The Role of Informationtechnology on the Nigerian Banking System

Only available on StudyMode
  • Topic: Bank, Online banking, Cheque
  • Pages : 8 (1689 words )
  • Download(s) : 28
  • Published : March 17, 2011
Open Document
Text Preview
Information Technology and Banking
It is becoming increasingly difficult, if not
impossible, for banks employing traditional
methods (manual methods) to compete favorably
in the industry. According to Gandy, (1995, p.18),
the potential of the new information era to deliver
financial services directly into people’s home is
causing trepidation among the big retail banks.
IMF conference of 1989 confirmed that
Information Technology has had more impact
on more fundamentals, more quickly, than
virtually any other external change in the history
of the banking industry. It is transforming every
aspect of a bank’s business, from its management
information to the nature of the products and
services it offers. It fundamentally affects many
of the key drivers of both cost and revenue,
which will increasingly determine a bank’s overall
profitability and competitive positions’
With Information Technology, electronic
funds and information transfer systems have
been variously designed to deliver services to
customers in a ‘better’ and ‘faster’ ways. Today,
investment in technology has become an
important component of an overall strategy in
banks. Writing on new technologies and
performance enhancement in the banking
industry, (Ovia, 1997, p.2) stated that the new
technologies have created unparalleled wired
economy. The transfer of money from point ‘A’
to point ‘B’ has resulted in turning the actual
money into bits and bytes through satellite
transponders, fibre optic cables or regular
telephone lines.
Banks utilize computer based systems as well
as telecommunication technologies for storage,
processing and communication (Adetayo et al.,
1997, p.692). Computer technology has provoked
several inventions and automated devices. The
advent of computer and its various application
areas has really brought succour to the agitating
mind of many bank executives. Computer, an
electronic device that accepts inputs, processes
them, produces outputs, and stores data (Barry,
1988, p.9) has become a potent weapon in their
hands. The origination of computer was an
outcome of a deliberate search for methods of
producing efficient, accurate and timely
allows banks to get closer to their customers,
find out what they really want, and deliver a
wider range of services at lower costs (Gate, 1996,
The first stage of the application of IT in
banking was the use of Computer as a back office
affair to transfer accounting and record keeping
activities from branch ledgers to a centralized
system The second application area was on the
automation of the labor intensive business of
clearing cheque (David, 1982, pp.78-79). The
third area of technological application accords
priority to the liberation of banks and customers
from the traditional constraints of time and place.
Here, existence of high-speed cash dispensers
and provision of home banking facilities have
brought banks into closer and more frequent
contact with their customers. Customers can do
their banking when they want and at the
convenience, comfort, privacy and security of
their homes. The fourth application area centers
on innovative technology where new products
and services are made available to the
customers. Banks now have computerized credit
ratings and programs that determine when
calculation of accounting balances is to be done.
The banking industry, which slowly evolved
over the centuries, has suddenly found itself
experiencing an intense process of change and
transformation occasioned by deregulation and
the exigencies of technological revolution. This
has tremendous effects on the mode of banking
operation and personnel requirements.
Automated Devices
Information Technology refers to the
automation of processes, controls, and
information production using computers,
telecommunications, software and ancillary
equipment such as Automated Teller...
tracking img