1.1 Background to the Study
In recent times, Information Technology(IT), which basically involves the use of electronic gadgets especially computers of storing, analyzing and distributing data, is having a dramatic influence on almost all aspects of individual lives and that of the national economy-the banking sector inclusive. The increasing use of IT has allowed for integration of different economic units in a spectacular way. This phenomenon is not only applicable to Nigeria but other economies of the world, though the level of their usage may differ. In Nigeria, IT usage, especially in the banking sector, has considerably improved, even though it may not be as high as those observed in advanced countries (Adeoti, 2005; Adeyemi 2006).
The use of IT in the banking sector became of interest to this study due to the rapid change going on in the business environment, there has been a need for organizations to employ a faster, more efficient and more effective way of carrying out their activities in order to get better results and performance from operations. Thus, there is no better method that could be employed in achieving better performance by organizations that the use of information technology.
Information technology has become a global tool for the banking industry to reach global markets. The use of Information technology in banks has become a global phenomenon and every bank must be Information technology compliant in order to survive in the global competitive environment. The introduction of Information technology has changed manual and traditional forms of doing business and is being replaced by the sophisticated technology that is based on automation and interconnection of computers and other electronic devices. For instance, ledger books, paper invoice, printed materials and business trips are being replaced with online billing and payments, an elaborate website with product information and real-time teleconferencing across continents and time zones (Ojokuku and Sajuyigbe, 2012).
Moreso, the role of information technology in this modern age cannot be overemphasized especially in the banking industry which operates in a complex and competitive environment. Due to the tight competition, there are a lot of changing conditions and highly unpredictable economic climate. Laudon and Laudon (2010) contend that managers cannot ignore information systems because they play a critical role in contemporary organizations. Also, Adetayo, Sanni, Ilori (2009) and Boyett and Boyett (2009) emphasized the effect of IT on business and the effect of business on IT while Oyelusi, Ilori, Ogwu, and Adagunodo (2010) also claimed that only banks that overhaul the while of their payment and delivery systems, operations and apply IT devices are likely to survive and prosper in the new millennium.
However, some scholars have argued that additional investments in information technology contributed negatively to productivity. Morisson and Bernact (2009), Baily (2008) posited that additional investments contributed negatively to productivity, arguing that ‘estimated marginal benefits of investments in IT are less than the estimated marginal costs”. Litchenberg (2009) also argued that although IT investments have increased productivity, it has not resulted in supernormal business profitability rather there was some evidence of small or negative impact on profitability. Mulira (2009) also observed that ad-hoc acquisition of IT has often resulted in under-utilization of the equipment and the developmental impact on such cases has also been minimal.
Hence, the main purpose of this study is to conduct a survey on the impact of the implementation of information technology on the operational efficiency of banks in Nigeria. that is if it has actually impacted on banking positively or negatively.
1.2 Statement of The Problem
In this 21st century, business organizations need to find new and faster ways to adapt to the changing business environment. These days, computers and information processing devices are everywhere; they make work faster and more efficiently carried out. Computers and information processing influence decisions made by managers and decision makers and also affect how work is organized and how employees feel about work. The essential element of management is information processing and thus information technology systems are expected to heavily influence management and business operations.
However, the decision to invest in information technology by the organization is based on fear of being left behind by competitors rather than on a genuine understanding of the real benefit that information technology brings to the organization. Thus, the main focus of this research work is to investigate the extent of the impact of information technology on the performance of business organizations dealing especially with the banking industry.
1.3 Objectives of The Study
The general purpose of this study is to examine the impact of information technology on the operational efficiency of banks in Nigeria. This study is set out to achieve the following objectives to:
1. Assess the effect of information technology on bank services delivery.
2. Assess the impact of information technology on bank’s profit.
3. Examine whether or not information technology has any effect on the daily operations of banks in Nigeria.
14. Research Questions
This study addresses the following questions:
1. To what extent does information technology improve Nigerian banks ‘service delivery?
2. Does information technology have an influence on banks’ profit?
3. To what extent does information technology affect the daily operations of banks in Nigeria?
1.5 Research Hypotheses
The following hypotheses have been developed:
H01: There is no significant relationship between information technology and Nigerian banks ‘service delivery.
H01: There is a significant relationship between information technology and Nigerian banks ‘service delivery.
1.6 Significance of the Study
The study examines the impact of information technology on organization’s performance. It is hoped that the research result would enable organizations more especially the banking industry to know the benefit or effect of IT on their profitability after investing in information technology. The findings of this study will assist senior management to have a more realistic approach in making decisions on organizational investments and the associated expectation of the likely benefits. Moreover, it is expected to serve as a blueprint for students, managers and employees or organizations who are interested in conducting a research on the impact of information technology in organizations.
1.7 Scope and Limitation of The Study
In carrying out this research work, the focus of the study is on the impact of information technology on the operational efficiency of banks in Nigeria. This study examines the information technology banking operation of a commercial bank in Nigeria.
However, due to the short time is given in carrying out this study, the study is limited to some commercial banks in Nigeria.
1.8 Operational Definition
Information: This can be defined as processed data that has been verified as accurate and timely, organized for a purpose and presented within a context that gives it meaning and also relevant to the decision at hand.
Information technology (IT): This can be defined as both the hardware and software that is used to store, retrieve and manipulate data in order to process it into information.Organization: This can be defined as a group of people who form a business in order to achieve a particular aim.
Performance: This can be defined as a successful execution of a contract, or fulfillment of an obligation.
operational efficiency: it can be defined as the ratio between an output gained from the business and an input to run a business operation. When improving operational efficiency, the output to input ratio improves.