CHAPTER
ONE:-
INTRODUCTION
1.1 BACK GROUIND TO THE
STUDY
Globally,
information technology has become a key element in economic development of many
countries in the world. Over the years, many innovations have taken place in
the world, the most striking and most celebrated is the aspect of the internet.
Organizations today are confronted with rapidly changing market condition
indicated by high merger rate and strong competitors. Under these conditions,
traditional management approaches that focus on financial figures and on
centralized, analytical planning methods are considered to be insufficient for effectively
steering the organization in dynamic environment. Irechukwu‟ (2000), itemized
banking services that have been changed via the use of internet as including
opening an account, mandate on customers account, and transaction processing
and recording.
The Internet which is synonymous with computer communication
technology in everyday language can be defined as technologies that facilitates
the information cycle, comprising gathering, processing, disseminating and
storing of information and as such internet encompasses a wide range of
technologies such as telephone, computer, word processing application, web
browser, servers, full text document, database and main frame computers. Its
devices especially modern computer and email facilities has therefore strengthened
early modernizations such as fax and telephone. Other devices include data
recognition equipment, telecommuting and teleconferences using real time and
services (Adeoti, 2005).
Internet
has provided self-service facilities
from where prospective customers can easily complete their account opening
documents directly online. Internet in
Nigeria banking system and operation has been acknowledged as the life wire of
banks in the financial sector as it promotes and facilitates the performance of
commercial banks in the country. This therefore calls for as a result, there is
a pre-requisite need to embrace the Internet. It is in view of this that this research work
attempts to examine the role of Internet in promoting the efficiency of commercial
banks in Nigeria today. Internet has
played a prominent role in all areas of human life but the breakthrough of
social progress and the vigorous development in internet has immeasurably
increased the role of information in every facet of human life. It has also
improve the overall processes of commercial banks performance and efficiency in
Nigeria, via the use of innovation and creativity pertaining to information
technology by commercial banks, this as a result has led to smooth, easy and
convenient way of banking with adequate and quality service to customers, which
has also paved way for efficiency and effectiveness to banking in Nigeria. Banking
operation in Nigeria is becoming highly information technology based - this is
because of its inter-sectorial link and as it appears to be reaping from
technology revolution, as it is seen by its application in all areas of its
activities (Akinuli, 1999). According to
Laudon and Laudon, (1991), opined that managers of banks cannot ignore the use
of internet because it plays a significant role in contemporary organization. The application of internet concept,
techniques, policies and implementation strategies to commercial banking
services has therefore become a subject of fundamental importance as it
concerns all banks and a prerequisite for local and global competitiveness.
The banking operation must react
quickly to changes and other volatile variable in operation. In the past, a
large but manageable amount of book keeping in banks was handled manually, but
due to the expansion in banking industry, there are massive volumes of book
keeping today. It is not surprising that most banks have resorted to the
application of internet banking in some of their activities specialty with sophisticated
computers designed to meet their needs as well as their customers.
This obviously has been one of the ways
of solving the problem of increased volume of activities as well as accurate
and adequate information.
Be that as it is, Nigeria is not
left out in the quest for internet usage due to the speed with which it work is
being done in a couple of minutes and the need for such urgency cannot be
relegated to the book ground by the Sterling Bank Plc, Abuja.
As a result of this development,
high productivity has been achieved and conversely professionals like
accounting officers and other members of staff are threatened to be replaced by
this electronics machines.
1.2 STATEMENT
OF PROBLEM
Internet is seen as the back-bone of the
financial system in the economy and could also be referred to as the life-line
of the economy-therefore the success of an economy is solely based on its
financial system which out rightly is reference still being made to the past,
to do with the banking performance in the economy. A broad opening in internet
has been experienced in the world for banks and they are currently taking
advantage of these innovations to provide better improved customer and more
efficient services that will enhance productivity (Akinuli, 1999; Ovia, 2005).
This project will therefore find out the role of internet in promoting
efficiency in commercial banks and the adaption of internet has had on the vast
majority operations of commercial banks in Nigeria. It will provide a basis or
proposed recommendations which can be re-adjust to the threats, opportunities,
features technological competition and contingencies of internet banking on
commercial banks in Nigeria. According to Milgrom and Roberts (1990) they
argued that to be successful, firms typically need to adopt internet as part of
a “system” or “cluster” of mutually reinforcing organizational approaches.
Banking has come of age and as such, competition has alerted banks to look for
innovations that will keep their customers and even win more customers. As a
result of the need for efficiency and effectiveness of internet on commercial
banks, the web was introduced and has been used mostly for commercial purposes
through internet banking and information technology. The adoption of internet
in the banking sector is also attributable owing to the fact that, linguistic
barriers needed to be put to an end to enable easy and cheaper communication
during transaction, to foster customer-bank relationship, increase customer
satisfaction, improve operational efficiency, reduce the running cost, reduce
transaction time, give banks competitive edge, provide security to investors
fund and promotion of other financial services. This cloudy atmosphere
therefore provides a fertile ground for the researcher to examine the role of internet
in promoting efficiency in the banking
sector, especially its impact on Sterling Bank Plc, Abuja, which will be used
as a case study for this research so as to realize its significant impact and
also short and long term goals in their operations in order to guarantee their
profitability and growth.
1.3 OBJECTIVES OF
THE STUDY
The
general purpose of this study is to examine the role of information technology
in commercial banking in Nigeria. Sterling Bank Plc is used as a case study for
this research project. The study specifically aims to determine the significant
role of information technology in commercial banking in Nigeria. It will
examine how information technology has enhanced the growth of commercial banks
in Nigeria. Determine the effect of information technology in the process and
operation of Nigerian banks. It will evaluate the extent to which job
satisfaction of the banks has been influenced and affected ever since the
introduction of modern information technology on commercial banks. In this
regard the main objectives of this study will include:
i. To determine the extent to which
information technology has contributed to customer satisfaction and banks
performance.
ii. To determine how skillful and
knowledgeable the staff are in the use of information technology in commercial
banks.
iii. To determine whether there is an
increase in the level of efficiency and effectiveness of operations since the
introduction of information and electronic technologies in commercial banking
system.
1.4
RESEARCH QUESTIONS
i.
Does internet have any effect on the performance of commercial banks in
Nigeria.
ii.
To what extent have internet service help bank staff in the operations of their
duties.
1.5 RESEARCH HYPOTHESIS
In other to carry out
this research, the following hypotheses have been postulated. 1.
The Null (H0) Hypothesis
2.
The Alternate (H1)Hypothesis
The
null hypothesis states a conjecture in a negative form while the alternate
states a conjecture in a positive form (Izedonmi, 2005). For the purpose of this study, the hypothesis
testing shall be stated thus:
Hypothesis
1: H0: The use of Internet does not have a significant effect on
the operation of commercial banks.
H1:
The use of internet has a significant effect on the operation of commercial
banks.
Hypothesis 2: H0:
Internet does not help commercial banks in promoting efficiency in carryout
their duties
H1:
Internet does help commercial banks in promoting efficiency in carryout their duties.
1.6 SIGNIFICANT OF THE STUDY
Internet has a major driving force to
the development of technology which has impacted positively in virtually every
sector of the Nigerian economy. In the banking sector, financial institutions
use the internet in their day to day operations in order to provide quality of
service to their customers via the use of modern day technology. Internet has
also improved customers knowledge about the use of computer and other gadgets
through which customers of a bank can access their bank account and make other
payments anywhere in the world.
Internet has also enhanced
government work via reliable infrastructure, skilled human resources, open
government and other essential issues of capacity building and also developing
centres to improve IT capabilities especially at zonal, state and local levels.
In the light the above therefore
this study will be great benefit to the operations of many financial institutions,
most important banks as the study will council some of the most important use
of internet to promote the efficiency of their operations.
Again the study gives an insight
into the problems and prospects of using internet in banking operations.
Various organizations like the
governmental agencies, accounting firms, computer users etc. will equally find
this work beneficial.
1.7 SCOPE
AND LIMITATIONS OF THE STUDY
This
research is concerned with the role of internet in promoting efficiency in
commercial banks in Nigeria using Sterling Bank Plc, Wuse II, for the case study. This bank was certified
worthy for the research due to the wide spread branch network and high
indulgence in I.T practices. The bank performance is weighted before and after
the incorporation of internet into their system. We are also concerned with how
the employees and the customers are reacting to this new innovation. We will
also consider if investment made in internet was worth the end result achieved.
We will also endeavor to expatiate on the new facilities leading to the
assimilation of internet in the banking industry in Nigeria.
LIMITATIONS: This study may be limited due to slow
response of some banks in giving out information and low co-operation on the
part of the members of the public. And also, during the research work other
problems stemmed up in which some of them are:
FINANCIAL
CONSTRAINT: As
a student there was not enough capital to spend in transport and fact finding
and borrowing of necessary literature that would have helped in the writing of
this research work.
TIME
CONSTRAINT: The
time specified for the completion and submission of the project is considered
inadequate by the researcher.
ACADEMIC
WORK-LOAD: The
study coincided with the period the researcher was preparing for final year
lectures and examinations.
But notwithstanding, the researcher
still made a concerted effort in giving the work a good attempt.
1.9
DEFINITION OF TERMS
Internet:
Internet is the
connection or network of millions of computers worldwide for the purpose of sharing
of information. It is a global computer network providing a variety of
information and communication facilities, consisting of interconnected networks
using standardized communication protocols.
Computer:
is an electronic machine that can store, organize and retrieve/locate
information, perform calculations and control other machines.
Intranet:
Intranets are computer networks that are
privately developed and operated and operated within an organization.
Extranets:
Extranet is a collaborative network that uses internet technology to link with
their suppliers, customers or other business that share common goals. Information Technology: is the study or
the use in electronic processes for gathering and strong information and making
it available using computers.
World
Wide Web: is the system on the internet that allows you to
find and use information that is held on computers all over the world.
Computer
Security: has to do with the protection of information from
theft, competing or preservation from availability.
Electronic
Banking: is the situation whereby transfer of payment are
been done via computers.
Automated Teller Machine:
is a machine that enables banks customers to withdraw money from their checking
or savings account by inserting an Automated Teller Machine.
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