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Page 1: 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

[email protected]

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

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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

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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

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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

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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

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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.

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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.

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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.

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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

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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

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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

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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.

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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%

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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

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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%

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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

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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

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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

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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

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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

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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

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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.

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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

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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

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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

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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.

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42

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