Effect of Information Technology on the Operations

EJISDC (2002) 10, 2, 1-8 The Effect of Information Technology on the Growth of the imprecateing Industry in Nigeria P. A. Idowu Dept of ready reck wizr Science and Engineering Obafemi Awolowo University Ife-Ife Nigeria A. O. Alu Dept of Management and Accounting Obafemi Awolowo University Ife-Ife Nigeria E. R. Adagunodo Dept of ready reckoner Science and Engineering Obafemi Awolowo University Ife-Ife Nigeria ABSTRACT The advent of Information Technology (IT) is rapidly changing the lingoing persistence. In this study, the impact of IT on the hopeing industry in Nigeria is described.A questionnaire was employed to apprehend data from customers at five major money boxs in Nigeria on the extent to which customers believe that IT exerts an impact on banking function. The results of the study clearly indicate that IT has contributed immensely to the suppuration of the banking industry in Nigeria. Keywords Information Technology, Banking, Nigeria. 1. INTRODUCTION A powerful force drives the world towards a converging commonality, and that force is engineering (Levitt, 1992). From the beginning of the human era, technology has been one of the most essential and most every last(predicate) important(predicate) factors for the development of mankind (Coombs et al. , 1987).During the last two hundred years, technological changes have often been related to frugal growth in the form of new types of goods and operate. Smith (1776) first wrote nearly technical changes in the form of new machines as one of the three important ca employments of increase incomes more than 200 years ago. Information Technology (IT) fanny be defined as the innovative handling of schooling by electronic cogitates, which involves its access, storage, processing, transportation or transfer and words (Ige 1995). Research shows that IT affects financial institutions by easing enquiry, saving time, and improving service delivery (Alu, 2002).IT also provides solutions to the emergency s of modern societies in health cargon delivery, library operate, education, and communication networks within organizations, etc. Some available telecommunication and information technologies which are presently creation apply in the banking industry in Nigeria are telephone, facsimile, wireless radiophone, very sm on the whole aperture terminal satellite (VSAT), telegraphy, and computing device systems (Ugwu, 1999). According to Alu (2002), some banks in Nigeria have LANs (Local neighborhood Network) in most of their branches but none of the banks have deployed home banking applications. . BANKING IN NIGERIA As a result of the incr salvaged demand for customer deposits, Nigerian banks, peculiarly the new generation banks, have realized the imperative of good and stir up customer service. Also, due to the fact that some customers lost their deposits in the erstwhile technically-insolvent or distressed banks, customers have now become wiser, more discerning, alert and sophist icated with regards to The electronic daybook on Information Systems in Developing Countries, http//www. ejisdc. org EJISDC (2002) 10, 2, 1-8 2 hoosing where it is preventive to put their money, and where they would be served promptly, preferably in a pleasant, courteous and friendly environment. Thus, they have started looking at the level of service and professionalism of the banks before depositing their funds. Proximity to the bank is no longer the issue safety and the level of service, with regard to quality, speed and efficiency has become the major imperative. On the part of the banks, they have realized that one way in which they can provide quality service is through the subroutine of technology.Hence, there is a growing rate of adopting new technologies in Nigerian banking operations. Moreover, there is growing evidence that customers have started associating quality of service in a bank with the banks self-will of an online, real-time system. In fact, possession of su ch a system is now judged to be the sine qua non of a high quality banking service in Nigeria. So, for a bank to be sensed as providing high quality service, that bank has to have an IT system, which it uses to deliver services to customers in a more timely, friendly and considerate manner, at no duplicate cost to the customers.Despite the fact that many of the new generation banks base their marketing strategy on the possession of supposedly on line, real-time systems, they bump that their systems colligate are down for about 50 percent of the time. Many customers feel cheated by this reality and complain about the incessant downtimes. They were promised an online, real-time system, only to find out that the banks systems are down at least half the time, and that the national carrier, NITEL (Nigeria Telecommunication), is to blame.Whilst the responsibility of NITEL cannot be denied, many customers still feel that it is the responsibility of the affected banks to micturate care of these problems, and that they should be given the nationwide, online, real-time banking service they were promised. Faced with this dilemma, many banks in the country are resorting to alternative personal solutions by using the rattling Small Aperture Terminal (VSAT) satellite systems, for long distance electronic communication. For short distances, the MDS (Metropolitan Digital Services) system is often used.The problem here is that all the banks are laborious to procure appropriate VSATs independent of one another. In other words, there is no collaboration between the banks in sourcing this very expensive technology and thereby providing a cost- heartive solution to the problem. It would also be fair to say that Nigerian banks are generally imbued with an overly competitive mind -set, which tends to foreclose the benefits of synergism or collaboration in solving most of their common problems. 3. RESEARCH METHODOLOGYIn order to assess the perceptions of banking customers in Nigeria with respect to the quality of banking services, a questionnaire survey was conducted. A grab sampling technique was used to select the customers from the banks. Five commercial banks in Nigeria Wema Bank Plc, Union Bank of Nigeria Plc, izzard Bank Plc, Cooperative Bank Plc, and entree Bank Plc. were selected for this sampling on the basis that they have branches in almost all the produces in Nigeria and they make use of estimators in almost all their branches.The researchers visited the banks during working hours and the questionnaires were given to the customers as they visited the banks. A total of 500 questionnaires were distributed in this way. 260 questionnaires were returned to the researchers, a response rate of 52%. The survey instrument can be found in the Appendix. In addition, the researchers conducted personal discourses with five bank managers and fifteen IT staff in order to gain an appreciation of what types of IT systems and electronic application ser vices The Electronic Journal on Information Systems in Developing Countries, http//www. jisdc. org EJISDC (2002) 10, 2, 1-8 3 were available in the selected banks. The responses were measured with a fivepoint Likert-type rating scale, where Strongly jeer (SA) = 4 Agree (A) = 3 Strongly Disagree (SD) = 2 Disagree (D) = 1 and Neutral (N) = 0, while the scores f r o negative items were reversed. 4. RESULTS AND handling plug-in 1 shows the IT systems that are being used in the selected banks. Telephone, Facsimile, Local Area Network, computer system, MICR (Magnetic Ink Character Recognition), were used in all the banks.Also Wema, Omega and Access banks used Very Small Aperture Terminal (VSAT), Electronic Funds Transfer (EFT), and wireless radiophone. The researchers were able to identify IT devices available in the selected banks from personal interview conducted with the 5 branch managers and 15 IT staff in the banks. Table 1 IT systems and electronic application service in the sele cted banks Types of IT systems Wema Omega Union Co-op Access Telephone X X X X X Wireless radiophone X X X Facsimile X X X X X Computer X X X X X Electronic Mail VSAT X X XLocal Area Network X X X X X MICR X X X X X EFT X X X 4. 1 Effect of IT on Banking Services The effect of IT on an enquiry on a customers state of account, and services enjoyed by the customers from the banks as perceived by the banks customers, are shown in Table 2. Out of the 260 respondents, 86. 2% agree that IT was really helping the bank they confirmd, while 90. 8% hold that IT made the enquiry about the state of their accounts faster. Also, 83. 1% agreed that IT had a great demonstrable impact on the services rendered by the banks.The meanspiriteds of 3. 12, 3. 29 and 3. 07 respectively for the selected banks respondents confirmed that IT has a positive effect on the enquiry of customers state of account and services enjoyed by the customers from the selected banks. Generally, the set up of IT on the en quiry of the customers state of account and services enjoyed by the customers from the banks have an appreciable influence on any bank. The use of a LAN and computer systems have ensured quick and improved services delivery to customers by the banks.But it may be important to state that the use and application of these electronic devices are hampered by the inadequacy of infrastructural facilities like power render. 4. 2 set up of IT on Customer Services Table 3 shows the response of customers from the banks with respect to the effect of IT on customer services provision. About 66. 5% disagreed that IT had no effect on services rendered by the banks. Also 82. 7% agreed that there is a need to improve on the services rendered by these banks. The means of 2. 77 and 2. 4 respectively confirmed that IT has effects on services rendered by these banks to their customers and about 83% of the respondents agreed that the banks need to improve on the The Electronic Journal on Information Sy stems in Developing Countries, http//www. ejisdc. org EJISDC (2002) 10, 2, 1-8 4 services rendered to the customers. This shows that the services the banks are adviseing now are not the best they can offer to their customers and that the banks should improve on these services to their customers. Table 2 Effects of IT on Banking Services Question SD IT/computer is really helping this 2. bank IT makes enquiry about the state 2. 3 of my account faster IT/computer has a great positive 2. 3 impact on the services rendered by this bank D 4. 6 N 6. 9 A 43. 9 SA 42. 3 Mean 3. 12 0 6. 9 36. 6 54. 2 3. 29 4. 6 10 37. 3 45. 8 3. 07 N 9. 7 A 18. 8 SA 5. 0 Mean 2. 77 10. 4 50. 4 32. 3 2. 94 Table 3 Effects of IT on Customer Services Question SD D I dont think IT has any effect on 34. 6 31. 9 services rendered There is a need to improve the 0 6. 9 services rendered by this bank Table 4 promptness and efficiency of services as perceived by the customers Question SD DN A SA Mean I enjoy prompt an d efficient service 0 16. 2 9. 2 37. 7 36. 9 2. 93 delivery I was once delayed in the bank 16. 5 31. 5 6. 9 32. 7 12. 4 2. 38 because the computer was down IT does not increase prompt and 43. 1 42. 7 4. 6 7. 3 2. 3 3. 17 efficient service delivery 4. 3 Promptness and efficiency of services as perceived by the customers From Table 4, about 75% of the respondents agreed that they enjoyed prompt and efficient service delivery from the banks. The mean of 2. 93 shows that IT enables the banks to provide prompt and efficient services to their customers.Questions 3 and 7 (see Appendix) are similar, but the reaction of the respondents confirmed the conclusion above because about 85% of the respondents agreed that IT has increased prompt and efficient service delivery by the banks. Also, on the issue of delay due to computer down times, only 44. 9% of the respondents agreed that they were once delayed in the bank because the computer was down, though this might be due to the epileptic power supply and inefficient telecommunication theme in Nigeria. The mean of 2. 93 confirmed that most of the time, customers go to the bank when computers are not down. 4. Influence of IT on patronage as perceived by the customers Table 5 gives responses on the influence of IT on patronage as perceived by the customers. 70% of respondents agreed that based on the efficiency and effectuality of services rendered, they could encourage their colleagues to patronize the banks they used. Also, 65. 8% of the customers agreed that the banks use of IT further them to patronize the banks they use. The means of 2. 47 and 2. 52 respectively show that IT encourages customers to patronize the banks. The The Electronic Journal on Information Systems in Developing Countries, http//www. jisdc. org EJISDC (2002) 10, 2, 1-8 5 use of computers, telephone, VSAT, and EFT has contributed immensely to the growth of banking industry. In Nigeria presently, some banks are not making use of IT and those banks ar e being patronized by few customers, the majority of whom are illiterate and poor. This makes the turnover of these banks low. Table 5 Influence of IT on patronage as perceived by the customers Question SD D N A SA I can encourage my colleagues to 4. 6 5. 0 20. 4 47. 3 22. 7 patronize this bank IT/Computer encourages 2. 3 9. 6 22. 3 32. 7 33. 1 customers to patronize this bankMean 2. 47 2. 52 Table 6 Perception of customers on the ease of conducting banking transactions Question SD D N A SA Mean Saving or withdrawing money is 21. 9 36. 9 7. 3 31. 2 2. 7 2. 63 time consuming IT eases banking transactions 2. 3 2. 3 9. 6 50. 0 35. 8 3. 10 4. 5 Perception of customers on the ease of banking transactions Table 6 above shows that 58. 8% of customers disagreed that saving and withdrawal of money is time consuming. Also, 85. 5% agreed that IT eases banking transactions. The means for questions 6 and 13 (see Appendix) are 2. 63 and 3. 00 respectively. The mean of 2. 3 for question 6 (see App endix) shows that some respondents agreed that saving and withdrawal of money is time consuming despite the use of IT in those banks. Table 7 Effects of IT on the fundamental interaction between cashiers and customers Question SD D N A SA IT has reduced the interaction 15. 0 30. 4 17. 7 27. 3 9. 6 between cashiers and customers Mean 2. 15 4. 6 Effects of IT on the interaction between cashiers and customers Table 7 shows that 36. 9% agreed with the view that IT has reduced the interaction between customers and cashiers, 17. 7% are indifferent to the question and 45. 4% disagreed with the view with a mean of 2. 15. 4. 7Effects of IT on cashiers work The rates at which cashiers in the banks hang to their customers depend on the equipment available for the cashiers to work with. From Table 8, 83. 1% agreed that computer speeds up cashiers work, while 10% disagree and 6. 9% are indifferent. The mean of 3. 12 confirmed that IT/Computer really affect the rates at which cashiers attend to their customers. Generally, the use of electronic devices like computer telephone, facsimile, etc. will go a long way to increase the speed of the cashiers work. Table 8 Effects of IT on cashiers work Question SD Computers really speed up 2. 7 cashiers work D 7. N 6. 9 A 37. 3 SA 45. 8 The Electronic Journal on Information Systems in Developing Countries, http//www. ejisdc. org Mean 3. 12 EJISDC (2002) 10, 2, 1-8 6 4. 8 IT and banks productivity From Table 9, 81. 5% agreed that the use of IT increases bank productivity in that with the use of IT, the bank can attend to a lot of customers since IT speeds up cashiers work. The mean of 2. 98 shows that IT has a positive effect on the growth and productivity of the banks. There is no bank that can make use of one or combination of two or more of the IT systems listed in Table 1, which will not have effects on the productivity of the bank.Table 9 IT and the productivity of the bank Question SD D IT increases the banks productivity 0 4. 6 5. N 13. 8 A 37. 3 SA 44. 2 Mean 2. 98 CONCLUSION The study has dealt with the effects of IT as perceived by customers on selected commercial banks in Nigeria, which make use of IT in their operation. The study revealed that IT has appreciable positive effects on the bank productivity, cashiers work, banking transaction, bank patronage, bank services delivery, customers services, and bank services.These affect the growth of the banking industry in Nigeria positively because customers can now collect money from any branches of their bank. Also customers do not need to move about with large sums of money, and customers are being attended to within a short period of time. The study also revealed that telephones, computer systems, LANs, and Facsimile services are available in nearly all the banks making using of IT in Nigeria while WANs (Wide Area Network), Electronic File Transfer, and wireless phones are available in some of the banks. This finding confirms Alus (2002) claims on the IT devices available in Nigerian banks.Research has shown also that IT is really helping these banks, so other banks in Nigeria that are not making use of the IT are encouraged to do so. From the study, the major hindrance to the use of IT in the banking industry in Nigeria is inadequate electric power supply. Electricity supply is not regular because of the limit point of the machine that is supplying electricity to Nigeria. Furthermore, the Nigerian government is finding it difficult to equip the NEPA (National Electric Power Authority) while the demand for electricity is increasing daily.Therefore, the situation will continue to worsen until the Nigerian government funds NEPA appropriately. So, for this nation to be effective in the use of IT in the banking industry and to make the banking industry grow in an appropriate way, there is a need for the Nigerian government to find a solution to the epileptic supply of electricity throughout the country, since NEPA is owned by Nigeri an government and there is no private company in Nigeria that provides electricity. The Electronic Journal on Information Systems in Developing Countries, http//www. ejisdc. org EJISDC (2002) 10, 2, 1-8 6. 7 REFERENCES Alu, A.O. (2000) Effects of Information Technology on Customer Services in the Banking Industry in Nigeria, M. B. A. thesis in Management and Accounting, Obafemi Awolowo University, Nigeria. Coombs, R. , Saviotti, P. and Walsh, V. (1987) Economics and Technological Change, Macmillan London. Ige, O. (1995) Information Technology in a De-regulated Telecommunications Environment, Keynote address, INFOTECH 95. First International Conference on Information Technology Management, Lagos, November 16-17. Levitt, T. (1992) The globalization of Markets, in Transnational Management Text, Cases and Readings in Cross-Border Management.Richard D. Irwin. Smith, Adam (1776) The Wealth of Nations Ugwu, L. O. (1999) Assessment of Impacts of Information Technology on Selected Service I ndustries in South Western Nigeria, MSc. Thesis in technology Management, Obafemi Awolowo University, Nigeria. APPENDIX Dear Respondent, This questionnaire is designed for a research work from the department of Management & Accounting, OAU, Ife. Please, FILL IN correct information, all the information will be treated confidentially and the information will be used for this research work only. Thanks. Please tick or fill where appropriate.SECTION A 1. Sex A. MALE B. FEMALE 2. Age A. 18-25 ( ) B. 26-35 ( ) C. 36- 45 ( ) D. 46 & above ( ) 3. Educational qualification A. WASCE( ) B. OND/NCE( ) C. Bsc/BA( ) D. Msc/PhD( ) E. Others Specify . 4. For how long have you been using this bank? A. 0- 2yrs ( ) B. 3-5yrs ( ) C. 6- 8 ( ) D. 9 & above( ) 5. What type of account do you operate? A. Current( ) B. Savings( ) C. Others specify .. 6. My Account here is mainly for A. Business( ) B. Salary( ) C . Others specify 7. For how many hours do you blow over on queue ? A.Less than1 ( ) B. 1 -2 ( ) C. 3-4 ( ) D. 5 & above( ). The Electronic Journal on Information Systems in Developing Countries, http//www. ejisdc. org EJISDC (2002) 10, 2, 1-8 8 SECTION B Strongly Disagree 1. 13. Agree IT increases bank productivity 15. Neutral IT/Computer is really helping this bank I dont think IT has effect on the banks operation I enjoy prompt and efficient service delivery I will encourage my colleagues to patronize this bank IT does not increase prompt and efficient service delivery To save or withdraw money is time consuming I was once delayed in the bank ecause the computer was down IT makes enquiry about the state of my account faster IT/computer has a great positive impact on the growth of this bank IT/Computer has reduced the interaction of the Cashiers with customers IT/Computer encourages customers to patronize this bank Computer really speed up cashiers work IT improves transactions 14. Disagree There is a need to improve the services rendered by this bank 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. The Electronic Journal on Information Systems in Developing Countries, http//www. ejisdc. org Strongly Agree