IMPACT OF ICT ON THE FINANCIAL PERFORMANCE OF DEPOSIT MONEY BANKS IN NIGERIA
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CHAPTER ONE
INTRODUCTION
1.1 Introduction
In recent times, Information Communication Technology (ICT), which majorly involves the use of electronic gadgets like computers for storing, analyzing and distributing data, is having an increasing influence on almost all aspects of human lives and that of the economy- the banking sector inclusive. The increasing use of ICT has allowed for integration of different economic units in a spectacular way. This phenomenon is not only applicable to Nigeria but the world at large, though the level of their usage may differ. In Nigeria, ICT usage especially in the banking sector, has considerably improved, even though it may not been as high as those observed for advanced countries (Adeoti, 2005; Adeyemi, 2006).
Banks face serious challenges in managing the dynamic nature of their customers who are now very sophisticated and knowledgeable in the banking relationship. Thus, banks have developed so many strategies to be more responsive to the demand of their customers and to manage the situation for survival and growth through reduced costs of operation, significant share of customer’s transaction, and profitability among others.
Eventually, the ICT became the lifeblood of any organization for growth and development. Thus, the entire world is moving away from traditional banking to computerized banking applications. Consequently, there has been huge investment in ICT infrastructures and personnel. Related to this, there have been significant influxes of ICT companies, consultants and service providers over the years. Furthermore organizations have deployed state of the art ICT infrastructures and experienced personnel for competitive reasons over the years. They have developed, applied and implemented the best ICT policy accordingly. Banks have been facing the top challenges of required ICT capital investments in human capacity building, deployment of equipments, systems or designing applications, etc due to the ever rapid changing ICT technology and the dynamism of the global ICT industry in particular.
Over the years, banks have invested huge capital in deployment of ICT solutions for front office and back office automation accordingly. However the ever increasing challenges of ICT deployment with the right choice had remained a burning issue in the banking industry with the ever increasing need of interdependence etc. It is against this background that this study sets to investigate and analyze the impact of ICT on the performance of deposit money banks in Nigeria.
1.2 Statement of the Problem
Times have changed, and so it is with every area of life including banking. One can now transact business across the globe through the use of Information Communication Technology (ICT). There are now electronic markets, electronic banking, electronic library, etc. Modern Banks now realized that only those that overhaul their payment service delivery and operations are likely to survive and prosper in this 21st century.
The evolution of ICT dates back to 1986 when the banking sector in Nigeria was deregulated. The result of this deregulation brought far-reaching transformation through computerization and improved bank service delivery. The 21st century will bring about an all-embracing convergence of computing, communications, information and knowledge. Information Communication Technology has given banks a potential they could only dream about and have given bank customers high expectations. Many commercial Banks today are still struggling with effective use of internet which limits the services to their customers.
Today’s business environment is very dynamic and undergoes rapid changes due to technological innovation, increased awareness and increased demands from customers. The banking industry of the twenty first century operates in a complex and competitive environment characterized by these changing conditions and highly volatile economic climate, and information and communication technology (ICT) is at the center of this global change curve (Agboola, 2006). Hence the banks that will survive and complete effectively in today’s business environment must necessarily integrate ICT into its operational processes. This study therefore intends to evaluate the impact of ICT on banks performance.
1.3 Objectives of the Study
The general objective of this study is to analyze the impact of ICT on the finance on the performance of deposit money banks in Nigeria. Specifically, the study intends to find out:
- Determine the extent to which point of sales services enhance the performance of banking sector.
- Determine the extent to which Automated teller machine (ATM) enhance the performance of banking sector.
- The access the effect of e-banking on the performance of deposit money bank.
1.4 Research Questions
The following research questions were raised to guide the study:
- Does point of sales services deployments have impact on banks return on asset (ROA)?
- Does Automated teller machine (ATM) have any significant impact on the performance of the banking sector in Nigeria?
- Does e–Banking improve the performance of deposit money bank in Nigeria?
1.5 Research hypothesis
Ho1: Point of sales (POS) does not have any effect on deposit money bank performance
Ho2: Automated teller machine (ATM) does not have any impact on the performance of deposit money bank
Ho3: e-Banking has no impact on the performance of deposit money bank
1.6 Significance of the Study
In the light of the stated objectives which this study is set to achieve, the following are the significance of the study
It would help to evaluate the adoption of information and communication technology by Nigerian banks in terms of its effect on banks efficiency and bank customer relationship
It would also justify the application of information and communication technology in banking service delivery in term of profitability of banks. This could be used as yardstick by banks that are yet to adopt information and communication technology in their operations
It would contribute to existing literature by identifying the major barriers to the adoption of information and communication technology in banking operation in Nigeria and suggest how to address them
It would also be an invaluable tool for students, academic, institutions and individuals that want to know more about the impact and relevance of information and communication in Nigeria banking sector.
1.7 Scope of the Study
This study focused on the empirical analysis of the impact of ICT on deposit money bank performance. The measures of banks performance are return on asset and bank deposit while the variable for banks performance is profitability. This study is limited to focus on Union Bank of Nigeria plc for the period of 2010-2018.
1.8 Definition of Terms.
Auto mated Teller Machine (ATM): A machine usually in a wall outside the bank, from which you take money out of your bank account, using a special card.
Computer: An electronic device that accept data as an inpute, process it and produce information as an output as a result of step by step of instructions (Woherem 2007).
Data: These are raw fact sent into the computer for processing eg. Teller, it helps in decision making or information in an electronic form that can be stored and processed by a computer.
Information Technology: Information technology is hard are, software and communication required for information system development and operations.
Nigeria Auto mated cleaning system (NACS): A system for the electronic funds transfer between banks of Nigeria.
Smart Card: A smart plastic card with a electronic part that records and share information.
Telegraph: This is a method of sending and receiving messages by electrical or radio signals.
- Plan Of The Study
This study in terms of coverage, it is divided into five chapters. Introduction review, research methodology, data presentation and analysis, summary, conclusion and recommendation.
Chapter one involve introduction, which include background of this study, statement of the problem, research questions, objectives of the study, research hypothesis, significance of the study, definition of terms and plan of the study.
Chapter two comprises of a five examination of the subject matter via literature review. This shed light on the work of different authors and researchers in related fields, review of journals and articles that are related and relevant to the work included.
Chapter three, methodology explains the use of analysis which examine the data obtained from the investigation of the study.
Chapter four shows the data analysis and presentation, analysis of questionnaire, analysis of personal data of respondents, and analysis according to research question testing of hypothesis.
Chapter five, the main findings of the study are discussed in addition, recommendation are also made.
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