18-04-2012, 02:30 PM
Information and Communication Technology
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Introduction
Today’s business environment is very dynamic and undergoes rapid changes as a
result of technological innovation, increased awareness and demands from customers.
Business organisations, especially the banking industry of the 21st century operates in a
complex and competitive environment characterized by these changing conditions and
highly unpredictable economic climate. Information and Communication Technology
(ICT) is at the centre of this global change curve. Laudon and Laudon, (1991) contend
that managers cannot ignore Information Systems because they play a critical role in
contemporary organisation. 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 concerns to all banks and indeed a 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 (1995) contend that financial service providers should modify
their traditional operating practices to remain viable in the 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 (2000) 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 operations and the resultant effects.
Information and Communication Technology
Information Technology (IT) is the automation of processes, controls, and information
production using computers, telecommunications, software and ancillary equipment
such as automated teller machine and debit cards (Khalifa 2000). It is a term that
generally covers the harnessing of electronic technology for the information needs of a
business at all levels. Irechukwu (2000) 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 facilities (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 their chequebooks, credit and debit cards.
Communication Technology deals with the Physical devices and software that link
various computer hardware components and transfer data from one physical
location to another (Laudon and Laudon; 2001).
ICT products in use in the banking industry include Automated Teller Machine,
Smart Cards, Telephone Banking, MICR, Electronic Funds Transfer, Electronic Data
Interchange, Electronic Home and Office Banking.
Several authors have conducted investigation on the impact of ICT on the
banking sector of the Nigeria economy. Agboola et al (2002) discussed the dimensions
in which automation in the banking industry manifest in Nigeria. They include:
(i) 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.
(ii) Automated Payment Systems: Devices used here include Automatic Teller
Machine (ATM), Plastic Cards and Electronic Funds Transfer.
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(iii) Automated Delivery Channels: These include interactive television and the
Internet.
Agboola (2001) 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 center 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 (1998) wrote on the application of information technology in
Nigerian banks and pointed out that IT is becoming the backbone of banks’ services
regeneration in Nigeria. He sited 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
(2000) 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 (1997) discovered that Nigeria banks since 1980s have performed
better 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. The study,
however pointed out that whilst most of the banks in the west and other parts of the
world have at least one PC per staff, Nigerian banks are lagging seriously behind, with
only a PC per capital ratio of 0.18 (Woherem, 2000).
This study carried out a more comprehensive evaluation of the response of
Nigerian banks to the adoption of ICT. The study covered 36 out of the 89 banks in the
country as at the end of 2005. A total of 216, 180 and 36 questionnaires were
administered to the employees, customers and Head of Systems Units of the 36
selected banks respectively. Out of these, 90.28%, 77.78% and 97.22% were
respectively retrieved. Three categories of variables that relate to the adoption and
implementation of information technology devices were used for the study. These are:
(i) Nature and Degree of adoption of innovative technologies
(ii) Degree of utilisation of the identified technologies:
(iii) Impact of the adoption of IT devices on banks operation
The first variable refers to how banks have made new products and
services available to customers. These services include computerized credit
ratings, programs that determine when cheques should be made available to
customers and daily calculation of accounting balances. It also involves how
various types of information technology devices are made available in each of
the studied banks. A table was used to display the availability of the ICT in the
studied banks.
The Likert-type rating was used to measure and analyse the degree of
utilisation of identified technologies and the variations in their rate of adoption.
The responses were analysed on a 4-point itemized rating. Impacts of the
adopted technologies were examined on specific areas of banking services. The
impact analysis model developed by Agarwal and Tanniru (1992) was used to
assess the effects of ICT on both the process generated (task performed) and
the process dimensions. Both local and global impact criteria were considered.
The impact is global when the resource used or released by a process impact
other processes outside the main decision, but local if it affects only the
generation of the product or task performed (Ugwu et al., 1999). Direct impacts
of IT on local criteria such as time saving, error rate reduction, enhanced
management decision making, and improved speed of service delivery as
perceived by the bank workers and customers were examined. The impact on
global criteria such as competitive advantage, market segmentations, high
revenue and forecasting were also assessed. The impact assessment model
looks at the performance (effectiveness and efficiency) and effect which the
applications of systems have within an organisation. The performance
assessment helps to determine whether to readjust or put more resources to
improve performance of the system while applications assessment helps to
determine how the implementation and use of introduced systems affects the
organisation (Senn, 1982) The responses of customers on the impact of IT were
measured on a 5-point Likert-type rating scale. Arithmetic mean and standard
deviation of the local and global impact criteria were calculated to determine
their levels.