301
_ACESS 2003 556573 22582040 454221
_ACESS 2004 637473 31341507 554302
_ACESS 2005 501515 66918315 500034
_ACCESS 2006 737149 1.75E+08 1277880
_ACESS 2007 6083439 3.29E+08 1549825
_ACESS 2008 16056464 1.04E+09 2542308
_ACESS 2009 880752 6.48E+08 4207719
_ACESS 2010 12931441 7.27E+08 6078176
_ACESS 2011 13660448 9.46E+08 23186858
_DIAMOND 2001 1689618 47372580 -
_DIAMOND 2002 1478175 53063057 964694
_DIAMOND 2003 145113 59344036 2316413
_DIAMOND 2004 833498 69114931 3006526
_DIAMOND 2005 2526552 1.25E+08 3421569
_DIAMOND 2006 3849545 2.19E+08 4871024
_DIAMOND 2007 6930754 3.12E+08 6333714
_DIAMOND 2008 11822011 6.03E+08 9042512
_DIAMOND 2009 6931127 6.51E+08 12244606
_DIAMOND 2010 6522455 5.48E+08 3615396
_DIAMOND 2011 -2.2E+07 7.23E+08 2881408
_FIRST 2001 4676 212901 6169
_FIRST 2002 3979 266356 9161
_FIRST 2003 10323 320578 13312
_FIRST 2004 11096 312490 11515
_FIRST 2005 12184 377496 6239
_FIRST 2006 16053 538145 6497
_FIRST 2007 18355 762881 335
_FIRST 2008 30473 1165461 380
_FIRST 2009 35074 1667422 461
_FIRST 2010 32123 1962444 26031
_FIRST 2011 47462 2463543 14853
_UBA 2001 1183 187248 -
_UBA 2002 1361 198680 3073
_UBA 2003 2989 200995 8680
_UBA 2004 4185 208806 8437
_UBA 2005 4653 248928 8490
_UBA 2006 11468 851241 18808
_UBA 2007 19831 1102348 24590
_UBA 2008 40002 1520091 34667
_UBA 2009 12889 1400879 42310
34
SOURCES: Annual Reports of the five Banks with investment on ICT (software and hardware, office equipment etc.)
Estimation Techniques
The study examines the application of information and technology on the business growth in the
banking system in Nigeria. As the efforts of this research is to achieve some clearer sets of
objectives on the research topic. The part of this study makes use of econometrics tools and
essentially regression techniques on the time series data in analysing the research problem. For
the purpose of this section, multiple regression analysis was used in relations to the hypotheses
formulated.
Also, data was analyzed using quantitative approach. The quantitative analysis involves the use
of panel regression method. Panel data was developed and used for the study as it increases
efficiency by combining time series and cross-section data. Panel data involves the pooling
observations on a cross section of units over several time periods. Furthermore, panel data
facilitates identification of effects that cannot be detected using purely cross- section or time
series data; to reveal the relationship between information communication technology and the
growth in the banking system in Nigeria.
_UBA 2010 -2167 1432632 5807
_UBA 2011 16385 1655465 5855
_ECO 2001 716371 23680193 -
_ECO 2002 553725 24071779 12081
_ECO 2003 816815 27313810 41361
_ECO 2004 894439 37642066 1154105
_ECO 2005 1668174 67652618 1486422
_ECO 2006 3559 132092 2468245
_ECO 2007 7450 311396 2008430
_ECO 2008 -5 432466 1916
_ECO 2009 4588 355662 4791
_ECO 2010 1619 454239 4935
_ECO 2011 -2291 1102027 10322
35
Data presentation
Analysis of Regression Outcome
Dependent Variable: PAT?
Method: Pooled Least Squares
Date: 02/25/13 Time: 03:01
Sample: 2001 2011
Included observations: 11
Number of cross-sections used: 5
Total panel (balanced) observations: 55 Variable Coefficient Std. Error t-Statistic Prob.
C 2005.298 0.444292 4513.470 0.0000
TA? 7.89E-08 9.03E-08 2.873685 0.3863
ICT? 5.87E-09 1.70E-09 3.463624 0.0011
R-squared 0.971111 Mean dependent var 2006.000
Adjusted R-squared 0.166231 S.D. dependent var 3.191424
S.E. of regression 2.914119 Sum squared reside 441.5887
Log likelihood -135.3254 F-statistic 6.383072
Durbin-Watson stat 1.8226161 Prob(F-statistic) 0.003319
SOURCES: Annual Reports of the five Banks with investment on ICT (software and hardware, office equipment etc.)
Interpretation and Discussion of Regression Outcome
This model shows the relationship between; Profit after Tax (PAT), Total Asset (TA) and
Information Communication Technology (ICT). The coefficients of the variables in the estimate
are positively related to the profit after tax of the selected banks with its constant term.
In assessing the coefficient of the pool variables from the various banks, the result is positive;
this indicates that there is positive relationship between growths of these banks (PAT) through
the vast uses of Information communication Technology during the period under review.
The co-efficient of determination (R2) shows that the regression equation does gives a good fit to
the observed data since it is able to explain only 0.971111 or 97.1111% of total variation in
profit after tax.
The F* – statistics 6.383072 when compared with the F-prob value of 0.003319 shows that the
model is significant, it further justifies that the explanatory variables; investment on information
36
communication technology and total assets are able to justify the trend in return on assets. Thus,
the hypothesis of a significant relationship between the two regressors and the dependent
variable Profit after tax is validated.
When subjected to further test using t -ratio, the result, further confirm that all the coefficients
are significant at 5% level of significance. This further justify that the model is unbiased and
could predict the influence of total asset and investment on information communication
technology on profit after tax of the bank which is a proxy of bank growth.
Durbin Watson Statistics (D-W) is 1.826161 and this shows that there is positive autocorrelation
among the values in the residual model. It implies that there is Serial correlation. The evidence of
this analysis implies that there is significant relationship between Banks‟ growths (Profit after
tax) and the application of information communication technology (ICT) to acquire more assets
during the period of this research review.
With this, the third hypothesis is validated that banks and other financial institutions in Nigeria
are willing to form consortium/partnership to enhance their productivity of service and reduce
the cost of production.
Findings and Implications
There are indeed no doubts that majority of organizations including the banks have taken the
advantage of IT to enhance their operations. Today most of them have website on the Internet in
order to extend their services globally, provide executive services and promote quality of service
delivery. Driven by their ambitious aspirations to dominate the African financial services
landscape, and under the leadership of a dynamic and visionary management team through
information technology, Nigerian banks has been rapidly transformed from being just a bank to a
one-stop-shop financial solutions provider. As the economies of Nigeria and Africa continues to
37
improve, following the established path of other emerging markets; that is, increased political
stability, improved government finances, growing domestic consumer demand, high commodity
prices and significant improvement in other economic indicators. The finding in this research
relate to the various objectives of information communication technology in enhancing banking
growth.
Summary of Findings
This research work focuses on the application of information technologies on business
growth in the banking industry in Nigeria. The uses of information communication technology in
banks have served a lot of purposes; most functions done on the bases of manual methods are
fast track, customers are well served, bank staff and customers used lesser time in processing and
receive an end use of a particular bank services. Moreover, application of information
communication technology enhances bank job to become more professional, global, and less
tedious and less time consuming.
Based on the report of these research findings; it has shown that through the application of
information communication technologies, various advantages have been raised ranging from
enhancement of skills of bank‟s workers to compile with information telecommunication age;
most banks‟ staff is well ground on the uses of information telecommunication to speed up
transaction which further reduce operating cost. Most banks used in this research apply
information communication technology with the uses of advance software that improve service
delivery, this is noticeable from the data collected on ICT from United Bank for Africa, First
Bank, Access Bank and ECOBANK that include both hardware and software (intangible asset)
cost on the provision of information communication telecommunication to enhance service
delivery in the banking firm.
38
Going through the financial reports of the five banks used and based on the analysis, it was found
out that bulk of the staff training the banking firms engage in per financial year is based on the
effective uses of information communication technology to enhance the development of the
bank.
More so, at present, based on the application of information communication technology and the
monetary guidelines of the Central Bank of Nigeria; all commercial bank are interconnected
through information communication technology whereby client and various banks both local
Nigerian Banks and international banks can engage in interconnectivity With the uses of
information communication technology making the banking industry an effective global
business. Hence, other findings provided to support this research by the researcher are listed
below;
I. It as being observed in this study that banks are not willing to invest more in the
upgrading of information communication technology and the main crop of their profit is
form the use of technological gargets
II. Information Communication Technology has impact in building the business engages in
by the banking industry.
III. Technology acquisition of information communication technology has brought about
expected improvement to the business growth of the banking business and enhances
investment, reduces time schedule by clients.
IV. The finding also support that there has been an improvement on service delivery to the
customers as a result of the technological acquisition
39
V. There has been increased competition and reduction of work load as a result of
technology acquisition
VI. That information technology makes work easier and faster.
VII. Lastly, there is a significant relationship between information technology and
productivity.
Conclusions
The significant relationship of information technology is an extremely complex one. The
discussion in this study is necessarily limited in scope and depth. It however provides the reader
with a basic understanding of the research work associated with developing and using
information system to enhance banking operation. Investment in information technology
[computer software and systems, training and telecommunication] may not appear in capital
budget, but for financial institution they are much more important than outlays for plant and
equipment. An efficient information system is a valuables asset for any company, especially if it
allows the company to offer a special product or services to its customer. Therefore outlays for
information technology deservers careful financial analyses to improve the banking firms and
economic development
Recommendations
Having drawn the findings and concluding on the research topic, the following are the opinions
of the researcher as recommendations to the study:
I. It is recommended that the central bank of Nigeria being the apex regulatory bank should
compel banks and other financial institution to invest a reasonable percentage out of the
40
proportion of the profit made, because it has being proved that banks and other financial
institution are not investing sufficiently into information communication technology.
II. On recognition of the tremendous impacts of information communication technology in
any organization setting, more efforts should be made by both employees and the
managements to observe that information communication technology is used for positive
economic activities and not for fraudulent activities.
III. Technology process of Information Communication Technology (ICT) should be
improved in-line with adequate skill personnel with those that understand the etiquettes
of information communication technology and could link the behavior of individual and
team in achieving desire results along with the organizational goal and economic
objectives.
IV. The arrangement of the company‟s resources is very important and it should be done in a
way that it will be easy for very departments in the organization to be able to
communicate in an effective format and also able to interchange resources within and
outside the organization with less time impact and quick procedures through high level
information communication technology.
V. The organization culture should be communicated and interrelated in a way that
information communication technology will have impact in creating Management style
whereby organization competitive edge are obtained and customer or clients services
satisfaction are delivered on time.
VI. Banks in Nigeria should use more of advance information communication technology
systems whereby services rendering will be at the fingertips of the customer such as the
41
mobile banking, phone banking communication system, internet banking and advance
electronic banking system which will reduce time, aid productivity and provide economic
values at large.
VII. Conclusively, there should be a significant relationship between information technology
and productivity because using the right technology (i.e. computers, software and
telecommunication) will bring about best productivity of an organization most especially
the banks.
42
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