CHAPTER
ONE

INTRODUCTION

1.1    Background
of the study

Information
technology is a body of tools with the convergence of communication and
computer. It is also series of machine, which can execute sequence of instructions.
The sequence of instruction is a program made particularly flexible and not
rigid and can be change depending on the information being processed (Goldberg,
2009).

The new
millennium brought with it new possibilities in terms of information access and
availability simultaneously, introducing new challenges in protecting sensitive
information from some eyes while making it available to others. Today’s
business environment is extremely dynamic and experience rapid changes as a
result of technological improvement, increased awareness and demands Banks to
serve their customers electronically. Banks have traditionally been in the
forefront of harnessing technology to improve their products and services.

The Banking
industry of the 21st century operates in a complex and competitive environment
characterized by these changing conditions and highly unpredictable economic
climate. Information and Communication Technology (ICT) is at the centre of
this global change curve of Electronic Banking System in Nigeria today.
(Stevens 2002).

Assert that
they have over the time, been using electronic and telecommunication networks
for delivering a wide range of value added products and services, managers in
Banking industry in Nigeria cannot ignore Information Systems because they play
a critical impact in current Banking system, they point out that the entire cash
flow of most fortune Banks are linked to Information System.

The
application of information and communication technology concepts, techniques,
policies and implementation strategies to banking services has become a subject
of fundamental importance and concerns to all Banks and indeed a prerequisite
for local and global competitiveness Banking.

The
advancement in Technology has played an important role in improving service
delivery standards in the Banking industry. In its simplest form, Automated
Teller Machines (ATMs) and deposit machines now allow consumers carry out
banking transactions beyond banking hours.

With online
banking, individuals can check their account balances and make payments without
having to go to the bank hall. This is gradually creating a cashless society
where consumers no longer have to pay for all their purchases with hard cash.
For example: bank customers can pay for airline tickets and subscribe to
initial public offerings by transferring the money directly from their
accounts, or pay for various gods and services by electronic transfers of
credit to the sellers account. As most people now own mobile phones, banks have
also introduced mobile banking to cater for customers who are always on the
move. Mobile banking allows individuals to check their account balances and
make fund transfers using their mobile phones. This was popularized by First
Atlantic Bank (now First Inland Bank) through its “Flash me cash” product
Customers can also recharge their mobile phones via SMS. E-Banking has made
banking transactions easier around the World and it is fast gaining acceptance
in Nigeria.

The delivery
channels today in Nigeria electronic Banking are quite numerous has it is
mentioned here Automatic Teller Machine (ATM), Point of Sales (POS), Telephone
Banking, Smart Cards, Internet Banking etc Personal computers in the Banking
industry was first introduced into Nigeria by Society Generale Bank as the
popular PC easy access to the internet and World Wide Web (www) and internet is
increasingly used by Bank’s as a channel of delivering the products and
services to the numerous customers.

Virtually
almost all Banks in Nigeria have a web presence; this form of Banking is
referred to as Internet Banking which is generally part of Electronic Banking. The
delivery of products by banks on public domain is an indication of
advertisement which is known has E-Commerce. Electronic commerce on the other
hand is a general term for any type of business or commercial transaction it
involves the transfer of information across the internet. E-Commerce involves
individuals and business organization exchanging business information and
instructions over electronic media using computers, telephones and other
communication equipments. This covers a range of different types of business
from consumers to retails products.

However,
Electronic banking as it is; is a product of E-Commerce in the field of banking
and financial services. It’s offers different online services like balance
enquiry, request for cheque books, recording stop payment instructions, balance
transfer instructions, account opening and other form of traditional banking
services. The Internet allows businesses to use information more effectively,
by allowing customers, suppliers, employees, and partners to get access to the
business information they need, when they need it. These services all translate
to reduced cost: there are less overhead, greater economies of scale, and
increased efficiency.

The internet
is revolutionizing sales techniques and perceptions of leading brands, and the
internet is intensifying competition in all its forms. Banking are continuing
to use the internet to add value for their customers; but in order for this to
work effectively – maximizing opportunities, reducing risks and overcoming
problems – an E-Banking strategy is required as an impact.

The growth of
the Web and Internet as new channels, the growth in their use by customers, the
growth in their use by customers, and the floor of companies entering the
market, presents a series of key challenges to companies. It is easy and cheap
to put up a website.

But to create
an environment delivering effective service on the Web to a significant
proportion of your customer base requires an E-Banking strategy.

Electronic
Banking offers different online services like balance enquiry, request for
cheque books, recording stop payment instructions, balance transfer
instructions, account opening and other form of transitional Banking services.

The impact of
information Technology on service delivery in banks  cannot be overemphasis. Hence the need to
investigate it impact on service delivery in UBA Kakuri branch in Kaduna.

1.2    Statement of Problem

In Nigeria, customers of banks today
are no longer about safety of their funds and increase returns on their
investments only. Customers demand efficient, fast and convenient services.
Customers want a Bank that will offer them services that will meet their
particular needs (personalized Banking) and support their Business goals for
instance; businessmen want to travel without carryout cash for security
reasons. They want to be able to check their balance online, find out if a
cheque is cleared, transfer funds among accounts and even want to download
transaction records into their own computer at work or home. Customers want a
preferential treatment and full attention by their choice Bank. All these are
only achievable through the use of ICT: In line with rendering qualities and
acceptable services that most Banks in Nigeria are gearing toward and investing
large sum of money in information and communication Technology, expectedly such
Banks services have been improved. United Bank for Africa (UBA), Zenith Bank,
GT Bank (to mention few) are in the forefront in the use of IT in rendering
services to their Customers (The Guardian Newspaper April 18, 2008p 21).

Hence, some of the typical issues
posing serious challenges on service delivery in bank are advance information
technology. Banks and the entire financial sector in Nigeria have been most
radically affected by these developments. This is so because information
technology has become a critical business resource and its absence could result
in poor decision and ultimately business failure. As such many banks and
financial institutions have failed in the past due to their inability to
utilize information technology in marketing their financial services as well as
their operations.

Today’s
business environment is very dynamic and undergoes rapid changes due to
technological innovation, increased awareness and increased demands from
customers. The banking industry of the twentieth century operates in a complex
and competitive environment characterized by these changing conditions and
highly volatile economic climate, and information and communication technology
ICT) is at the centre of this global change curve (Agboola,2006). Hence the
banks that will survive and complete effectively in today’s business environment
must necessarily integrate ICT into its operational processes.

Given this
scenario, this thesis attempts a synthesis of empirical facts on the extent to
which information and communication technology has informed innovations in the
operational modalities and service delivery modes of banks in Nigeria and the
impact of this on bank performance. It is against this background that the
subject matter is seen as a problem worthy of investigation.

1.3    Objective
of the study

The central
objective of the study is to examine the impact of information and
communication technology on customer’s service delivery. The specific
objectives are:

1.          
Investigate
how Information and communication Technology enhances customer’s satisfaction
in United Bank of Africa.

2.          
Examine
the benefits a customer derives from using ICT tool  in United Bank for Africa.

3.          
Identify
the challenges militating against ICT operation in United Bank for Africa.

1.4      
Research Questions

In the study the research question below is proffered with answers;

1.      How does
ICT enhance customer’s satisfaction in United Bank of Africa?

2.      What
benefits do customers derive from using ICT tools in United Bank of Africa?

3.      What
are the challenges militating against ICT operation in United Bank for Africa?

1.5    Statement of Hypothesis

The
stated hypotheses tested in this study;

Ho1:  Information
and communication Technology does not enhance bank service delivery.

HA1:  Information
and communication technology enhances bank customer satisfaction.

1.6    Significance
of the Study

The study
would enable the banks executives and indeed the policy makers of the banks and
financial institutions to be aware of electronic banking as a product of
electronic commerce with a view to making strategic decisions. The research is
equally significant because it would provide answers to factors militating
against the implementation of electronic banking in Unity Bank Plc; prove the
success and growth associated with implementation of electronic banking
highlight the areas of banking operations that can be enhanced via electronic
banking and also be an invaluable tool for Students, Academician, institutions,
Corporate managers and individuals that want to know more about electronic
banking trends especially in Nigeria.

1.6    Scope
of the study

In pursuance
of the objective of the study; attention shall be focus on information
technology in banks. In order to conduct an empirical investigation into the
impact o information and communication on bank customer service delivery in
united bank for Africa and will also examine the nature of ICT operation in
united bank for Africa from 2007 to 2009.

1.7    Definition
of terms

ATM:
Automated Teller Machine: According to Peter and Sylvia (2008), an ATM combines
a computer terminal, Recordkeeping system, and cash vault in one unit,
permitting customers to enter a financial firm’s bookkeeping system with either
a plastic card containing a Personal Identification Number (PIN) or by punching
a special code number into a computer terminal linked to the financial firm’s
computerized records 24 hours a day. Once access is gained into the system,
cash withdrawals may be made up to pre-specified limits and balance inquiries,
and bill paying may take place. Mishkin (1998) states that the wonders of
modern computer technology have also enabled banks to lower the cost of bank
transactions by having the customer interact with an electronic banking
facility rather than with a human being. One important form of electronic
banking facility is the automated teller machine (ATM), which has the advantage
that it does not have to be paid over time. Furthermore, because of its low
costs, ATMs can be put at locations other than a bank or its branches, further
increasing customer convenience. The low cost of ATMs has meant that they have
sprung up everywhere. Although ATM was introduced in the Nigerian banking
industry in early 2000, most banks embraced its use after the 2005 banks’
consolidation. Today, there is hardly any bank without the ATMs.

The banks
have also deployed the ATMs to other locations such as supermarkets, tertiary
institutions, hospitals, hotels and so on. There is no doubt that the
introduction of ATMs by banks is to reduce operation costs and to ensure that
the customers are better served. But the ATM is not without challenges because
there are always people out there who would want to reap where they did not sow
.The infrastructures that support the machine are susceptible to abuse, misuse
and failure in many ways, resulting in financial loss as a result of fraud,
unauthorized use of customers personal identification number and loss of
customers confidence. ATM fraud has taken an alarming proportion and most
customers are now afraid to use their ATM cards. There is no doubt that there
must be collusion between some bank staff and fraudsters for such frauds to
succeed. This is one of the reasons customers are fret about the security of
on-line transactions. While on the other hand, some customers have not helped
matters because of their carelessness or fraudulent nature.

ATM Card:
debit card use by banks customers in making transactions via ATM. The card is a
complex circuit that process micro processors with a single chip that contains
the complete arithmetic and logic unit of computers , it provide access to
customers to perform balance inquiry, mini statement and cash withdrawal as
well as transfers through the use of Automated teller machine. This debit card
can also be used for internet online and post transactions.

Chip Card:
this is a card containing one or more computer chips or integrated circuit for
identification, data storage or special purpose processing used to validate
personal identification numbers authorize purchase, verify account balances and
store personal records.

Electronic Data
Interchange (EDI):
The transfer of information between organizations in machines readable form. Electronic
monetary value is measured in currency units stored in electronic form on
electronic device in the consumer’s possession. This electronic value can be
purchase and held on the device until reduced through purchase or transfer.

Mobile Banking: this
is a product that enables the bank to offer customers to access services
anywhere. Customers can make their transactions anywhere such as account balance
inquiry, transactions inquiry. Bill payment/electronic fund transfer. Transfer
between accounts etc.

Payment System:
A financial system that establishes that means for transferring money between
suppliers and of fund, usually by exchanging debits or Credits between
financial institutions.

Point Of Sale (POS)
Machine:
A
Point-of-Sale machine is the payment device that allows credit/debit
cardholders make payments at sales/purchase outlets. It allowed customers to
perform the following services Retail Payments, Cashless Payments, Cash Back
Balance Inquiry, Airtime Vending, Loyalty Redemption, Printing ministatement
etc.

Smart Card: A
Card with a computer chip embedded, on which financial health, educational, and
security information can be stored and processed.

Transaction Alert:
Our customers carry out debit/credit transactions on their accounts and the
need to keep track of these transactions prompted the creation of the alert
system by the Bank to notify customers of those transactions. The alert system
also serves as notification system to reach out to customers when necessary
information need to be communicated.

Western Union Money
Transfer (WUMT): Western union Money
transfer is a product that allowed people with relatives in Diaspora who may be
remitting money home for family up-keep, Project financing, School fees etc.
Nigerian Communities known for having their siblings gainfully employed in
other parts of the world are idle markets.

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