ASSESSMENT OF EMPLOYMENT REQUIREMENTS IN THE BANKING SECTOR AND ITS IMPACT ON UNEMPLOYMENT IN NIGERIA

CHAPTER TWO

LITERATURE REVIEW

2.1INFORMATION, COMMUNICATION AND TECHNOLOGY (ICT) IN THE BANKING SECTOR

Information Technology (IT) is the automation of processes, controls, and information production using computers, telecommunications, software and ancillary equipment such as automated teller machine and debit cards (Khalija, 2000:26). It is a term that generally covers the harnessing of electronic technology for the information needs of a business at all levels. (Irechukwu, (2000:23) Lists some banking services that have been revolutionized through the use of ICT as including account opening, customer account mandate, and transaction processing and recording. Information and communication technology has provided self-service facilities (automated customer service machines) direct online. It assists customers to validate their annual numbers and receive instruction on when and how to receive their cheque book, credit and debit goods. Communication technology deals with the physical devices and software that link various computer hardware components and transfer data from one physical location to another (Laudon and Laudion, 2001:63) ICT products in use in the banking industry include. Automated teller Machine, Smart Cards, Telephone Banking MICR, Electronic Funds Transfer, Electronic Data interchange, Electronic Home and office Banking. Several authors have conducted investigation in the impact of ICT on the banking sector of the Nigerian economy. Agboola et al (2002:2) discussed the dimensions in which automation in the banking industry manifest in Nigeria. They include:

1. Bankers Automated Clearing Service: This involves the use of magnetic ink character reader MICR for- cheque processing. It is capable of encoding, reading and sorting cheques.
2. Automated Payment systems: Devices used here include Automatic teller machine (ATM), plastic cards and Electronic Funds Transfer.
3. Automated Delivery channels: These include interactive television and the internet.

Agboola (2001:1) studied the impact of computer these services include computerized credit ratings, programs that determines when cheques should be made available to customers and daily calculation of accounting balances. It also involves how various types of information technology device are made available in each of the studied banks.

2.2IMPACT OF THE ADOPTION OF ICT DEVICES IN BANKING OPERATION

According to Olatokunadn Igbinedwn (2009:373) in an article on the Adoption of Automatic teller machines in Nigeria: an application of the theory of diffusion of innovation, “opined that Globally, Automatic teller machines (ATMs) have been adopted and are still being adopted by banks. They offer considerable benefits to both banks and their depositors. The machines can enable depositors to withdraw cash at more convenient times and places then during banking hours at branches. In addition, by automating services that was previously completed manually. ATMs reduce the lost of serving some depositors demands. These potential benefits are multiplied when banks share their ATMs allowing depositors of other banks to access their accounts through a bank’s ATM (Mc Andrews, 2003:71). Banks have become the principal deployers of ATMs. Two reasons for this are that they want to increase their market share although due to the prevalence of ATMs, it is not likely to be the primary means by which ATMs increase profitability for most banks, or/and above a certain level of operations, the cost of a single transaction performed at an ATM is potentially less than the cost of a transaction conducted from a teller, as ATMs are capable of handling more transactions per unit of time than are tellers Laderman, 1990:28).

In Nigeria the development of ATM by banks and its use by bank customers is just gaining found and has burgeoned in recent times. This has happened especially after the recent consolidation of banks, which has in all probability, made it possible for more banks to afford to deploy ATMs or at least become part of shared networks (Fasan, 2007:28). The increased deployment of ATMs in the banking sector has made the issue of technology relevance important. ATM services designed for those desirous of exclusive services. Cards were rare and the process for obtaining them tortuous. Presently, the use of ATM cards has been widely promoted. Banks no longer appear to want personal contact with their customers, some banks have resorted to panelizing the customer as it were, formal possessing an ATM card, by debiting the account of such a customer for withdrawing below a certain amount across the counter. Agboola, (2006:27) reported that although only a bank had an ATM in 1998, by 2004, fourteen of them had acquired the technology. Agboola (2006: 27) produced largely positive outcomes such as improved customer services, move accurate records, ensuring convenience business time, prompt and fair attention, and faster- services etc. Also, the banks’ image is improved creating a more competent market. Work has also been made easier, and more interesting, the competitive edge of banks, relationship with customers, and the solution of basic operational and planning problems has been improved. Fanawopro (2006:15) sated that Nigeria’s debt card transactions rose by 93 percent between January 2005 and March 2006 over previous years owing to aggressive roll out initiatives by Nigerian banks, powered by interswitch network. The number of ATM transactions through the interswitch network had increased from 1,065,972 in 2004 to 14,448,615 between January 2005 to March. This is a rise of 92.6 percent with respect to the previous years. More than 300 ATMs have been deployed on the network, while about 2 million cards have been issued by 23 banks as at March 2006.

A recent survey conducted by interswitch consulting limited revealed that ATM service provided by banks and non-financial institutions, stood as the most popular e- business platform in Nigeria (Interswitch consulting limited, 2007). The report showed that awareness for various banking services rendered by Nigerian banks is mostly invited to the traditional banking services. Findings showed that 99 percent of the respondents were aware of savings accounts, while 92 percent are aware of local current accounts and 72 percent are aware of local money transfer services. However, among the more modern banking services such as electronic banking, internet banking, point of sales (POS) transactions, money transfer, ATMs emerged as the most popular with 96 percent awareness level. ATM awareness also ranked higher than awareness level about current accounts and slightly below savings account (Omankhanten, 2007:16). In order to encourage customs to embrace the technology and overcome their fears of putting their checks into a machine’s shot rather than a teller’s hand; banks- originally did not charge customers any fees for using ATMs. In time, sure banks started charging customers for not using ATMs, through so-called “human teller fees” a charge for each time a customer uses a teller for a service that could be performed by an ATM. Banks could only be used by customers who already had current or savings accounts with that bank, through the bank’s proprietary ATM network (Ugwu, 2008: 102).

According to Merton (1992:12), the primary function of a financial system is to facilitate the allocation and deployment of economic resources, both partially and across time in an uncertain environment. This conception would also apply to financial innovations such as ATMs and highlights the view that a financial innovation represent something new that reduce costs, reduces risks, or provides an improved product/ service/instrument that better satisfies participants, demands (Frame and White, 2002:2). This burgeoning of ATMs in Nigeria calls for a study on its diffusion that would give insight into assets such as how far it might go, if it is being adequately adopted by users, if it is necessary at all, and what could be done, if need be, to improve on its use in the country Frame and White (2002:2) emphasized the need for studies on financial innovation to and research and asset financial regulators, since hypotheses advanced by the broad descriptive literature on innovation remain largely untested. Reportedly, a lot of the testing of hypotheses involving innovation has come from, individuals trained in the economic aspect of industrial organization. The data and research environments have not been conducive to empirical work on financial innovation (Frame and White, 2002:2).

In Nigeria, it appears that both reasons are valid because the banks with more ATMs appear to be more current, visible and likely to deliver better services on time, which might influence on adopter’s decision to use an ATM; besides this, the stiff competition among banks tying to carve niches in the stock market, alongside the large size of potential customer patronage (as a result of the large population of the country) makes ATM adoption for banks crucial. At present in Nigeria, there is a fostering of shared networks, shared networks are used probably because they increase the convenience of ATM use by enabling a given bank’s customers to carry out banking transactions over a mider geographic area than would be possible with a proprietary network.

Also, it is not necessarily for a bank to own an ATM in order to belong to a shared network. Through spreading the fixed cost associated with ATMs over transactions initiated by customers of many different economics of scale (Laderman, 1990:43).

Hence, there is clearly a need to study the issue of adoption of ATM Nigerian context, especially from the perspective of information services. This is because the diffusion of the innovation of automatic teller machines can be specifically perceived through the attitudes and actions of users. The diffusion of Innovation Theory (DOT) used in this study, attempted to examine the factors that influenced an individual to adopt an innovation. The theory proposed five focal beliefs or constructs that influence the adoption of any innovation. These are relative advantage, complexity, compatibility, trial ability and observability. Relative advantage indicates the usefulness of an innovation; compatibility is the degree to which an innovation is perceived as consistent with existing values, past experiences, and the needs of the potential adopter; complexity is the degree to which an innovation is perceived as relatively difficult to understand and use; trial ability is trying out or testing an innovation so that it makes meaning to the adopter; and observability is the degree to which the results of an innovation are visible to other (Rogersl 1995:52). The essence of the use of these constructs is to empirically test part of DOI’s attributes with a view to exploring factors that brought about the adoption of the innovation (automatic teller machines). An innovation in this study is taken to mean an idea, practice; or object that is perceived to be newly a person or adopting entity.

2.3IMPACT OF INFORMATION, COMMUNICATION AND TECHNOLOGY ON BANK OPERATIONS

According to Agboola, Yinusa and Olagunde (2003:3) in an article on the impact of digital revolution on the structure of Nigerian banks,” asserts that digital revolution has transformed the nature and context of banking leaving behind for reaching effects and implications on both organizational and industrial structure. It has utilized developments in information and communication technology to usher in the era of information economy where the productivity and competitiveness of units or agents in the economy (be they firms, regions or nations) depend mainly on their capacity to generate, process an apply knowledge- based information efficiently (Castells, 1996:39). It is an economy where information is both the currency and the product.

Divyer (199:6) confirmed that information technology has had more impact on more fundamentals, more- quickly, than virtually any other external change in the history of the banking industry. It is transforming every aspect of a bank’s business, from its management information to the nature of the products and services it offers. It fundamentally affects many of the key drivers of both cost and revenue, which increasingly determine a bank’s overall profitability and competitive positions. Darlington (2003:113) noted that the revolution has changed the very nature of banking. Though money is still being handled, information, not money, is now life blood of the banking industry. He claims further that from what was essentially a transaction-based business, where customers came to the bank (or didn’t), banking has made the leap into what is essentially a sale-and-marketing culture. In the new culture, a bank defined almost solely by its ability to add value to the customer relationships, which breaks down into acquiring, analyzing, integrating, and leveraging of information about, from and for the benefit of each individual customer (Wikipedia, 2007:12).

A pervasive use of information and communications technology is necessary because the relative standing of staff within each bank and that of banks within the industry is influenced by the ability to utilize the various opportunities provided by the digital revolution. Differential rate of utilization often lead to digital divided. Digital divided separates the information rich and the information poor within or between different organizations in the society. The organization for economic-operation and development defines the digital divide as the difference between individuals, households, businesses and geographic areas with regard to their opportunities to access ICTs and their use of the internet for a wide variety of activities. It is the gap between those who have real access to information and communications technology and who are able to use it effectively and those who don’t have such access (Bridges, 2002:21). This “digital divide” has implications on the relative positioning of individuals as well as firms in the banking industry and eventually influences organizational structure of the industry.

1. TheoreticalFramework

Though there are many theories that can be applicableforthisstudy,theresearcherdecidedtofocusonthetheoryoftransferoflearning theory and motivation theory. This isbecausethegraduate’s work is what is been learnt in school that istransferredtotheworkplace.Thatis,thelearningexperiencethatisacquiredbyGraduatesisexpectedtobetransferredtohisnewenvironmentandbringoutthedesiredoutcomeneededforthegrowth and development of that area. Bransford(2005)definestransferoflearningastheabilitytoapplypreviouslearningtoanewsituation, problem or to future learning. Another definitionexplainsitas “carrying over knowledge, skills, understanding,attitudesandhabits of thinking from one learning situation to another(Johri,2005).Transferoflearningisthestudyofthedependencyofhumanconduct, learning or performance on priorexperience. Thisnotionwas originally introduced as transfer of practicebyEdwardThorndike and Robert S. Woodworth. They exploredhowindividualswouldtransferlearninginonecontexttoanotherthatsharedsimilar characteristics or more formally how “improvement in one mental function could influence another related one. Their theory implied that transfer of learning depends on the proportion to which the learningtasksandthetransfertaskaresimilarorwhereidentical elements are concerned in the influence and influence function known as identical elementtheory.

Transfer of learning canalso be defined operationalas theprocess and the effective extent to which past experiences affectslearning and performance in a current novel situation (i.e. thetransfer target) (Ellis, 1965). Transfer of learning is the application ofskills and knowledge learned in one context being applied in anothercontext. (Cormier & Hagman, 1987) For example: an employer oftencomplains that their newly hired employees have totally inadequateeducation. Part of their complaint is that the employeescannotperform tasks on the job that they “should have” learned to do whilein school.Schools respond by saying that the students have beentaught to accomplish the tasks. Clearly, this is a transfer of learningproblem that is owned jointly by schools, employers and employees.Different theories of Transfer of Learning by Charles Judd,

2010: Mental Discipline theory, Apperception theory, Identical Element theory, Generalization theory and the Gestalt theory. The research will focus on only four of these theories brief. Mental Discipline Theory: Tells us that education is a matter of training in the mind or discipline the mind. These trainings or disciplines are the vigorous mental exercises in the field of classics, in the field of logic, in the field of grammar, science and mathematics. The theory assumesthatthosetrainingcanmakeanindividualeffectiveinall area where a given faculty is employed. Apperception theory:

Apperception states that transfer of learning is done by becoming consciously aware of a particular idea and assimilates this idea with the other which was already acquired. It is a process of relating new ideas to the older ideas that was already acquired.

Theory of Generalization is another way of relating experience in which what is gained at a certain point will redound to the advantage of the individual in the many spheres of his or her thought as well as in his or her action. The Gestalt theory of transfer states that the transfer of learning can be best achieved when an individual is in the very best of the frame of mind; in the time that he or she is aware of the meanings of a particular situation or experiences and to their practical application to one’s daily life.