This paper focuses on an application of Information Communication and Technology in Nigeria Financial Institution like the use of Automated Teller Machine (ATM), Smart Cards etc. It also embraces the role of information technology in our contemporary environment. 	The computerization of Nigeria financial institution was not left out from the discussion of the subject matter. The value of information communication and technology in financial institution together with methodology and hypothesis were critically analysed to consolidate the important of information technology in financial institution. 	Finally, the summary and recommendations were given to enhance the greater efficiency in Banking Industry in the post consolidation and recapitalization of financial Institution

Owojori, Anthony A.

Munich Personal RePEc Archive

MPRA
Munich Personal RePEc Archive
The Status of Information
Communication and Technology in
Financial Institutions in Nigeria
Anthony A. Owojori
University of Ado-Ekiti, Nigeria
25. August 2009
Online at http://mpra.ub.uni-muenchen.de/16783/
MPRA Paper No. 16783, posted 27. September 2009 16:02 UTC
THE STATUS OF INFORMATION COMMUNICATION TECHNOLOGY IN 
FINANCIAL INSTITUTIONS IN NIGERIA 
 
 
 
 
 
 
Anthony Adekunle Owojori 
(BSc. (Hons), MA, PhD, FCA, ACTI) 
Senior Lecturer 
Accounting & Business Education 
Department of Educational Foundations & Management 
Room 111, Faculty of Education 
University of Ado-Ekiti, Ado-Ekiti, Nigeria 
adekunleowojori@yahoo.com 
2348033525195 
 
 
 
 
 
 
 
 
 
 
 
 
 
Abstract 
This paper focuses on an application of Information Communication and Technology 
in Nigeria Financial Institution like the use of Automated Teller Machine (ATM), Smart 
Cards etc. It also embraces the role of information technology in our contemporary 
environment.  The computerization of Nigeria financial institution was not left out from the 
discussion of the subject matter. The value of information communication and technology in 
financial institution together with methodology and hypothesis were critically analysed to 
consolidate the important of information technology in financial institution.  Finally, 
the summary and recommendations were given to enhance the greater efficiency in Banking 
Industry in the post consolidation and recapitalization of financial Institution. 
 
 
KEYWORDS: Automated Teller Machine, information and communications 
technology; technological breakthroughs; centralized architecture; global depository 
receipt 
 
 
 
 
 
 
 
 
 
INTRODUCTION 
 Information Technology system allowing a financial institution to collect information 
from many different sources and develop a composite picture about it customer, its market 
position in different financial centers, and its net exposure in those market. The centrality of 
information in financial institution is seen is decision-making. And the quality of decision 
made depends on the quality of decision made depends on the quality accuracy, and 
timeliness of the information available to the decision maker. Hence, communication of the 
right information at the right time and at the right quality is what every decision maker, 
whether on individual or institution requires at any time. 
 Tulien (1997) said that technological breakthroughs first brought about industrial 
revolution and lately information revolution which have brought considerable changes to 
financial institution. The innovations in information and communication technologies in 
recent years and their increasing role in development have made it imperative for government 
of developing nations to harness information technology for financial institution 
transformation thus it has been noted that success of any financial institution depend on 
information technology and efficient electronic exchange. 
 Cronin and May .J. (1995) The business today is conducted in an age of financial 
institution crisis and highly complex technology imposing on financial institution the need to 
implement sophisticated system which accord with present day needs. It is therefore very 
necessary that effective and useful information should be available to any organization for 
effective decision making.  
 Financial Institutions in industrialized nations have trended toward offloading 
consumer banking services from branch locations to Automated Teller Machines (ATM) and 
point of sale (POS) terminals allowing consumers increased access to their bank accounts and 
credit facilities through card based instrument. Privatization practices and policies of Central 
Banks globally have opened electronic financial transactions markets to emerging players 
who can offer innovation or efficiencies.  This paper therefore examined the application of 
information, communication technology in the Nigerian banking system. 
THE NIGERIAN EXPERIENCE 
 In Nigeria in the late seventies up to the early eighties, the processing of information 
in financial institution was based on the centralized architecture with a mainframe computer 
running a multi-user operating system and various users connected to via terminals. This type 
of processing changed to a more decentralized approach with Local Area Network with in 
financial Institutions branches. Prior to the deregulation of the financial Institution in the mid 
80’s. Most banks had an appreciably high number of branches, some of which were in rural 
areas and were completely manual in operating. Some were sophisticated to the extent of 
implementing only wide area Networks by linking branches within cities and only one or two 
implemented intercity connectivity using leased lines. 
 With the deregulating of the financial Institution system in Nigeria, they witnessed the 
emergence of many Financial Institution with fever branches, in the mid eighties. These new 
Institution were sophisticated in operation and attempted to take advantage of recent advance 
in information technology from inception. As a result, there was an increased market pressure 
to adopt new technology as customer began to demand more sophisticated product and 
increased convenience in services delivery. 
 Focus of this new technological competition was the implementation of the global 
banking concept in Nigeria and this has affected all aspects of the financial institution. From 
the very standard retail operations such as cash withdrawal and cheque processing to the 
creation and delivery of sophisticated corporate products such as interest rate or foreign 
exchange swaps, in addition, the society for worldwide inter-bank. Financial 
telecommunication (SWIFT), made possible by advances in information technology and to 
which some of our banks have acquired membership, has facilitated inter bank transaction 
across the globe. 
 Financial Institutions in Nigeria have decided to take advantage of information 
technology to improve their services and expand their operating base. 
Applications Of Information Technology In Nigeria Financial Institution 
(a) Automatic Teller Machine (Atms) 
 The automatic Teller Machines were introduced in the retail banks with the objectives 
of reducing personnel costs associated with traditional “teller window” customer services 
transactions. 
(b)  Smart Cards 
 Smart cards are small sized piece of plastic devices with embedded integrated circuit 
and used as payment instrument. The power of smart cards lies in the ability to store and 
manipulate data, to handle multiple applications on one card and to perform secure 
transactions. 
(c)  Global Depository Receipt Programme 
 Through this instrument, the financial institution was able to attract. institutional 
investors from diverse markets such as Europe, The United State of America, Middle East 
and other countries in Africa to Nigeria. 
Information Technology’s Role Today 
 Every day, financial Institution use computers in new ways computers are 
increasingly affordable; they continue to be more powerful as information processing tools as 
well as easier to use.  Computers in Financial Institution one of the largest applications of 
computers is keeping all the financial record and also keeping the employment records of all 
their workers in large. Databases that are manage by computer programs. Program and 
databases are use as billing customers; tracking payments received and payment to be made 
and tracking supplier needed and items produced, stored, shipped. 
 Data processing is the input, verification, organization, storage, transformation and 
extraction of information from data. Any information system refers to the application of 
computer system that process the data. Data bases store the master files. 
 Application programs provide the data entry, up dating and query and report 
processing. 
Computerization in the Nigeria Financial Institution 
The financial Institutions comprise the banking and non-banking institution. It is 
widely recognized that computerization promotes efficiency and ensures timely delivery of 
high quantity products and services; hence, the interest of government and monetary 
authorities and the financial public for a computerized financial system. Therefore, the global 
financial system is witnessing a major change in information technology with increasing use 
of computer. 
Structural Adjustment Programme (SAP), 1986, SAP aimed at increasing 
competition, promoting more efficient financial intermediation and encourage more licensing 
of new banks and non-bank financial institutions.  The Central Bank of Nigeria (CBN) 
introduced the magnetic ink character recognition (MICR), a computerized system for 
processing cheques and other payment instrument to replace the manual processing of 
clearing cheques. The bank is also implementing the bank analysis system (BAS), which will 
provide the Bank and other corporation with information to monitor developments and 
financial viability of the banks. 
Barriers To Information Communication And Technology In Financial Institution     
 According to Maruapula (2007) some barriers to information, communication 
technology are: 
Costs 
 Most financial Institution have not been able to benefit from the opportunities of 
information flow because of various barriers they are confronted with. One of these involves 
the costs arising from the acquisition and maintenance of new information technology. 
Alemie (1998:183) observes that the cost of establishing networks and the tariffs charged are 
so high that even if computers, are available it is only the privileged few who can have access 
to the service. 
 Language 
 According to Alemna (1999:168) Another important barrier to information flow is 
linguistic. He asserts that 90% of the data bases on the Internet are in English. Gruike (1995) 
also addressing the language issue. Suggest that there would be an even greater achievement 
in the area of information flow if there could direct speech interfaces with all kinds of 
computer. In this case the illiterate people would be able to access information. 
Standardization 
 In Financial Institution, there is also the problem of the standardization of hardware 
facilities. The information superhighway has engineered the importation of various brands of 
information technology by Financial Institution. Adam and Wood (1999:314) assert that 
imported technologies are designed to operate in an air-conditioned, dust free environment 
with a good maintenance support. 
Illiteracy 
 Illiteracy in Financial Institution is one of the serious constraints to the effective use 
of information technology. The quality of training in information communication technology 
is also unsatisfactory. Introduction to physical equipment will not solve the problem of 
information availability and flow unless it is coupled with human capacity and skill lack of 
infrastructure remains the main setback to the development of information communication 
technologies in Financial Institution. Telephone line failures and electronic blackouts are 
frequently experienced. 
  The Status of Information Management in Financial Institution 
 Financial Institution are becoming more dependent on Information than ever before 
and the survival and success of these Financial Institution will highly depend on the ability to 
manage information as a resource for competitive advantage. This concerned with 
establishing the extent to which information management in practiced in Financial 
Institutions. 
 The main problem is the importance of information management within the financial 
institution and to ascertain how information can ensure competitive advantage in financial 
institution. The aim of the research was to determine the status of information management in 
these institutions as well as to investigate what people generally understand the concept 
information management. 
 The research revealed that information management, as a formalized concept, is fairly 
new to most financial institution managers and that there is no common understanding of the 
concept. It is how ever evident that most financial institution manager accept the fact that 
information management is a necessary condition for ensuring the sustainability of their 
institutions. Most of them acknowledged that information is very critical for the survival of 
the institution and for staying ahead of others. 
 It is recommended that institution should adopt a holistic approach toward 
information management. Financial institution should employ people with proper information 
management skills and trained personnel. 
How Information And Communication Are Of Crucial Importance To The Success Of 
Financial Institution    
 In a digital world, information and communication are of crucial importance to the 
success of financial institution. This arises for the: 
• Increasing dependence on information and the systems and communications that 
deliver the information. 
• Scale and cost of current and future investments in information and 
• Potential of technology to dramatically change in financial institution create new 
opportunities and reduce costs. 
Many financial institution recognize the potential benefits that technology can yield. 
But, with those potential benefits come certain risks. To be successful, the organizations must 
also understand and manage the risks associated with implementing new technologies. To 
provide effective direction and adequate control, therefore financial institution needs to have 
an appreciation of the benefits, risks and constraints of information technology.  
Value Of Information Communication And Technology In Financial Institution 
 The value is obtained by comparing the cost of setting up the system with the 
expected benefits of improvements in information delivery. The value of information 
communication and technology is the difference between its benefits and costs. The benefits 
and information offer to financial institution depends in its quality. Its quality is usually 
defined in terms of timeliness, accuracy reliance etc. 
Awe (2002), Stated that, the value of information communication and technology lies in the 
net benefits it offer to financial institution. Benefit must outweigh costs for information to be 
of any value. Thus system analysts are encouraged to seek ways of reducing cost and 
enhancing the information content of the systems they are recommending. In this way 
financial institution will make decisions that are right for the circumstances at hand. 
CONCLUSION 
 In this research work, an attempt has been made to compare the use of information 
communication and technology in some financial institution. The work has also indicated the 
role of technology in financial institution. 
 The work observed that recent development in information communication and 
technology has brought with it greater efficiency in the utilization of productive resources 
through improved competition and innovation. The impact of the development on the 
Nigerian financial institution has come in form of huge cost savings: convenience, 
elimination of intermediaries, ability to access remote and far flung areas of the world for 
new business, enhanced speed at carrying out financial activities, efficiency which is the 
watch word of modern business 
Information communication technology in financial institutions as it obtains in 
Nigeria vis-à-vis the industrialized nations of Europe, America, Japan etc. is not quite 
impressive. While the use of technology in financial institution started in the industrialized 
nations fully n the 1960s it barely started in Nigeria around the 1970s. It is not worthy that 
First Bank of Nigeria Plc is the forerunner in the application of technology in banking in 
Nigeria. It is still evident that a lot more efforts must be made by the financial institution to 
keep abreast with international standard. The approach of the Nigerian financial institution 
should now be to develop systems with the capacity to support new products and give better 
service. It is hoped that with time Nigeria will become self reliant in the production and 
application of appropriate technology used in financial institutions. 
 
Recommendations 
In order to sanitize some of the pitfalls of the use of technology in financial institution 
in the next century, the following steps are necessary to take: First, there should be a 
compulsory computer literacy training in financial institution. 
Second, measure to protect customers’ privacy of account from the risk of misuse as a 
result of proliferation of data the financial institution should be incorporated into legislation. 
This will maintain customer’s confidence in the financial institution. 
Third, modern scientist should find out a way completely obliterating the menace of 
the computer virus syndrome if information from the financial institution is to continue to be 
reliable to the nations. 
A look at the performance of the First Bank Plc. four years before it went 
computerized and four years after it become computerized would reflect a high growth rate 
margin, which has continued to ascend. 
REFERENCES 
Cronin, May .J. (1995) Doing more Business on the Internet (2nd Edited). New York: Van 
Nostrand Reinhold. 
First Bank Monthly Business and Economic Report, August (19991):The Impact of 
Technology in Banking in the 21st Century. 
Linda J. A. (2000); Information Technology’, (internet) 
Maruapula T. L. (2007) Information Management in Financial Institution in Bustswana. 
O. I. Wale Awe: (2000) Management Information Systems. 
The Officials Journal of the Institute of Chartered Accountants of Nigeria, January/March 
(2002) vol. 35. No 1. 
Tulien L. W. (1997) “Application of Information Technology Being a Keynote Address 
on the Application of Information Technology on Financial Administration in Nigerian. 
 
 
 
 


The Status of Information Communication and Technology in Financial Institutions in Nigeria

https://mpra.ub.uni-muenchen.de/16783/1/MPRA_paper_16783.pdf

The Status of Information Communication and Technology in Financial Institutions in Nigeria

Abstract

Similar works

Full text

Available Versions

Munich Personal RePEc Archive