Full Project – Impact of information and communication technology (ICT) on business performances

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CHAPTER ONE: INTRODUCTION

• Background to the Study

Today’s business environment is very dynamic and undergoes rapid changes as a result of technological innovation, increased awareness and demands from customers. Business organizations, especially the banking industry of the 21st century operates in a complex and competitive conditions and highly by these changing conditions and highly unpredictable economic climate. Information and communication Technology is at the centre of this global change curve. Laudon and Laudon, (2016), contend that managers cannot ignore information systems because they play a crucial role in contemporary organization. They point out that the entire cash flow of most fortune 500 companies is linked to information system.

The application of information and communication technology concepts, techniques, policies and implementation strategies to banking services has become a subject of fundamental importance and prerequisite for local and global competitiveness. ICT directly affects how managers decide, how they plan and what products and services are offered in the banking industry. It has continued to change the way banks and their corporate relationships are organized worldwide and the variety of innovative devices available to enhance the speed and quality of service delivery.

Harold and Jeff (2015), contend that financial service providers should modify their traditional operating practices to remain viable in 1990s and the decades that follow. They claim that the most significant shortcoming in the banking industry today is a wide spread failure on the part of senior management in banks to grasp the importance of technology and incorporate it into their strategic plans accordingly.

Woherem (2013), claimed that only banks that overhaul the whole of their payment and delivery systems and apply ICT to their operations are likely to survive and prosper in the new millennium. He advices banks to re-examine their service and delivery systems in order to properly position them within the framework of the dictates of the dynamism of information and communication technology. The banking industry in Nigeria has witnessed tremendous changes linked with the developments in ICT over the years.

The quest for survival, global relevance, maintenance of existing market share and sustainable development has made exploitation of the many advantages of ICT through the use of automated devices imperative in the industry. This study evaluates the response of Nigerian banks to this new trend and examines the extent to which they have adopted innovative technologies in their operation’s and the resultant effects.

Information Technology (IT) IS the automation of processes, controls, and information production using computers, Tele communications, software and ancillary equipment such as automated teller machine and debit cards (Khalifa 20117). It is a term that generally covers the harnessing of electronic technology for information needs of a business as all levels. Irechukwu (2018) lists some banking services that have been revolutionized through the use of ICT as including account opening, customer account mandate, and transaction processing and recording. Information and communication technology has provided self-service (automated customer service machines) from where prospective customers can complete their account opening documents direct online. It assists customers to validate their account numbers and receive instruction on when and how to receive cheque books, credit and debit cards.

Several authors have conducted investigation on the impact of ICT on the banking sector of the Nigeria economy. Agboola et al (2012) discussed the dimensions in which automation in the banking industry manifest in Nigeria. They include:

1. Bankers Automated clearing services: This involves the use of Magnetic Ink character Reader (MICR) for cheque processing. It capable of encoding, reading and sorting cheques.
2. Automated payment systems: Devices used here include Automatic Teller Machine (ATM), plastic cards and Electronic funds Transfer.

• Automated Delivery channels: These include interactive television and the internet.

Agboola (2016) studied the impact of computer automation on the banking services in Lagos and discovered that Electronic Banking has tremendously improved the services of some banks to their customers in Lagos. The study was however restricted to the commercial nerve centre of Nigeria and concentrated on only six banks. He made a comparative analysis between the old and new generation banks and discovered variation in the rate of adoption of the automated devices.

Aragba-Akpore (2018) wrote on the application of information technology in Nigerian banks and pointed out that IT is becoming the backbone of banks’ devices regeneration in Nigeria. He cited the Diamond Integrated Banking Services (DIBS) of Diamond Bank Limited and Electronic Smart Card Account (ESCA) of all states Bank Limited as efforts geared towards creating sophistication in the banking sector. Ovia (2017) discovered that banking in Nigeria has increasingly depended on the deployment of information technology and that the IT budget for banking is by far larger than that of any other industry in Nigeria. He contended that on-line system has facilitated internet banking in Nigeria as evidenced in some of them launching websites. He found also that banks now offer customers the flexibility of operating an account in any branch irrespective of which branch the account is domiciled.

Woherem (2017), discovered that Nigeria banks since 1980s have perform in their investment profile and use of ICT systems, than the rest of industrial sector of the economy. An analysis of the study carried out by African Development consulting Group Ltd. (ADCG) on IT diffusion in Nigeria shows that banks have invested more on IT, have more IT personnel, more installed base for PCs, LANs, and WANs and a better linkage to the internet than other sectors of the Nigerian economy.

• Statement of the Problem

The Banking industry all over the world helps to promote economic growth and development. In recognition of this important role, a lot of effort is being put into the development of the sector. One area of such effort is the use of information and communication technology to improved banking services with the advent of computers and its revolution in information processing electronic banking has become the order of the day. Electronic banking enhances the speed and quality of service delivery and has changed their system of banking all over the world in Nigeria. Electronic banking is still at the infancy stage. A great deal of effort and investments are still required to make the country relevant to the present dispensation in the industry. Many transactions are still being done manually, the waiting time for customers is still relatively long and the quality of service is yet to be satisfactory to some customers.

Since the banking sector has become dependent of information and technology, the performance enhancement of the Nigeria banks will be best achieved through its optimal utilization. This issue of absolute necessary is the subject of this study. Moreover, the cost of acquiring this technology vis-a-vis its benefit is on other problem.

• Objectives of the Study

The focus of this study is to determine the impact of information and communication technology on banking service in Nigeria. The four objectives, which are to be achieved, are to:

1. Determine what constitutes information and communication technology.
2. Examine the factors responsible for the use of information and communication technology in the banking sector.

• Examine the effect of information and communication technology on banking service.
  • Research Questions

1. How does innovative technologies contribute to the survival of the banking industry operations?
2. What is the difference in the efficiency of the Nigerian banking industry before and after the adoption of information and communication technology?

• To what extent does information and communication technology products have effects on customer services?
  • Significance of the Study

The study is expected to provide information on various information and communication technology devices used by banks in Nigeria and the extent of the usage. The result of this research is expected to increase our knowledge of information and communication technology in the banking industry in Nigeria. The findings of the study would be of benefit to commercial banks and the customers alike.

• Scope of the Study

This study takes a look at the impact of information and communication technology on business performance.

Effort will be made to source for data from First Bank of Nigeria Plc (Iganmu Branch).

• Limitation of the Study

Information and communication technology is still relatively in Nigeria. The increasing awareness of financial and educational institution in the field is very recent. One major limitation is that most bank staff at the management level are not easily accessible. When they are available, the competition in the industry makes them unwilling to disseminate information on the topic.

• Brief History of First Bank of Nigeria Plc Jalingo

First Bank of Nigeria is a Nigeria Bank and Financial Services Firm. First Bank traces its ancestry back to the first major institution founded in Nigeria.

The Current Chairman is Dr. Ayoola Oba Otudeko, OFR. The Bank is the largest retail lender in the nation, while most banks gather funds from consumers and loan it out to large corporations and multinationals, First Bank has created a small market for some of its retail clients.

At the end of August 2006, the bank had assets totaling 650 Billion Naira or $5 Billion Dollars. The Bank was also the most highly capitalized stock on the Nigeria Stock Exchange and had about 10 Billion outstanding shares. It has a subsidiary in the United Kingdom, FBN Bank (UK), which has a branch in Paris. The bank also has representative offices in South Africa and China.

The company was named the best bank in Nigeria by Global Finance Magazine in September 2006. The firm’s auditors are Akintola Williams Deloitte & Touche (Charted Accountants).

The firm has solid short and long term rating from Fitch and the Global Credit Rating Company Partly due to its low exposure to non-performing loans. The firm’s compliance with financial laws has also strengthened with Economics Financial Crimes Commission giving it a strong rating.

Pre – Independence

The Bank traces its history back to 1894 and the Bank of British West Africa. The Bank originally served the British Shipping and Trading Agencies in Nigeria.

• Definition Of Terms

Bank: Oxford Dictionary defines bank as an establishment for the custody of money which it pays out on customers order.

Commercial Bank: A bank that accepts deposits and makes consumer commercial and real estate loans (Saunders 2012)

Computer: An electronic device that on receipt of an appropriate input is capable of processing the input according to a set of previously supplied instructions and making the result available if desired (Essen, 2015) Britain J.T identified two major types of computer

Computer Hardware: Physical equipment used for input processing and output activities in an information system (Laudon & Laudon 2017)

Computer Software: Detailed pre-programmed instructions that control and co-ordinate the work of computer hardware (Laudon and Laudon 2017).

Data: Raw facts representing events occurring in organizations or the physical enrolment before they have been organized and arranged into from that people can understand and use (Laudon & Laudon 2017).

Information: Data that have been shaped into a form that is meaningful and useful to human beings. (Laudon & Laudon 2017)

Processing: The conversion, manipulation and analysis of raw inputs into a form that is more meaningful to human (Laudon & Laudon 2017).

Database: A group of related files (Laudon & Laudon 2017).

Network: A two or more computers linked together to share date or resources such as printer.

Communication Technology: Physical devices and software that links the various pieces of hardware and transfers data one physical location to another. Computer and communication equipment can be connected in networks for sharing voice, data, images sound or even video (O. BRIEN 2016).

Storage Technology: Physical media and software governing the storage or organization of data for use in an information system e.g magnetic or optical disk or tape (O. BRIEN 2016).

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Full Project – Impact of information and communication technology (ICT) on business performances