IMPACTS OF INFORMATION AND COMMUNICATION TECHNOLOGY (ICT) ON THE BANKING INDUSTRY IN NIGERIA

CHAPTER ONE

1.1   INTRODUCTION

As we move into the 21^st Century, banks all over the world realize that only those that overhaul the whole of their payment and service delivery systems and operations are likely to survive and prosper in the New Millennium. This is due to the pressures of globalization, consolidation, deregulation and rapidly changing technology.

Today’s business environment is very dynamic and undergoes rapid changes as a result of technological innovation, increased awareness and demands from customers. In view of this, the banking industry of the 21^st Century operates in a complex and competitive environment characterized by changing conditions and highly unpredictable economic climate. In view of the foregoing, the application of Information and Communication Technology (ICT) concepts, techniques, policies and implementation strategies to banking services has become a subject of fundamental importance and concern to all banks and indeed a pre-requisite for local and global competitiveness Agboola (2005).

1.2   STATEMENT OF THE PROBLEM

In Nigeria, the use of computer has become more widespread in banks than in other sectors of the economy except perhaps, the energy sector; yet, the banks still have a long way to go in order to meet the standards of adoption of Information and Communication Technology (ICT) of their counterparts elsewhere. There are many problems confronting banks in Nigeria in their use of ICT. Studies have revealed that most of the problems facing the banks are telecommunication-related, and are directly traceable to problems with the public telecommunication services which are the backbone of their communication links.

1.3   OBJECTIVES OF THE STUDY

The objective of this research work is to demonstrate in a schematic manner, the aspects of present-day banking business where performance could be significantly enhanced through the application of Information and Communication Technology (ICT). Banks in Nigeria currently operate in an environment characterized by a fluid customer loyalty and intense competition as they scramble to increase their market share, and to look for ways of coping with significantly rising operating cost and dwindling profit.

This research project will examine the general impacts of Information and Communication Technology (ICT) on the banking industry. The following objectives will be evaluated:

• To give a comparative analysis between the growth of fixed telephone lines and mobile phone lines with respect to growth in ICT.
• To examine using a Trend Analysis, the growth rate of Intercontinental Bank within the period 2003-2008 with respect to growth in ICT
• To identify the effect of the volume of fixed telephone lines and mobile phone lines between 2003-2008 on the performance of Intercontinental Bank Plc in terms of growth in loans & advances, customers’ deposits and profit after tax (PAT)
• To explore the current ICT applications in Nigerian banking industry

1.4   RESEARCH QUESTIONS

–       What effect has the use of ICT systems like Telephone, VSAT, MICR, ATM, Computers etc have on Intercontinental Bank’s productivity

–       What effect has the use of ICT-driven technologies have on customers’ patronage

–       What effect has the growth of fixed and mobile telephone lines have on Intercontinental Bank’s performance

1.5   RESEARCH HYPOTHESIS

        HYPOTHESIS 1

H₀:    Adoption of ICT by Intercontinental Bank Plc has not increased its productivity

H_A:    Adoption of ICT by Intercontinental Bank Plc has increased its productivity

HYPOTHESIS 2

H₀^:        Adoption of ICT by Intercontinental bank has not improved customer’s patronage

H_A:    Adoption of ICT by Intercontinental bank has improved customer’s patronage

HYPOTHESIS 3

H₀^:        There is no variation of growth in ICT systems

H_A:    There is variation of growth in ICT systems

HYPOTHESIS 4

H₀^:        Growth in Intercontinental Bank’s performance is independent on ICT

H_A:    Growth in Intercontinental Bank’s performance is dependent on ICT

1.6   SCOPE AND LIMITATION OF THE STUDY

Due to unavailability of data and the state of diffusion of ICT in this part of the world, the researcher employed secondary data of the bank during the introduction of General System of Mobile communications (GSM). Also, the data on ICT was collected before and after the introduction of GSM.

However, the study is strongly limited to cover the period of 1995 to 2008. Specifically, the study divides the period into three; 1995-2008(growth rate of fixed and mobile telephone lines), 2003-2008 (growth rate of fixed and mobile telephone lines against Intercontinental Bank’s Performance) and lastly 2003-2008 (performance of Intercontinental Bank Plc)

1.7   JUSTIFICATION OF THE STUDY

In the early stages of globalization, deregulation and consolidations, organizations usually dedicate more resources and priority to financial and personal issues, downplaying operational issues like ICT and its relative importance to organizations. The increasing competitive pressures on companies, many of which operate in a global economy (e.g. banks), has been a strong driver for ICT adoption. Firms are constantly searching for opportunities to cut costs and ICT holds great promise in this respect as it increases the efficiency of a firm’s business processes, both internally and between trading partners in the value chain.

Now, the use of ICT among Nigerian banks is no different where its role as a core operational driver was established in the early 1990’s; transforming the delivery of banking products and services. The availability of communications networks and clients/server technology saw the birth of  ‘online, real-time” banking where all or some branches had access to computing resources (usually located at the bank’s head office).

Today, the mere possession of online real-time technology is no longer a source of competitive advantage for all operators in the sector. The role of ICT has evolved today, where banks, in addition to automating processes and improving service delivery, implement ICT solutions that facilitate various business strategies and thus, offer competitive advantage.

This study is of great importance considering the fact that entry barriers to some industries have been greatly lowered by leveraging on ICT. Also, the pace of globalization, liberalization, deregulation, commercialization, and privatization is rapidly opening up markets and making the existing ones more competitive. This study highlights various opportunities presented by Information and Communication Technology (ICT) that can be harnessed in order to compete favourably in this increasingly competitive and unpredictable business environment.   This study is justified in the sense that it highlights the imperative of ICT and its inherent dynamism.

1.8   SIGNIFICANCE OF THE STUDY

Electronic communication using digital information and communication technologies is already the standard means of inter-organisational and inter-country communication in most developed world, and also increasingly in the third world countries. They are helping individuals, companies and countries to store and transmit information held anywhere in the world, and to communicate them across the globe irrespective of time and space. This means that whoever does not have the technical infrastructure to participate in this new mode of communication would not be able to trade or relate with other individuals, companies or countries of the world in the coming century. Therefore, this study is significant because Nigerian banks cannot afford to let this opportunity of embracing Information and Communication Technology (ICT) pass it by.

1.9   ORGANISATION OF THE STUDY

The arrangement of the research is as follows:

Chapter One: introduction already explained above, statement of the research problems, objectives of the research, research questions, research hypotheses, scope of the study and justification of the study.

Chapter Two: background to the study

Chapter Three: Literature Review and Theoretical Framework

Chapter Four: Research Methodology and Empirical Analysis

Chapter Five: Summary of findings, Conclusions & Recommendations.

Tagged with: Banking Industry, ICT, Information and Communication Technology