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THE EFFECT OF AUTOMATION IN BANKING SERVICES

CHAPTER ONE

INTRODUCTION

1.1 BACKGROUND OF THE STUDY

Today’s business environment is very dynamic and undergoes rapid changes as result of technologies information, increased awareness and demands from customers business organization, especially the banking industry of the 21st century operates in a complete and competitive environment characterized by these changing conditions and highly unpredictable economic climate. Information and communication technology ICT is at the centre of the global change curve. Loudon and Loudon (1991) centered that managers cannot ignore information system because they play a critical role in contemporary organization .They point out that the entire cash flow of most fortune 500 companies is linked of information systems.

The application of information and communication technology concepts techniques, policies and implementation strategies to banking service has become a subject of fundamental importance and concern to all bank and indeed a pre-requisite for local and global competitiveness. ICT directly affects high managers decided, how they plan and what products and service are offered in the banking industry. It has continued to change the very banks and their co-operative relationship are organized worldwide and the variety of innovative devices available to enhance the speed and glorify of services delivery.

Financial service producers should modify their traditional operating practices to remain viable in the 1990’s and the decades that flow. They claim that the most significant shortcoming in the banking industry today is wide spread failure on the part of senior management in banks to group the importance of technology and incorporate it into their strategic plans accordingly. The banking industry has witnessed tremendous changes linked with the development in ICT over the tremendous changes linked with the developments in ICT over the 16 years. The guest for survival, global relevance, maintenance of existing market share and sustainable development thus made exploitation of the advantages of ICT through the use of automated devices imperative in the industry .This study evaluates the response of Nigeria banks to this new trend and examines the extent to which they have adopted the innovative technologies in their operations and the resultant effects (Horald and Jeff1995).

Information technology and communication has provided self service facilities(automated services) 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 (Loudon and Loudon 2001).

1.2 STATEMENT OF THE PROBLEM

In the research mode many well, known problems emerge when functional analysis is applied to information systems .Where financial modes do not expect the risks and uncertainty of their own costs and benefits estimates. Adjustments applied to the banking industry produce much stronger productivity growth then do government analysis/statistic of productivity growth presence of ATM of a use of ATMS enables branch to protect rather than grow market branch. There is higher IT spending associated with higher unit cost efficiency in that their life expectancy is shorter. The very high rate of technological change in computer based information systems theory that most systems are seriously out of date in 5 to 8 years. The high rate of technological obsolescence on budgeting for systems means that the pay book period must be shorter and the rates of returns higher than typical capital projects with financial models is to use them cautiously and to put the results into a broader context of business analysis.

1.3 OBJECTIVES OF THE STUDY

The main objective of the study is to determine the Effects of automation on banking services.

Specific Objectives includes

1.    To examine how management has led to poor information technology.

2.    To assess how lack of technical knowhow has influenced information technology in banking services.

3.    To find out how inadequate resources have led to poor information systems.

4.    To examine how ignorance has lend to poor automation system in banking services

5.    To analyze the principal causes f automation failure in banking services.

6.    To identify the challenges pulled by implementing near systems and management function.

7.    Evaluate models for understanding the banking value of information system.

8.    Evaluate the issues and technical alternatives to be considered when developing international information systems.

9.    Identify the challenges pulled by global information system and management solutions.

1.4 RESEARCH QUESTIONS

1. How has management contributed to the deterioration of information technology?

2. In what ways has the lack of technical expertise impacted information technology within banking services?

3. What role do inadequate resources play in the development of poor information systems?

4. How has ignorance influenced the implementation of automation systems in banking services?

5. What are the primary factors contributing to the failure of automation in banking services?

6. What challenges arise from the integration of new systems and management functions?

7. What models exist to understand the value of information systems in banking?

8. What issues and technical alternatives should be considered in the development of international information systems?

9. What challenges are associated with global information systems and their management solutions?

1.5 RESEARCH HYPOTHESES

1. Poor management practices lead to a decline in information technology within organizations.

2. The absence of technical expertise within banking services negatively affects information technology implementation.

3. Inadequate resources result in the development of subpar information systems.

4. Ignorance regarding automation systems contributes to their failure in banking services.

5. Multiple factors, including technical, organizational, and human, contribute to the failure of automation in banking services.

6. Implementing new systems alongside management functions poses significant challenges due to organizational inertia and resistance to change.

7. Various models can effectively assess the value of information systems within banking, each with its strengths and limitations.

8. Developing international information systems requires addressing complex technical issues and considering cultural and regulatory differences.

9. Global information systems face challenges related to data security, interoperability, and aligning with diverse management strategies.

1.6 SIGNIFICANCE OF THE STUDY

Behavioral research made have theorized that information technology facilitates flattening of hierarchies by broadening the distribution of information to empower lower level employees and increase management efficiency; pushing decision -making rights lower in the organization  because lower level employees receive information they need to make decision without supervision.(This empowerment is possible because of higher educational levels among the work force which give employees the capabilities to make intelligent decisions).

Managers can now receive so much more accurate information on time, they become much faster at making decisions so fewer managers are required. Management costs decline of a percentage of revenues and the hierarchy becomes much more efficient(Drucker 1988,Bresnahon, Brynsolttson and Hist.2000; Loudon and Marr,1995; Malone,1997).

Management span of control has also been broadened enabling high level managers and control of more employees spread over greater distances thus why many companies have eliminated thousands of middle managers as a result of these changes.

Also there is difficulty of measuring intangible benefits give financial models on application bias: Transaction and clerical system that displaces labor and save spaces always produce more measurable fungible benefits than management information systems ,decision  support system and computer, supported collaborative work systems.

Traditional approaches of solving information system investments tend to access the profitability of individual systems project business functions. These approaches do not adequately address investments in IT infrastructure and new business models or other enterprises-wide. Capabilities that could benefit the organization as a whole(Ross and Beath,2002).

The traditional focus on the financial and technical aspects of an information system  tends to overlook the social and organizational dimensions of information systems that may affect the true cost and benefits of the investment  many companies  information systems investment  decisions  do not  adequately consider cost from organizational disruptions curves for a new system  have on productivity or the time managers need to spend overseeing  new system related changes. Benefits, such as more timely decision from a new system or enhanced employee learning and expertise, may also be overlooked in a traditional financial analysis(Ryan, Harrison andSchkode,2002).

There is some reason to believe that investment in information technology requires special consideration in financial modeling. Capital budgeting historically concerned itself with manufacturing equipment and other long –term investments such as electrical generating facilities and telephone networks. These investments had expected lives of more than 1 year and up to 25 years. However, information system differs from manufacturing system.

Through the research I have studied that computer automation on the banking service country wide and discovered that electronic banking has tremendously improved the service of some banks to their customers..

1.7 SCOPE OF THE STUDY

The study is conducted out in a more comprehensive evolution of the response of Nigeria bank to the adoption of ICT. The study covered l out of the 150 banks. In the country as let the end of 2009. A total of 126, 120 and 36 questionnaires were administered to the employees’ customers and head of system units of the selected bank respectively.

1.8 LIMITATION OF STUDY

·       Lacks of adequate finance, shortage of finance are experienced since a lot of expenses were involved.

·       Reluctance of respondents to give data or fill in the questionnaires limited the success of the study.

·       Inadequate time, the study consumed a lot of time therefore being affected.

·       There were some hidden information which the management did not allow be given out claiming it was confidential.

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