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In recent times, Information Technology (IT), which basically involves the use of electronic gadgets especially computers for 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 been as high as those observed for advanced countries (Adeoti, 2005; Adeyemi, 2006).

The use of IT in the banking sector became of interest to this study due to the significant role it plays in the economy. It helps in stimulating economic growth by directing funds to economic agents that need them for productive activities. This function is very vital for any economy that intends to experience meaningful growth because it makes arrangements that bring borrowers and lenders of financial resource together and more efficiently too than if they had to relate directly with one another (Adam, 1998; Ojo, 2007). In essence, the banking sector acts as a bridge that connects lenders and investors in the economy. Hence, the need for reforms in the Central Bank of Nigeria-CBN.

The banking industry is one of the critical sectors of the economy whose contribution to the pace of development and economic growth cannot be fully quantified. Changes in today’s modern world reveal that the preponderance of natural factors cannot equip the banking sector fully to grapple with the exigencies of global completion. According to Hanna (1994), information, flexibility and fast response are the key new factors for coping with global competition and information communication technology plays a critical role in these areas for the purposes of quality enhancement. Antholt (1993) has declared that information is just as important as a production factor like land, labor and capital.

The significance of IT in today’s successfully organisation cannot be underestimated. It plays a major role in the success of the organisation in highly competitive world by providing easy and fast means of collecting, storing, retrieving, processing transmitting and distributing information. There can be various others factors that determine the success of a firm, and a firm may use various strategies to pursue the path of success. However, fast and easy access of information through the use of IT is very important to the firm because, it influences all other success factors, and the competitive strategies cannot be practically implemented without its support. Therefore, no business firm that minimizes the use of IT can attain the topmost position in its business. This is quite much true in the case of financial institutions, which include commercial banks. Hence, commercial banks are highly information intensive and the use of IT by them for easy and fast means of information collection, storage, retrieval, processing, transmission and distribution of information, should have extensive contribution to their performance.

The evolution and recent developments in information and communication technology has come to shape the way organisations operate and do business. The emergence .of the World Wide Web (internet) and mobile telephony i.e. telecommunication system is the driving force behind this development. Consequently, manual and traditional forms of doing business are becoming things of the past as they give way to the sophisticated technology that is based on automation and interconnection of computers and other electronic devices vide electronic communication. For instance, ledger books, paper invoice, printed materials and business trips are being replaced with online billing and payments, elaborate website with product information and real-time teleconferencing across

continent and time zones.

Information technology has radically changed how banking is done all over the world, the volume and speed of banking transaction has improved tremendously as a result of quantum growth in information technology which has created business opportunities for banks. The positive impact of information technology IT on the global criteria, especially improved revenue corroborates with the findings of Laudon & Laudon, (1991) that studied the entire cash flow of most fortune 500 companies and linked their success to Information System. They concluded that Information Technology directly affects how managers decide, how they plan and what products and services are to be produced.

Information Technology (IT) is the automation of processes, controls, and information production using computers, telecommunications, software and ancillary equipment such as automated teller machine and debit cards. It is a term that generally covers the harnessing of electronic technology for the information needs of a business at all levels.

Since 1980s, Nigeria banks have performed better in their investment profile and use of ICT systems, than the rest of industrial sector of the economy. An analysis of the study carried out by African Development Consulting Group Ltd. (ADCG) on IT diffusion in Nigeria shows that banks have invested more IT personnel, more installed base for Personal Computers (PCs), LANs and WANs and a better linkage to the Internet than other sectors of the Nigerian economy. The study, however pointed out that whilst most of the banks in the west and other parts of the world have at least one PC per staff, Nigeria banks are lagging seriously behind, with only a PC per capital ratio of 0.8, Woherem (2000).

Information and communication technology (ICT) is the modern handling of information by electronic means which involves access to storage of, processing, transportation or transfer and delivery (Ige, 1995). It refers to the convergence of the computer and telecommunication system in a seamless flow of information around the world. The fusion of computer and telecommunication and their uses in obtaining relevant and purposeful management information system is the main thrust of information technology. It is the acquisition, processing, storage and dissemination of vocal, pictorial, textual and numerical information by a micro-electronic based combination of computing and telecommunications. The focus of ICT is on telecommunication and computerization. It implies the convergence of computing and communication (Telecommunication) technologies and its uses or application for global Internet, Intranet, Extranet, World Wide Web (WWW), Visual reality, Cyberspace-the New Digital Mentality and Culture (Uwaje, 2000). Communication Technology comprises the physical devices and software that link (connect) various computer hardware components and transfer data from one physical location to another. Connectivity has facilitated the use of electronic delivery channels. Distances and geographical locations are no longer barriers to financial transactions.

Full online, real-time capabilities have revolutionized electronic transfer of funds. Electronic fund transfer (EFT) is an electronic oriented payment mechanism. It allows customers accounts to be credited electronically within 24 hours (Ugwu, et al., 1999). Mark (1975) classified the basic elements of EFT system into three:

clearing network characteristics, remote service or point of sale characteristics and pre-authorized debit and/or credit characteristics.

Electronic fund transfer has also been various designed to ease international transfer of money. In 1977, the international payment system known as SWIFT (Society for Worldwide Inter-bank Financial Telecommunication) became operational. SWIFT enables user banks to use electronic mode to transfer international payments, statements and other banking messages. In Nigeria, First Bank’s’ Western Union, Monogram of United Bank for Africa (UBA) among others performs international funds transactions.

Information technology is the term which generally covers the use of electronic technology for the information needs of a business at all levels. It has made it possible for banks to:

1.       Improve in service delivery with the availability of online, real-time transactions.

2.       Funds transfer will be faster, more accurate and cheaper in charges.

3.       Capacity to process large volume of transactions which will require lower administrative cost.

4.       Reduction of cash transactions with long term prospects of minimal cash handling.

Information technology application by bank is centered on customer’s service. Banks now respond to customers for balance on their account, statement of account and account activity enquiries.  The work of front office teller (cashier) is at minimal (ATM) Banks are able to serve customers outside the banking hall 24 hours on daily basis. Merchant customers are able to make local and international business transactions online, they allow online payment via online, telephone or mobile payment medium (Interswitch, etranzact etc), with this payment switch, the merchant account holder’s customers can make payment for goods and service without necessarily seeing the business merchant in person.

Competition has become stiff; banks now do many things in different ways. Bank that has concentrated its activities in the old media can invest in the new media by recognizing its activities especially if it finds out, albeit painfully that it is losing ground to those competitors utilizing sophisticated technology.

According to Odubanjo (2000), Nigeria banks are responsible albeit at a snail speed to the information technology revolution enveloping the universe. The deregulation of the banking sector in Nigeria in 1986 brought far-reaching transformation through computerization and improved bank service delivery. The watershed in the computerization of the Nigerian financial sector started with the changing policy environment enumerated with Structural Adjustment Programme (SAP) 1986.


The advent of information technology in the operations of the commercial banks in Nigeria among other sectors has brought about several noticeable developments but at the same time, it brings about its attendant problems. The paradox behind the information technology productively makes many managers to believe that the huge investment does not commensurate with increase in productivity.

Given the high level of financial stakes involved, the investigation of the impact of information technology on organizational and employee performance has been and continues to be a major research concern for both academics and practitioners.


The questions this research work intends to answer are as follows: –

1.       How has information technology aid banking operations?

2.       Why are banks unable to strictly comply with the mission statement/corporate mission? With information technology, some banks management does not adequately plan to meet the services quality. For example, the required number of customers to be attended to by a cashier within the daily working hours to guide against long queues is neglected – this causes delay in service delivery time leading to long queues in the banking hall.

3.       Why is high incident of bank fraud borne out of information technology? This’ fraud ranges from ATM card fraud, internet banking fraud, email and text message fraud, fund transfer to untraceable offshore accounts, among others.

4.       Does the huge investment into information technology in banks have a proportionate profit return?


This project work is therefore, aimed at examining how the adoption of information technology affects the operations of commercial banks in Nigeria. The specific objectives are:

1.       To investigate how the adoption of information system has influence on the growth and development in the banking sector;

2.       To investigate the extent at which effectiveness and efficiency in banking sector after the advent of information technology.

3.       To examine the modes by which commercial banks can improve on their service delivery in order to attract depositor’s funds.

4.       To determine how information technology has assisted in the enhancement of globalisation of Nigeria commercial banks.


The dominant role that the banking industry plays in Nigerian economy cannot be over-emphasized. Government, statutory corporations, corporate bodies, businessmen, civil servants depend on the banks for the transaction of one business or the other. The banking system is required as a catalyst for a rapid macro-economic development of other sectors of the economy; hence, its stability

should be the priority of the government most especially during the domestic dispensation. Going by the recent distress in banking industry in Nigeria, the level of public confidence in the sector has dwindled and this has led to the instability syndrome in the sector and as such the public assurance and confidence on efficiency in the private sector in decaying, (Akpoyibo, 2006; Soludo, 2007).

The major cause of this syndrome can be traced to the problems inherited in the banks operational system.

The quest for globalization and commercialization has brought about innovations in technology.  The digital age and the potential threat posed by non-traditional competition which necessitates innovation has made it inevitable for Nigerian commercial banks to improve upon their operation as they face evolving revolution are being confronted with increasingly sophisticated customer base compelling them to offer today what their customers would be expecting tomorrow.  Banks have to deviate from just being a profit making minded to a more conscious customer centered institution.

This research will enable banks to identify ways of remaining competitive in the global and domestic financial industry.  It also helps prepare banks repositioning towards meeting the challenges imposed by global banking.

It is also expected that the work will contribute to the bank’s future projections on strategies to be used in attracting depositors’ funds, reduce queues in the banking hall, the bank’s management policies.

And finally, this research work intends to contribute to knowledge in academic field and serve as a source of reference to researchers who would carry out research on similar study in the future.


This study would only focus on the impact of information technology on the banking operations of Nigeria.

However, the extent of this research would be limited due to time constrains, class academic work and the nature of its kind – a first degree research exercise, thereby limit its scope and intensity. Emphasis is laid on activities in the First Bank PLC. The period covered by this research study is 2005 – 2010.



Information refers to a processed/analysed data through the computer system that informs a recipient about a situation. It is the meaning assigned to data within some context for use of data, Walters, (1992).


Data are raw, unanalysed facts, figures, events from which information can be developed. A data is a basic raw fact that can process and converted to a meaning output called information. It is the encoded representation of facts, ideas and instructions such that the representations can be processed, communicated and interpreted by computers and/or people, Walter (1992).


A computer is a programmable, multi-purpose use machine that accepts data (raw facts and figures) and processes or manipulates it into information that we can understand and utilize (Microsoft Encarta (2009).


Communication often called telecommunication allows data and information to be transmitted from one point to another electronically. It is the transfer of idea or information from data processing system to ultimate users. The ultimate purpose of

communicating is to inform the recipient.


It is a term used for a direct or immediate communication link between two devices. Online links are contrasted with offline links, in which only direct communication is possible. Thus, a telephone link is online, whereas, a telegram link is offline. The term online and offline are further used to denote the difference in time between when data in input into the system and when it is processed. A computer works online if input data is processed immediately (real-time processing operating mode) and offline if there is a significant time period between input and processing time, Clems & Sachwill (1992).

Disk Storage:

This is data storage on optical or magnetic tape/disc in memory system. It is characterized by low cost and relatively fast access to data stored on it. Longley & Shain (1989). External memories such as CD ROMS, DVD ROMS, Flash drives, external hard drive etc are capable of storing and retrieving billions of information in a small portable device.


Internet is also known as the net is a massive connection of networks linking millions of computers via protocols, hardware and communication channels. It enables the automation of several tasks which have been carried out manually in t he past. Internet is the term used to describe the collection of international computer networks which form a vast global network of computer network based communication, Fisher (1995). Those who have access to the internet can send messages to other internet connected people at any part of the world within the twinkle of an eye. Some of the services available on the net include e-mail, bulletin boards, electronic journal, mailing lists and many more.

In view of the above concepts, we can therefore say that the information technology is of utmost relevance to individual performance within the organisation.

The truth is that information and deployment of information technology has changed the nature of work, approach to work and service delivery; this has resulted in various outcomes for the individual employee and the organisation at large. For instance the mobile phones have allowed managers to stay in touch with their field personnel no matter how far the distance may be. Luthans (2002), corroborated to this by stating that the text compatibilities of the cell-phones have also enabled formal communication amongst individuals of the same organisation with several distances apart.

The portable laptops and palmtop that can handle banking transactions of the day, report presentations, share data and other critical tasks help employees communicate with each other via the email and the internet. More recently, the Persona Digital Assistant (PDA) which are wireless handheld and connected to the internet have made virtually all information available, anywhere, anytime.

Electronic Mail (e-mail):

It permits the transmission of letters, memos and other documents from one terminal or computer to another in a different office, city, state or country, Fuori and Gioia (1991). E-mail uses a central switching centre which is responsible for renting mailboxes to subscribers and- acting as the public telephone network link.  Anderson (1990). When a message is created on the sender’s system, it is addressed to a remote mailbox and it’s transmitted by telephone line or wireless network to the mailbox services operator and forwarded to the receiver. The receiver enters a personalised code (password) via the keyboard in the terminal/computer which allows him to read the messages on a visual screen. The transmitted messages are stored in an electronic mailbox on the receiving computer until the recipient is ready to read them and/ or print as hard copy on paper. The advantage of this is that, it is fast and saves time difference problems.

This material content is developed to serve as a GUIDE for students to conduct academic research

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