the impact of IT in banking industry in a certain country

EJISDC (2002) 10, 2, 1-8

The Effect of Information Technology on the Growth of the Banking Industry in

Nigeria

P. A. Idowu A.O. Alu E.R. Adagunodo

Dept of Computer Science Dept of Management and Dept of Computer Science

and Engineering Accounting and Engineering Obafemi Awolowo Obafemi Awolowo Obafemi Awolowo

University University University

Ife-Ife Ife-Ife Ife-Ife

Nigeria Nigeria Nigeria

ABSTRACT

The advent of Information Technology (IT) is rapidly changing the banking industry. In this study, the impact of IT on the banking industry in Nigeria is described. A questionnaire was employed to collect data from customers at five major banks in Nigeria on the extent to which customers believe that IT exerts an impact on banking services. The results of the study clearly indicate that IT has contributed immensely to the growth 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 technology (Levitt, 1992). From the beginning of the human era, technology has been one of the most essential and most important factors for the development of mankind (Coombs et al., 1987). During the last two hundred years, technological changes have often been related to economic growth in the form of new types of goods and services. Smith (1776) first wrote about technical changes in the form of new machines as one of the three important causes of increasing incomes more than 200 years ago.

Information Technology (IT) can be defined as the modern handling of information by electronic means, which involves its access, storage, processing, transportation or transfer and delivery (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 needs of modern societies in health care delivery, library services, education, and communication networks within organizations, etc.

Some available telecommunication and information technologies which are presently being used in the banking industry in Nigeria are telephone, facsimile, wireless radiophone, very small aperture terminal satellite (VSAT), telegraphy, and computer systems (Ugwu, 1999). According to Alu (2002), some banks in Nigeria have LANs (Local Area Network) in most of their branches but none of the banks have deployed home banking applications.

2. BANKING IN NIGERIA

As a result of the increased demand for customer deposits, Nigerian banks, especially the new generation banks, have realized the imperative of good and prompt 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 sophisticated with regards to

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