CHAPTER ONE

INTRODUCTION
1.1 Background Of The Study
Todays organisations are confronted with rapidly changing market conditions, indicated by
high merger rates and strong competitors. Under these conditions, traditional management
approaches that focus on financial figures and on centralised, analytical planning methods are
considered to be insufficient for effectively steering the organization in a dynamical environment
(Hoffmann 2002). The recent management support approaches like intellectual capital or
particularly the balanced scorecard aim at providing a broader view of organizational performance.
They combine both financial and non-financial aspect and comprise activities not only to monitor
but also to plan and influence organisational performance (Hoffman 2002). Their success
demonstrates the strong demand for this so called comprehensive performance management.
The banking sector as transform banking industry to a high performance, by increased demand for
information technology (IT) in the banking sector become imminent and unavoidable in the world
at large and Nigerian in particular. Invariably the future lies in the (IT) information technology
driven banking systems and services. Banks have embarked on deployment of (IT) information
technology based banking products and services such as automates teller machine (ATM), internet
banking, mobile banking solutions, Point of sale terminals, computerized financial accounting and
reporting, human resources solution among other (Ovia, 2005).
Performance is defined as valued contribution to reach the goals of an organization. Contribution
can be made by individuals or groups of employees as well as by external groups. In the past, the
measurement of performance was usually restricted to a financial perspective, resulting in various
limitation.
Zenith bank PLC is a leading Nigerian financial institution and one of the biggest and most
capitalized companies on the Nigerian stock exchange. Established in May 1990, zenith bank began
operations in July of the same year as a commercial bank. Its shares were listed on the Nigerian
stock exchange in October 21, 2004 following a highly successful initial public offering (IPO). The

bank has a shareholder base of about one million, an indication of the acceptance of the zenith
brand.
However banks have to provide an excellent service to customer who are sophisticated and will not
accept less than about average service. Thus, the issue of service marketing in general, and banking
sector in particular has become one of the most important and modern directions which have
witnessed a substantial expansion during the last years in almost all societies. E-banking offers
significant benefits for both banks and customers. It provides bank additional channels to delivers
products and services to customers at a lower cost (Lin, Hu, and Sung 2005). These channels
expand the geographical area for banks and can help attract and keep further customer (Dandaparni,
Karels, and Lawrence, 2006). Such bank services like E-banking, Automated Teller Machine
(ATM), mobile banking solutions, point of sales terminals and internet banking and not only
provides to customers with appropriate and faster transactions but also benefits from higher interest
rate resulting from cost saving by the banks (Sumra & Manzoor, 2013).
1.2 Statement Of The Problem
One of the challenges confronting e-banking in Nigeria could be classified into three classed as
human constraints, operational constraints and technical constraints. The human, constraints include
physical disability poor sight, illiteracy and ageing. The operation constraints standardization of
channels. Furred, funds and standardization of channels. The technical constraints are cantered on
the lack of supporting infra structures such as erratic electricity supply, interdependence and lack of
encryption on short message system (SMS) message (Agbada, 2008).
Other identified problems that can have an impact of information technology on the financial
performance in the banking sector, can be grouped broadly as psychological and behaviour. These
include consumer awareness for personalized services among others. Additionally, diffusion of
smart card innovation needs high investment for the upgrades of ATMS and EET/POS terminals to
be capable of accepting smart cards and presumably a substantial investment in adding smart card
technology for mobile computer and telephony stand to be another challenge. The implementation

of smart card for the whole Europe, according to visa figures requires eight billion dollars ($8
billion) investment. Although this is an affordable amount for many of the potential players, most
players would only pay the entire amount if it would give them some proprietary or luck in
advantage. So far, no player has felt confident enough to take a committed first mover position.
This is in developed countries, what more of a developing country like Nigeria (Ovia, 2005).
Coupled with these problems is a situation where a bank issue an individual debit card that is
associated with an account with a line of credit and is also an ATM debit card, the individual can
perform a number of different types of transactions with the same card. The line of credit could be
accessed fraudulently, where the owner has recourse under consumer credit legislation and under
regulation in the fraud involves an electronic fund transfer (EFT) where automated teller machine
(ATMs) or electronic point of sales (POS) terminals are used, his liability is limited under the
EETA. However the fraudulent use of the card directly debits his bank account in a paper-based
transaction, the consumer has no recourse under current legislation. This is an example where the
same card represents three different instrument, each of which, in the case of fraud, would require
different action by the consumer (Agbadga, 2008).
In order to investigate the impact of (IT) on bank performance in addition to problems identified,
this study intends to investigate and answer the following question:
To what extent does (IT) improve bank performance with reference to the selected commercial
banks in Nigeria.
1.3 Objectives Of The Study
The main objective of the research project is the impact of information technology on the financial
performance in banking sector with reference to Zenith Bank PLC, Nigeria. And the specific
objectives are:1. To determine the extent to which information technology has increased the volume of
deposits in Zenith Bank Plc

2.

To examine the availability of information technology enhance customers satisfaction in Zenith

Bank
3. Examine the efficiency of information technology on bank-customer relationship;
4. Does information technology actually find out what problems encounter by the customer while
using (IT) products and service;
1.4 Research Questions
This research work shall be guided by the following research questions:
1. Has information technology increased the volume of deposits in the Zenith Bank Plc.
2. Has the availability of information technology promotes satisfaction oriented result to the
customers.
3. Does information technology contribute to the efficiency on bank-customer relationship.
4. Does information technology actually find out what problems encounter by the customer products
and service in your bank.
1.5 Research Hypotheses
The hypothesis to be tested in the curse of this research work is:
Ho:1 The information technology has not increased the volume of deposits in the Zenith Bank
Plc.
Ho:1 The information technology has increased the volume of deposits in the Zenith Bank Plc.
Ho:2 The availability of information technology dos not promotes satisfaction oriented result to
their customer.
Hi:2 The availability of information technology promotes satisfaction oriented result to their
customers.
Ho:3 The information technology does not contribute to the efficiency on bank and bank customers.
Ho:3 The information technology has contribute to the efficiency on bank and bank customers.
Ho:4 The information technology actually has not find out what problems encounter by the
customer products and service in your bank?
Hi:4 The information technology actually find out what problems encounter by the customer
products and service in your bank?
1.6 Significant Of The Study
In the light of the stated objectives which this study is set to achieve, the following are the
significance of the study:
1. It would justify the application of information technology increased the volume of deposits in
Nigerian banking sector.

2. It would also observe the availability of information technology enhance customers satisfaction in
Zenith Bank.
3. It would help to evaluate the adoption of information technology by Nigeria bank in terms of its
effect on banks efficiency and bank customer relationship;
4. It would help information technology by identifying the actually problems encounter by the
customer products and service in your bank?
1.7 Scopes And Limitation Of The Study
The researcher intend to cover all the banks in Zenith Bank Plc, both Damaturu branch Yobe
State and Jos branch Plateau State to have a better insight of the problems associated with the
impact of information technology (IT) on financial performance. Nevertheless, this study will be
limited to Zenith Bank Plc, Damaturu branch and Jos branch. This study therefore covers the
management and staff, customers and their environment besides the subject itself as it affects its
mastery. This study shall cover the period since the introduction of information technology in
Nigeria banking sector to date. Information technology was introduced into Nigerian economy
upon the commencement of the electronic payment scheme in 1996. All the various information
technology and banking performance toward development of a country.
1.8 Definition Of Terms
1. Information: is data that have been processed into a form which is meaningful to the recipient and
which is of real or perceived value in current or prospective decision and actions.
2. Technology: refer to the scientific knowledge used in practiced ways in industry such as computer
system and so many others
3. Information Technology: Is the application of computers and telecommunications equipment to
store, retrieve, transmit and manipulate data, often in the context of a business or other enterprise.
4. Financial performances: AS the level of performance of a business over a specified period of
time, expressed in terms of overall profits and losses during that time evaluating the financial
performance of a business allows decision making to judge the results of the business strategies and
activities in objective monetary terms.
5. ATM: is an Abbreviation for Automated Teller Machine. It is a cash point that can be used to
withdraw cash.

6. Bank Account: is a record of financial transactions between a bank and the customer which is
maintained by the bank.
7. Point of Sale: (POS) this refers to the location at which a payment of a card transaction occurs,
usually by way of a device such as a credit card terminal or cash register.
8. GSM Banking: is an abbreviation for Global System Mobile: This is mode of e-banking makes use
of global system for mobile communication (GSM) phones as the primary electronic device.
9. Bank: As a place where money and other valuable are kept for safe until when they are needed.

CHAPTER TWO
LITERATURE REVIEW
2.1

Introduction

This chapter focuses on review of the existing literature the researcher will focus on reviewing the
concept of information technology, status of information technology in Nigeria, the evolution of the
Nigerian banking sector, the impact of information technology in the Nigerian banking sector,
enhancing the performance of banking sector through appropriate information technology,
information technology implementation by corporate bodies, the concept of financial performances,
2.2 The Concept of Information Technology
Information technology according to Odunfunwa (2010) is a body of tools with the convergence of
communications and computers. Similarly Goldberg (2012) describes information technology as a
series of machines that can execute sequence of instructions. The sequence of instructions is a
programmed made particularly flexible and not rigid and can be changed depending on the
information being processed. And also Ige (2010) opined that Information technology can be
defined as modern handling information via electronic means, which involves its access, storage,
processing, transportation or transfer and delivery.
6

Information technology is the automation of processes, controls, and information production using
computers, telecommunications, software and ancillary equipments such as automated teller
machine and debit cards Khalifa (2012) It is a term that generally covers the harnessing of
electronic technology for the information needs for businesses at all levels.
According to Obinna (2012) information technology has rightly observe that it is of great
importance that the advent of information technology has brought enormous changes and
challenges on how businesses are run. Yet, information technology is not breaking new barriers
defining new horizons and bringing new dimension to our lifestyle. Information technology is a
systematic body of tools technologies and in fracture for generating, storing, processing and
transmitting data and information.

2.2.1

Status of Information Technology in Nigeria

Woherem (2010) argues that, in Nigeria in the late seventies up to the early eighties, the processing
of information in financial institution was based on the centralized architecture with a mainframe
computer running a multi-user operating system and various users connected to via terminals. This
type of processing changed to a more decentralized approach with Local Area Network within
financial institutions branches.
According to Adeyomi (2010), opined that the prior to the deregulation of the financial institutions
in the mid 80s most banks had an appreciably high number of branches, some of which were in
rural areas and were completely manual in operating.
Richard (2009) says some were sophisticated to the extent of implementing only Wide Area
Networks by linking branches within cities and only one or two implemented intercity connectivity
using leased lines. With the deregulation of the financial institution system in Nigeria, they
witnessed the emergence of many Financial Institutions with fever branches, in the mid-eighties.
These new Institutions were sophisticated in operation and attempted to take advantages of recent

advance in information technology from inception. As a result, there was an increased market
pressure to adopt new technology as customer began to demand more sophisticated product and
increased convenience in services delivery.
According to Kimberly (2010), focus of this new technology competition was the implementation
of the global banking concept in Nigeria and this has affected all aspects of the financial institutions
from the very standard retail operations, such as withdrawal and cheque processing to the creation
and delivery of sophisticated corporate products, such as interest rate or foreign exchange swaps.
According to Rahman and Hallady (2011), in addition to the Society for Worldwide Inter-bank
Financial Telecommunication (SWIFT), made possible by advances in information technology and
to which some of our banks have acquired memberships has facilitated interbank transaction across
the globe.
According to Coco (2010), Financial Institutions in Nigeria have decided to take advantage of
information technology to improve their services and expand their operating base.
2.3

The Impact of Information Technology in the Nigerian Banking Sector

According to Alu (2011) the impact of information technology in Nigerian banking sector cannot be
overemphasized. Information technology has contributed immensely to the growth and
development of Nigerian banking sector. Some of the vital roles of information technology in the
Nigerian industry are discussed below. Information technology has opened new markets, new
products, new services and efficient delivery channels for the Nigerian banking sector. Online
electronic banking, mobile banking and internet banking are few examples. Information technology
has provided the Nigerian banking sector with the wherewithal to deal with challenges that the new
economy poses. Information technology has been the cornerstone of recent financial sector reforms
aimed at increasing the speed and reliability of financial operations and of initiatives to strengthen
the financial sector.

The information technology revolution has set the stage for unprecedented increase in financial
activity in Nigerian banks. The progress of technology and the development of worldwide networks
has significantly reduced the cost of global fund transfer. Information technology enables Nigerian
banks in meeting with the high expectations of customers who are more demanding and more
techno-savvy compared to their counterparts in yester-years. Customers demand instant, anytime
and anywhere banking facilities.
According to Duji (2010) Information technology has been providing solutions to Nigerian banks in
terms of taking care of their accounting and back-office requirements. This has, however, now given
way to large scale usage in services aimed at the customers of banks. Also according to Ugwu (2011)
Information technology has also facilitates the introduction of new delivery channels in the form of
automated teller machine (ATM), net banking, mobile banking, and the like. Further, information
technology deployment has assumed such high levels that is no longer possible for banks to manage
their information technology implementation on a stand-alone basis. With information technology
revolution, banks are increasing interconnecting their computer system not only across branches in
some cities in Nigeria, but also to other geo-political locations with high speed network infrastructure
and setting up local area and wide area network and connecting them to the internet. As a result,
information technology systems. And networks are now exposed to a growing number of Nigerian
banks.
According to Akinuli, (2013) in is textbook Information Technology in Nigerias Banking industry
he further say about the following impacts of information technology in Nigerias banking system.
This include the following as follows:
2.3.1 GSM Banking: This mode of e-banking makes use of the Global System for Mobile
communication (GSM) phones as the primary electronic device. GSM has improved the operational
efficiency of many banks in the country. The mobile banking services basically allow customers to
operate their accounts with the operating banks from mobile phones to a large extent as long as

their phones and network support SMS (short messaging service). The user could be able to check
account balance up to his two last transactions.
2.3.2

Automated Teller Machines (ATM): ATMs are a computer-controlled device that

dispenses cash, and may provide other services to customers who identify themselves with a
Personal Identification Number. ATM dispenses cash at any time of the day and night, unlike the
traditional method where customers have to queue for a very long time in order to withdraw cash or
transfer funds.
2.3.3

Adoption of the ICT Integrated Project: Banks in Nigeria have successfully completed

information and communication technology integration project which enables them to communicate
easily across as many employees as possible within and outside the country to deliver radicallyenhanced customer-centric services.
2.3.4 Funds Transfer: Customers can now electronically transfer funds across the globe without
any problem or delay as compared to the traditional method before the advent of information
technology when funds are seriously delayed before they are delivered to the recipients.
2.3.5 On-Line Banking: With the aid of information technology, online banking provides the
opportunity of paying bills and performing transactions of any kind electronically. Electronic
payments can be credited or debited the same day. Customers can make payments for goods or
services without necessarily coming in contact with physical cash and running the risk of handling a
large amount of money.
2.3.6 Electronic Mail: Information technology has given rise to electronic mail which improves
communication between individuals, external parties and the bank within or across various
geographical regions or boundaries. The availability of online information provides bankers and
customers with a powerful vehicle for research.
2.3.7 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. Also,

10

request for cheque books or purchase of draft can be made and granted via electronic devices that
are web-enabled.
2.3.8 Point of Sales: This refers to the location at which a payment of a card transaction occurs,
usually by way of a device such as a credit card terminal or cash register.
2.3.9

Internet Banking: these has brought about all manageable possibility in the area of cost

reduction creation of new service and personalization of customer relation. (West 2012).
Noted that internet banking being able to automated most of the routine banking practice of
marketing and client relation. Internet banking is phased into three (3) generation.
i.

First generation referred to as brochure were state, banks of this level require website, state which

ii.

noting more than information centre about the banks.

Second generation also known as transactional stage enable banks to do banking business on the

iii.

web.
Third generation allow bank to offer customer with a range still far away from the bridge head of
brochure were internet banking as a new generation banks that provide himself as information
technology driving bank have not seen able to go beyond this advert.
2.4

The Problems and Challenges of Information Technology in Nigerian Banking Sector

The adoption of Computerization by Nigerian banks brought with it new challenges for
bank management and regulatory and supervisory authorities. This stem from the reliance on
information technology to provide banking services with the necessary security Amoroso (1994).
Some of these challenges and problems include;
2.4.1

Regulatory Risk

Because the internet allows service to be provided from anywhere in the world, there is a danger
that banking Nigeria will try to avoid regulation and supervision. What can regulation do?
They can require even banks that provide their services from a remote location through the
internet to be licensed. Licensing would be particularly appropriate where supervision is
weak and corporation between a virtual bank and the home supervision is not adequate.

11

Licensing is the norm, for example, in the United States and most of the countries in the
European Union. A virtual bank licensed outside their jurisdiction that wishes to offer
electronic banking services and take deposits must first establish a licensed branch.
Determining when a banks electronic services trigger, the need for a license may be difficult,
but indicators showing where banking services originate and where they are provided can
help.
2.4.2 Legal Risk
Electronic banking carries heightened legal risks for Nigerian banks. Nigerian banks can potentially
expand the geographical scope of their services faster through electronic banking than through
traditional banking. In some cases, however, they might not be fully vast in a jurisdiction
local laws and regulations before they begin to offer services there, either with a license or
without a license is not required. Some of the banks that lack contact with the supervisory
authorities may find it difficult to abreast of regulatory changes. As a consequence, some
banks would unknowingly violate customer protection laws, including on data collection and
privacy, and regulations on soliciting. In doing so, they expose
themselves to losses through lawsuits or crime that te not prosecuted because of jurisdictional
disputes.
2.4.3 Operational Risk
The reliance on new technology to provide services makes security and system availability the
control operational risk in electronic banking. Security threats can come from inside or outside
the system, so banking regulations and supervisors in Nigeria must ensure that banks have
appropriate practices in place to guarantee the confidentiality of data as well as the integrity
of the system and the data. Bank security practice should be regularly tested and an reviewed
by outside experts to analyze the network vulnerabilities and recovery preparedness.
Capacity

planning

to

address

increasing

transaction volumes

12

and

new

technological

developments should take account of the budgetary impact of new investments, the ability
to attract staff with the necessary expertise, and potential dependence on external service
providers. Managing heightening operational risks need to be integral part of Nigerian banks
overall management of risk, and supervisory need to include operational risk in their safety
and soundness evaluations.
2.4.4 Reputational Risk
Breaches of security and disruptions to the systems availability can damage Nigerian banks
reputation. The more Nigerian banks depends on electronic delivery channels, the greater
the potential for reputational risks. If one electronic bank encounters problems that cause
customers to lose confidence in electronic delivery channels as a whole or to view bank failure
as system supervisory deficiencies, these problems can potentially affect other providers of
electronic banking services. Reputational risk also stem from misuse of security precautions or
ignorance about the need for such precautions. Security risk can be amplified and may result in
a loss of confidence in electronic delivery channel.
2.5.

Information Technology Implementation by Corporate Bodies

Austin (2011) noted that it is appreciated that the rate of information technology by corporation has
gathered momentum in recent years, to the extent that one can confidently assert that the use of
information technology in business operations has come to stay.
However, the use of information technology by businesses is a function of the level of development
of public infrastructures such as power supply and telecommunication in the companies locations.
He maintained that the acceptance of the computer world has a vital tool for corporate management
is on the rise and rise as a result of the increasing difficulties of coping with the effective
incorporation of management information system (MIS) into banking operations. It is evident today
that the adoption of information technology by business has facilitated easy flow and safe storage of
information. It has also been successful employed to improve customer services, enhance decision

13

making processes, reduce the strains on management and make operations more efficient and less
cumbersome.
Besides, it is appreciated that there are areas of banking which are particularly amendable to the
application of information technology. Below are the seven areas which include customer services,
transactions processing and recording, risk management, corporate planning, financial controls,
auditing and controls, and human resources management.
A. Customer Services: Ovia, (2012) has noted that service is at the heart of the business of
banking information technology that played, it playing and it will continue to play a major role in
the delivery of quality services in the banking sector. Financial institutions have used information
technology aggressively and innovations to crate the requisite competitive advantage and to
dramatically improve the quality of service delivered to their customers some of such baking
services which have been revolution through the use of information technology.
1. Opening an Account: Staff service (Automated Customer Service Machines) facilities now exist.
From these machines, prospective customer wishing to open an account can (after being screened
and found eligible) complete their account opening documents direct online, have their data
validated, account numbers assigned and advised when or how their cheque book, debit card etc
will be deliver to them.
2. Self-Service Tellers: Such as touch screens for enquires online, automated teller machines (ATM)
for cash withdrawals and statement of account is now common place. These are used to make the
delivery of banking service more participatory for customers and more efficient and less
monotonous for banks staff who are opportune to their engage in more challenging tasks. These
self-service work stations are being used by customers for lending their electronic wallets (small
cards) setting up standing order payment, and for amending existing order.
3. Electronic Banking: It is appreciated that the rapid advantage in technology has made the
provision of home banking services a pleasant reality to the public. Under the scheme, customers
for a reasonable fee, can receive an increasing range of banking services such as utility bill

14

payments, setting-up standing orders, transferring funds from their accounts to that of another
customer of some bank or to another customer of another bank, confirmation of account balances
and indeed, online statement of account.
4. Customer Account Mandate Maintenance: The document uncaging capabilities of many banking
application software in the market today now make it possible for detailed information on a
customers mandate cards to be scanned in the system and tied to such information. This
functionality has improved the security of customers mandate maintenance and efficiency of
mandate verification.
5. Stopped Cheque: Many applications software now came with cheque number validation
functionality, with these functions, banks can effortlessly and accurately flag a stopped instrument
and successfully avoid instruments in error.
6. Reversal of Erroneous Entries: Bank reconciliation is a long-standing and effective management
control over bans balances. The wider idea is not just to reconcile the bank balance as reported in
books of a customer with that on the bank statement, but to ensure that all outstanding items on
both the bank statement and the customers banks are genuine reconciling items.
7. Opportunity Management: For any given situation, people will develop a repertoire of responsive
actions. Information technology is playing a key role in customers service through positive reenforcement of the relationship between banks and their customers. Banks which are not correctly
employing this inexpensive tool could take this limit. This idea of opportunity management is that
of seizing every opportunity to reassure the customer card/concern or his/her plight.
8. Full Online, Real-Time Capabilities: This is one capability employed by banks today in their
drive to provide more and quality services to customers. A bank with this capability can deliver
some quality of services to its customer irrespective of the branch where a customers account is
maintained. This service has been successfully used to positively reinforce the relationship between
banks and their customers who are no longer treated as belonging to a particular branch, but
belonging to the bank as a whole.
B. Transacting Processing And Recording: Obinna (2012) further observed that the most
important and in daily applied advantage of information technology rest in its ability to automate

15

information. Intensive (and particularly paper intensive) transactions and services. Such
information constitutes the core component of business process integration. Todays technology
makes it possible to build an electronic highway linking related business processes through shared
information on a common information technology plat form. Some specific banking transactions
whose processing a recording have been remarkably improve by information technology are: cash,
cheque, clearing, fund transfer, value dating and rate charges.
C. Risk Management: According to Kotaz (2012) the management need to critically review and
understand the risks associated with information technology. The risks are in general, it should be
willing to take risk to ensure more realization of the bank objectives. In some case, banks offer new
products and services via the internet. It is important that management understand the risk and
ramifications of these decisions. Sufficient levels of technology and management information
system (MIS) are necessary to support a business ventures. Below are some risk management

briefly described.
Corporate Risk Policy and Procedure: corporation are known to maintain their corporate policies
and procedures manuals on compact disk-read only memory (CD-ROM) which is networked to all

personnel computer (PCs) in the organization for easy reference.

Credit Risk Disbursement: This is a very important function in a banks credit risk service chain.
It will abuse if not properly controlled. It should be done only when a loan customer has met all the
conditions precedent for drawing down the approved facility. It is becoming increasingly

centralized due to the availability of information technology functionality.

Operations Risk: Because of the reliance on technology or all facet of electronics banking,
operational risk is one of the more significant risks. To limit operational risk through the availability
of information, banking organizations have considered implementing an integrated enterprise-wide
architecture and technology infrastructure that can facilitate. Interoperability ensures the security,
integrity and availability of data and support the management of relationships with third-party
service providers.

16

Limits Monitoring: With the power of information technology, risk management officers in banks
are now more able than ever before to monitor the ban exposure to customers. The linking of
related accounts has facilitates the monitoring not of individual accounts, but also of a group of
accounts, thereby ensuring belonging to a group are will within individual limits. The limits
monitoring facility is also known to be playing a major role in budgetary control.
D. Corporate planning: Enyinna (2010) is of the view that corporate planning is the think-tank of
every organization. It is the driving force strategy formulation and decision making aimed at
creating competitive advantage for the organization consequently, the decision on the degree of
automating the processes of an organization, the adoption of the manual and auto inter faces, and
the type comprehensive information technology solution to be implemented to achieve all of this is
influenced to a large extent by corporate planning. He further explain in broad terms, that the
corporate planning unit is usually responsible for providing advice on the structure of the firm, its
management and control, and its system procedures and process. This has already been profitably
adopted by banks world over. Many of these corporate planning units have reportedly relied heavily
on information technology facilities to successfully performance of their corporate responsibilities

thus:
a) Effective Presentation: It is appreciated that for an organization to have a fulfilled corporate
planning there must be an effective presentation. Therefore, it is the starting point of every strategy
assignment to properly articulate the concepts and idea through analysis, before recommending,
from a cost/benefit point of view, the best alternative course of action for the organization.
b) Service Quality: Quality control is important for the healthy growth of banks. There is need for
clearly defined sets of standards to be achieved, especially concerning service delivery to
customers. Corporate planning using special information technology packages for work study,
economic, operations research, liner programming and similar mathematic models, are able to cope
with the present day challenges of bench marking the quality of their service, comparing

17

performance with those of competitors and recommending requisite process implements or reengineering schemes to upgrade and sustain services quality at the desired levels.
c) Resource Allocation: One of the information technology aided management techniques which has
been successfully employed in the financial services industry to a great advantage is the queuing
theory which has been applied to problems related to waiting periods at the countries. A study of
the arrival pattern of customer for counter services, their waiting periods, the number of service
point etc, over a period of time and the variation at different times of the day, different das of the
week, seasonal variations etc have been used to solve resource allocation problems. In respect of
staff money space, office equipment and other bank assets allocation.
E. Financial Controls: Austin (2011) lamented that the financial controller of bank should be
qualified chartered accountant. His responsibility includes ensuring that proper books of account
are kept, and that accounting policies of the bank are appropriate and consistency applies. He also
has the responsibility of managing the banks balance sheet for liquidity, long term stability,
sustainable profitability and compliance with relevant/appropriate statues. The managing of the
banks profit making process through realistic and time-conscious budgeting and period
performance review of actual performance against budget.
F. Auditing Controls: Lizzy (2011) has rightly observed that it is understood that there have been
detected errors irregularities and fraud which have continued to dominate the conduct of audits in
the early days. Then the auditor was seen as a blood hound and not a watchdog. Increasing
however, there have been the recognition of the need to provides financial accounting information
for the benefits of investors and other interested to their formation contained in the companys
balance sheet, so the rule of the auditor was increase seen as being to lend credibility to this
information, rather than requesting him to merely certify it as being free form errors, irregularities
and fraud. The rapid development of the 1930s and 1940s really saw the birth of auditing as we
know and understood it today. During this period, company management, particularly in large

18

enterprises confirmed the acceptance of their responsibility to detect error and fraud. They did this
by establishing system of financial control and reporting which were designed to minimize, if not
totally eliminate the risk of errors, irregularities and fraud.
G. Human Resources Management:

according to Godschal (2012) human resource

management: is a compensation monitoring payroll systems are known to have been integrated into
the core banking package, there by facilitating payroll administration and employee compensation
management. Each month, only payroll changes are addressed. Some of the changes addressed
monthly would then be those due to joiners, leavers, increase in certain compensation components,
promotion, salary increment, leaved holiday payments etc.`
2.6 The Concept of Financial Performances
Farlex financial Dictionary (2012) define performance as word which means to be carry out or to
render. According to Farlex financial Dictionary (2012) financial performance refer to any of many
different mathematical measures to make a profit common example of financial performance
include operating income earnings before interest and taxes and net asset value. Its important to
note that no one measure of financial performance should be taken on its own. Rather, through
assessment of a companys performance should take into account many different measures.
According to business dictionary define financial performance is the level of performance of a
business over a specified period of time expressed in terms of overall profit and losses during that
time evaluation the financial performance of a business allows decision makers to judge the results
of the business strategies and activities in objectives monetary terms. (Ayo, O. D. 2011)

19

CHAPTER THREE
RESEARCH METHODOLOGY
Introduction
This chapter explains the research instruments used in the course of the study.
3.1

Research Design

The study employs the survey research design. This is because it gives the opportunity for research
to see the reality more closely. Inference are not base on theory or principle but it is based on firsthand information.
3.2

Population of the Study

The population of the study consists of all staff (senior, middle cadre and junior) of Zenith Bank
Plc, Damaturu branch, Yobe State and Jos branch, plateau state as at 2016. The researcher decided
to use this financial institution because it is well established with a big workface who would be a
key tool in responding to the questionnaires and oral interview of the subject matter. The whole
populations of Zenith Bank Intl Plc, Damaturu branch staff are sixty (60).
3.3

Sampling Techniques

This study adopts the simple random sampling technique. Thus, respondents were selected
randomly from all the entire staff of Zenith Bank Plc both Damaturu branch, Yobe State and Jos
branch, Plateau State. This will enable true representative of the entire population and guarantee
adequate and accurate data information.
3.4

Method of Data Collection

The procedure for the data collection involves the use of both primary source (i.e questionnaire)
and secondary sources.

20

3.4.1

Primary Source

In this research work, our primary source has been on questionnaire and oral interview which was
carried out at both Zenith Bank Plc, Damaturu branch, Yobe State and Jos branch, plateau state with
their staff and customers.
3.4.2

Secondary Source

This process of research work is based on the information gathered from text books, journals,
magazine and previous written literatures, seminar paper and other documentary evidence that are
relevant to the study. For the purpose of this study, the researcher employed the use of available
literature pertaining to the subject matter of the study. The useful sources are textbook, journals, and
internet.
3.5

Method of Data Analysis

Data analysis is major step in any research work for easy analysis, data will be tabulate for each
variable, the tabulation of data gives the researcher a trends on the variable tested. These include
the use of tables, percentages and using chi-square test to analyse the data used

21

CHAPTER FOUR
DATA ANALYSIS AND DISCUSSION OF RESULTS
4.1

Data Presentation

This chapter deals with the presentation of the analysis of the respondents response obtained
through the questionnaire administer. In the course of this research work, the total of sixty (60)
copies of the questionnaires administered randomly to staff, of Zenith Bank PLC Nigeria, out of
which sixty (60) on the population used for the research project out of which forty (40) were
returned duly completed. It is on these retuned copies the outcome of this research study is based.
In this chapter, each question in the questionnaire has a range of two options, thus: favourable for
Yes response, unfavourable for No response. The experimental variables examined in this study.
Impact of information technology on the financial performance in banking sector. The breakdown
of the questionnaires administered is shown in the table below:
Table 1: The Total Questionnaires Administered.
Questionnaire

Respondent

Percentage

Returned

40

67%

No Returned

20

33%

Total

60

100%

Sources Field Survey 2016.

4.2

Data Analysis

The data analysed here were gathered from the staff of Zenith Bank Plc, Damaturu branch and Jos
branch and its customers. On this note, it is appreciated that for effective interpretation of the data,
the need to exhaustively elucidate the technique and formula used is required. Each question
contains two or more option raging from Yes, No and also placed on percentage (%) base.

22

Therefore, the simple percentage (%) obtain used in order to enable the researcher obtain accurate
figures representing the values of the options thus:

Table4:2:1
Does information technology contribute to the efficiency and Bank-customer relationship in your
bank?
Response

Respondent

Percentage

Yes

38

95%

No

5%

Total

40

100%

Sources: Field Survey 2016

This question tries to know whether or not the information technology contribute to the efficiency
and bank customer relationship in your bank. All the 38 respondent and represents 95% agreed
that information technology contribute to the efficiency and bank-customer relationship in your
bank. While 2 respondent and represents 5% disagreed on that.
Table 4:2:2
Does information technology increased the volume of deposits in the zenith bank.
Response

Respondent

Percentage

Yes

35

87.5%

No

12.5%

Total

40

100%

Sources: Field Survey 2016

This question tries to know whether information technology increased the volume of deposits in the
zenith bank or not. All the 35 respondent and represents 85.5% agreed while 5respondent and
represent 12.5% disagreed.
Table 4:2:3

23

Does information technology actually enhance the financial performance of zenith bank plc
Nigeria?
Response

Respondent

Percentage

Yes

38

95%

No

5%

Total

40

100%

Sources: Field Survey 2016

The table above indicate that 38 respondent represent 95% agreed that information has actually
enhanced zenith bank plc performance while 2 respondent represent 5% disagree.
Table 4:2:4
If yes in what ways.
Response

Respondent

Percentage

Automated Teller Machine

37

92.5%

Pont of sales terminals

5%

Internet Terminals

2.5%

Other specific

40

100%

Total
Sources: Field Survey 2016

This question is meant to find out if information technology actually enhance the financial
performance transaction of zenith bank Plc Nigeria 37 respondents represent 92.5% responded that
like the transaction may with automated teller machine ATM while, 2 respondents represent 5%
also like the transaction make on point of sales terminals while, 1 respondents represent 2.5% agree
that internet terminals is other transaction that you can make use your computer or phone.
Table 4:2:5
Does information technology on financial performance be used as a tool for assessing the zenith
bank plc performance?
Response

Respondent

Percentage

Yes

39

97.5%

24

No

2.5%

Total

40

100%

Sources: Field Survey 2016

The above table agree that 39 respondents which represent 97.5% show that information technology
on financial performance be used as a tool for assessing zeith bank plc performance. While 1
respondents which represent 5% disagree that information technology cannot tool for assessing
zenith bank plc financial performance.
Table 4:2:6
Do you enjoy the 21st century technology provided by your bank?
Response

Respondent

Percentage

Yes

40

100%

No

Total

40

100%

Sources: Field Survey 2016

From the above observation, all the respondents represented by 100% take a lead in the question by
agree totally enjoy the 21st century technology provided by your bank.
Table 4:2:7
If your answer to question Six is Yes, has this technology increase your performance.
Response

Respondent

Percentage

Yes

40

100%

No

Total

40

100%

Sources: Field Survey 2016

This question tries to know whether has this technology increase your performance. All the 40
respondent and represents 100% agreed has this technology increase your performance of the 21 st
century technology provided by the bank.
Table 4:2:8
Do you feel satisfy with the use of information technology (IT) provided by your Organization.

25

Response

Respondent

Percentage

Yes

40

100%

No

Total

40

100%

Sources: Field Survey 2016.

From the above observation, all the respondents represented by 100% take a lead in the question by
agree totally that the feel satisfy with the use of information technology (IT) provided by the
Organization (zenith bank).
Table 4:2: 9
If your answer is yes in what way this has helped you.
Response

Respondent

Percentage

Reduce turnaround time

0%

Improve good performance

0%

Increase customers relationship

0%

Provide good service

0%

All of the above

40

100%

Total

40

100%

Sources: Field Survey 2016.

From the above table show that 40 respondents representing 100% agree that all the responses say
yes that the feel satisfy with the use of information technology (IT) provided by the Organization
(zenith bank).
Table 4:2:10
Information technologies facilitate the activities of auditing in modern banking practices.
Response

Respondent

Percentage

Yes

31

77.5%

No

22.5%

Total

40

100%

Sources: Field Survey 2016.

26

In the above table show that 31 of the respondents representing 77.5% out of forty (40) staff
represents agreed that information technology facilitate the activities of auditing in modern banking
practices while, nine (9) of the respondents representing 22.5% disagree.
Therefore, the table shows clearly that 77% agreed that information technology facilitate the
activities of auditing in modern banking practices.
Table 4:2:11
Information technologies enhance the management services in banking operations.
Response

Respondent

Percentage

Yes

30

75%

No

10

25%

Total

40

100%

Sources: Field Survey 2016.

In the table above question, 30 respondent represented by 75% of the total responded agreed that
information technologies enhance the management services in banking operations. 10 respondent
represented by 25% of the total respondent disagreed saying that information technology does not
enhance the management service in banking operations.
Therefore, the response received from the staff shows that information technologies (IT) enhance
the management service in banking operations.
Table 4:2:12
Does information technology actually find out what problems encounter by the customer products
and service in your bank?
Response

Respondent

Percentage

Yes

30

75%

No

10

25%

Total

40

100%

Sources: Field Survey 2016

27

In the above, shows that 30 of the respondents representing 75% agree that the information
technology actually use to find out what problems encounter by the customer products and service
in your bank. While 10 of the respondents representing 25% disagree for that question.
Table 4:2:13
Improvement of information technology in productivity of modern banking operation?
Response

Respondent

Percentage

Yes

40

100%

No

0%

Total

40

100%

Sources: Field Survey 2016

From the above observation of the table show that all the respondents represented by 100% agree
that the Improvement of information technology in productivity of modern banking operation.
Table 4:2:14
Has the adoption of information technology on financial performance improve the services render
by the bank?
Response

Respondent

Percentage

Yes

39

97.5%

No

2.5%

Total

40

100%

Sources: Field Survey 2016

This question tries to know whether the adoption of information technology on financial
performance improve the services render by the bank. All the respondents have all the 40
respondents 100% agreed that the adoption of information technology on financial performance
improve the services render by the bank.
Table 4:2:15
If yes how does information technology on financial performance improve the service offer by the
bank?
Response

Respondent

28

Percentage

Produce more customer

37

92.5%

Reduce customer

2.5%

All of the above

5%

Total

40

100%

Sources: Field Survey 2016

This question is meant to find out if yes how information technology on financial performance
improves the service offer by the bank. 37 respondents represent 92.5% responded agree that
information technology produce more customer on financial performance on the service offer by
bank while, 2 respondents represent 5% also disagree while, 1 respondents represent 2.5% agree all
of the above.
Table 4:2:16
Has the adoption of information technology on financial performance by the zenith bank plc
increased it customer portfolio?
Response

Respondent

Percentage

Yes

39

97.5%

No

2.5%

Total

40

100%

Sources: Field Survey 2016

The above table show that 39 people representing 97.5% admit that the portfolio has increase while.
1 person disagree which is representing 10%.
Table 4:2:17
If yes in what ways
Response

Respondent

Percentage

Opening of account

34

85%

Increase in loan

12.5%

Other

2.5%

Total

40

100%

Sources: Field Survey 2016

29

From the above observation of the table show that 34 people admit that opening of accounting
representing 85% agree, while 5 person agree says increase in loan which representing by 12.5%,
while the other 1 did not admit representing 2.5%.

Table4:2:18
Has the availability of information technology promotes satisfaction oriented result to the
customers.
Response

Respondent

Percentage

Yes

34

85%

No

15%

Total

40

100%

Sources: Field Survey 2016

The table above information gathered shows that thirty four (34) respondents representing 85%
completely agreed that information technology promote satisfactory oriented result to their
customers while six (6) respondents represented by 15% disagreed for the question. Therefore, the
response received shows that information technologies promote satisfactory oriented result to their
customers.
4.3 Test of Hypotheses
Going by this research, selective questions are question: 1,2,12 and 18 respectively could be used to
test the hypotheses. All the test are carried out at 0.05 or 5% level of significance as shown in
appendix III.
Summary of Chi-Square Table Results
O

O-E

(O-E)2

38
35
30
34
2

34.25
34.25
34.25
34.25
5.75

3.75
0.75
-4.25
-0.25
-3.75

14.0625
0.5625
18.0625
0.0625
14.0625

30

O-E2
E
0.410584
0.016423
0.527372
0.001825
2.445652

5
10
6
Total

5.75
5.75
5.75

-0.75
4.25
0.25

0.5625
18.0625
0.0625
Compute

0.097826
3.141304
0.01087
6.657218

Value
Source: personal table
Computation of Chi-Square
Degree of freedom (DOF) = (R-1) (C-1)
Where:R = Row
C = Column
1 = Constant
R=2

C=8

Chi-square level of significant = 0.05 Degree of freedom

(R -1) (C -1)
(2-1) (8-1)
1X7 = 7
The level of significance is 5% or 0.05 and the confidence interval is 93% now the DOF is 0.05
going through chi-square table under 7 with 0.05 confidence interval is 14.067 Therefore critical
value as obtained from chi-square table is 14.067 while the computed test is 6.657218.
Rejection/Acceptance Decision or Criteria and Conclusion
The cut-off point in chi-square (X2) table is 14.067 and the computed value is
6.657218 is less than the critical value (14.067) from the table we reject the null
hypothesis; HO:1 The information technology has not increased the volume of deposits in the
Zenith Bank Plc;HA:1 The information technology has increased the volume of deposits in the
Zenith Bank Plc;HO:2 The availability of information technology dos not promotes
satisfaction oriented result to their customer; HA:2 The availability of information

31

technology promotes satisfaction oriented result to their customers; H O:3 The information
technology does not contribute to the efficiency on bank and bank customers; H A:3 The information
technology has contribute to the efficiency on bank and bank customers; H O:4 The information
technology actually has not find out what problems encounter by the customer products and service
in your bank; HA:4 The information technology actually find out what problems encounter by the
customer products and service in your bank.
Conclusion
Since the computed value is less than the critical test value (6.657218 <
14.067) we therefore conclude that, the zenith bank should accepted reject the
null (H0) hypothesis and accept the alternative (HA) hypothesis.
4.4 Discussion of Results
The above material of this project is to examine the Impact of Information Technology on the
Financial Performance in Banking Sector a case study of zenith banking plc Nigeria. During the
process of study, a given number of research question were formulated in chapter one. From the
analysis of finding, it was discovered that the four research question were accepted.
1. From the data analysis of the result, it was observed that information technology has increased the
volume of deposits in the Zenith Bank Plc. in order to meet the high expectation of customers
demand. According to Alu (2011) say that the information technology enables Nigerian banks in
meeting with the high expectations of customers who are more demanding and more techno-savvy
compared to their counterparts in yester-years. Customers demand instant, anytime and anywhere
banking facilities.
2. From the data analysis result, based on our finding it was observed that the availability of
information technology promotes satisfaction oriented result to the customers through the
introduction new system has automated information intensive and particularly paper intensive

32

transactions and services. This constitute core component that integrate a successful cash chques
clearing and fund transfer etc.
3. In another result finding it was observed that Information technology has a great impact in bankcustomer relationship though the introduction of new banking operation that is put in place like
automated teller machine (ATM), point of sales terminals, internet banking and so many others.
According to Ugwu (2011) Information technology has also facilitates the introduction of new
delivery channels in the form of automated teller machine (ATM), Point of sales terminals, internet
banking, net banking, and mobile banking etc. Further, information technology deployment has
assumed such high levels that is no longer possible for banks to manage their information
technology implementation on a stand-alone basis. With information technology revolution, banks
are increasing interconnecting their computer system not only across branches in some cities in
Nigeria, but also to other geo-political locations with high speed network infrastructure and setting
up local area and wide area network and connecting them to the internet. As a result, information
technology systems. And networks are now exposed to a growing number of Nigerian banks such
as zenith bank plc.
4. Also in another finding of the result it was observed that the information technology actually find
out what problems encounter by the customer products and service in your bank. Some of the
problem that being observed terms of e- banking in the zenith bank plc. Could be classified into
three classed as human, operational and technical constraints. Other problems that can have an
impact of information technology on the financial performance in the banking sector, can be
grouped broadly as psychological and behaviour. These include consumer awareness for
personalized services among others.

33

CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATIONS
5.1 Summary
In this chapter, a summary of the work and the conclusions arrived at will dealt with. Also,
recommendations based on the findings of the study will be given and the areas for further study is
to examine the Impact of information technology on the financial performance in banking sector
with a reference to zenith bank plc Nigeria and the specific objective deals with the research
question, significance and scope of the study are also highlighted. The study covers a period of four
year (2011 - 2015).
Chapter two contain literature review of various relevant literatures which deal with the views of
different authors on the subject matter of the study. During the review, it was found out that the
effective use information technology goes a long way in determine the efficiency of such
establishment and that no organization can achieve its set objectives without the support of
information technology (IT).
To effectively achieve the aims of this study, three research questions were drawn a later developed
to eighteen (18) questions which made up the questionnaire for this project. The questionnaires
were administered to the respondents in order to ample their opinion towards the subject matter of
this project.
Chapter four shows the analysis of the responses given by the respondents towards the questions
asked in the questionnaire. The results were than presented in a tabular form. It is worthy to note

34

that information technology (IT) should be viewed so that appropriate ones could be used to match
very situation. The study also revealed various ways in which worker can increase the financial
performance in the bank sector through the use of information technology.
To ensure that the opportunities and advantages are realized, it will be important as it is in every
other walk of life to ensure that banking research and development is sustained so that banks at
large can learn from within and that experiences and activities in different institution and sectors
can inform and guide other without the continual need for re-invention of the wheel. Once again Its
serve to provide the means from much of this activities to realize the potential it holds
5.2

Conclusion

Adoption of information technology has influenced the content and quality of banking operations.
From all indications, information technology (IT) presents great potential for business
reengineering of Nigeria Banks. Investment in information technology should form an important
component in the overall strategy of banking operations to ensure effective performance. It is
imperative for bank management to investment in information technology products to facilitate
speed, convenience, and accurate services, or otherwise lose out to their competitors.
The banking sector in Nigeria presents information technology (IT) provides with great opportunity
to market their innovations. Success in this area however depends on how they can customize their
services to appeal to the ready minds of various stake holders in the industry.
5.3

Recommendation

Based on these findings, it had been established that information technology (IT) plays a crucial
impact in Nigeria Banking Sector. Information technology is therefore an effective device that can
be used in any sector in order to speed up its services, particularly in the banking sector. This are
the following recommendation were pass:
1. Through the banking sector information technology should be give more space in the banking
operation/activities.

35

2. For bank-customer relationship to be effectively enhanced, information technology should be in

place.
3. That the banking sector should encourage information technology in financial operation/ activities.
4.

That the banking sector should improve and give more attention to modern banking operation on
the financial performance it terms of payment.

5. That the banking sector and other bank should use information technology for their financial and
non-financial transactions.
6. Good report should be maintained between the bank and the customer.
7. That the banking sector should keep given excellence service and satisfaction oriented result to
their customers.
8. That the bank should adoption the use of information technology by contributed in no small
measure in curtailing fraud and other financial crimes in Nigerian banking industry.

36