ABSTRACT
This work assessed the impact of Information and
Communication Technology deployments on Deposit Money banks performance,
2012-2017. The general objective of this study is to determine the impact of
ICT deployments on Deposit Money Banks performance. Two specific objectives and
two hypotheses were formulated and tested the study. The researcher adopted
ex-post facto research design in the study. The data was collected from the
First bank’s annual report from the bank’s website covering the period of 2012
-2017.The independent variable of the study is ICT deployments, while the
dependent variable of the study is deposit money banks performance. Simple
regression analysis was used to test the objectives and the hypotheses were
tested using Pearson correlation analysis to determine the relationship between
the dependent and independent variable. The analyses were carried out using
statistical package for social sciences (SPSS). The result showed that point of
sale has positive and significant relationship with return on asset. Also, the
result equally indicated that automated teller machine has positive and significant
relationship withbanks deposit. The study concluded that Information
Communication Technology innovation has influenced Deposit Money Banks in a
positive way. Based on the findings of the study, the researcher recommended as
follows: The management of the financial institutions should make more adverts
on the use of Point of Sales (POS) and Automated Teller Machine (ATM) so as to
encourage more people to use it which on the long run will increase the
performance of the Nigeria banking system. More so, the cost procuring POS and should
be drastically reduced, to make it affordable to retailers, filling stations,
and supermarkets, so as to promote the performance of the Nigeria banking
system.
Chapter
one
Introduction
1.1 Background to the Study
In the 1990s
when Information and Communication Technology(ICT)was not in existence, banks
experienced many hardships and restrictions. Customers had to visit their
various branch banks to withdraw money. There were no computers, internet etc.,
rather information and activities were handled manually and this made banking
work cumbersome.There were long queues at the banks on some days when the bank
staff could not handle the workload. There was no cashless economy.People
carried cash around with them and so on. But now the use ICT in banks changed
all these things and also improved banks performance in the whole world.
In this 21st
century, information communication technology has vastly developed and has led
to development in the whole world. Banks have always been at the forefront of
controlling and making use of technology to improve their performance and
services to their customers. Today banks operate in a complicated and
competitive environment due to the nature of our highly unpredictable economy.
The use of ICT in banks brought competition, flexibility, efficiency etc. to
the banking industry and has also played a very important role in improving
service delivery standards in the banking industry. For example, the use of
Automated Teller Machine (ATM) now allows customers to carry out their various
banking transactions beyond banking hours. It allows customers to withdraw
money without going inside the bank.
The use of
mobile banking allows the customer to do any transaction and check their
balances without stress. This has created a cashless economy where there is no
need for carrying cash around; transactions are done through the internet. The
use of computers and internets made bank works faster and easier. We also have
point of sales, smartcards, etc. The use of ICT has helped the banking industry
in improving their performance. With ICT,customers and employees have access to
information in a way that is controlled and safe. ICT infrastructure evolved to
become a critical factor driving productivity and growth in global economies
with varying implications among developed and developing nations
(Steinumueller, 2001). It is important for developing nations not to isolate
themselves from the changes occurring due to the development in the ICT
globally (Gholami et al, 2004). This is partially because ICT is transforming
the global economy and creating new network that crosses cultures as well as
minimizes distances. However, it is important to note that increased
investments in ICT without the involvement of other socioeconomic factors may
not improve growth in developing nations (Mbaerikaetal, 2003)Researches by Grigorian, et al., (2002); Nzotta and Okereke,
(2009); Thiel, (2001) has shown that globalizationhas caused intense
competition in the banking industry, worldwide. The world is seen as a global
village which turned the markets and economies in like manner. The phenomenon
called globalizationhas significantly intensified competition in three
particular aspects in the way competition had evolved giving it a new dimension;(i)
Banks facespressures from a wide and diverse range of competitors; (ii) the
regulatory environment has become less protective of the banking sector and
(iii) competition has become global in nature (Abdulsalam, 2006). The universal
banking systemwas introduced in Nigeria in the early 1990s and rest of the
worldas an offshootof globalization. Under this new system, banks were no
longer specializedin either merchant banking or commercial banking; rather they
are allowed to provide banking and other financial services to their customers
under the new universal banking license. Bankscould therefore provide
commercial banking, stock broking, insurance business, and asset and trustee
management services under the new banking regulation. It also prompted a rapid
and significant branch office expansion programwith its attendant significant
increases in the volume of customers’transactions in banking industry for
survival and profitability (Johnson, 2005). The increased demand for
information and communication technology (ICT) in banking sector became
imminent and unavoidable in the world at large and Nigeria in particular.
Invariably, the future liesin the ICT driven banking systems and services.
Banks have embarked on deployment of ICT based banking products and services such
as automated teller machine (ATM), internet banking, mobile banking solutions,
point of sale terminals, computerizedfinancial accounting and reporting, human
resources solution among others (Ovia, 2005).Linked to this, was the banking
license liberalizationof the early 1990s in Nigeria. The landmark period
witnessed the birth of the new generation banks(i.e. GT Bank, Zenith Bank,
etc.) that commenced operations with the state-of-the-art technology, which
exposed the sluggishness and inefficiency of the older banks (i.e. the three
Giants; First Bank, UBA and Union Bank). Some researchers had shown that the
then “re-engineering” fever,compelled the old generation banks to change. It was
further stated that the trend actually took selected commercial banks some
timeto follow suit because the issues were much more than designing algorithms
and chewing seminal computing papers from first class journals. Based on the
above, this study is focused on investigating the impact of ICT deployments on
banks performance.In measuring performance of a bank, there are financial
performance and non financial performance. For this study the researcher
measured one financial performance which is return on asset (ROA) and one non
financial performance which is the Bank deposits; which is the mirror of how
the bank is accepted by the public.
1.2 Statement of the Problem
Times have
changed, and so it is with every facet of life including banking. One can now
transact business across the globe through the use of Information Communication
Technology (ICT). There are now electronic markets, electronic banking,
electronic library, etc. Modern Banks now realized that only those that
overhaul their payment service delivery and operations are likely to survive
and prosper in this 21st century.
The evolution of
ICT dates back to 1986 when the banking sector in Nigeria was deregulated. The
result of this deregulation brought far-reaching transformation through
computerization and improved bank service delivery. The 21st century
will bring about an all embracing convergence of computing, communications,
information and knowledge. Information Communication Technology has given banks
a potential they could only dream about and have given bank customers high
expectations. Many commercial Banks today are stillstruggling with effective
use of internet which limits the services to their customers.Today’s business
environment is very dynamic and undergoes rapid changes due to technological
innovation, increased awareness and increased demands from customers. The
banking industry of the twenty first century operates in a complex and
competitive environment characterized by these changing conditions and highly
volatile economic climate, and information and communication technology (ICT)
is at the center of this global change curve (Agboola, 2006). Hence the banks
that will survive and complete effectively in today’s business environment must
necessarily integrate ICT into its operational processes. This study therefore
intends to evaluate the impact of ICT on banks performance.
1.3 Objectives of the Study
The purpose of
this study is to determine the impact of Information Communication Technology
deployments on banks performance.
Specifically,
the study intends to find out:
1.
To
evaluate the impact of Information
Communication Technology deployments on
banks return on asset (ROA)
2.
To
evaluate the impact of Information Communication Technology deployments on banks
deposit.
1.4 Research Questions
1. To what
extent do Information Communication Technology deployments have impact on banks
return on asset (ROA)?
2. To what
extent do Information Communication Technology deployments have impact on banks
deposits?
1.5 Research hypotheses
H0. Information
Communication Technology deployments have no positive and significant impact on
banks return on asset (ROA).
H1. Information
Communication Technology deployments have positive and significant impact on banks
return on asset (ROA).
H0. Information Communication Technology
deployments have no and significant positive impact on banks deposit.
H1.
Information Communication Technology deployments have positive and significant impact on
banks deposit.
1.6 Scope of the Study
This study
focused on the empirical analysis of the
impact of ICT deployments on banks performance. The measures of banks
performance are return on asset and bank deposit while the variable for banks
performance is profitability. This study is limited to focus on first Bank plc
Nigeria for the period of 2012 -2017.
1.7 Significance of the Study
The Banking Industry
The findings of
the study will be used by stake holders in the banking industry to make
appropriate decisions towards adoption of different technological channels in
delivery of services. They will understand the benefits of adopting electronic
banking in their financial institutions. They will also appreciate the impact
of information communication technology on their performance.
The Academicians and Scholars
Future
researchers and scholars may use the survey as a source of reference for
further research on the same area. It is important to document the research
findings for future reference. Scholars will be keen to understand the impact
of technology on financial performance in the banking industry.
The Government
The government
will be interested in finding out how technology can be maximized in spurring
economic growth in financial institutions.
1.8 Limitations of the Study
The researcher encountered financial problem, lack
of time to cover all commercial banks in Nigeria and difficulty in collecting
data used for the study.
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