Information Technology and Corporate Performance in the Banking Industry
Chapter One
OBJECTIVES OF THE STUDY
The study is aimed at bringing awareness of the information technology and corporate performance as it effects banking sector.
- To identify the importance of information technology and corporate performance to banking sector.
- To ascertain the relationship between information technology and corporate performance in banking sector.
- To examine the effect information technology in relation to banking sector performance.
- To determine the usefulness and empirical analysis of information technology in banking sector performance.
CHAPTER TWO
REVIEW OF RELATED LITERATURE
INFORMATION AND COMMUNICATION TECHNOLOGY DEFINED
ICT is a combination of ‘Information Technology’ and ‘Communication Technology’. It merges computing with high speed communications link carrying data, sound and video (Alabi, 2005). Information Technology (IT) deals with the collection, storage, manipulation and transfer of information using electronic means. ‘Communication Technology’ refers to the physical devices and software that link various computer hardware components and transfer data from one physical location to another (Laudon and Laudon, 2001).
According to Mejabi (2008), Information Technology is a general term that describes any technology that helps to produce, manipulate, store, communicate and/or disseminate information. Information 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) define information 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, retrieves, processes, stores and disseminates information for the purpose of facilitating planning, control, coordination and decision making in organisations. Information technology on the other hand provides the technical solutions identified in the information system; including the networks, hardware and software (Grainger-Smith and Oppenheim, 1994). Porter and Miler (1985) conceive of information 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, (Hanson and Narula, 1990).
Information technology is basically an electronic device and it’s based on integrated circuits or silicon chips. Hanson and Narula (1990) further identify two major forms of information technology, namely information technology as Telematics, meaning “Big media” and Ethnotronic, meaning “Small media”. Telematics are to be identified with such technologies as computers, telephone, satellites, television, radio, video and those that rely on large scale infrastructures. Ethnotronics includes technologies such as typewriters, audio cassette records, fax machines, paper copies, calculators, digital watches and other more personal types of technologies.
Information Technology (IT) is the automation of processes, controls, and information production using computers, telecommunications, software and ancillary equipment such as automated teller machines and debit cards (Khalifa, 2000). It is a term that generally covers the harnessing of electronic technology for the information needs of a business at all levels.
Information technology is a medium that has revolutionized banking and everyday operations at the click of a button thus enabling sophisticated product development, better market infrastructure, implementation of reliable techniques for control of risks and reaching geographically distant and diversified markets (Marion, 2008). In an attempt to provide a comprehensive definition of ICT, United Nations Educational Scientific and Cultural Organisation UNESCO (2006) gives the definition as forms of technology that are used to transmit, store, create, share or exchange information. This broad definition of ICT includes such technologies as radio, television, video, DVD, telephone (both fixed line and mobile phones), satellite systems, computers, internet, hardware and software as well as the equipment and services associated with these technologies such as video conferencing, electronic mail, online banking, electronic commerce and so on.
ICT: A PERSPECTIVE OF NIGERIAN BANKS
Technology can be referred to as the application of knowledge for the execution of a given task. It entails skills and processes necessary for carrying out activities (works) in a given context, while ICT encompasses computer systems, telecommunication, networks and multimedia applications (Frenzel, 1996). It came into use in the late 1980s, replacing earlier terms like Electronic Data Processing (EDP), Management Information System (MIS), although the latter terms are still in use (Frenzel, 1996).
ICT has transcended the role of support services or only electronic data processing. Its fields of applications are somewhat global and unlimited. Its devices especially the Internet through the World Wide Web (www) and modern computer email facilities have further strengthened early innovations like the telephone and fax. Other ICT devices include data recognition equipment, factory automation hardware and services, tele-computing and teleconferences using real time and online system (Adeoti, 2005). It is a concept that is having a remarkable effect on almost entire aspects of the human endeavours. This connotes that it involves the application of principles to engage physical component in achieving an intended goal.
The convergence of computer and telecommunication after about four decades of applying computers to routine data processing, mainly in information storage and retrieval, has created a new development where information has become the engine of growth around the world. This development has created catch-up opportunities for developing countries such as Nigeria to attain desired levels of development without necessarily ‘reinventing the wheels’ of economic growth. This new technology has brought far-reaching revolution in societies, which has tremendously transformed most business (banking) scenes (Ovia, 2005)
From 1970, the banking sector grew significantly in terms of number and coverage as a result of increase in economic activities. However, between 1970 and 1985, the growth of the sector was relatively slow due to predominant government regulations but the period 1986-2000 witnessed a phenomenal growth of the sector as a result of the financial deregulation policy, that is the Structural Adjustment Program-SAP of 1986 (Iganiga, 1998). This brought about the liberalization of bank license leading to a rapid change in the sector. Some of the banks were characterized by paper oriented methods, rather than technological based systems and this resulted to slow pace of their operations vis-à-vis their employees’ productivity cum general performance. The use of computers and other ICT gadgets in their operations were limited. This was one of the reasons adduced by Ojo (2007) as factors responsible for the Nigerian financial sector malaise.
CHAPTER THREE
RESEARCH METHODOLOGY
INTRODUCTION
In this chapter, we described the research procedure for this study. A research methodology is a research process adopted or employed to systematically and scientifically present the results of a study to the research audience viz. a vis, the study beneficiaries.
RESEARCH DESIGN
Research designs are perceived to be an overall strategy adopted by the researcher whereby different components of the study are integrated in a logical manner to effectively address a research problem. In this study, the researcher employed the survey research design. This is due to the nature of the study whereby the opinion and views of people are sampled. According to Singleton & Straits, (2009), Survey research can use quantitative research strategies (e.g., using questionnaires with numerically rated items), qualitative research strategies (e.g., using open-ended questions), or both strategies (i.e., mixed methods). As it is often used to describe and explore human behaviour, surveys are therefore frequently used in social and psychological research.
POPULATION OF THE STUDY
According to Udoyen (2019), a study population is a group of elements or individuals as the case may be, who share similar characteristics. These similar features can include location, gender, age, sex or specific interest. The emphasis on study population is that it constitute of individuals or elements that are homogeneous in description.
This study was carried out to examine the information technology and corporate performance in banking industry. Staff of Union Bank PLC form the population of the study.
CHAPTER FOUR
DATA PRESENTATION AND ANALYSIS
This chapter presents the analysis of data derived through the questionnaire and key informant interview administered on the respondents in the study area. The analysis and interpretation were derived from the findings of the study. The data analysis depicts the simple frequency and percentage of the respondents as well as interpretation of the information gathered. A total of hundred and twenty (120) questionnaires were administered to respondents of which 100 were returned. The analysis of this study is based on the number returned.
CHAPTER FIVE
CONCLUSIONS AND RECOMMENDATION
Summary
In this study, the focus was to carry out an investigation information technology and corporate performance in banking industry. The study specifically was aimed at ascertaining the impact of IT in the banking sector performance.
The study adopted the survey research design and randomly enrolled participants in the study. A total of 100 responses were validated from the enrolled participants where all respondents were staff in Union Bank in Enugu metropolis.
The findings revealed that ICT is extremely important in the present and in the future banking operations.
CONCLUSIONS
Information and Communication Technology (ICT) is a man-made resource, embracing principally the electronic technologies of computers and telecommunications (voice, data, and video), and comprising of both electronic hardware and computer software. The significance of ICT in today’s successful organization cannot be underestimated. It plays a strategic role in the success of organizations in today’s highly competitive world by providing easy and fast means of collecting, storing, retrieving, processing, transmitting and distributing information. ICT is extremely important in the present and in the future banking operations.
RECOMMENDATIONS
Based on the major findings, the following recommendations were provided:
- Investment in Information and Communication Technology should be a priority to commercial banks because of its numerous benefits.
- Banks should fully utilise ICT so as to increase profit by cutting down the cost of operation.
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