BENEFIT OF ICT IN THE BANKING SECTOR

 

1.1  INTRODUCTION

The ICT is a comprehensive term which is consists of almost all communication devices such as radio, television, cellular phones, computer network, satellite systems etc. It includes service and applications also like video conferencing and distance learning. The term Information Communication Technology is mostly used as an Information Technology (IT) .The importance of Information Technology and Communication is less related to the term technology than its potential to convey information to larger population at distinct area. Mostly every country of the world has put their efforts in establishing organizations for the development of advance communication techniques, increasing productivity and modernization. Today Business environment is very dynamic and go through frequent changes as a result of technological innovations. (Ayo, 2010)

ICT can be helpful in reducing poverty by providing access to education, health & government services Information Technology is becoming an invaluable part of our society for development, supporting growth, promoting innovation and enhancing competitiveness.  The one of the best example of Information technology is Banking Sector. (Ayo, 2010)

The increase in flexibility and power of wireless provides proper opportunities for rising services to customers. In the current Business organizations, M-commerce has applications in various fields such as financial services, retail sector, telecommunication and information technology etc. M-commerce is broadly accepted and adopted in various field and this fusion of technology and commerce is becoming quite popular these days. (Jahanshahi Asghar Afshar, Mirzaie Alireza and Asadollahi Amin, 2010).

Internet Banking makes various change in the banking sector. This is e-banking which facilitate the customer to make transactions without any inconvenience.  Internet service providers (ISPs) offer broad range of technologies with different data signaling rate (speed) to access internet. ISP is the company whom a monthly fee is paid in order to use the Internet. (Mani, 2000)

Some other type of modem like DSL and cable modems also works in similar way.

The Banking sector is developing day by day in many areas and one of these areas relate to the digitalization of formerly paper-based processes. Now E-Mails basically known as Electronic mails are preferred as compared to postal mails as these are fast to access and quick to respond. E-mails are especially being applied for non-legal correspondence like account statements, marketing and sales. Banks provide several online services to the customers like credit card bills and other transaction details.

Information and communication technology (ICT) has now become a core of banking sector, while banking industry is the core part of every vigorous economy. There is a great effect of globalization, competition and innovation in banking industry. Information and communication technology (ICT) has in particular brought a complete paradigm shift on the bank's performance and on the customer service delivery in the banking industry. In order to compete with global competition and match the global development, the banks have to focus on the excellence of customer service delivery. Banks also have to invest and focus on ICT services for diminishing the operation cost.  As ICT network has many advantages as better, convenience and comfortable service, remote reach, time saving, deliver variety of value added products and services. There is a significant effect of flexible and user friendly banking service on the ICT growth and development. Customer satisfaction and customer service delivery is a key parameter for banks to ascertain that how effective and efficient they are.

 

1.2 WHAT IS BANKING ?

Banking: is an industry that handles cash, credit, and other financial transactions. Banks provide a safe place to store extra cash and credit. They offer savings accounts, certificates of deposit, and checking accounts. Banks use these deposits to make loans.

1.3 BRIEF HISTORY OF BANKING SECTOR IN NIGERIA

In 1892, the African Banking Corporation and the Bank of British West Africa, now First Bank of Nigeria, were established in Nigeria. The first domestic bank In Nigeria was established in 1929 and called Industrial and Commercial Bank. The bank liquidated in 1930 and was replaced by Mercantile Bank in 1931.

     Banking activities started in Nigeria in the year 1892 with the opening of the Africa Banking Corporation in Lagos .The aim of the bank at that time was to serve British trading interest in Nigeria, such as the Royal Niger Company.

1.4 APPLICATION OF ICT IN BANKING SECTOR

ICT has entirely reorganized the scenario and the magnitude of competition in the banking industry. Following the introduction of online banking, ATMs and card banking, which are the initial milestones of electronic banking, the diffusion of ICT and increased penetration of Internet has added a new challenges and distribution channel to retail banking: online banking for the delivery of services and products. In the past, banking took place on the High Street. The banking time was limited as branches get open from 10am to 5pm and five days a week Monday to Friday. This was very inconvenient for customers who are working fulltime. Banks had to employ many staff to deal with customers as this was the only way that services could be provided. Banking as a business is no longer just the domain of Traditional time bound banking. The major supermarkets also offer banking services to their customers. Now there are also some banks which has purely online operations with no local branches at all. All this change has come about because of the rise of the internet and widespread access to broadband.

v SOME OF THE APPLICATION AREA INCLUDE:

Telephone Banking

It is a banking service provided by a financial institution, which permit its customers to access their account over the telephone. Telephone banking is relay on the technology called interactive voice response system (IVRS).This facility can be provided for 24 hour a day, 365days a year. Telephone banking is done through an automated phone answering system with phone keypad response or voice recognition capability. (Maria, 2011)

Automated Teller Machine (ATM)

ATM is the alternative banking channel which provides banking facilities to customer without any bank teller. It is an electronic computerized telecommunication device that allow customer to access bank account from other place apart from bank premises. The good thing about ATM is that it provides 24 hour cash withdrawal facility and account balance inquiry without having long queue. Through this channel the transaction occur quickly as sliding the card is faster than writing cheque and it is also more accurate than paying with cash.

 

INTERNET Banking

 

Internet Banking is the type of self service banking. In this customer can access his account with the help of internet through intelligent communication gadgets. Customer finds it time saving and convenient, and for bankers it is cost saving. Customer can access their account through their personal PC, laptops, Tablets etc. Internet has reduced the geographical distance between the cities, states and countries. So there is no requirement to open the branches in each area of the city as now long distant place are connected through internet. Customer perceives Internet banking as usefulness and ease to use than traditional banking service.

 

 

 

Mobile banking

Banks were directed on the regulatory/supervisory issues, registration of customers for mobile banking, to ensure technology standards, interoperability, interbank clearing and settlement arrangements for fund transfers, customer grievance and redressal mechanism and transaction limits in an attempt to ensure safe, secure transfer of funds. Under extant regulatory prescriptions, there is no monetary restriction on fund transfer effected through mobile banking as it is left to the risk perception of each bank and policies approved by their respective boards. In line with these guidelines, banks have been offering mobile banking services to their customers through various channels such as SMS, USSDchannel, mobile banking application etc. The committee considered options of using mobile for the merchant payments whereby the merchants on initiating the payment request completes the transaction by accepting an OTP generated by customer on his mobile. The committee also considered a standard and simple process to generate OTP across all banks.

2.1 BENEFIT OF ICT IN BANKING SECTOR

 

•      ICT has taken the center stage in almost every aspect of human endeavor

•      ICT help banks improve the efficiency and effectiveness of services offered to customers.

•      It enhances business processes, managerial decision making, and workgroup collaborations.

•      ICT strengthens their competitive positions in rapidly changing and emerging economies.

•      ETC.

2.2 EFFECT OF ICT IN BANKING SECTOR

v Here are some of the basic effect of ICT in Banking:

•      Security Risks:  most banks make sure that their websites are secure, but no bank website is immune from cyber-crime and hacking. Hackers target bank websites to swipe account information.

•      ATM: one disadvantage of internet banking relates to withdrawing money.

•      Deposit limitations

•      Customer service

•      Etc.

2.3 CURRENT CHALLENGES OF BANKING SECTORS

•      Increasing Competition

•      A Cultural Shift

•      Regulatory Compliance

•      Changing Business Models

•      ETC.

 

 

 

 

 

 

 

 

 

CONCLUSION

The use of ICT in banking services is aimed at not only providing better services to customer but also to attain competitive advantages among them. Development of a sound and adequate ICT has become a necessity to meet the challenges of growth and diversification of banking industry. ICT has given the bank an opportunity to offer a wide range of services such as ATM, Mobile Banking, e-banking, M-commerce etc. to their customers. The concept of Information Communication technology like M-Commerce. Since the main focus of the study is on the role of the ICT in banking sector, the detailed discussion have been made of ICT services in banking industry is given. This chapter also deals with mobile banking, which is essential need of today

 

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