The Role of Information Technology in the Nigerian Banking System

The Role of Information Technology in the Nigerian Banking System.

CHAPTER ONE

INTRODUCTION

1.1 Background of the Study

Globally, information and communication technology has become a key element in the economic development of many countries in the world. Over the years, many innovations have taken place in the world, the most striking and most celebrated is the aspect of information and communication technology.

Organizations today are confronted with rapidly changing market conditions indicated by high merger rates and strong competitors.

Under these conditions, traditional management approaches that focus on financial figures and on centralized, analytical planning methods are considered to be insufficient for effectively steering the organization in a dynamic environment.

Irechukwu (2000) Itemized banking services that have been changed via the use of information technology as including opening an account, the mandate on customers’ accounts, and transaction process and recording.

Information Technology which is synonymous with computer communication technology in everyday language can be defined as technologies that facilitate the information cycle, comprising gathering, processing, disseminating, and storing of information, and as such information and communication technology encompasses a wide range of technologies such as telephone, computer, word processing application, web browser, servers, full-text document, database, and mainframe computers.

Its devices especially modern computers, email facilities, and the internet has therefore strengthened early modernization such as fax and telephone.

Other technology devices include data recognition equipment, telecommuting, and teleconferences using real-time and services (Adeoti,2005).

Information and communication technology has provided self-service facilities from where customers can easily complete their account opening documents directly online. Information technology in Nigeria’s banking system and operation has been acknowledging as the life wire of banks in the financial sector as it promotes and facilitates the performance of banks in the country.

These, therefore call for a pre-requisite need to embrace information and communication technology. It is in view of this that this research work attempts to examine the role of information and communication technology on the performance of banks in Nigeria today.

Information communication technology has played a prominent role in all areas of human life but the breakthrough of social progress and vigorous development has immeasurably increased the role of information in every factor of human life.

Igwe(2005)noted that the advent of electronic mail and personal computers on every desk, the internet, and its application to banking have produced amazing results.

It has also improved the overall processes of commercial banks’ performance in Nigeria, via the use of innovation and creativity pertaining to information technology by commercial banks.

This, as a result, has led to a smooth, easy, and convenient way of banking with adequate and quality service to customers, which has also paved way for efficiency and effectiveness to banking in Nigeria.

Banking has now become almost totally dependent on the computer.

In the past, a large but manageable amount of book-keeping was handled manually, but such has been the expansion in banking that a huge labor force would be needed to tackle today’s massive volume of book-keeping.

The computer is necessary because there is no other way of dealing with the problem (Okonta, 2009).

The application of information technology concepts, techniques, policies, and implication strategies to commercial banking services has, therefore become a subject of fundamental importance as it concerns all banks and a prerequisite for local and global competitiveness.

1.2 Statement of the Problem

As earlier pointed out, there is a delay in payment of cheques which leads to the adoption of ICT in the banking system. Adoption of information and communication technology which suppose to ease banking transactions rather resulted in woes to customers.

Most people complain of the time wasted in banks. This occurs when there is a power failure in banks resulting into slowdown in operation.

Another problem that emerged was that banks do not have information backup to fall back on should there be any computer breakdown.

In investing in electronic banking, the country will need a large number of financial resources in computer technology, obviously, the resource is in short supply in Nigeria, coupled with a high level of poverty.

For efficient functioning of the electronic payment system, there must be the availability of infrastructural facilities such as electricity and telecommunication network, however, power supply fluctuates and there is still constant failure links in networks.

Since the early 2000s banks have been developing and introducing payment cards for their customers as well as deploy ATM’s cards. Usage was however low due to lack of interconnectivity i.e. switching platforms to interconnect the ATMs for cardholders.

These constraints are centered on the lack of supporting infrastructures such as erratic electricity supply, interdependent, and lack of encryption on short message system(SMS) messages(Agbada,2008).

1.3     Purpose of the Study

The main purpose of the study is to examine the role of information technology in the Nigerian banking system. In this regard the specific purpose of this study is to:

Determine the extent to which ICT products enhance the performance of the banking sector.

Identify the benefits of the banking sector derived from the adoption of information technology.

Find out the challenges facing the banking sector on the application of information technology.

REFERENCES

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Agbada, A.O. (2008). Electronic Banking in Nigeria, problems and prospects from the consumers perspective , central bank of Nigeria Bullion, volume 32, number 4: October-December.
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CSN Team.

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