adoption and utilisation of information communication ...

NJISS, Vol. 9, No.1, 2010

ADOPTION AND UTILISATION OF INFORMATION COMMUNICATION TECHNOLOGY IN THE NIGERIAN BANKING INDUSTRY I. S. Madueme Department of Economics, University of Nigeria, Nsukka, NIGERIA ABSTRACT This work has been an attempt to provide empirical information on available information technology gadgets and software in Nigerian banks and their utilisation. The study also evaluated problems associated with information technology utilisation in the thirteen banks studied from 1999 and proffered possible solutions. Data were collected through questionnaires and interviews and analysed descriptively. Data obtained from empirical studies reveal that the many information technological gadgets and software's were availab!e and in use in Nigerian banks. These facilities and software's were utilized for information storage and retrieval, information processing, modelling and simulation, teleconferencing and so on. Hence the results of this work also reveal that the state of the art in the banking industry is the same with the .manufacturing and media sector, where file transfer protocol, web offset and gopher had low level of availability and adoption. The study therefore recommended increase in the capabilities of African countries to procure increased modern technology .through an endogenous creation of comparative advantage, free economic environment and perfect patent protection. This is essentially important if the banking industry will increase their operational efficiency and meet up with the current ongoing competition in today's globalized world. Keywords: Adoption Utilisation, Information Technology, Banks, Nigeria.

Impact. Commercial

of robotics, media electronics, optical fibers and digital networks are generic radical technological innovations. The nature of response and challenges of such technologies are equally fundamental because generic technical innovations alter the fundamental nature of product and processes It has influenced information transmission between and within organizations in multifarious dimensions.

INTRODUCTION Information technology is the product of advances in key areas of computing, telecommunications and microelectronics (Martin, 1988) Out of various emerging technologies, information communication technology can be described as a new techno-economic paradigm which has experienced the most rapid development and taken the field of micro electronics, informatics, data processing and communications into areas of life which only a few years ago were an exclusive preserve of space and advance manufacturing systems (Kagbojola, 2004). Its growing applications

The diffusion of information communication technology innovations embodied in a vastly improved computing and telecommunications capacity has generally been weak especially in SubSaharan African countries. However a strong

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abilities, support for training in new skills such as programming remedial activity and simulation of real life situations.'

interest in its adoption to provide information services has emerged in recent years in the continent for two main reasons. First of all, the revolution in information technology has resulted in computer hardware becoming cheaper and more readily available. Secondly, the value added or the substantial utility of information communication technology in the provision and access to information services for improved planning and management has become more widely recognized (Kagbojola, 2004).

In summary, information communication technology is profoundly transforming competitive strategies, product development, manufacturing processes and procurement practices. No important field of endeavor remains immune to the influence of information communication technology and no corner of life is left undisturbed at its coming (Martin, 1988). The transformations achieved by information communication technology induces managerial and organizational innovations, new businesses practices such as sourcing, de-layering, time based competition, just in time procurement and flexible manufacturing (Hanna, 1994). It is an enabling technology, which blends traditional industrial structures, based on small firms with trends towards quality enhancement (Gbade, 1990 and Antonello, 1990). This is because the success and efficiency of firms surely depends on timely access to information.

Hence the information sector is taking up such a large percentage of GDP because the abundance of cheap labor and raw material is no longer adequate for global competition. Information, flexibility, product quality and fast response are the key new factors required and IT plays a critical role in these areas (Hanna, 1994). Information is just as important as a production factor like land, labor and capital. (Antholt,1993). 'Effective communication links and computerized system are a sine qua non for high quality service delivery. With instantaneous access to information, identified shortages in markets are quickly disseminated throughout a global network, thereby ensuring efficiency, competitiveness, strengthening of domestic service quality' (Adeola, 1995). Its importance can be stipulated as follows:

An overview of the global production and use of information technology in Africa reveals that for over thirty years, technological innovation has fuelled unprecedented advances in digital computing capability especially in the fields of semi-conductor technology (the foundation on which the information communication industry is built), recording technology and telecommunication capability. Though information communication technology can be seen to attribute to economic growth, it also introduces new challenges in Africa and its diffusion is often compounded by problems of cost allocation, geographic and climatic conditions, procurement practices of operations, equipment design and other architectural issues for several years.

a) It enhances access to global knowledge, markets and capital. b) It is a critical tool for competition in an information intensive economy c) It transforms the way people do things d) It increases the amount of information available to economic agents e) It increases information intensity of processes, occupations, institutions, products and economies. 1) It reduces transaction and coordination costs within and across institutions (Hanna, 1994).

In Nigeria, the adoption level of information technology in the nineties in terms of availability and utilization is at an average of 52 percent while the frequency of utilization is about 56 percent (Vanguard, 1998). According to the report, there are about seven computers per one thousand persons in Nigeria which indicates very low computer availability. Mansel and Wehill (1998) used the 'footprint analysis' which refers to infrastructure, experience, skills and knowledge (INEXSK) to conip~te inter country index values for the adoption of information communication technology. The values they obtained are presented in Table 1.

. The essential significance of information communication technology lies in the role as a change agent, creator of possibilities; and an enabling and liberating presence in our midst which changes the "relationship between learning and leisure (Martin, 1988). According to Craig (1984), 'although it will be some time before the full potential of leT is realized, the advantages are apparent and include exposure to new ideas, experiences, development of logical thinking and reasoning

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Table 1: Index values on the diffusion of information technology for selected countries NIGERIA TYPE OF JAPAN ICT Personal 0.38 68 computers Main lines 72 0.36 Internet 22 0 hosts Television 101 5.5 sets Source: Mansel and Wehlll (1998)

FRANCE

GERMANY

UNITED KINGDOM

UNITED STATES

60

74

60

147

82 22

72 60

74 78

92 238

95

90

100

127

Table 1 shows very low index values for Nigeria compared to other countries. This unsatisfactory state of affairs according to ITU (1998) brought about a greater desire for universal access to information technology facilities in developing countries though by the year 2001 the adoption of ICT became more prominent in the Nigerian scene. Hence within the past seven years, fiscal policies have been used to encourage increased consumption of ICT facilities in Nigeria. The installation of the global service mobile communication system and greater private sector participation has helped to improve the diffusion of information communication technology in the Nigerian economy. With respect to the banking sector (which is fundamentally a service industry which thrives on a series of informational transactions based on shared concepts, procedures and relationships that enable commodities and funds to floy{ within and among regions), information communication technology diffusion has taken place to a great extent. Many banks are deviating from the use of manual record keeping and transactions to micro banker training soft wares and packages. This is based on the purview that with increased competition, new electronic services are likely to sharply accelerate the global retail financial services by making delivery systems more efficient, reducing prices and spreads, undermining geographic and segment barriers and increasing customer value and convenience.

METHODOLOGY The scope of this study is restricted to Nigerian Commercial banks that have been in existence for at least ten years. This scope is chosen because such banks have a history of pre and post information technology adoption experiences, which the study is structured to capture. The scope of the study will also focus on assessing the adoption and utilisation levels of information communication technology since 1999. Primary data was collected through questionnaires and interviews while secondary data was collected through annual bank reports from 1997. Data are presented in tables and analysed descriptively using chi square statistics. Data Presentation

and Analysis

The results on available ICT facilities and their level of adoption are presented on Tables 2, 3 and 4. Data from Tables 2 and 3 show the available ICT facilities and softwares in Nigerian banks and their various uses in the banks. Data from Table 2 show that available ICT facilities and softwares in Nigerian banks in their order of ranking are computers, telephones, fax machines, spreadsheets, word processing packages, MS word, E mail, ATM, Power point, Data based management, web offset, file transfer protocol, word perfect, gopher, oracle and insurance accounting. Many of the facilities and softwares were abundant as evidenced from the high values from the table. Chi square test values in Table 3 also show that the proportion of respondents who identified computers, telephones, fax machines, spreadsheets, word processing packages, MS word, E mail, ATM, Power point, Data based management, web offset, file transfer protocol, word perfect, gopher, oracle and insurance accounting as facilities and software in Nigerian banks were also greater than those In disagreement.

In line with the foregoing historical developments, it becomes imperative to assess the extent of adoption and utilisation' of 'information communication technology on various sectors; in this instance the banking sector and the associated problems in.order to determine empirically the extent to which the expected contributions from its adoption have been realized in the Nigerian banking industry

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Table 2: Available ICT facilities and Software in Commercial No 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19

ICT facility/software Telephone Fax machine Computer Word processing package Email File transfer protocol Web offset Gopher ATM Flex cube Microbanker Word perfect MS word Spreadsheets Data base management Fault diaqnozer Oracle Insurance accountinq Power point

Banks

Cumulative % 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100

Valid % 97.1 97 100 89.9 85.6 47.8 62.3 23.2 85.5 8.7 116 30.4 88.4 91.3 68.1 4.3 14.5 11.6 69.6

Rank 2 3 1 5 7 12 11 14 8 17 16 13 6 4 10 18 15 16 9

Table 3: Available ICT Facilities and Software Utilization by Banks No 1 2

3 4 5 6 7 8 9 -

rli' 11

r 12 t13-

Software utilisation Data analysis Information processing Information storace and retrieval Information dissemination CD ROM searches Teleconferencinq General management Forecastinq Graphics and education Modelling and simulation Seminar presentation Customer accounti.Q9.J!!formatlon Human capitaL.management

Cumulative % 100 100 100 100 100 100 100 -- 100 ~60 100 100 -100 100 -

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Valid % 85.5 67 95.7 81.2 24.6 30.7 78.3 47.8 50.7 33.3 70.7 66.7 33.3

Rank 2 6 1 3 12 11 4 9 8 10 5 7 10


Table 4: Chi square Test Values on Available Software and Facilities in Commercial No.

1 2 3 4 5 6 7 8 9 10

Software Word perfect: Yes MS Word: Yes Spreadsheets: Yes Data base management: Yes Statistical packages: Yes Fault diagoniser: Yes Micro banker: Yes Oracle: Yes Insurance accounting: Yes Power point: Yes

No No No No No No No No No No

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Computers

No Yes

12

Fax machine

No Yes

13

Telephone

14

Banks

Observed

Expected

Residual

144 63 24 183 18 189 66 141 144 63 198 9 183 24 177 30 183 24 63 144

103.5 103.5 103.5 103.5 103.5 103.5 103.5 103.5 103.5 103.5 103.5 103.5 103.5 103.5 103.5 103.5 103.5 103.5 103.5 103.5

40.5 40.5 79.5 79.5 85.5 85.5 37.5 37.5 40.5 40.5 94.5 94.5 79.5 79.5 79.5 79.5 79.5 79.5 40.5 40.5

I

0 207

•

Variable constant

Chi square cannot be performed

6 201

103.5 103.5

96 96

No Yes

6 201

103.5 103.5

96 96

Word processing package

No Yes

21 186

103.5 103.5

-82.5 82.5

15

Email

No Yes

30 177

103.5 103.5

-73.5 73.5

16

File transfer protocol

No Yes

108 99

103.5 103.5

4.5 -4.5

17

Web offset (www)

No Yes

78 129

103':5 103.5

-25.5 25.5

18

Gopher

No Yes

159 48

103.5 103.5

55.5 -55.5

-

,

•

32

l

~


Table 5: Chi Square Test Values on Software Utilization in Commercial No. 1

2

Software utilisation Data analysis: No Yes Information processing: No Yes InfOJQ1ationstorage and retrieval, No Yes Information dissemination: No Yes

3

"4

5

Banks

Observed

Expected

Residual

30 177

103.5 103.5

73.5 73.5

27 180

103.5 103.5

76.5 76.5

9 198

103.5 103.5

94.5 94.5

39 168

103.5

64.5

103.5

64,5

156 51

103.5 103.5

52.5 52.5

123 83

103.5 103.5

45 162

103.5 103.5

58.5 58.5

108 99

103.5 103.5

4.5 4.5

102 105

103.5 103.5

15 15

138 69

103.5 103.5

34.5 34.5

42 165

103.5 103.5

61.5 61.5

CD ROM searches : No Yes Teleconferencing: No Yes General management: No Yes Forecasting :) No Yes ~raphics and education: No Yes

6

7

8

9

10

11

Modelling and simulation: Na Yes-. Seminar presentation: No Yes

..

21 21

~

..

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(85.5%), greater than that of those who did not identify it as an ICT facility 30(14.5%). The test of quality of proportions revealed that these proportions are significantly different Thus, E-mail is an ICT facility in Nigerian banks. The proportion (percentage) of respondents who identified File Transfer Protocol as an leT facility is 108 (47.8%), which is lesser than that of those who did not identify it as an ICT facility 99(52.2%). The test of quality of proportions revealed that these proportions are not Significantly different. Given the p-value of 0.718, it is therefore not regarded as an ICT facility available in Nigerian banks. Moreover, the proportion (percentage) of respondents who identified Web Offset (W'N'N) as an ICT facility is 129 (62.3%), greater than that of those who did not identify it as an ICT facility 28 (37.7%). The test of quality of proportions revealed that these proportions are significantly different. Thus, Web Offset (W'N'N) is an ICT facility available in Nigerian banks. Gopher is not identified as an ICT facility available in Nigerian banks given the proportion (percentage) of respondents as 48 (23.2%), which is not greater than that of those who did not identify it as an ICT facility 159(76.8%). The test of quality of proportions revealed that these proportions are insignificantly different. Then, Gopher is not an ICT facility in Nigerian banks. Lastly, Flex cube, Hex cube, Java Programmer and financial software are other ICT facilities identified as available in Nigerian banks. The level of adoption of ICT facilities and software is illustrated graphically Fig.1. From Fig. 1, computer as an ICT facility has 100% availability and adoption in Nigerian banks followed by Telephone and Fax Machine that has an equal value of 97% respectively. Other ICT facilities such as Flex cube, Hex cube, Java Programmer and financial software are 91 % available in Nigerian banks followed by Word Processing Package that is 90% available. Email and web offset recorded its availability in Nigerian banks as 85% and 62% respectively. The rest like File Transfer Protocol and Gopher are the least available ICT facilities in Nigerian banks with 48% and 23% respectively which shows that such software are not too popular now in Nigerian commercial banks. Associated problems with the adoption of information communication technology include irregular power supply which necessitates the use of private generators with its associated implication on the cost of production, high cost of training ICT staff, irregular maintenance of leT gadgets, inadequate co-ordination between branch networks and head offices to mention but a few.

However software such as flex cube recorded low values of 8.7%, fault diagnozer was 4.3%, Oracle had 14.5%, Insurance accounting had 1.6% and Gopher recorded 23.2%. This low values portray that such software have not been adopted in many of the banks within the sample. The available software were also examined critically to identify the uses they were put to in the banks. In order of ranking, they were used primarily for information storage and retrieval as evidenced from the high score of 95.7 in Table 2. In the same table the available software were used for data analysis which had a score of 85.5%; for information dissemination with a score of 85.5%, general management which had a score of 78.8%; for seminar presentation which recorded a high value of 707%; information processing with a value of 67%; customer accounting information with a value of 66.7% and graphics and education with a score of 50.v%. It was also evident from data collected that the software were used sometimes for forecasting, human capital management. modelling and simulation, teleconferencing and CD ROM searches. This is evidenced from their low values of 47.8, 33.3, 33.3, 30.7 and 24.6 respectively in Table 2. Chi square test values in Table 4 also portray the same non significant difference in proportions. The proportion (percentage) of respondents who identified telephone as an ICT facility is 201 (97.1 %), greater than that of those who did not identify it as an ICT facility 6 (29%) The test of quality of proportions revealed that these proportions are significantly different. Thus, Telephone is an ICT facility in Nigerian banks. The same is applicable to Fax Machine. The proportion (percentage) of respondents who identified Computer as an ICT facility is 207 (100%), greater than that of those who did not identify it as an ICT facility 0 (0.0%). The test of quality of proportions revealed that these proportions are significantly different. Therefore, Computer is an ICT facility in Nigerian banks The proportion (percentage) of respondents who identified Word Processing Packaqe as an ICT facility is 186 (899%), greater than that of those who did not identify it as an ICT facility 21(10.1%). The test of quality of proportions revealed that these proportions are significantly different. Thus, Word Processing Package is an ICT facility in Nigerian banks. On the other hand, E-Mail as one of the current ICT facility, the proportion (percentage) of respondents who identified it as an ICT facility is 177

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Available

leT facilities

in Nigerian banks and their level of adoption

.' ~........

. "",\'

»>.

'00%

t

i

I

. Fig. 1: Level of adoption of ICT facilities and software CONCLUSIONS

AND RECOMMENDATIONS

power point, spreadsheets, word processing packages to mention but a few. These facilities and software were utilized for information storage and retrieval, information processing, general management, seminar presentation, graphics and education, forecasting, human capital management, modelling and simulation, teleconferencing and so on.

The collection, compilation and classification of vital technological statistics are lacking in Sub Saharan Africa. (Khall-Timany,2002) This was also concurred by Hanna (1994) in her work where she stressed the need for empirical information of ICT impacts on sectors in developing countries. This work has been an attempt to provide this 'lacking' empirical information on the impact of information communication technology with respect to Nigerian banks.

Data also revealed that facilities such as computers, fax machines, telephones had a high level of availability and adoption. In addition software's such as java programmer, micro banker and other financial software's, word processing packages, spreadsheets also had a high adoption rate in Nigerian banks.

Data obtained from empirical studies reveal that the many information technological gadgets and software were available and in use in Nigerian banks.

The implication of these findings is that seemingly the efforts geared towards increased consumption of

Some of such facilities are computers, telephones, internet facilities, fax machines, ATM,

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information communication technology have been productive over the years.

Antonelto C. (1990): New information technology and industrial organization; Experiences and trends in Italy. In information technology and new growth opportunities. OECD.

Wenhill (1998) in their footprint analysis which refers to infrastructure, experience, skills and knowledge did a computation of inter country index values on the adoption of leT. They discovered that in the nineties the index values expressed in percentages for Nigeria was as low as 0.38 for computers, 0.36 for main lines etc. Kagbojola (2004) also discovered 68% level of adoption and 52% utilization of telex services.

Ayogu M. and Ogbu O. (2002): Globalization and technology: Africans participation and perspectives. ATPS Special paper series. NO.1 Craig L. (1984): This is information technology and education. London channels four televisions.

Hence, the results of this empirical work show higher levels of technological adoption in the banking industry. It also reveals that the state of the art in the banking industry is the same with the

Gbade S. (1990): Improving Corporate image of banks. Business Times, July. Hanna N. (1994): The information technical revolution and economic development, World Bank discussion paper No. 120. USA: The World Bank.

manufacturing and media sector, where file transfer protocol, web offset and gopher had low level of availability and adoption according to the work of Kagbojola in 2004 . It was based on this purview that it is recommended in line with Ayogu and Ogbu (2002) to increase the capabilities of African countries to procure increased modern technology through an endogenous creation of comparative advantage, free economic environment and perfect patent protection. This is essentially important if the banking industry will increase their operational efficiency and meet up with the current ongoing competition in today's . globalized world.

I T U (1998): World development report: Universal telecommunications access: World Telecommunication indicators, Switzerland: ITU. Kagbojola D. (2004): The impact of information technology on the Nigeria economy: A study of manufacturing and service sectors in South Western and South Eastern zones of Nigeria. African Technology Policy Studies Network Nairobi. Working Paper Series, No. 39.

REFERENCES

Mansel and Wehill (1898): Knowledge, societies, information technology for sustainable development

Adeola F. (1995): The new GAIT Implications of Uruguay round for trade and services; First Bank of Nigeria bi-annual review 3.

Martin W. (1988): The information society London, The Eastern press.

Antholt C. (1993): Getting ready for the 21st century; Technological Change and institutional modernization in agriculture, USA; World Bank.

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