ABSTRACT
Financial institutions in
Nigeria are revolutionizing their operations through use of information
technology since they have come to realize the fact that computerized banks
gains in the long run.
Data was collected from
primary source and was analyzed using simple percentage and chi-square to test
the formulated hypothesis from one hundred and. fifty administered questionnaires sent
and gotten from both staff and customers of United Bank of Africa (UBA) PIc.
The study has shown that
information technology is extremely important in the present and in the future
banking operation.
TABLE OF CONTENTS
CHAPTER ONE: INTRODUCTION
1.0
Background of the Study
1.1 Historical Background of United Bank
for Africa (UBA) Plc
1.2 Statement
of the Research Problems
1.3 Objective of the Study
1.4 Research Questions
1.5 Research Hypothesis
1.6 Scope and Limitation of the Study
1.7 Justification of the Study
1.8 Research Methodology
1.9 Organization of the Study
1.10 Operational Definition of Terms
CHAPTER TWO:
LITERATURE REVIEW
2.1 Introduction
2.2 Information Technology Concept
2.3 Past Researches on Information Technology
2.4 Evolution of Information Technology
2.5 Development of Information Technology in
Banking Industry
2.6 Computer Technology in Banking Industry
2.7 Information
Technology in Growing Nigerian Financial Market
2.8 Globalization, Information Technology and Nigerian
Commercial Bank
2.9 Benefits of Applying Information
Technology
2.10 Challenges
Facing the Application of information Technology in Nigerian Banks
References
CHAPTER THREE:
RESEARCH METHODOLOGY
3.0 Introduction
3.1 Research Design
3.2 Population and Sample
3.3 Method of Data Collection
3.4 Method of Data Analysis
CHAPTER FOUR:
DATA PRESENTATION AND ANALYSIS
4.1 Introduction
4.2 Classification and Analysis of Responses
4.3 Personal Information
4.4 Data Analysis and Interpretation
4.5 Discussion of Findings
CHAPTER
FIVE:
SUMMARY, CONCLUSION AND RECOMMENDATIONS
5.1 Summary of Findings
5.2 Conclusion
5.3 Recommendations
Bibliography
CHAPTER ONE
INTRODUCTION
1.0 Background of the Study
Development in a country can
be measured in terms of its overall social, economic and political development.
But no matter how developed the country is, it cannot be self-sufficient, there is an
everyday urge to improve in the social
relationship, economic development and politics.
In Nigeria, during the
pre-colonial era, there is always an interaction' which starts mostly from
trading 'activity which enables the country to exchange what it has for what it
requires. Trading was carried out among the various tribes that made up the
present Nigeria nation through the primitive methods of trade by barter system
which is the exchange of goods for services. Likewise, objects like shells,
cowries, beads, etc. were adopted as means of exchange. However, as society
grew more complex, these crude methods of exchange became insufficient. Coins
and paper notes were introduced and these made it' easy for any amount of goods
and services to be acquired at the exchange of such coins and paper notes.
Thus as the nature of
businesses became more wide and complex, it became very imperative for all
sectors to be connected with a modern means that would be simpler, faster and
more convenient. This gave birth to the modern day banking system using
information technology. The banking industries are now getting connected with
the information technology facilities which make banking operation, service and
business activities easier, faster, more efficient, and more effective for
individuals and organizations alike to transact businesses. The impact has
become far reaching to the extent that organizations jostling for relevance in
a competitive environment cannot help but embrace the potentials of the
e-revolutions.
Information Technology (IT) is
a man-made resource, embracing principally the electronic technologies of
computers and telecommunications (voice, data, and video), and comprising of
both electronic hardware and computer software. The significance of IT in today's
successful organization cannot be underestimated. It plays a major role in the success of
the organization in today's highly competitive world by providing easy and fast means of collecting, storing,
retrieving, processing, transmitting and distributing information. There can be
various other factors that determine the success of a firm, and a firm may use
various strategies to pursue the path of success. However, fast and easy access
of information through the use of IT is very important to the firm because it
influences all the other success factors, and the competitive strategies cannot
be practically implemented without its support. Therefore, no business-firm
that minimizes the use of IT can attain the topmost position in its business.
This is very much true in the case of financial institutions, which include
commercial banks. Commercial banks have a major role in the economic
development of a country. They are the major financial intermediaries between
the sources of funds and the users of funds; and their business is heavily dependent on information
related to the fund market, which includes fund suppliers, fund users, brokers;
information related to the central bank, and Ministry of Finance directives
that they have to follow; and information related to their competitors. Besides,
their business also includes providing financial information to their customers
licensee, commercial banks are highly information intensive, and the use of IT
by them, for easy and fast means of information collection, storage, retrieval,
processing, transmission, and distribution of information, should have'
extensive contribution to their performance.
The use of IT is widespread –
from the most developed countries through the developing countries to the least
developed countries, although the extent of overall use is directly related to
the level of development. Commercial banks, since they are highly information
intensive, have invested in IT extensively. Even in a country like Nepal, a
developing country still at the lower rungs of the development ladder, new
banks in the near past years started their operations with computerized
systems. In Thailand, another developing country that is trying to climb on to
the developed platform, commercial banks have computerized operations, and many
of their services/products are IT based. In developed countries like the US and
Canada, IT has become a necessity for financial institutions if they want to
survive in the market, and the financial institutions keep on trying to come
out with new services/products which are IT based, Pritam (2002).
1.1 Historical
Background of United Bank for Africa (UBA) Plc
United Bank of Africa (UBA) Pc
is the West Africa's largest banking and financial services group as measured
by asset base, number of customers, branch network and profitability. It
provides personal and commercial banking, wealth management services,
insurance, corporate and investment banking and transaction processing
services. The bank employs more than 17,000 staff (Core and support) who serve
their over 6 million personal, business, public 'sector and institutional customers through their offices in
Nigeria, Ghana, Cameroon, Cote d' Ivoire, New York, London and the Cayman
Island.
As a leading player in the African financial services
sector, the banks aspiration is to fly the flag of African excellence within
the global financial community and to be a role model to other African businesses.
The United Bank of Africa
(UBA) PIc has largely been a Nigerian and West African Bank. As the largest
financial services company (by balance sheet size, branch network, customer
base and profitability) in West Africa and the biggest listed company in
Nigeria (by market capitalization, December 2007), the group has been
recognized as a leader within the financial services industry in the region and a key
driving force of the region's economic development. UBA now has presence in
seven African countries, spanning West, Central and East Africa, with main
operations in Nigeria and Ghana, two of the most vibrant economies of Africa.
Africa and beyond
UBA is intensifying its
efforts to extend its reach beyond West Africa into the rest of the continent,
as it pursues its vision to be the undisputed leading and dominant financial
services group in Africa. Beyond Africa, the group's aspiration is to be the
bank of choice for all transactions involving Africans and Africa- related
businesses, wherever these may be around the world. In addition to presence in
the Cayman Islands, UBA is the only Sub-Saharan African Bank with regulatory
presence in New York (Dating back to·1984). With ~e establishment of UBA
Capital (Europe) Ltd, the Group's London based investment banking arm regulated by the
financial services authority (FSA), UBA became the only African bank with dual
presence in both New York and London. UBA Capital will be the Group's beachhead
for launching into the rest of Europe. In Asia, UBA is currently focused on the
most populous and fastest growing economy in the region-China. UBA Group
recently entered into the Memorandum of Understanding (MOU) with state owned
China Development Bank (CDB)'China's second biggest bank, on a partnership deal
for financing long-term infrastructural projects across Africa, UBA (2007
Annual report).
International Institutional Investors
The exiting prospects for UBA
Group have attracted the attention of international investors seeking emerging
markets opportunities, such as the Board of Directors of the International
Finance Corporation (IFC) in· March 2007. The' private sector financing arm of
the World Bank Group, granted UBA a US$50 Million convertible debenture loan as
part of a US$75million financing and advisory services package approved for the
group. The US$50 million inflow was converted into equity on September 30,
2007. In May 2007, the African Development Bank (ADB) took a US$50 million
equity position in the UBA, the first time it has made a direct equity
investment in a private sector· organization on the continent throughout its
43-year history. In addition, a Global Depository Receipts (GDR) programme
jointly placed. and managed on the international securities markets by JP
Morgan Chase and Renaissance Capital raised approximately US$300 million from
other international institutional investors, during UBA Group's combined rights
issue and public offer in April 2007.
E-Banking Services
UBA is the clear leader in the
deployment of solutions across electronic channels in West Africa. As at 30
September 2008 it has 1,256 ATMs, 3,296 pas machines deployed. Outside of
Nigeria, they had a further 55 branches and 76 ATMs. During 2008, UBA processed
10% of the total value of all POS transactions in Nigeria. In 2008 UBA also
pioneered the deployment of cheque-deposit ATMs into the Nigerian market. In
May 2009, UBA again pioneered the first cash deposit ATM in Nigeria. These
successes will be extended to the rest of Africa.
UBA remains the only bank in
Nigeria with a full electronic platform for payroll administration for
corporate clients. Going beyond payment of salaries, corporate organizations
are given a convenient, secured electronic alternative to managing employees.
Some of the banks e-banking
services include: U-Direct, U-Mobile, EMS, Bank Collect, Pay Direct, If-Pay, SMS/E-Mail Alerts, U-Dividend
monitor, U-Dividend, Dubai Visa Solution, Etranzact, Schools Online,
EduPortal.
Achievements
UBA has maintained a
consistent and solid financial performance in its long history. They have a
history of leading and pioneering innovations in the Nigerian financial sector.
The, following are parts of the bank's landmark achievements:
·
UBA was the first among international banks to be registered under Nigerian
Law in 1961.
·
UBA is the first Nigerian bank to offer an IPO following its listing on the
Nigerian Stock Exchange in 1971.
·
UBA is the, only sub - Saharan African bank (ex-RSA) with a branch in USA
(New York)- set up in 1984.
·
UBA was the first Nigerian Bank to introduce a Cheque Guarantee Scheme
known as UBACARD in 1986.
·
UBA is the 1st and only Nigerian Bank to obtain a banking license in the
Cayman Islands -1988.
·
UBA is the only. Nigerian company with .a GDR programme - 1998 (1st
for a Nigerian Bank as a means of facilitating international investor interest).
·
Best Domestic Bank in Nigeria (Euromoney 2000)
·
UBA is the 1st Nigerian Bank to obtain a banking license in Ghana -2004.
·
UBA led the consolidation in the Nigerian banking industry with merger of Standard Trust Bank Pic and
UBA in 2005.
·
UBA received excellent credit ratings (short and long term); Global Credit
Rating (SA) AA+ and A+ in 2005
·
UBA was the first to introduce the Nigerian Government Bond Index in 2006.
·
UBA is the first ever Nigerian Bank to surpass the N 1 trillion balance
sheet size (including contingents) -:- 2006.
·
UBA is the first Nigerian Bank to enter into strategic relationship with
the international Finance Corporation (IFC).
·
UBA is the first private sector organization in Africa to benefit from a
direct equity investment by the African Development Bank.
·
UBA is the first Nigerian financial institution to introduce a loyalty programme
(the Lion's Pride Reward Scheme).
·
UBA Global Markets in collaboration with Federal Mortgage Bank of Nigeria
(FMBN) was the first bank to introduce a mortgage bond backed by securitization
of black Africa.
·
UBA is the only Sub-Saharan African Bank (ex-RSA) with operations in the USA
(New York established since 1984) and London.
·
UBA is the largest e-banking footprint in Nigeria (Inters witch 2007).
·
UBA is the largest Nigerian bank by assets, deposits, and branch, ATM and customers
(Fitch. 2007).
·
UBA is ranked Number One Bank in Nigeria (Agusto & Co, 2007).
·
UBA is the second highest moving Nigerian bank according to The Banker world
rank (The banker, July 2008).
1.2 Statement of the Research Problems
The banks in Nigeria among other
sectors has developments but at the same time, it brings about its attendant problems. The questions this
research work intends to answer are as follows:
1.
How has an information technology aid banking operation?
2.
Why are banks unable to strictly comply with the mission statement/corporate
mission? With information technology, some bank management does not adequately
plan to meet the services quality. For example, the required number of
customers to be attended to by a cashier within the daily working hours to
guide against long queues is neglected- this causes delay in service delivery
time leading to long queues in the banking hall.
3. Why is high incidence of bank fraud borne
information technology? This fraud
ranges from ATM card fraud, internet banking fraud, email and text message
fraud, fund transfer to untraceable offshore accounts, among others.
4.
Does huge investment into information technology in banks have a proportionate
profit return?
1.3 Objective of the Study
The objective of the study is
to examine how the adoption of information technology affects the operations of
commercial banks in Nigeria such as:
1. How the introduction of information
technology has influenced bank performances as well as assessing logically
whether the adoption of information system has influence on the growth and
development in the banking sector.
2. Also to find out the reason why banks
nowadays have to abandon the former ways of operations to modern banking such
as e- banking and identify the problems arising from the operational system of
the commercial banks in Nigeria'.
3. To investigate into the extent of
effectiveness and efficiency in banking sectors after the introduction of
information technology.
4. To examine the modes by which commercial
banks can improve on their service delivery in order to attract depositor's
funds.
5. To access how information technology helps in
the reduction of cost and benefit in increasing the revenue profit of the bank.
6. To access how information technology has
assisted m the enhancement of
globalization of Nigeria commercial banks.
7. To access how information technology has
affected the customer base of the banks.
8. And finally to make recommendations based on
findings.
1.4 Research Questions
1. Does the introduction of information
technology have influence on bank performances?
2. Is there any reason why banks nowadays have
to abandon the former ways of operations to modern banking such as e-banking?
3. Are there effectiveness and efficiency in
banking sectors after the introduction of information technology?
4. What are the modes by which commercial banks
can improve on their service delivery in order to attract depositor's funds?
5. In what way has information technology helped
in reducing the cost and benefit of the bank?
6.
Does information technology assist the enhancement of globalization of Nigeria
commercial banks?
7. Does information technology affect the
customer base of the bank?
1.5 Research Hypothesis
Hypothesis I
HI: The use
of new information technology leads to improvement in banking services.
Ho: The use
of new information technology does not lead to improvement in banking services.
Hypothesis II
HI: The use
of information technology gives the bank a competitive edge over other banks in
the banking industry.
Ho: The use
of information technology does not give the bank a competitive edge over other
banks in the banking industry.
Hypothesis III
HI: The use
of new information technology has contributed to the profitability and growth
of the banks.
Ho: The use
of new information technology does not contribute to the profitability and
growth of the bank.
1.6 Scope and Limitation of the Study
The research work covers the
role information technology plays on the banking operations of commercial banks
in Nigeria. Specifically, the information in this research work is limited to
happenings in the United Bank for Africa Pic. Emphasis is laid on activities in
the United Bank for Africa Pic, in selected branches, in Lagos. The period of
the study is to be focused on 2004-2010.
The major limitations of this
research work are the constraints encountered in the use of questionnaires for
generating data information. Bank customers often find the efficiency of the
operational system of the bank in different ways or perspectives; hence, it 'is
not possible to determine the exact level of differences between belief and practice in the
banking operation.
The bank staffs are not ready
to give out information in any form particularly in writing as it may be
required in the case of questionnaires due to secrecy. To get information or
data from these groups of people, it takes a long process one has to exercise a
lot of patience.
Due to time and financial
capability, the researcher was unable to cover all the products of the bank
that has been made possible through information technology. I limit my findings
to elective banking department in head office at Lagos and some of the branches
in Lagos state.
1.7 Justification of the Study
The banking system is required
as a catalyst for a rapid macro-economic development of other sectors of the
economy; hence, its stability should be the priority of the government most
especially during the democratic dispensation. Going by the recent distress in
banking industry in Nigeria, the level of public confidence in the sector has
dwindled and this has led to the instability syndrome in the sector and as such
the public assurance and confidence on efficiency in the private sector in
decaying.
The major cause of this
syndrome can be attributed to the problems inherited in the banks operational
system. The quest for globalization and commercialization has brought about
innovations in technology. The digital age and the potential threat posed by
non-traditional competition which necessitates innovation has made it
inevitable for Nigerian commercial banks to improve upon their operation as
they face evolving revolution are being confronted with increasingly
sophisticated customer base compelling them to offer today what their customers
would be expecting tomorrow. Banks have to deviate from just being a profit
making bank to a more conscious customer centered institution.
This research will enable
banks to identify ways of remaining competitive in the global and domestic
financial industry. It also helps prepare banks repositioning towards meeting
the challenges imposed by global banking. Also, it is expected that the work
will contribute to the bank's future projections on strategies to be used in
attracting depositor's funds, reduce queues in the banking hall, the bank's
management policies.
Finally the research work will
also be- a contribution to knowledge in academic field and serve as a source of
reference to researchers who would carry out research on similar study in the
future.
1.8 Research Methodology
Data for this research work
will be collected using two of data gathering techniques. The primary source
will be facilitated through questionnaires to be administered at random among
staff and customers of the selected bank.
Information from internet,
journals and articles and the use of textbooks as well as the CBN bullion will
constitute the secondary source of data for this research work.
Also, primary data to be
collected for this project will be analyzed through the descriptive approach,
while the secondary data will be analyzed using tables,' frequencies and percentages. Data to be
collected in this regard include data on bank productivity, capacity utilization and employment
size.
1.9 Organization of the Study
This research work contains
five chapters.
Chapter one contains the
introduction of ·the study, statement of problems, objective of the study,
statement of Hypothesis, scope of the study, justification of the study,
research methodology, Operational definition of technical terms as well as the
plan to the study.
Chapter two covers the
literature review while chapter three deals with research techniques and source
of date.
The date gathered in chapter
three were presented, analyzed and interpreted in chapter four while the
summary, conclusions and recommendations of the findings were discussed in
chapter five.
1.10 Operational Definition of
Terms
Computer Crime: Crime actions accomplished
through the use of computer systems, especially with intent to defraud, destroy
or make unauthorized use of computer system resources.
Computer Terminal: Any input output device
connected by telecommunication links to a computer.
Data: Facts or observations about
physical phenomena or business transaction
Data Base: A collection of logically
related records or files. It consolidates many records previously stored in
separate files so that a common pool of data records serves many applications.
Data Processing: The execution of systemic
sequence of operations performed upon data to transform it into information.
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