ABSTRACT

This research explores the impact of information technology (IT) on banking operations
in Nigeria. In the rapidly evolving global banking landscape, the adoption of IT has
become imperative for survival and competitiveness. The study delves into the
transformation brought about by IT, emphasizing the shift from manual to automated
processes, such as online billing, payments, and real-time teleconferencing. The research
highlights the role of specialized software programs and banking applications in carrying
out various banking functions, emphasizing the necessity for banks to overhaul their
payment and delivery systems to align with the dynamism of information and
communication technology. Furthermore, the study acknowledges the central position of
IT in fostering a cashless society, with features like Automated Teller Machines (ATMs)
and online banking contributing to enhanced customer service and operational
efficiency. The objectives of the study encompass determining the impact of IT on
banking operations in Nigeria, assessing how IT has facilitated the growth of Nigerian
banks, and examining its effects on liquidity. The research holds significance in justifying
the application of IT in banking services for profitability, identifying reasons behind the
shift to modern banking, assisting bank management in understanding the importance of
IT, contributing to existing literature on barriers to IT adoption, and serving as a
valuation tool for various stakeholders interested in the impact and relevance of IT in the
Nigerian banking sector. The study employs a comprehensive literature review,
emphasizing the concepts of ICT, electronic banking, and common banking products. It
explores the evolution of information and communication technology in the banking
sector and its various applications, including point of sale terminals, smart cards, ATMs,
and mobile banking. The research methodology involves a thorough examination of the
impact of IT on the performance of Banks, offering insights into the challenges faced and
the potential benefits accrued from IT adoption.
INTRODUCTION
Information and communication technology has become global tool for banking
industry to reach global markets. The use of ICT in banks has become a global
phenomenon and every bank must be ICT compliance in order to survive in global
competitive environment. The introduction of ICT has changed manual and traditional
forms of doing business and is being replaced by the sophisticated technology that is
based on automation and interconnection of computers and other electronic devices. For
instance, ledger books, paper invoice, printed materials and business trips are being
replaced with online billing and payments, elaborate website with product information
and real-time teleconferencing across continents and time zones (Ojokuku and Sajuyigbe,
2012).
Ovia (2001) said that the banking industry has moved into an era of menu-driven
ultra- robust specialized software programmes called banking applications and these
applications can carry out virtually all banking functions relying heavily on information
collection, storage, transfer and processing. Woherem and Adeogri (2000) claimed that
only banks that overhaul the whole of their payment and delivery systems and apply
Information communication technology (ICT) to their operations are likely to survive and
prosper in the new millennium. He advices banks to re-examine their service and delivery
systems in order to properly position them within the framework of the dictates of the
dynamism of information and communication technology.
Abubakar and Rasmaini (2012) observed that Information and communication
technology has become the heart of the banking sector, which is the heart of every robust
economy. The advancement in Technology has played an important role in improving
service delivery standards in the Banking industry. In its simplest form, Automated Teller
Machines (ATMs) and deposit machines now allow consumers carry out banking
transactions beyond banking hours. With online banking, individuals can check their
account balances and make payments without having to go to the bank hall. This is
gradually creating a cashless society where consumers no longer have to pay for all their
purchases with hard cash (Josiah and Nancy, 2012).
 Over the years, many innovations have taken place in the world. The most striking
and most celebrated is the aspect of information technology. Organisations 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 centralised, analytical planning methods are considered
to be insufficient for effectively steering the organisation in a dynamic environment.
Hoffman (2002). Recent management support approaches like balanced score card is
aimed at providing a broader view of organisational performance.
The role of technology in the “information age” is well recognised by banks,
businesses, industries, governments and as such has completely woven in to their
organisational structure and strategic planning process. Previous research work shows
that information technology has become the nervous system of banks today and as such
Nigerian banks which do not have the means to deliver banking service online and real-
time across all branches within the country and abroad will be termed uncompetitive.
Information technology has been acknowledged as the life wire of banks in the
financial sector as it promotes and facilitates the performance of banks in the country.
These therefore call for a pre-requisite need to embrace information technology. It is in
view of this that this research work attempts to examine the impact of information
technology on the performance of banks in Nigeria today.
STATEMENT OF PROBLEM
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. As a result of the need for
efficiency and effectiveness in the banking sector, the web is introduced and used mostly
for commercial purpose through internet banking and information technology. The
adoption of information technology in banking sector is 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.
Despite the adoption of information technology in banking sectors today with its
numerous objectives, observation has however shown that, not all the objectives have
been realised and felt by users. It is highly disheartening to observe that, some among
many undertaken are not working to standard thereby causing more harm than good to
shareholders, potential investors among other users. Banks today seems to be mainly
interested in the dividend declared and profit to be made, thereby losing sight of the
critical and more important areas like making transaction equipment’s work to standard,
providing security to investors fund so as to win more investors to the company and
intern make huge profit. Banks today are unable to comply strictly with the mission
statement/corporate mission with information technology. Much bank management does
not plan to meet the service quality, for example, the required number of customers to be
attended to by a cashier within the daily working hours to guide against long queue is
neglected irrespective of the fact that, automated teller machines (ATM) is introduced.
This intern causes delay in transactions. Despite this innovation ‘information
technology’, banks still find it difficult to properly sort out transactions thereby leading to
loss of trust by customers. Also the banks have found it a challenge to grow and meet up
with their responsibilities to shareholders and other stakeholders of the banks.
Irrespective of the fact that banks are making much profit, they still suffer from liquidity
problems which is said to be as a result of insolvency. Critically evaluating the
introduction of information technology owing to its objectives, it is not concern with how
much technology is provided but how well it serves potential users.
This cloudy atmosphere therefore provides a fertile ground for the researcher to
examine the effects of information technology on banks performance in Nigeria banks so
as to realise its significant impact on their operations in order to guarantee their
profitability and growth.
OBJECTIVES OF THE STUDY
The general purpose of this study is to examine how the adoption of information
technology affects the operation of commercial banks in Nigeria. The study specifically
aims to;
Determine the significant impact of information technology on the banking
operation in Nigeria. (Its effect in the reduction of cost and benefit in increasing the
income profit of the bank).
Examine how information technology has enhanced the growth of Nigerian banks.
Determine the effect of information technology on the liquidity of Nigerian banks.
SIGNIFICANCE OF THE STUDY
Every organization is concerned with the best possible strategy to adopt in
improving performance so as to guarantee sustainable growth that will lead to the
achievement of other goals. In light of the stated objectives which this study is set to
achieve, the following are the significance of the study;
It would justify the application of information technology on banking services
delivery as it result to profitability of banks.
It would also help to find out the reasons why banks today have to forgo the
former ways of operation to modern banking such as e-banking and as such identify the
problems arising from the operational system of commercial banks in Nigeria.
The knowledge that would be gained from this research work will assist
management of banks to appreciate the importance and use of information technology to
achieve the overall efficiency and effectiveness in operation.
It would as well contribute to existing literature by identifying the major barriers
to the adoption of this innovation on banking operation in Nigeria and suggest how to
address them.
It would also be a valuation tool for students, academic institutions, and
individuals that want to know more about the impact and relevance of information
technology in Nigerian banking sector.
 SECTION TWO
LITERATURE REVIEW
Concept Of ICT And Perspective Of Nigerian Banks
The revolution in ICT has made the banking sector changed from the traditional
mode of operation to presumably better ways with technological innovation that improves
efficiency. According to Mejabi (2008), information and communication technology is a
general term that describes any technology that helps to produce, manipulate, store,
communicate and/or disseminate information. Microsoft Encarta 2009 defined
information and communication technology as the processing of data via computer: the
use of technologies from computing, electronics, and telecommunications to process and
distribute information in digital and other forms. Information technology combines the
technology of computers and communications to provide information processing services
throughout the office or around the world. Sajuyigbe and Alabi, (2012) posited that ICTs
encompass technologies that can process different kinds of information (audio, video,
text, and data), and facilitate different forms of communications among human agents,
and among information systems.
Information and communication technology is a term which generally covers the
harnessing of electronic technology for the information needs of businesses at all levels,
(Anderson, 1990). In addition, Longley and Shain (1992), defined information and
communication technology as the acquisition, processing, storage and dissemination of
vocal, pictorial, textual and numerical information by a micro-electronic based
combination for computing and telecommunication. While an information system (IS) is
a group of formal process that together collects, retrieve, process, store and disseminate
information for the purpose of facilitating planning, control, coordination and decision
making in organizations. Information and communication technology on the other hand
provides the technical solutions identified in the (IS) information system; including the
networks, hardware and software (Accad , 2009). Ovia, (2001)conceived of information
and communication technology to broadly encompass the information that business
creates and use as well as a wide spectrum of increasingly convergent and linked
technologies that process the information. In addition to computers, the data recognition
equipment, communication technologies, factory automation and other hardware services
are involved. Traditionally, telephone, radio and television were referred to as media
technology.
The use of information and communication technology in banking operations is
called electronic banking. Ovia, (2001) argued that Electronic banking is a product of e-
commerce in the field of banking and financial services. In what can be describe as
Business-to-consumer (B2C) domain for balance enquiry, request for cheque books,
recording stop payment instruction, balance transfer instruction, account opening and
other forms of traditional banking services. Banks are also offering payment services on
behalf of their customer who shop in different e-shops. The use of ICT has delivered a
wide range of value added products and services to bank customers (Ojokuku and
Sajuyigbe, 2012). The use of information technology in banking operations is called
electronic banking. Josiah and Nancy, (2012) observed that there are positive impacts of
e-banking on bank turnover and profitability and to a lesser extent on employment, most
notably when e-commerce is part of larger business strategies of bank. The use of e-
banking can contribute to improved bank performance, in terms of increased market
share, expanded product range, customized products and better response to client
demand. Only banks that use their technology resources effectively have the opportunity
to secure real competitive advantage in this fast changing industry through real product or
service differentiation.
Information and Communication Technologies (ICTs) may be viewed in different
ways. The World Bank defines ICTs as “the set of activities which facilitate by electronic
means the processing, transmission and display of information” (Alu, 2002). ICTs “refer
to technologies people use to share, distribute, gather information and to communicate
through computers and computer networks” (Laudon and Laudon, 2001). ICTs can be
described as a complex varied set of goods, applications and services used for producing,
distributing, processing, transforming information (including) telecoms, TV and radio
broadcasting, hardware and software, computer services and electronic media” (Laudon
and Laudon; 2010). ICTs represent a cluster of associated technologies defined by their
functional usage in information access and communication, of which one embodiment is
the Internet.
Electronic Banking And The Common Banking Products
Ojokuku and Sajuyigbe (2012) identified the following ICT banking products:
1. Point of Sale terminals: POS terminals handle cheque verifications, credit
authorization, cash deposit and withdrawal, and cash payment. This enhances
electronic fund transfer at the point of sale (EFTPOS). EFTPOS enables a customer's
account to be debited immediately with the cost of purchase in an outlet such as a
supermarket or petrol station. It consists of the accumulation of electronic payment
messages by the retailer, which are subsequently passed on to appropriate institutions
for processing. The purchase price is debited on the buyer's account and credited on
the seller's account.
2. The Card System: The card system is a unique electronic payment type. The smart
cards are plastic devices with embedded integrated circuit being used for settlement of
financial obligations. The power of cards lies in their sophistication and acceptability
to store and manipulate data, and handle multiple applications on one card securely.
Depending on the sophistication, it can be used as a Credit Card, Debit Card and
ATM (Automated Teller Machine) card.
a. A credit card: This is a payment card issued to users as a system of payment. It
allows the cardholder to pay for goods and services based on the holder's promise
to pay for them. The issuer of the card creates a revolving account and grants a
line of credit to the consumer(or the user) from which the user can borrow money
for payment to a merchant or as a cash advance to the user.
b. A debit card: This is also known as a bank card or check card is a plastic payment
card that provides the cardholder electronic access to his or her bank account(s) at
a financial institution. Some cards have a stored value with which a payment is
made, while most relay a message to the cardholder's bank to withdraw funds from
a payee's designated bank account. Online debit cards require electronic
 authorization of every transaction and the debits are reflected in the user’s account
immediately. The transaction may be additionally secured with the personal
identification number (PIN) authentication system; some online cards require such
authentication for every transaction, essentially becoming enhanced automatic
teller machine(ATM) cards.
3. Automated Teller Machine (ATM): An ATM device allows a bank customer to
withdraw cash from his account via a cash dispenser (Machine), and the account is
debited immediately. A fundamental advantage is that it needs not to be located
within the banking premises. It is usually in stores, shopping malls, fuel stations etc. It
saves customers time in service delivery as alternative to queuing in bank halls,
customers can invest such time saved into other productive activities. ATMs are a
cost-efficient way of yielding higher productivity as they achieve higher productivity
per period of time than human tellers.
4. Mobile Banking: Mobile Banking refers to provision and ailment of banking- and
financial services with the help of mobile telecommunication devices. The scope of
offered services may include facilities to conduct bank and stock market transactions,
to administer accounts and to access customized information.
 SECTION THREE
Impact of ICT Adoption on Nigeria Banking Operations
The adoption of Information and Communication Technology (ICT) in the
Nigerian banking sector has revolutionized traditional banking operations, reshaping the
industry's landscape and significantly impacting various aspects of service delivery. This
shift from manual to automated processes has been pivotal in enhancing operational
efficiency, customer experience, and overall competitiveness.
One of the notable effects of ICT adoption in Nigerian banks is the transformation
of routine banking transactions. Automated Teller Machines (ATMs) have become
ubiquitous, allowing customers to access their accounts, withdraw cash, and conduct
various financial transactions beyond traditional banking hours. The convenience offered
by ATMs has not only improved customer service but has also contributed to reducing
queues in banking halls.
Electronic banking, facilitated by ICT, has introduced innovative services such as
online billing, payments, and real-time teleconferencing. Customers can now engage in a
wide range of banking activities from the comfort of their homes or offices, reducing the
need for physical visits to bank branches. This shift towards digital banking aligns with
global trends and fosters financial inclusion by providing access to banking services in
remote areas.
Moreover, the adoption of specialized software programs and banking applications
has streamlined internal processes within banks. These technologies facilitate information
collection, storage, transfer, and processing. They have become indispensable tools for
managing diverse banking functions, from ledger maintenance to credit authorization and
payment services. The result is a more efficient and effective banking system capable of
meeting the demands of a dynamic and competitive financial environment.
Despite the positive impact, challenges associated with ICT adoption in Nigerian
banking operations are evident. The study recognizes liquidity problems and potential
gaps in meeting service quality standards. These challenges underscore the need for a
holistic approach to ICT adoption, addressing not only the technical aspects but also
ensuring alignment with strategic objectives, risk management, and regulatory
compliance.
The adoption of ICT in Nigeria's banking operations has been a transformative
journey, bringing about unprecedented advancements in service delivery, operational
efficiency, and customer satisfaction. While challenges persist, the overall impact has
positioned Nigerian banks on a trajectory of continuous evolution, resilience, and
adaptability in the dynamic global banking landscape. The sector's commitment to
leveraging ICT will likely remain a key driver for sustainable growth, financial inclusion,
and enhanced competitiveness.
 SECTION FOUR
SUMMARY AND CONCLUSION
SUMMARY
The research explores the significant impact of Information and Communication
Technology (ICT) adoption on banking operations in Nigeria. ICT has become a global
tool for banks to reach markets efficiently, leading to a shift from manual to automated
processes. The introduction of ICT has replaced traditional methods with sophisticated
technologies, such as online billing, real-time teleconferencing, and banking applications,
transforming the industry. The study emphasizes the necessity for banks to be ICT
compliant for survival in the global competitive environment.
The research identifies the pivotal role of technology in the "information age" and
its integration into the organizational structure and strategic planning of banks. However,
despite the adoption of ICT, challenges persist, including liquidity problems and a gap in
meeting service quality standards. The study underscores the importance of a holistic
approach to ICT adoption, addressing technical aspects, strategic alignment, risk
management, and regulatory compliance.
The adoption of ICT in Nigerian banking operations has revolutionized service
delivery, enhanced operational efficiency, and improved customer satisfaction. The
challenges highlight the need for continued evolution and adaptability, positioning
Nigerian banks for sustained growth and competitiveness in the dynamic global banking
landscape.
CONCLUSION
Nigerian banks have demonstrated resilience and adaptability in leveraging ICT
for sustainable growth. The commitment to technological advancement remains a key
driver for enhancing competitiveness in the dynamic global banking environment. The
findings of this research contribute to the ongoing dialogue on the role of ICT in the
Nigerian banking sector and provide valuable insights for future strategic planning and
decision-making in the industry.
 The research underscores the transformative journey of Nigerian banks through
the adoption of Information and Communication Technology (ICT), bringing
unprecedented advancements in service delivery, operational efficiency, and customer
satisfaction. The shift from manual to automated processes, facilitated by technologies
like online banking, ATMs, and specialized software programs, has reshaped the banking
sector's landscape. The convenience offered by these technological innovations has not
only improved customer service but has also contributed to financial inclusion by
providing access to banking services in remote areas.
While the positive impact of ICT adoption is evident, challenges, particularly
liquidity problems and service quality standards, persist. The study emphasizes the need
for a comprehensive approach to ICT adoption, ensuring not only technical
implementation but also alignment with strategic objectives, effective risk management,
and regulatory compliance.