Impact of Information Technology on the Nigerian Banking Sector

IMPACT OF INFORMATION TECHNOLOGY ON NIGERIAN BANKING SECTOR (A CASE STUDY OF ZENITH BANK NIG. PLC) MURTALA MOHD WAY KANO BRANCH BY ANWAR HASSAN SPS/08/SMS/02856 IN PARTIAL FULFILLMENT OF THE REQUIREMENT OF THE AWARD OF POST GRADUATE DIPLOMA IN BAYERO UNIVERSITY KANO. July, 2010 CERTIFICATION PAGE This is to certify that_________________________________ Name:- Anwar Hassan Exam No:- SPS/08/SMS/02856 SUPERVISOR :- DR. MOHD LIMAN SIGNATURE:- __________________________ DEDICATION This project is dedicated to my entire family. ACKNOWLEDGMENT The task of putting this project into shape calls for the support of many hands.

Firstly I would like to thank the Almighty Allah for giving me the life, without which I would not exist. My regards goes to my project supervisor Dr. Mohd Liman for his corrections and constructive critism on the best way to handle the project. My regards goes to my wife, Hajiya Rukayya Aliyu Umar B/Kudu for her role throughout this work. My hand of facilitation should also be extended to all my lecturers in the department of business Administration. I also wish to express my gratitude and appreciation to all the staff of Zenith Bank Nig. Plc for their co-operation during work.

My acknowledgement would be incomplete without mentioning my father’s/family role and guidance throughout my academic pursuit, Alh. Hassan Mohd Whom care and humility keeps me going all along. ABSTRACT it is obvious that the advent of information technology offers banking firms a new frontier of opportunity and challenges, despite this possibilities, there are various psychological and behavioural issues such as trust, security of internet transactions, reluctance to change and preference for human interface which appear to impede the growth of internet banking.

Consequently, the action taking by Nigerian banking sector in appropriately utilizing (IT) determine the success of the banks. Thus the study accesses the impact of (IT) in Zenith Bank Nig. Plc Murtala Muhammad way Kano Branch from the use of self administered questionnaire, the result of the study shows that the impact of information technology in the bank is the huge cost saving and the enhance speed in carrying out the financial activities of the bank. It is found that the branch has not been very effective and efficient in delivering services to the customers.

The study therefore recommend among others the provision of compulsory training to all the staff in the bank to improve service delivery to the customers. ABSTRACT The researcher work centres on the impact of (IT) on Nig. Banking Sector (A case study of zenith bank Nig. Plc) which also take cognisance of statement of the general problem, significance of the study. The researcher also acknowledge the opinions of various authors on the chosen topic with names and year clearly stated. Questionnaire & personal interview were used in collecting the detail information required for this research work.

Responses from various respondent were tabulated and analysed with the aid of simple percentage ratio for easy assessment by the researcher. Recommendations were made in line with the findings. TABLE OF CONTENT Title page……………….. ………………………………………………………………. i Certification…………………………………………………………………………….. ii Dedication……………………………………………………………………………….. iii Acknowledgment…………………………………………………………………….. iv Abstract……………………………………………………………………………………. v Table of content……………………………………………………………………….. vi CHAPTER ONE 1. 1Background of the study…………………………………………………1-3 1. Statement of the problem………………………………………………3-5 1. 3Objective of the study……………………………………………………….. 5 1. 4Significance of the study…………………………………………………6-7 1. 5Research methodology………………………………………………………. 7 1. 5. 1Population of the study…………………………………………………. 7 1. 5. 2Sampling techniques…………………………………………………….. 7 1. 5. 3Method of data collection………………………………………………. 8 1. 5. 4Method of data analysis…………………………………………………8 1. 5. 5 Method of data presentation………………………………………. 8 CHAPTER TWO 2. 1 Introduction………………………………………………………………………. 9 2. 2Concept of Information Technology……………………………. -10 2. 3Information Technology Network………………………………10-11 2. 4 Data Base and its application business…………………………. 12 2. 4. 1 The Usage of data base in Business………………………. 12-13 2. 4. 2 Function of Data Base…………………………………………….. 13-14 2. 4. 3 The need for database in organization………………….. 14-15 2. 5Electronic Banking…………………………………………………….. 15-16 2. 6 P. C Banking…………………………………………………………………….. 17 2. 7Internet Banking…………………………………………………………17-18 2. 8 Data Presentation and Analysis………………………………………. 18 2. 8. 1 Demography of the respondent…………………………………….. 8 2. 8. 2 Year of service of the respondent in Murtala Mohd Kano Branch………………………………………………………………….. 19 2. 8. 3 The Position/Department of the respondent………….. 19-20 2. 8. 4 Qualification of the respondents questionnaire……………20 CHAPTER THREE 3. 1 Introduction……………………………………………………………………21 3. 1. 2 Summary of work done…………………………………………………21 3. 2. 2 Summary of major findings……………………………………. 21-22 3. 3 Conclusion……………………………………………………………….. 22-23 3. 4 Recommendation…………………………………………………….. 23-24 CHAPTER ONE INTRODUCTION 1. 1BACKGROUND OF THE STUDY

Information Technology is increasingly becoming the most profound determinant of changes across work in 21st century. This phenomena can be understood fro the wholesale deployment of the convergence of the high speed computers, communication apparatus, information and data bank as well as skilled manpower, which brought about dramatic changes in all facts of life. The emergence of multi- link computer network and the falling cost of computer and computing power have completely turnaround the way we live, work and even the way we think.

It is now common to transfer voice data, image and video clips across continents in a matter of seconds. The overwhelming impact of this technological explosion is also being felt in the banking industry. Implementation of information technology has completely revolutionaries the banking industry, the system is fast changing from paper based branch banks to digitalized banking service infact, it has already altered the internal accounting and management system of banks and its fundamentally changing the delivery system need to facilitate inter section with customers.

The deployment, according to Ghaziri (1998) has seen banks all over the world struggling to keep pace with technological solution to meet the challenges of a rapidly changing world, in this context banks with the ability to invest and integrate information technology will become dominant and command competitive edge in the global market. Like other industry in contemporary society, operators of banking are convenient that investing in the bank is critical and the future of all facet of banking depend on the mpact of information technology in banking is hinged on strategic planning aimed at conciliating long-term marketing plans and position. This impact is often viewed in three dimensions. It affects the employees, customers and bank concerned. For the banks, development in information technology allow for more efficiency and effectiveness in the delivery of banking products and service . It has therefore created new bases for competition. The information technology revolutionary in banking permits rapid access to information that is critical to business decision, prompt delivery and urgency of judgment required in competitive global market.

Thus the ability to act quickly and effectively will distinguish the successful banks of the future from ones destined to fall back Harari (2000). There cannot be a more appropriate time for banks in Nigeria to ensure the sweeping information technology revolution than now. The awesome possibilities in self- inquiring facility , remote banking , tele banking and electronic payment system among others are high ingredient of development in the financial sector which invariably pose positive impact for the entire economy.

Amidst all these , one cannot contemplate technology apathy in modern banking, first as it is difficult to ignore the low side of the technology revolution in banking industry with particular reference to Zenith Bank Nigeria Plc. This studies the high and the low sides of the impact of IT banking in the development of the economy. 1. 2 STATEMENT OF THE PROBLEM The role of information technology as a factor of immense possibilities in today’s world is crucial for the survival of modern business. There is hardly , an industry that has failed to respond to the dynamic of information technology revolution. ince the realization of the potentials of information technology as the determinant of success in the new and even the next phase of banking . It has become a matter of policy for management and stockholders to adopt the IT option in business. This explain why banks are falling over themselves in pursuing technology based solution to business . Certain for banking such as, customers, services branch control, payment clearing system, international cash transfer etc and now being integrated into the business plan in the banking system.

A midst the underlying guest for representation in new world information order, it has become part of strategic thinking for banks to win the loyalty and commitment for customers to the culture of information technology by letting them into the numerous possibility that is promised. This study is concerned about the functioning of banking vis-a-vis its utilization of information of banking technology in business formulation and operations. The following questions are therefore, raised with a view to answering them in the course of the study. i. To what extent has the application of IT ensures the survival of the bank in Nigeria? i. How does information Technology contribute to the growth of the bank? iii. To what extent does the IT contribute to the attainment of the profitability goals of the banks iv. Have the IT use by the bank contribute to increasing market shares? 1. 3 OBJECTIVES OF THE STUDY Generally, this study is set to examines impact of information Technology on Nigerian Banking Sector with particular reference to Zenith Bank Plc, specifically, the study tries to achieve the following objectives. i. To find the extent to which the application of It ensures the survival of bank ii.

To determine if information Technology applied by banks contribute to the growth of these bank. iii. To examine whether information Technology contribute increase in their market share. iv. To check if information Technology application by the bank contributes in the attainment of profitability and goals of the bank? 1. 4 SIGNIFCANCE OF THE STUDY The significance of this study on the importance of maintaining a virile information technology base in the banking sector other than the ease with which it permits generation , storage, processing and retrieval of data, computer technology has boasted confidence in the operation of the bank sector.

Application of information Technology (IT) has increased the capacity of the bank to beat certain constraints in the implementation of rather difficult tasks in business operations, this has further raised the level of productivity evident in quality service delivery thereby lading to higher profit margin and increasing confidence among investors and stakeholder . For the researcher , the journey of the study would lead to invaluable acquisition to knowledge from the exposure of the operation of Zenith Bank Nigeria Plc and indeed the banking industry in the information Technology (IT) based society.

To the body of research in banking and Business administration, findings of the study will no doubt be an addition to the volume of literature , currently in existence. The study is also significant to large society for its commitment to unveiling the impact of information technology in banking. 1. 5RESERCH METHODOLOGY This chapter, as the name implies involve the population sample sampling techniques, samples size, method of data collection, method of data analysis as well as method of data presentation. 1. 5. 1 POPULATION OF THE STUDY The aim of the research is to cover the impact of the information technology in Nigeria banking sector.

Taking Zenith bank Plc as the case study The population of the study, therefore, comprised of the staff as well as customers of Zenith Bank Nigeria Plc, Kano (Murtala Mohammed way Branch). 1. 5. 2 SAMPLING TECHNIQUES In the course of this study the systematic random sampling in which every element of the population are engaged in similar activities as such has equal of being selected to respond to the questions administrated. 1. 5. 3 METHOD OF DATA COLLECTION Primary and Secondary source of data have been employed in the process of conducting the research.

Primary method of data collection is the first and new information which are specifically collected through administration of questionnaire to the respondent which form the basis of our data analysis and presentation. on the other hand are data which have been collected by person or group outside the organization under study. These are data that have been pre collected and re-recorded other than for their purpose of this research . these include textbooks, government publication, newspapers internet, which were employed from part of literature review of this study. 1. 5. METHOD OF DATA ANALYSIS The researcher uses tabular form for presentation and simple percentage to analyze the data collected, and draw inferences from them. 1. 5. 5 METHOD OF DATA PRESENTATION In view of this study, data where presented in tabular form. This according the researcher’s opinion is adequate for the intended purpose. CHAPTER TWO 2. 1INTRODUCTION As a catalyst in the process of economic growth and development, the Nigerian banking sector, had undergone some remarkable change in recent times, specifically the information technology has brought about dramatic change in the system.

The entire work done by heterogeneous writers, which are relate to project work are revisited, to allow for increase understanding and logical conclusion. In view of this, fact on issues related to definition of information technology , exploitation of information technology electronic office among other would be touched. 2. 2THE CONCEPT OF INFORMATION TECHNOLOGY Although various authors defined information technology in different forms , but it would appear that various definitions are in consensus. Each definition represents the different view on the individual author depending on his approach to the subject.

According to Learner and Trole (2010), information Technology concerns application and system for business that covers the entire business enterprises, its more than a spreadsheet and word processor program that used within a given organization. Leonard (2003:5), defines information Technology as the technology which support the activities involving the creation of electronic data processing together with their related method, management and application. He said further that information technology entails the following. i. What type of network to be used in an organization? ii.

What operating system(s) an organization should be using? iii. Comparing data base of customers, financial data business model etc. iv. What type of information needed in computer system and how such information are shared with the company v. The inter-connectivity of various field office to ensure efficient exchange of information. vi. The use of computer to improve customer service spread up in company business and become efficient. 2. 3INFORMATION TECHNOLOGY NETWORK According to Georgia (1980), there are four (5) concepts which are applicable to information technology (IT) as follows: i.

Information technology (IT) is only a development of updating data processing device both hardware and software. ii. Information technology is a device to assist management and specialist in undertaking their work, which is not of a routine nature. This will include electronically stored vocabularies with spelling connection facilities and the linkage of individual work station that allows interaction and discussion. iii. Information technology process related directly to cost saving by the substitution of manual task with mechanized version. iv.

Information technology includes the idea of artificial intelligence and involves the use of Decision Support System (DSS) to assist decision logic. However, with the success of Automated Teller Machine (ATM) Bank had the incentive of developing new product and new delivery channels. Such as home banking via phone and personal computer. ATM Network allowed the bank to reach new customers outside the market, served by their branches and created opportunity for greater price competition. With the help of Information Technology, what the bank delivered and how they deliver it have changed dramatically. . 4DATA BASE AND ITS APPLICATION ION BUSSINESS Dandago (2001), seen database as very important tool for modern managers. They assist in all levels in the selection, analysis and incorporation of facts and figures required for decision making in connection with the whole range of organization activities. Database can be define and use as demand . The term file is use more often. However a database means computer programme and a set of Integrated files, which constitute the corporation database . Database work best with information that is structured ins some ways.

Their strength lies in their ability to perform rapid searches. To sort data to different sequence and to select record that meet a given set of criteria. 2. 4. 1 THE USAGE OF DATA BASE IN BUSSINESS Typically, in a commercial organization there are various aspects of information and their uses. Dandago (2001), listed the use of database in business as follows:- i. The Sales/marketing department would need the information about stock representatives would need to know detail of a given product (revision, model) and its availability which means interrogating stock level, production schedule and so on. i. The finance Department which would incorporate the wage section need to collect information from all other department to be able to carryout its function. iii. The production management department would need to know machine capacities availabilities of raw materials and sales. iv. The Personnel Department would need to hold particular of all employees, and their record of services including facts about staff in the sales /Production department. 2. 4. 2FUNCTION OF DATABASE

The basic function of database system can be categorized into two (2) main functions as follows:- i. OPERATIONAL DATABASE The purpose of this category of database is to cope with requirement of data handling for activities such s payroll, selling and production, all oriented to batch processing (ie computerized system in which the computer does several job and after the other without instruction between the jobs) These kind of database are designed to deal with large inputs of numerical data and result in many printouts.

This approach requires a special trained staff who can ensure the correct method of data entry and who carryout extra programming if necessary. ii. INFORMATION DATABASE This data is intended simply to provide information demand and to satisfy the need of many different classes of users. The objective is that an organization database should not simply reproduce schedules and historical information, but should be able to contribute effectively to management activities including planning 2. 4. 3. THE NEED FOR DATABASE IN ORGANIZATION

Need for Database in an organization is very imperative in this era of computer. The data base has been generally accepted in an organization, because is used to examine the efficiencies arising from a non- database approach consisting of impediment programmes. Master and other files for stocks, sales acquisition and production etc they are:- i. Duplications of inputs and efforts e. g sales cause change in stock production level as well as affecting the purchasing requirement for raw materials ii. Data items are often duplicate.

These apply in many cases to complete record in files. iii. Interrelationship of all activities and occurrence may not be fully appreciated by individual manager involved in making decision in respect of their own units. 2. 5ELECTRONIC BANKING Richard (2001), describes electronic banking as process by which a customer may perform banking transactions electronically. The following terms all refer to one form or another of electronic banking. Personal computer (PC) banking internet banking , virtual banking , online banking, home banking, remote electronic banking and phone banking.

PC Banking, Internet banking or online banking are the most frequently used designations , it should be noted, however that the terms used to describe the various types of electronic taking are often used interchangeable. In line with this, electronic banking enables the bank to provide corporate or high value customer with a graphic users interface (GUI) software on a PC to require about financial transaction and account cash transfers, cheque book issue and acquiring on rates without visiting the bank.

The technology used to promote this service is called electronic data Interchangeable (EDI) . It is used to transmit business transactions in computer readable from between organization and individual in a standard form. In retails banking, the emphasis is on automation Teller Machine (ATM) Electronic Transfer Point of sales (ETPOS): The batch method, telephone banking smart card and online/offline, real time/up and other electronic based banking individual identification number (PIN) to treat their business which the bank rely upon.

The customers has an obligation to safeguard the card, the number , and the password to maintain confidentiality. The payment system on cash paper electronic method of each country differ. However , the core payment system on cash paper electronic method of each country differ . However, the core payment transaction types are:- i. Cash ii. Deposit of Cash from an account iii. Credit transfer from one account to another (Cheque direct Debit card). iv. Credit transfer from one account to another (GRO) 2. 6 P. C BANKING

According to Hussan (2006), PC banking is a form of online banking that enables customers to execute bank transactions from a PC via a modem. In most PC banking ventures the bank offers the customers a proprietary to perform financially transaction from his or her home computer. The customer then deals into the bank with his or her modern, down loads data and runs the programs that are resident on the customers computer. Currently, many banks offer PC Banking Systems that allows customers to obtain account balances and credit card statement, pay bills and transfer funds between accounts. . 7 INTERNAL BANKING Trent (2000) defines internal banking sometimes called “Online Banking” is an outgrown of the PC Banking. Internet banking uses the internet as the delivery channel by which to conduct banking activities. For example, transferring funds, paying bills, viewing, checking and savings, account balance, paying mortgages and purchasing financial instruments and certificate of deposits. In internet banking customer accesses his or her account from a browser software that runs internet banking programmes residents on the banks world-wide web server, not on the user PC. . 8 DATA PRESENTATION AND ANALYSIS The data presentation and analysis was base on the homographic ethics of the respondent ie years of service, position/departments respondents. 2. 8. 1 DEMOGRAPHY OF THE RESPONDENT This point of the study present the result of data collected on demography of the respondents in Murtala Mohd Kano branch and the result is presented in table 2. 8. 1 below:- Male3060 Female1040 TOTAL40100% Source :Questionnaire Responses, 2010 The table above shows that 30 (60%), of our respondent are male and 10(40%) are female 2. . 2 YEARS OF SERVICE OF THE RESPONDENT IN MURTALA MOHD KANO BRANCH The study present the result of data collected based on the years of service of the respondents. The result are presented in table 2. 4. 2 below:- VariableResponsesPercentage (%) 1-51020 6-101560 11-151520 16 and above– 40100% source:- questionnaire responses,2010 The table shows that 10 (20%) of respondent have 1-5 years experience in service, 15(60%) worked between 6-10 years, and 15 (20%) worked between 11-15 and none have worked for 16 to above. 2. . 3THE POSITION/DEPARTMENTS OF THE RESPONDENT IN MURTALA MOHD KANO BRANCH. VariableResponsesPercentage (%) Managers marketing110 Manager operations110 Marketers1020 Cashiers1530 Laborers1020 Drivers310 Total40100% The table above shows that 1 (10%) of respondents is the marketing managers and 1(10%) is the operational manager with 10(20%) as marketers and 15(30%) cashiers, 10(20%)( laborers and 3( 10%) as the Drivers. 2. 8. 4 QUALIFICATION OF THE RESPONDENTS IN MURTALA MOHD KANO BRANCH. VariableResponsesPercentage (%)

MSC/MBA/M. ED830 B. Sc /HND1525 OND/NCE1525 GCE/SCE220 TOTAL40100% The table shows that 8(30%) of the respondent are MSc/MBA/M. D holders 15(25) are B. Sc/HND 15(25) OND/NCE and 2(20) GC/SSCE CHAPTER THREE SUMMARY, CONCLUSION AND RECOMMENDATIONS 3. 1 SUMMARY The research work assesses the impact of information technology on Nigerian Banking Sector, Zenith Bank Plc, Murtala Mohd way Kano, it gives the general background of the study, limitation of the study, both primary and secondary data were used as research methodology.

Related literatures of the study were reviewed, conclusion and recommendations were provided at the end of the research work. The following are the major findings obtained from the data analyzed. i. The application of information technology ensures the survival of the banks, by reducing the cost of services, increasing the level of productivity evident in quality service delivery by leading to higher profit margin. ii. Information Technology contributes to the growth of the banks by improving their services an expanding their operational base. iii.

Information technology increase the market share by reducing the number of constraint in the implementation of different task in business operation and increase the confident among the investors and stake holders. iv. The ability of information technology to provide huge cost saving, convenience, ability to access remote and far areas of the world for new business and enhanced speed in carrying out financial activities, increase the profitability and goals of the bank. v. Information Technology has brought greater efficiency in the utilization of productive information through improved competition and innovation 3. CONCLUSIONS The following conclusion are drawn from the findings of the study. i. The cost of acquisition, maintenance, establishing network and the tariffs charged are so high that even if computers, are available it is only privilege few who can have access to the service. ii. The quality of training is also a serious constraint to the effective use of Information Technology in the bank. iii. The absence of a clearly defined legal frame-work for information technology, leaving banks with inadequate legal cover to provide the services. iv.

Inavailability of informational infrastructure remain the main setback to the development of information technology e. g telephone line failures and electronic blackout are frequently experienced. 3. 3 RECOMMENDATIONS Based on the problem identified and conclusion drawn the following recommendation are made. i. The bank should provide a compulsory computer literacy training for their staffs to improve the efficiency of the system. ii. The bank should incorporate into legislation to protect customers privacy of account due to proliferation of data. ii. The bank should collaborate with the modern scientist to find out a way completely obliterating the menace of computer virus syndrome, if (IT) is to continue to be reliable to the customers. iv. Government should provide infrastructural facilities to enable the bank make efficient and effective use of information technology. QUESTIONNAIRE 1. Demography of Respondents: a. Male b. Female 2. Years of Service a. 1 – 5 years b. 6 – 10 years c. 11 – 15 years d. 16 – above years 3. Position/Dept a. Senior Staff b. Junior Staffs . Labourers 4. Qualification of the respondents a. Msc/MBA/M. ED b. Bsc. /HND c. OND/NCE d. GCE/SSCE 5. Do Information Technology ensures the survival of the Bank? a. Yes b. No 6. Do the application by of information Technology contribute to the attainment of profitability and goal of the bank? a. Yes b. No 7. Do the system contribute to increase in the market share? a. Very High b. High c. Low d. Very Low REFERENCES 1. The status of information communication and technology in financial institution in Nigeria. Owojori, Anthony A.

University of Ado-Ekiti, Nig. 25 August 2009. 2. Central Bank of Nig (2000), Banking Supervision Annual, Central Bank of Nigeria, P. 36. 3. Oyesanya Y(2004), Nigerian Internet 419 on the loose, the Nigerian Village Square, March 28 (www. Nigeriavillagesquare. com) 4. Information technology the story? the journal of economic perspectives, Vol. 14, No. 4, pp. 3 – 22 5. Ugwu L. O. Oyebisi T. O. , Ilori M. O and Adagunodo E. R (2000) Organisational impact of (IT) on Banking and insurance sector in Nigerian TECHNOVATION VOL. 20, No. 12.

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