The Effect of Atm on the Operation of Commercial Banks in Nigeria

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  • Topic: Bank, Online banking, Cheque
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Information and Communication Technology (ICT) in Banking Operations in Nigeria – An Evaluation of Recent Experiences
Akinlolu Agboola
Obafemi Awolowo University
Ile-Ife, Nigeria
The study is a comprehensive evaluation of the response of Nigerian banks to the adoption of ICT. Three categories of variables that relate to the adoption and implementation of information technology devices were used for the study. These include the nature and degree of adoption of innovative technologies; degree of utilisation of the identified technologies; and the impact of the adoption of ICT devices on banks operation. The study covered 36 out of the 89 banks in the country as at the end of 2005. A total of 216, 180 and 36 questionnaires were administered to the employees, customers and Head of Systems Units of the 36 selected banks respectively. Out of these, 90.28%, 77.78% and 97.22% were respectively retrieved. The study revealed that the period between 1990 and 2005 was characterized by fundamental changes in the content and quality of banking business in the country. Technology has been discovered to be the main driving force of competition in the banking industry during the period of study. Whereas only one bank had ATM in 1998 by 2004, 14 of the studied banks had acquired the technology. EFT also increased from 3 to 14; Smart Cards from 1 to 11; Electronic Home and Office Banking from 3 to 9 and Telephone Banking from 3 to 12 within the same period. The adoption of ICT in 2

banks has improved customer services, facilitated accurate records, provides for Home and Office Banking services, ensures convenient business hour, prompt and fair attention, and enhances faster services. The adoption of ICT improves the banks’ image and leads to a wider, faster and more efficient market. It has also made work easier and more interesting, improves the competitive edge of banks, improves relationship with customers and assists in solving basic operational and planning problems.

Today’s business environment is very dynamic and undergoes rapid changes as a result of technological innovation, increased awareness and demands from customers. Business organisations, especially the banking industry of the 21st century operates in a complex and competitive environment characterized by these changing conditions and highly unpredictable economic climate. Information and Communication Technology (ICT) is at the centre of this global change curve. Laudon and Laudon, (1991) contend that managers cannot ignore Information Systems because they play a critical role in contemporary organisation. They point out that the entire cash flow of most fortune 500 companies is linked to Information System.

The application of information and communication technology concepts, techniques, policies and implementation strategies to banking services has become a subject of fundamental importance and concerns to all banks and indeed a prerequisite for local and global competitiveness. ICT directly affects how managers decide, how they plan and what products and services are offered in the banking industry. It has 3

continued to change the way banks and their corporate relationships are organized worldwide and the variety of innovative devices available to enhance the speed and quality of service delivery.
Harold and Jeff (1995) contend that financial service providers should modify their traditional operating practices to remain viable in the 1990s and the decades that follow. They claim that the most significant shortcoming in the banking industry today is a wide spread failure on the part of senior management in banks to grasp the importance of technology and incorporate it into their strategic plans accordingly. Woherem (2000) claimed that only banks that overhaul the whole of their payment and delivery systems and apply ICT to their operations are likely to survive and prosper in the new millennium. He advices banks to re-examine their...
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