Description
Today, information technology (IT) has become a key element in economic development and a backbone of knowledge-based economies in terms of operations, quality delivery of services and productivity of services. Therefore, taking advantage of information technologies (IT) is an increasing challenge for developing countries.
JOURNAL OF COMPUTER SCIENCE AND ENGINEERING, VOLUME 7, ISSUE 2, JUNE 2011
63
The Impact of Information Technology in
Nigeria’s Banking Industry
1
Oluwagbemi Oluwatolani
2
Abah Joshua and
3
Achimugu Philip
Abstract-Today, information technology (IT) has become a key element in economic development and a backbone of knowledge-
based economies in terms of operations, quality delivery of services and productivity of services. Therefore, taking advantage of
information technologies (IT) is an increasing challenge for developing countries. There is now growing evidence that Knowledge-
driven innovation is a decisive factor in the competitiveness of nations, industries, organizations and firms. Organizations like the
banking sector have benefited substantially from e-banking, which is one among the IT applications for strengthening the
competitiveness. This paper presents the current trend in the application of IT in the banking industries in Nigeria and gives an
insight into how quality banking has been enhanced via IT. The paper further reveals that the deployment of IT facilities in the
Nigerian Banking industry has brought about fundamental changes in the content and quality of banking business in the country.
This analysis and clarification of how Nigerian Banks have used IT to reengineer their operations is detailed through literature review
and observation. Three categories of variables that relate to the use and implementation of information technology devices were
considered in this paper. These include the nature and degree of adoption of innovative technologies; degree of utilization of the
identified technologies; and the impact of the adoption of IT devices on the bank operations.
Index Terms-Information and Communication Technology, Information Technology, Banking
—————————— ? ——————————
1 Introduction
he Internet is globally widespread in use,
becoming an integral of IT within businesses
as well as many homes [5]. A vast market has
developed on the Internet, online purchasing and
banking have been by-products of this growth.
Many businesses have been quick to recognize
and exploit the niche. The range product on-line is
virtually inexhaustible and puts the Internet at the
top of the list of convenience good, alongside
ready-made meals. In this rapidly evolving
modern society of which we are all a part,
convenience has become crucial to survive the
ever increasing pace of life.
In particular, e-business, one of the IT
applications with the highest impact upon the
global economy, is creating a new business
environment [1]. As a growing number of
companies launch new Internet-based business
lines, many of the new technology advances occur
as a result of their using the Internet to improve
business processes. This often involves using the
Internet to carry out business transactions. E-
business has revolutionized the business sector in a
way unprecedented in past centuries. It has
fostered a new set of economic and social
relationships. A critical use of the Internet is to
develop and experiment with new business
models. It is not technology by itself that makes or
breaks an Internet venture, but the underlying
innovation and adequacy of the adopted business
approach. IT and e-banking have now become the
key elements for strengthening the competitiveness
of the national economy and improving the
productivity and efficiency of both private and
government banks. However, access to and use of
these technologies remains extremely uneven [2].
Less developed economies are being left
behind in the expansion of a global economy
where knowledge is a key factor driving
productivity growth. IT and e-banking contribute
to the future of developing countries, Nigeria
inclusive; underestimating their importance may
ultimately increase the gap with industrialized
countries. Most banks in the country look towards
opportunities arising from the new marketplace.
They also hope to benefit from the more pervasive
and enduing effects of e-banking upon their
T
————————————————
1. Oluwagbemi Oluwatolani is with the Department of Computer Science
of Lead City University, Ibadan, Nigeria.
2. Abah Joshua is with the Computer Engineering Department of the
University of Maiduguri, Maiduguri, Nigeria.
3. Achimugu Philip is with the Department of Computer Science of Lead
City University, Ibadan, Nigeria.
© 2011 JCSEhttp://sites.google.com/site/jcseuk/
JOURNAL OF COMPUTER SCIENCE AND ENGINEERING, VOLUME 7, ISSUE 2, JUNE 2011
64
business organizations. They are adopting
Internet-based technologies to craft lean
production systems and improve their distribution
efficiency. In this way, the competitiveness of
banks can be greatly enhanced.
Furthermore banks have to provide an
excellent service to customers who are
sophisticated and will not accept less than above
average service. Thus, the issue of service
marketing in general, and banking services in
particular has become one of the most important
and modern directions which have witnessed a
substantial expansion during the last years in
almost all societies [2,3]. This is because the
increasingly significant role which banking
services have with the widening and variety that
these services are characterized with, thus banking
services have touched most aspects of
contemporary societies life and activities.
2 The Nigerian Banking Industry
The structure of the Nigerian financial services
industry changed drastically during the period
under review, bringing about significant changes
in the market [9]. Within the context of current
developments and with increased breadth and
depth of competition, the task of identifying the
unique characteristics that will enable any bank
outperform its peers is becoming more
challenging. The industry is now characterized by
the following interesting dynamics:
2.1 Developing Business Models
Nigerian banks are rapidly internationalizing; a
trend most visibly demonstrated by the number of
Nigerian banks opening branches across West
Africa whilst new players, especially foreign banks
may soon emerge. Many banks have returned to
the capital market to shore up their shareholders’
funds beyond the required minimum level, to
enable them play more actively in the international
arena.
2.2 Customer Sophistication
The gradual re-emergence of the Nigerian middle
class has given rise to a class of knowledgeable and
financially savvy customers. Their benchmarks for
service quality have also risen, aided by the intense
competition among financial service providers to
attract new customers. It is no longer just sufficient
to provide products, but to align these closely with
specific customer segments and their identified
expectations.
2.3 Technology
In response to the demands for quick, efficient and
reliable services, industry players are increasingly
deploying technology as a means of generating
insights into customers’ behavioural patterns and
preferences. Well developed outsourcing support
functions (technology and operations) are
increasingly being used to provide services and
manage costs (e.g. Automated Teller Machine
networks, Cards processing, Bill presentment and
Payments, Software Development, Call centre
operations and Network management).
2.4 Regulation and Supervision
Regulators are also moving towards global best
practices, as they gain a visibly improved
appreciation of Basle II plus Compliance. The
larger and more complex the bank, the greater the
range of risks it faces, which is why at United Bank
for Africa (UBA) for instance, have adopted self-
regulatory methods by addressing risks through a
rigorous enterprise-wide risk management
framework.
However, the scope and dimension of
financial services in the foreseeable future will be
different from the present, in terms of the character
of players, dynamism of business models,
competitiveness, customer’s expectations, the
degree of internationalization, adjustment to
technological trends and innovations, as well as the
standards of the underlying infrastructure. UBA
have positioned themselves in line with these
emerging trends. Specifically, the bank is looking
beyond Ghana (the most popular destination for
most Nigerian banks right now), and consider
other virgin territories in sub-Saharan Africa which
hold great potential, in view of the expected inflow
of donor reconstruction funds, oil exploration
funds and increased regional trade [4]. For
sometime now, the bank’s management has been
re-inventing the institution as a dynamic, people
driven, customer-focused institution and above all,
as a place where customers are not just happy to
bank, but employees (including out-sourced staff )
are happy to work with adequate provision and
JOURNAL OF COMPUTER SCIENCE AND ENGINEERING, VOLUME 7, ISSUE 2, JUNE 2011
65
implementation of the current information
technology support systems.
3 Electronic Banking and its
Revolution in Nigeria
Electronic banking can be described as the act of
carrying out the business transaction of a bank
using electronic devices. Examples of electronic
devices that are used include Computer Systems,
Global System for Mobile Communication (GSM)
phones, Automated Teller machine (ATM),
Internet facilities, Optical Character Recognition
(OCR), Smart Cards, etc. E-banking is about using
the infrastructure of the digital age to create
opportunities, both local and global. E-banking
enables the dramatic lowering of transaction costs,
and the creation of new types of banking
opportunities that address the barriers of time and
distance. Banking opportunities are local, global
and immediate in e-banking [6, 7].
The evolution of e-banking dates back to
1986 when the banking sector in Nigeria was
deregulated [10]. The result of this deregulation
brought far-reaching transformation through
computerization and improved bank service
delivery. Competition with new products became
keen within the system while customer
sophistication posed a challenge for them, hence
the reengineering of processing techniques of
business activities encourage the automation of
financial services especially among new generation
of commercial and merchant banks.
In effect, the emergence of a crop of new
generation banks following the liberalization of
bank licensing motivated the introduction of high
technology in the Nigerian banking system.
Some of them considered the ‚arm-chair?
brick and mortar approach to banking of the old
generation banks as having no regard for the
customers and therefore an identified weakness
they can exploit on.
These new banks discovered that the
evolving technology at the global level could be
applied to greater advantage in the Nigerian
financial landscape [8]. That indeed paid off for
some of them, as customers, who ordinarily would
have found it almost impossible to leave the banks
they were already familiar with for a new one that
was yet to find its feet, quickly noticed the
difference in the available products and service
delivery systems of the two categories of banks
(old and new generation). The customers without
hesitation opted to pay for the extra values that
would satisfy the extra-personalized product
services and the attendant personalized marketing.
They therefore demonstrated their
preparedness to switch from one bank to the other,
the old ties notwithstanding; as they identified
gaps in the service delivery of their original banks
[6]. E-banking makes use of certain identification
features before access/permission is granted by the
bank to its users. A widely used identification
feature today is the use of personal identification
number (PIN). These are usually a series of codes
which is only known to the customers who owns
the account or anyone else the person(s) wished to
have access to his account. Permission to perform
financial transactions is immediately granted by
the banks once this PIN is quoted.
4 Impact of IT in Nigeria’s Banking
Industry
The following include some of the major impacts of
information technology in Nigeria’s banking
system:
4.1 GSM Banking
This mode of e-banking makes use of the
Global System for Mobile communication
(GSM) phones as the primary electronic
device. GSM has improved the operational
efficiency of many banks in the country. The
mobile banking services basically allow
customers to operate their accounts with the
operating banks from mobile phones to a large
extent as long as their phones and network
support SMS (short messaging service). The
user could be able to check account balance up
to his two last transactions.
4.2 Automated Teller Machines (ATMs)
ATMs are a computer-controlled device that
dispenses cash, and may provide other
services to customers who identify themselves
with a Personal Identification Number. ATM
dispenses cash at any time of the day and
night, unlike the traditional method where
customers have to queue for a very long time
in order to withdraw cash or transfer funds.
JOURNAL OF COMPUTER SCIENCE AND ENGINEERING, VOLUME 7, ISSUE 2, JUNE 2011
66
4.3 Adoption of the ICT Integrated Project
Banks in Nigeria have successfully completed
information and communication technology
integration project which enables them to
communicate easily across as many employees
as possible within and outside the country to
deliver radically-enhanced customer-centric
services.
4.4 Funds Transfer
Customers can now electronically transfer
funds across the globe without any problem or
delay as compared to the traditional method
before the advent of information technology
when funds are seriously delayed before they
are delivered to the recipients.
4.5 On-Line Banking
With the aid of information technology, online
banking provides the opportunity of paying
bills and performing transactions of any kind
electronically. Electronic payments can be
credited or debited the same day. Customers
can make payments for goods or services
without necessarily coming in contact with
physical cash and running the risk of handling
a large amount of money.
4.6 Electronic Mail
Information technology has given rise to
electronic mail which improves
communication between individuals, external
parties and the bank within or across various
geographical regions or boundaries. The
availability of online information provides
bankers and customers with a powerful
vehicle for research.
4.7 Bankers Automated Clearing Services
This involves the use of Magnetic Ink
Character Reader (MICR) for cheque
processing. It is capable of encoding, reading
and sorting cheques. Also, request for cheque
books or purchase of draft can be made and
granted via electronic devices that are web-
enabled.
Summarily, the impact of information
technology in banking industries in Nigeria
cannot be over-emphasized. It has provided
flexible and convenient services to customers.
Most current e-banking applications make use of
the Internet which allows customers to obtain
current account balances at any time. Customers
do not need to bother themselves once money
have been deposited or withdrawn from their
accounts as most banks in Nigeria employs the
use of short message service (SMS) to intimate
customers of their balances immediately the
transaction is performed.
5 Conclusion
There are indeed no doubts that majority of
organizations including the banks have taken the
advantage of IT to enhance their operations. Today
most of them have website on the Internet in order
to extend their services globally, provide executive
services and promote quality of service delivery
[8]. Driven by their ambitious aspirations to
dominate the African financial services landscape,
and under the leadership of a dynamic and
visionary management team through information
technology, Nigerian banks has been rapidly
transformed from being just a bank to a one-stop-
shop financial solutions provider. As the
economies of Nigeria and Africa continues to
improve, following the established path of other
emerging markets; that is, increased political
stability, improved government finances, growing
domestic consumer demand, high commodity
prices and significant improvement in other
economic indicators, the banks in Nigeria are well
positioned as a warrant on the African renaissance
story.
It is expected that when the 3G network is
operational, it will boost m-Commerce activities in
Nigeria but may require further investment in the
quality of cell phones. However, there are
enormous opportunities for m-Commerce
implementation in Nigeria based on the rate of
growth and the diffusion of mobile devices. There
is prospect for patronage but may be dependent on
the available services.
6 References
[1] J. O. Adetayo, S.A. Sanni, and M.O. Ilori, ‚The
‘The Imp act of Information Technology on Product
Marketing: A Case Study of Multinational
Company in Nigeria? Technovation, Elsevier
Science Ltd, 1999.
JOURNAL OF COMPUTER SCIENCE AND ENGINEERING, VOLUME 7, ISSUE 2, JUNE 2011
67
[2] A.A. Agboola, ‚Impact of Electronic Banking
on Customer Services in Lagos, Nigeria? in Ife
Journal of Economics and Finance. Department
of Economics, O.A.U, Ile-Ife, Nigeria, vol. 5,
Nos. 1&2, 2000.
[3] A.A. Agboola, ‚Inform Technology, Bank
Automation and Attitude of Workers in
Nigerian Banks? in Journal of Social Sciences,
Kamla-Raj Enterprises, Gali Bari Paharwali,
India, 2003.
[4] S. A. Akpore, ‚The Backbone of Banks’ Service
Regeneration?, Money watch, J 22, p23.1998.
[5] J.H. Boyett, and J. T. Boyett, ‚Beyond
Workplace 2000: Essential Strategies for the
New American Corporation, New York?
Dutton, 1995.
[6] J, Hawkins, ‚The Banking Industry in the
Emerging Market Economies: Competition,
Consolidation and Systemic Stability: An
Overview?. BIS Papers No. 4, pp: 1-44, 2001.
[7] A, Jide, ‚Don’t open an account, if it
isn’t an E-bank?. Jidaw collective Available at
http://www.Jidaw.com//article.html, 2002.
[8] L.O. Ugwu, T.O. Oyebisi, M.O. Ilori and
E.R. Adagunodo, ‚Organizational Impact of
Information Technology on Banking and
Insurance Sector in Nigeria? TECHNOVATION
Vol. 20, No 12, 2000.
[9] E.W. Woherem, ‚Information
Technology in the Nigerian Banking Industry?
Spectrum Ibadan, 2000.
[10] Stamoulis, D, ‚How Banks Fit in an
Internet Commerce Business Activities
Model?. Journal of Internet Banking and
Commerce, Vol. 5, No. 1.
ACHIMUGU Philip is a Lecturer at the Department of
Computer Science of Lead City University, Ibadan, Nigeria.
He holds B.Sc and M.Sc degrees in 2004 and 2009
respectively in Computer Science. He is also a PhD student
at the Obafemi Awolowo University, Ile-Ife, Nigeria in the
same field. He has over 18 publications in reputable journals
and referred learned conferences both home and abroad.
His research area is mainly software engineering with
emphasis on: Development techniques, Development tools,
Software products architecture and Usability.
OLUWAGBEMI Oluwatolani is a Lecturer at Lead City
University, Ibadan, Nigeria. She can be reached at
Department of Computer Science (Room 118), Faculty of
Information Technology and Applied Science Building. She
Holds B.Sc and M.Sc degrees in 2005 and 2011
respectively. Her research interests include computer-based
information systems. She has published about 15 articles in
locally and internationally reputable journals and learned
conferences.
Abah Joshua is a Lecturer at the Department of Computer
Engineering of the University of Maiduguri, Nigeria. He Holds
B.Sc and M.Sc degrees in Computer Science in 2005 and
2011 respectively. His research interests include computer
networks and communication. He has published many
articles in locally and internationally recognized journals and
learned conferences.
doc_626110329.pdf
Today, information technology (IT) has become a key element in economic development and a backbone of knowledge-based economies in terms of operations, quality delivery of services and productivity of services. Therefore, taking advantage of information technologies (IT) is an increasing challenge for developing countries.
JOURNAL OF COMPUTER SCIENCE AND ENGINEERING, VOLUME 7, ISSUE 2, JUNE 2011
63
The Impact of Information Technology in
Nigeria’s Banking Industry
1
Oluwagbemi Oluwatolani
2
Abah Joshua and
3
Achimugu Philip
Abstract-Today, information technology (IT) has become a key element in economic development and a backbone of knowledge-
based economies in terms of operations, quality delivery of services and productivity of services. Therefore, taking advantage of
information technologies (IT) is an increasing challenge for developing countries. There is now growing evidence that Knowledge-
driven innovation is a decisive factor in the competitiveness of nations, industries, organizations and firms. Organizations like the
banking sector have benefited substantially from e-banking, which is one among the IT applications for strengthening the
competitiveness. This paper presents the current trend in the application of IT in the banking industries in Nigeria and gives an
insight into how quality banking has been enhanced via IT. The paper further reveals that the deployment of IT facilities in the
Nigerian Banking industry has brought about fundamental changes in the content and quality of banking business in the country.
This analysis and clarification of how Nigerian Banks have used IT to reengineer their operations is detailed through literature review
and observation. Three categories of variables that relate to the use and implementation of information technology devices were
considered in this paper. These include the nature and degree of adoption of innovative technologies; degree of utilization of the
identified technologies; and the impact of the adoption of IT devices on the bank operations.
Index Terms-Information and Communication Technology, Information Technology, Banking
—————————— ? ——————————
1 Introduction
he Internet is globally widespread in use,
becoming an integral of IT within businesses
as well as many homes [5]. A vast market has
developed on the Internet, online purchasing and
banking have been by-products of this growth.
Many businesses have been quick to recognize
and exploit the niche. The range product on-line is
virtually inexhaustible and puts the Internet at the
top of the list of convenience good, alongside
ready-made meals. In this rapidly evolving
modern society of which we are all a part,
convenience has become crucial to survive the
ever increasing pace of life.
In particular, e-business, one of the IT
applications with the highest impact upon the
global economy, is creating a new business
environment [1]. As a growing number of
companies launch new Internet-based business
lines, many of the new technology advances occur
as a result of their using the Internet to improve
business processes. This often involves using the
Internet to carry out business transactions. E-
business has revolutionized the business sector in a
way unprecedented in past centuries. It has
fostered a new set of economic and social
relationships. A critical use of the Internet is to
develop and experiment with new business
models. It is not technology by itself that makes or
breaks an Internet venture, but the underlying
innovation and adequacy of the adopted business
approach. IT and e-banking have now become the
key elements for strengthening the competitiveness
of the national economy and improving the
productivity and efficiency of both private and
government banks. However, access to and use of
these technologies remains extremely uneven [2].
Less developed economies are being left
behind in the expansion of a global economy
where knowledge is a key factor driving
productivity growth. IT and e-banking contribute
to the future of developing countries, Nigeria
inclusive; underestimating their importance may
ultimately increase the gap with industrialized
countries. Most banks in the country look towards
opportunities arising from the new marketplace.
They also hope to benefit from the more pervasive
and enduing effects of e-banking upon their
T
————————————————
1. Oluwagbemi Oluwatolani is with the Department of Computer Science
of Lead City University, Ibadan, Nigeria.
2. Abah Joshua is with the Computer Engineering Department of the
University of Maiduguri, Maiduguri, Nigeria.
3. Achimugu Philip is with the Department of Computer Science of Lead
City University, Ibadan, Nigeria.
© 2011 JCSEhttp://sites.google.com/site/jcseuk/
JOURNAL OF COMPUTER SCIENCE AND ENGINEERING, VOLUME 7, ISSUE 2, JUNE 2011
64
business organizations. They are adopting
Internet-based technologies to craft lean
production systems and improve their distribution
efficiency. In this way, the competitiveness of
banks can be greatly enhanced.
Furthermore banks have to provide an
excellent service to customers who are
sophisticated and will not accept less than above
average service. Thus, the issue of service
marketing in general, and banking services in
particular has become one of the most important
and modern directions which have witnessed a
substantial expansion during the last years in
almost all societies [2,3]. This is because the
increasingly significant role which banking
services have with the widening and variety that
these services are characterized with, thus banking
services have touched most aspects of
contemporary societies life and activities.
2 The Nigerian Banking Industry
The structure of the Nigerian financial services
industry changed drastically during the period
under review, bringing about significant changes
in the market [9]. Within the context of current
developments and with increased breadth and
depth of competition, the task of identifying the
unique characteristics that will enable any bank
outperform its peers is becoming more
challenging. The industry is now characterized by
the following interesting dynamics:
2.1 Developing Business Models
Nigerian banks are rapidly internationalizing; a
trend most visibly demonstrated by the number of
Nigerian banks opening branches across West
Africa whilst new players, especially foreign banks
may soon emerge. Many banks have returned to
the capital market to shore up their shareholders’
funds beyond the required minimum level, to
enable them play more actively in the international
arena.
2.2 Customer Sophistication
The gradual re-emergence of the Nigerian middle
class has given rise to a class of knowledgeable and
financially savvy customers. Their benchmarks for
service quality have also risen, aided by the intense
competition among financial service providers to
attract new customers. It is no longer just sufficient
to provide products, but to align these closely with
specific customer segments and their identified
expectations.
2.3 Technology
In response to the demands for quick, efficient and
reliable services, industry players are increasingly
deploying technology as a means of generating
insights into customers’ behavioural patterns and
preferences. Well developed outsourcing support
functions (technology and operations) are
increasingly being used to provide services and
manage costs (e.g. Automated Teller Machine
networks, Cards processing, Bill presentment and
Payments, Software Development, Call centre
operations and Network management).
2.4 Regulation and Supervision
Regulators are also moving towards global best
practices, as they gain a visibly improved
appreciation of Basle II plus Compliance. The
larger and more complex the bank, the greater the
range of risks it faces, which is why at United Bank
for Africa (UBA) for instance, have adopted self-
regulatory methods by addressing risks through a
rigorous enterprise-wide risk management
framework.
However, the scope and dimension of
financial services in the foreseeable future will be
different from the present, in terms of the character
of players, dynamism of business models,
competitiveness, customer’s expectations, the
degree of internationalization, adjustment to
technological trends and innovations, as well as the
standards of the underlying infrastructure. UBA
have positioned themselves in line with these
emerging trends. Specifically, the bank is looking
beyond Ghana (the most popular destination for
most Nigerian banks right now), and consider
other virgin territories in sub-Saharan Africa which
hold great potential, in view of the expected inflow
of donor reconstruction funds, oil exploration
funds and increased regional trade [4]. For
sometime now, the bank’s management has been
re-inventing the institution as a dynamic, people
driven, customer-focused institution and above all,
as a place where customers are not just happy to
bank, but employees (including out-sourced staff )
are happy to work with adequate provision and
JOURNAL OF COMPUTER SCIENCE AND ENGINEERING, VOLUME 7, ISSUE 2, JUNE 2011
65
implementation of the current information
technology support systems.
3 Electronic Banking and its
Revolution in Nigeria
Electronic banking can be described as the act of
carrying out the business transaction of a bank
using electronic devices. Examples of electronic
devices that are used include Computer Systems,
Global System for Mobile Communication (GSM)
phones, Automated Teller machine (ATM),
Internet facilities, Optical Character Recognition
(OCR), Smart Cards, etc. E-banking is about using
the infrastructure of the digital age to create
opportunities, both local and global. E-banking
enables the dramatic lowering of transaction costs,
and the creation of new types of banking
opportunities that address the barriers of time and
distance. Banking opportunities are local, global
and immediate in e-banking [6, 7].
The evolution of e-banking dates back to
1986 when the banking sector in Nigeria was
deregulated [10]. The result of this deregulation
brought far-reaching transformation through
computerization and improved bank service
delivery. Competition with new products became
keen within the system while customer
sophistication posed a challenge for them, hence
the reengineering of processing techniques of
business activities encourage the automation of
financial services especially among new generation
of commercial and merchant banks.
In effect, the emergence of a crop of new
generation banks following the liberalization of
bank licensing motivated the introduction of high
technology in the Nigerian banking system.
Some of them considered the ‚arm-chair?
brick and mortar approach to banking of the old
generation banks as having no regard for the
customers and therefore an identified weakness
they can exploit on.
These new banks discovered that the
evolving technology at the global level could be
applied to greater advantage in the Nigerian
financial landscape [8]. That indeed paid off for
some of them, as customers, who ordinarily would
have found it almost impossible to leave the banks
they were already familiar with for a new one that
was yet to find its feet, quickly noticed the
difference in the available products and service
delivery systems of the two categories of banks
(old and new generation). The customers without
hesitation opted to pay for the extra values that
would satisfy the extra-personalized product
services and the attendant personalized marketing.
They therefore demonstrated their
preparedness to switch from one bank to the other,
the old ties notwithstanding; as they identified
gaps in the service delivery of their original banks
[6]. E-banking makes use of certain identification
features before access/permission is granted by the
bank to its users. A widely used identification
feature today is the use of personal identification
number (PIN). These are usually a series of codes
which is only known to the customers who owns
the account or anyone else the person(s) wished to
have access to his account. Permission to perform
financial transactions is immediately granted by
the banks once this PIN is quoted.
4 Impact of IT in Nigeria’s Banking
Industry
The following include some of the major impacts of
information technology in Nigeria’s banking
system:
4.1 GSM Banking
This mode of e-banking makes use of the
Global System for Mobile communication
(GSM) phones as the primary electronic
device. GSM has improved the operational
efficiency of many banks in the country. The
mobile banking services basically allow
customers to operate their accounts with the
operating banks from mobile phones to a large
extent as long as their phones and network
support SMS (short messaging service). The
user could be able to check account balance up
to his two last transactions.
4.2 Automated Teller Machines (ATMs)
ATMs are a computer-controlled device that
dispenses cash, and may provide other
services to customers who identify themselves
with a Personal Identification Number. ATM
dispenses cash at any time of the day and
night, unlike the traditional method where
customers have to queue for a very long time
in order to withdraw cash or transfer funds.
JOURNAL OF COMPUTER SCIENCE AND ENGINEERING, VOLUME 7, ISSUE 2, JUNE 2011
66
4.3 Adoption of the ICT Integrated Project
Banks in Nigeria have successfully completed
information and communication technology
integration project which enables them to
communicate easily across as many employees
as possible within and outside the country to
deliver radically-enhanced customer-centric
services.
4.4 Funds Transfer
Customers can now electronically transfer
funds across the globe without any problem or
delay as compared to the traditional method
before the advent of information technology
when funds are seriously delayed before they
are delivered to the recipients.
4.5 On-Line Banking
With the aid of information technology, online
banking provides the opportunity of paying
bills and performing transactions of any kind
electronically. Electronic payments can be
credited or debited the same day. Customers
can make payments for goods or services
without necessarily coming in contact with
physical cash and running the risk of handling
a large amount of money.
4.6 Electronic Mail
Information technology has given rise to
electronic mail which improves
communication between individuals, external
parties and the bank within or across various
geographical regions or boundaries. The
availability of online information provides
bankers and customers with a powerful
vehicle for research.
4.7 Bankers Automated Clearing Services
This involves the use of Magnetic Ink
Character Reader (MICR) for cheque
processing. It is capable of encoding, reading
and sorting cheques. Also, request for cheque
books or purchase of draft can be made and
granted via electronic devices that are web-
enabled.
Summarily, the impact of information
technology in banking industries in Nigeria
cannot be over-emphasized. It has provided
flexible and convenient services to customers.
Most current e-banking applications make use of
the Internet which allows customers to obtain
current account balances at any time. Customers
do not need to bother themselves once money
have been deposited or withdrawn from their
accounts as most banks in Nigeria employs the
use of short message service (SMS) to intimate
customers of their balances immediately the
transaction is performed.
5 Conclusion
There are indeed no doubts that majority of
organizations including the banks have taken the
advantage of IT to enhance their operations. Today
most of them have website on the Internet in order
to extend their services globally, provide executive
services and promote quality of service delivery
[8]. Driven by their ambitious aspirations to
dominate the African financial services landscape,
and under the leadership of a dynamic and
visionary management team through information
technology, Nigerian banks has been rapidly
transformed from being just a bank to a one-stop-
shop financial solutions provider. As the
economies of Nigeria and Africa continues to
improve, following the established path of other
emerging markets; that is, increased political
stability, improved government finances, growing
domestic consumer demand, high commodity
prices and significant improvement in other
economic indicators, the banks in Nigeria are well
positioned as a warrant on the African renaissance
story.
It is expected that when the 3G network is
operational, it will boost m-Commerce activities in
Nigeria but may require further investment in the
quality of cell phones. However, there are
enormous opportunities for m-Commerce
implementation in Nigeria based on the rate of
growth and the diffusion of mobile devices. There
is prospect for patronage but may be dependent on
the available services.
6 References
[1] J. O. Adetayo, S.A. Sanni, and M.O. Ilori, ‚The
‘The Imp act of Information Technology on Product
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[2] A.A. Agboola, ‚Impact of Electronic Banking
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Journal of Economics and Finance. Department
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[3] A.A. Agboola, ‚Inform Technology, Bank
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[4] S. A. Akpore, ‚The Backbone of Banks’ Service
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[5] J.H. Boyett, and J. T. Boyett, ‚Beyond
Workplace 2000: Essential Strategies for the
New American Corporation, New York?
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[6] J, Hawkins, ‚The Banking Industry in the
Emerging Market Economies: Competition,
Consolidation and Systemic Stability: An
Overview?. BIS Papers No. 4, pp: 1-44, 2001.
[7] A, Jide, ‚Don’t open an account, if it
isn’t an E-bank?. Jidaw collective Available at
http://www.Jidaw.com//article.html, 2002.
[8] L.O. Ugwu, T.O. Oyebisi, M.O. Ilori and
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[9] E.W. Woherem, ‚Information
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[10] Stamoulis, D, ‚How Banks Fit in an
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ACHIMUGU Philip is a Lecturer at the Department of
Computer Science of Lead City University, Ibadan, Nigeria.
He holds B.Sc and M.Sc degrees in 2004 and 2009
respectively in Computer Science. He is also a PhD student
at the Obafemi Awolowo University, Ile-Ife, Nigeria in the
same field. He has over 18 publications in reputable journals
and referred learned conferences both home and abroad.
His research area is mainly software engineering with
emphasis on: Development techniques, Development tools,
Software products architecture and Usability.
OLUWAGBEMI Oluwatolani is a Lecturer at Lead City
University, Ibadan, Nigeria. She can be reached at
Department of Computer Science (Room 118), Faculty of
Information Technology and Applied Science Building. She
Holds B.Sc and M.Sc degrees in 2005 and 2011
respectively. Her research interests include computer-based
information systems. She has published about 15 articles in
locally and internationally reputable journals and learned
conferences.
Abah Joshua is a Lecturer at the Department of Computer
Engineering of the University of Maiduguri, Nigeria. He Holds
B.Sc and M.Sc degrees in Computer Science in 2005 and
2011 respectively. His research interests include computer
networks and communication. He has published many
articles in locally and internationally recognized journals and
learned conferences.
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