As Information Technology is vital in banking today, it becomes imperative for banks to realize its impact on operational performance in order to justify capital investments. The objective of this work is to examine how the adoption of Information Technology affects the operations of commercial banks in terms of effectiveness, efficiency, competitiveness, customer base and globalization of the bank. The research methodology involved reviewing the existing network design of the investigating bank and comparing it with the proposed network design solution. The design and simulation results of work revealed that Information Technology led to increase customer satisfaction, improved operational efficiency, reduced transaction time, better competitive edge, reduced the running cost and ushered in swift response in service delivery.
BACKGROUND OF THE STUDY
The rapidly unfolding development within the information technology in recent times has led to resurgent calls for monies towards an effective cash management through Electronic banking (i.e. E-Banking). In the last few years, within the banking industry in Nigeria several commercial products were designed by banks to improve the qualities of services provided to customer. These products were also designed to meet the increasingly sophisticated needs of finance managers in a cross section or organizations operating in different sectors of the economy.
In recent years, these have been an evolution from paper transfer system and ordinary procedural cash management to an electronic transfer system and more secured and sophisticated cash management. There has been introduced, an increased sophistication in computer applications to cash management and in electronic funds transfer.
It is the responsibility of the finance manager to ensure proper management of a company’s account receivable and payable amongst other tasks. Improper management of these two important variables could result in losses arising from inability to take interest because of too early payments. Overdraft and loan interest charges could be incurred because of unnecessary working capital borrowings. The task faced with the finance manager is accelerating collections and showing a disbursement which is increasingly being done electronically.
The advert of financial innovations such as electronic transfer in the payment system and more recently, the launching of internet banking have transformed the worlds into a global village linked with electronic impulses. Companies are usually offered discounts if payments for certain goods and services are made within a specified period according to the terms of credit.
Similarly, no discount is been attracted when companies pay outside this period and this discount loss can cost the company substantial income when aggregated over an annual period. Companies also have to collect proceeds of sales quickly within the allowed time frame to provide working capital. Failure to do so can lead to working capital shortages prompting the company to borrow from banks at high interest rates to fill the gap between sales and collection of proceeds.
Between 1989 and 1995, several banks have acquired the means to make payment very quickly and transfer funds very quickly to cities in Nigeria within a few minutes of the request. However, the concept of electronic money was introduced in 1996 when the Federal Government through CBN gave approval to All States Trust Bank Ltd. To offer a financial product known as the ESCA smart card, an electronic purse. Subsequently, others followed. These innovations, which are still at a relatively early stage of development have the potential to challenge the predominant role of cash for making small value payments and makes retail transactions easier and cheaper for finance managers. This is an invaluable tool of it provides an enhanced cash management capability and use of electronic funds transfer has resulted in greater economization of money balances.
In an attempt to elucidate on the use of Electronic Banking in cash management, this write-up traces the history of commercial banks and origin of Electronic Banking, provides an in-depth treatise of conventional banking. It goes further to examine the role of Electronic banking in cash management, the advantages and obvious concerns about security of funds.
STATEMENT OF THE PROBLEM
Financial management is a key to the growth of any business perspective of the size and geographical spread of the firm. As business conqueror their immediate environment and spread to other towns and cities, it becomes more difficult to exercise control over the finances of the firm. There is the need to deliver funds to locations where it is needed and collect excesses from some other locations across the country. A number of problems abound in the Cash Management Service Department of any organization in Nigeria, such problems include the following:
Nevertheless, solutions to these numerous problem will to a large extent, explain the roles of Electronic Banking in Cash Management.
OBJECTIVES OF THE STUDY
The main objectives of this research work are:
SIGNIFICANCE OF THE STUDY
This work will go a long way to benefit:
The hypothesis of the study are been formulated and will be based on the objective of the study such as;
Information System (MIS), then there will be poor performance.
HI: If appropriate skills are developed in Management Information System (MIS), there will be excellent performance and employee efficiency.
HI: When banks acquire the necessary advanced technology, they will gain customer’s confidence and will be efficient and effective.
HI: When effective control measures are backed by complementary measures such as passwords, protocols and encryptions, fraudulent activities can be checked and controlled.
SCOPE OF THE STUDY
This topic of study is towards an effective cash management through Electronic banking. Problems and prospects, a Case Study of ACCESS Bank Plc. Therefore the research covers the problems, objective of the effective Cash Management through Electronic banking as well as the significance of it, limitations or possible problems and consequences, solutions and authentic recommendations.
LIMITATIONS OF THE STUDY
The limitations of this research work are catalogued below:
Definition of Key Terms
Bank is a financial institution that provides services, such as accepting deposits, giving business loans and auto loans, mortgage lending, and basic investment products like savings accounts and certificates of deposit. The traditional commercial bank is a brick and mortar institution with tellers, safe deposit boxes, vaults and ATMs. However, some commercial banks do not have any physical branches and require consumers to complete all transactions by phone or Internet. In exchange, they generally pay higher interest rates on investments and deposits, and charge lower fees (Business Dictionary, 2011).
Innovation is the application of better solutions that meet new requirements, in articulated needs, or existing market needs. This is accomplished through more effective products, processes, services, technologies, or ideas that are readily available to markets, governments and society ((Boston Consulting Group, 2009).
Automated teller machine (ATM), also known as a Cash Point, Cash Machine, is a computerized telecommunications device that provides the clients of a financial institution with access to financial transactions in a public space without the need for a cashier, human clerk or bank teller (DeYoung, 2005).
Credit card: is any card that may be used repeatedly to borrow money or buy products and services on credit. card that may be used repeatedly to borrow money or buy products and services on credit. Credit cards are issued by financial institutions, retail stores, and other businesses. A credit card offers the card holder revolving credit that can be paid monthly with as little as the required minimum payment. (Francesca and Claeys,2010).
Debit card is a card which allows customers to access their funds immediately and electronically. Unlike a credit card, a debit card does not have any loan facility (Francesca and Claeys, 2010).
Point of sale (POS) terminal is a retail payment device which; reads a customer’s bank’s name and account number when a bank card or credit card is swiped (passed through a magnetic stripe reader). It contacts the bank and (if funds are available) transfers or withdraws the customer approved amount and prints a receipt (Business Dictionary, 2011).
Mobile banking is performing banking transactions through a mobile device such as a mobile phone or Personal Digital Assistant (Boston Consulting Group, 2009).
Internet banking is a system which allows individuals to perform banking activities via the internet (Atanassov, Nanda, and Seru, 2007).
Electronic funds transfer is a system of transferring money from one bank account directly to another without any paper money changing hands (Barnes, 2003).
Real time gross settlement (RTGS) is a system for settlement of large-value transactions between banks and other financial institutions (Boston Consulting Group,2009).
Financial performance is a measure of how well a firm can use assets from its primary mode of business and generate revenues. This term is also used as a general measure of a firm’s overall financial health over a given period of time, and can be used to compare similar firms across the same industry or to compare industries or sectors in aggregation. There are many different ways to measure financial performance, but all measures should be taken in aggregation. Line items such as revenue from operations, operating income or cash flow from operations can be used, as well as total unit sales (Business Dictionary, 2011).
Income is revenue for a particular period normally for one year
Profit before tax is a profitability measure that looks at a company’s profits before provision of corporate income tax. Profit before tax is the net balance after deducting all expenses from revenue. It can result to a loss before tax if expenses are higher than revenues (Cicea and Hincu, 2009).
Return on assets is the total resources owned and controlled by a Bank divided by profit before tax (Dew, 2007).
Customer deposit is money placed in a Bank for safe keeping and it is a liability by the Bank owed to the depositor (