PROSPECT AND CHALLENGES OF INFORMATION TECHNOLOGY IN NIGERIA BANKING SECTOR

Abstract

This study investigated the prospects and challenges of information technology in modern banking operation in Nigeria with references to GT Bank and had for its objectives the following: evaluate the impact of electronic banking on the operations of financially institutions in the country. Examine the effect of information technology on bank customer relationship; identify barriers to efficient information technology system written a financial institution. The simple percentage and the Chi-Square method were used for the analysis. The findings show that the key factor to success in the banking business in Nigeria is good patronage by the customers. The customers have to be satisfied in terms of meeting their demands properly through appropriate information channels. The customer on the other hand have shown wide acceptance of information technology in banking service delivery. This is evident, usually huge turnover and increased profit declared at the end of financial year of banks. The following were also recommendations. The banks must be focused in terms of their needs and use the right technology to achieve goals rather than acquiring technology of internet banking because other banks have it.

CHAPTER ONE

INTRODUCTION

• Background of the study

Although a lot of research works have been done on the prospects and challenges of information technology in the banking industry, these research works were broad based, while a few were actually carried out on the role of information technology in modern banking operations. Modern banks now realize that only those that overhaul their payment service delivery and operations are likely to service and proper in the 21st century. This is due to the presence of globalization, consolidation, privatization, deregulation and rapidly changing technological environment. In order to properly place themselves in favourable positions for competitions and be one of the corporations to be reckoned with in the new century, banks make use of internet facilities to execute mobile making. This is developed by using personal computers (PCS) to form local area networks (LAN) and wide area networks (WAN) through client/server technology (Davenport, 1993).Many banks have installed modern computer interconnectivity backbone that would enable them achieve their communications of data and multimedia over internets, intranets and extranets. They also realize that they have to achieve not only management/staff will computer literacy but what could be called information literary i.e. knowing how to locate,, analyze, store and use information. All staff and managers in a modern bank need to be able to search and gather data from different sources, analyze them, select relevant ones and organize them in such a manner as to allow informed decision making in the organization. Banks of the future realize that the banking and other banking tomorrow requires more of electronic manipulations and shuffling of bits based money and other banking transactions, instead of paper. In other words, paper base of transactions, instead of paper. In other words, paper based transactions, like the internet banking services (Connel and Saleh, 2004). Whether a bank would be successful or not depends on the extent to which it invests on internet and communication technology (ICT) and how she uses it in an innovative manner. This area has been tip to be a major competitive ground for banks that are operating in the post consolidation era. What is the trend in the use of information technology in Nigerian banking industry? To what extent does information technology chance employees and organizations performance?

1.2 STATEMENT OF THE PROBLEM

Business need to continuously find better and faster ways to adapt to the competitive market place in order to complete in today’s high technology and fast paced environment. According to Hammer and Champy (1993) learning organizations provide a framework that encourages finding better and faster way to adapt in today’s high technology and fast paced world by:

1. Looking at the whole versus the parts a systematic perspective.
2. Detecting and correcting errors.
3. Improving actins through knowledge and developing the broad skills of their work force.

These days’ computers and information processing are in common usage. Computers influence what decisions are made, when decisions are made, what and who is available at the point of decision and who is asked to decide computers and information processing affects how work is organized and how employees fell about work (Stephen, 2012).

From my perspective, the essential element of management of information provision and this information technology system are expected to heavily influence management and business operation and as such the main thrust of this research work is to investigate the extent of this influence with special focus on modern banking operations in Nigeria.

1.3 OBJECTIVE OF THE STUDY

The study generally in kinds to investigate the prospects and challenge of modern banking operations in Nigeria, and to specifically:

1. Evaluate the impact of electronic banking on the operations of financial institutions in the country.
2. Examine the effect of information technology on banks customer relationship.
3. Identify barriers to efficient information technology system within a financial institution.
4. And from the findings make suggestions on how to make information technology system more efficient in modern banking operations

1.4 RESEARCH HYPOTHESES

For the successful completion of the study, the following research hypotheses were formulated by the researcher;

H₀: there is no impact of electronic banking on the operations of financial institutions in the country

H₁: there is impact of electronic banking on the operations of financial institutions in the country

H₀²: there are no barriers to efficient information technology system within a financial institution

H₂: there are barriers to efficient information technology system within a financial institution

1.5 SIGNIFICANCE OF THE STUDY

A vital component of any move towards better business performance is an integrated information technology infrastructure that supports organizations internal requirements for greater performance as well as compliance with market and industry regulations. This study is significant in the following ways:

1. It would have a direct effect on the efficiency and effectiveness of the use of information systems in the various steps of the modern banking operations.
2. It would enable employees and managers who are involved in the information systems of their organization to see opportunities for improvement in the use of information technology systems thereby improvement in the use of information technology system thereby improving the organizational productivity.

1. It would also be an invaluable tool for student academic, institutions and individuals that want to know more about the relevance of information technology in modern banking in Nigeria.

1.6 SCOPE AND LIMITATION OF THE STUDY

Nowadays, financial originations and other business organizations in general need to identify with the fact that information technology system has a strategic impact on their business. This research work shall strict contribution to this recognition and understanding by examining the impact and trend of information technology within the financial business sector in Nigeria. The focus of this study shall be on the adoption of information technology in banking operation by Nigeria banking operations of GT Bank Plc. This study shall cover the period since the introduction of information technology in Nigerian banking sector to date. Information technology was introduced into Nigeria economy upon the commencement of the electronic payment scheme in 1996. All the various information technology related schemes introduced since this period to date shall be examined in the course of the study. The following limitations were encountered by the researcher in the course of carrying out this study.

Time: This has always been a limiting factor for a research of this kind, because the structure needs to complete his work within a specified time frame.

Data Collection: The problems of data collection was a recurring decimal, since bank officials were not ready to release classified data neither were they to be found through other official sources.

Therefore, the researcher had to limit herself to the available data for this study.

Finances: Research has always been cost intensive, as the researcher had to make various journeys, photocopy materials and obtain official information. Thus, whereas the need for finance abounded, it’s supply was limited

1.7 DEFINITION OF TERMS

PROSPECT: The possibility or likelihood of some future event occurring.

CHALLENGES: A call to someone to participate in a competitive situation or fight to decide who is superior in terms of ability or strength.

INFORMATION TECHNOLOGY: Information technology (IT) is the application of computers to store, study, retrieve, transmit, and manipulate data, or information, often in the context of a business or other enterprise. IT is considered a subset of information and communications technology (ICT).

BANKING SECTOR: The banking sector is the section of the economy devoted to the holding of financial assets for others, investing those financial assets as leverage to create more wealth, and the regulation of those activities by government agencies.

1.8 ORGANIZATION OF THE STUDY

This research work is organized in five chapters, for easy understanding, as follows

Chapter one is concern with the introduction, which consist of the (overview, of the study), historical background, statement of problem, objectives of the study, research hypotheses, significance of the study, scope and limitation of the study, definition of terms and historical background of the study. Chapter two highlights the theoretical framework on which the study is based, thus the review of related literature. Chapter three deals on the research design and methodology adopted in the study. Chapter four concentrate on the data collection and analysis and presentation of finding.  Chapter five gives summary, conclusion, and recommendations made of the study

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