THE IMPACT OF ICT ON BUSINESS ORGANIZATION USING BANK AS A STUDY

THE IMPACT OF ICT ON BUSINESS ORGANIZATION USING BANK AS A STUDY

1.0     Introduction

Today’s business environment is very dynamic and undergoes rapid changes as a result of technological innovation, increased awareness and demands from customers. Business organisations, especially 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. Laudon and Laudon, (1991) contend that managers cannot ignore Information Systems because they play a critical role in contemporary organization as it regards fraud detection in Nigerian banks.

Information and Communication Technology is perceived to be a force to be reckoned with in the 21st century because it has caused and continues to cause major changes in the way we live. In the electronic media, ICT has ignited and provoked radical and drastic changes that has affected and revolutionized the broadcast industry, most especially in immediacy and timeliness of news. Information and Communication Technology not only facilitate and enhance the creation, processing, sharing and dissemination of information in the broadcast industry but the immediacy and timeliness of news is of a high priority.

Notwithstanding, with ICT, information spread, infinitely becomes faster and cheaper and readily available. Before now, there was a significant time lag separating the point when an event took place, and the time when the news may be publicly made available. But, ICT has helped bridge the time lag between when an event took place and the time it is made available to the public. Information and Communication Technology (ICT) is a generic term used to express the convergence of telecommunications, information, broadcasting and communications. According to Rodriguez and Wilson (2000) ICT is seen as a set of activities which facilitate and enhance the processing, transmission and dissemination of information by electronic means. ESCAP (2000) also perceived ICT as techniques people use in order to share, distribute, and gather information for communicating through computers and computer networks. Promoting Information and Communication Technology as an integral part for enhancing timely news delivery in the broadcast industry was articulated by Samadar (1995) he submitted that ICT is a tool for facilitating the creation, storage, management and dissemination of information by electronic means.

The term Information and Communication Technology (ICT) refers to forms of technology that are used to transmit, store, create, share or exchange information. This broad definition of ICT includes such technologies as: radio, television, video, DVD, telephone (both fixed line and mobile phones), satellite systems, computer and network hardware and software; as well as the equipment and services associated with these technologies, such as videoconferencing and electronic mail.

In the same way, high technology approaches to news processing have set in motion an evolution in strategies of news gathering in the first half of this decade. Central to these new approaches is the use of Computer. Williams and Sawyer (2003:3) pointed out that a computer is “ a programmable, multiuse machine that accept data –raw fact and figures, manipulate and process it into information that we can use, such as summaries, totals or reports” its purpose is to speed up problem solving and increase productivity.

Technology is invented by man to manipulate his social and physical environments. The sociology of science and technology made us to understand that, technology came with both manifest and latent intents. The manipulation of computer and other information and communication technology (ICT) to detect fraud in banks gives more insight into the manifest function of technological revolution. When computer was invented, the intention of its inventors is to hasten data processing with effortless ease. That it has been doing efficiently by giving timely and accurate information. The ability of computer to control and manipulations data continue to give the banking system the urge to upgrade their information communication technology (ICT) department.

The introductions of modern banking methods like automatic electronic gadgets; communication systems and computers; fraud has a watchdog to check its excesses. Due to forgery in cheques, bankers are extremely carefully when clearing them, and most times the forged cheques look authentic and the owner will have to confirm the signature on the cheque as his own.

2.0     Conceptual Framework

Information and Communication Technology (ICT) is the automation of processes, controls, and information production using computers, telecommunications, software and ancillary equipment such as automated teller machine and debit cards (Khalifa 2000). It is a term that generally covers the harnessing of electronic technology for the information needs of a business at all levels. lrechukwu (2000) lists some banking services that have been revolutionized through the use of ICT as including account opening, customer account mandate, and transaction processing and recording. Information and Communication Technology has provided self-service facilities (automated customer service machines) from where prospective customers can complete their account opening documents direct online. It assists customers to validate their account numbers and receive instruction on when and how to receive their cheque books, credit and debit cards.

A bank is a financial institution that accepts deposits and channels those deposits in to lending activities. Banks primarily provide financial services to customers while enriching investors. Government restrictions on financial activities by banks vary over time and location. Banks are important players in financial markets and offer services such as investment funds and loans. Also, a bank is an organization, usually a corporation, chartered by a state or federal government, which does most of all the following: receives demand deposits and time deposits, honors instruments drawn on them, and pays interest on them; discounts notes, makes loans and invests in securities; collects checks, drafts and issues drafts and cashier’s check. Sayers R. (1979) defined a bank as “institutions whose debts usually referred to as bank deposits are commonly accepted in final settlement of other debts”. Drover and Bostey (1972) contended that “a bankers business is toreceive money from his customers and to collect instruments representing money from his customers on the understanding that he will refund all moneys received or collected either on demand or at some definite date agreed upon between him and his customers”. The Bill of Exchange Act of 1882 defined a banker as a body of persons, whether incorporated or not, who carry on the business banking. The banking act defined a deposit taking institution which is recognized as a bank by the bank of England for the purpose of the banking act 1979.

From the foregoing, it could be concluded that before an institution is regarded as a bank in the United Kingdom, the principal aspect of its business must consist of receiving money for the credit of a current account, which the depositor could withdraw on demand by cheque. In modem banking where banks have become financial super markets providing a wide variety of services, the above definition will certainly not suffice. Fortunately, this opinion appears to have received official support m Nigeria.

3.0     INFORMATION AND COMMUNICATION TECHNOLOGY DEVICES USED IN THE BANKING INDUSTRY

Communication Technology deals with the Physical devices and software that links various computer hardware components and transfer data from one physical location to another (Laudon and Laudon; 20O1)

ICT products in use in the banking industry include:

• Automated Teller Machine,
  • Smart Cards
  • Magnetic Ink Character Reader (MICR)
  • Electronic Funds Transfer
  • Electronic Data Interchange
  • Electronic Home and Office Banking.

Several authors have conducted investigation on the impact of ICT on the banking sector of the Nigeria economy. Agboola et al (2002) discussed the dimensions in which automation in the banking industry manifest in Nigeria. They include:

• Bankers Automated Clearing Services: This involves the use of Magnetic
• Ink Character Reader (MICR) for cheque processing. It is capable of encoding, reading and sorting cheques.
• Automated Payment Systems: Devices used here include Automatic Teller
• Machine (ATM), Plastic Cards and Electronic Funds Transfer.

4.0     THE IMPACT OF ICT IN THE BANKING INDUSTRY

The banking industry or sector provides financial services to individuals, organizations, institutions etc and have been totally revolutionized by the impact of Information and Communications Technology (ICT) in virtually all areas of its operations. Many years ago a lot of tasks were carried out manually. These include preparation of cash books, journals, general ledgers, final accounts and reports. These however accounted to greater extent the long delays in providing financial services to customers, long queues experienced in banking halls, long turnaround time in meeting customers’ requests like cheque books requisition, raising drafts, processing of loan requests, withdrawal / deposit of cash, trade payments etc.

But today, the stories have changed significantly due to the impact of Information and Communication Technology. Unlike before where you have many paying and receiving tellers in the banking hall, you have fewer tellers nowadays and many Automated Teller Machines (ATM) in many strategic locations both within and outside bank premises. These days many banks even have e-branches and ATM galleries with highly reduced human activities. Loan processing have equally improved. Approvals can be obtained from various approving authorities via computer system.

The clearing system of bank instruments like cheques, managers cheque, bank drafts, etc have been reduced from four(4) working day to two(2) with chances of further improvement.

In security area, electronic revolving doors have practically replaced the manually operated types. Surveillance cameras of various types are in vogue. Computerized system of monitoring custom duties, excise duties, import duty, movement and payment of goods, taxes is now the order of the day.

Today in Nigeria financial inclusion strategy appears to be gaining ground. These involves using electronic means including handsets to facilitate payment of goods and services especially in areas that were not exposed to bank services. This strategy assists in mobilizing money that was not in the banking system. Thus improving the workability of monetary policy of the government.

The various banking software being used in the banking system have further improved the processes of generating reports, accounting, internal controls, human resource management, corporate governance and other processes in the system. The notable softwares include finnacle, globus, phoenix, bankmaster, etc.

Internet banking services have greatly contributed in revolutionizing the banking sector. The internet creates a new universal space for information sharing, collaboration, and commerce. (Bill, 1999). Today through the platform (internet) you can easily pay your utility bills, recharge your cards, transfer funds to various accounts, make payments with your electronic cards in commercial websites and you can even open accounts without necessarily going to the banking hall. Also, you can request for cheque books and stop your cheques through the internet and using your internet enabled handsets a good number of banking applications can be done.

5.0     CHALLENGES OF ICT TO BUSINESS ORGANIZATION

The list of the impact of ICT to a business organization especially the bank is endless so to say and more innovations are still on their way. However, the impact of information and communications technology have not been without its challenges. So many people have lost their jobs because of the replacement of some tasks and services by machines and computer systems. The unemployment situation have worsened such that, the percentage of unemployed youths have risen to worrisome level. Some banks have reduced the number of their branches as a result of improvement in technology. Banks like GTbank Plc and Zenith bank Plc have some branches with greater part of their operations carried out by machines and computer system. The cost of deploying the technology have impacted negatively to the profitability figures of many banks. As at today some banks are still behind others in competition because of associated cost of deploying some of the machines, computer systems and other electronic channels. The structure of banking halls are now different from what we used to know before. The computer systems, machines and other tools used are now more effectively, efficiently and strategically deployed to enhance banking operations. Many changes are still very much on their way and the impact will continue.

6.0     CONCLUSION

ICT have totally revolutionized the banking industry or sector and thereby changing the manner business is conducted nowadays. There is virtually no unit that does not have ICT innovations. The effect or impacts have the positive side of it as well as the negative side as we can deduced from the discussion. Whichever school of thought you belong, it is obvious that there is a cause and effect situation.

In conclusion, the impact of Information and Communications Technology in banking sector is enormous and has global impact. It has equally affected leading organizations all over the world. The effect is not only in the banking sector because virtually all sectors of human endeavour have experienced the revolution. Again, the speed of change is fast and in many years to come the impact will continue to cut across all areas of human endeavour going by the Research and Development (R&D) taking place all over the world presently.

REFERENCES

Bill,G.(1999) Business @ The speed of thought. USA: Warner books.
Ekezie,E.S.(1997)The Elements of Banking. Onitsha: Africana-Feb Publishers Ltd.

Williams, .K. B. & Sawyer, C. S. (2003): Using Information Technology; A practical introduction to computers & communications 5th ed. New York: McGraw-Hill Companies, Inc.

Federal Republic of Nigeria Official Gazette.(1991)No.26 Volume 78,Decree No. 24 Central Bank of Nigeria Decree and Decree No.25 Banks and other Financial Institutions Decree. Lagos: Govt Printer. Aluko – Olokun. A (1990): “Nigeria Banks and Computer: National Concord.

Ekeiqwe, C.C. (2000): “Computerizing a Banking system, Issue for Banking Executives” A paper presented in ICAN Mandatory continuing professional Education programme (MPCE) seminar.