THE ROLE OF COMPUTER IN ENHANCING BANKING SERVICES (A CASE STUDY OF UNION BANK PLC, GUSAU) BY HIBBAN BUHARI DEPARTMENT
OF COMPUTER SCIENCE. ZAMFARA COLLEGE OF ARTS AND SCIENCE GUSAU ZAMFARA STATE.
DEDICATION I dedicated this research project to Almighty Allah, who in his mercy grants me this golden opportunity of completing my studies as well as project successfully . I also dedicate this research project to our beloved parents, teacher’s and guidan ce. ACKNOWLEDGEMENT In the name of Allah, the most gracious, the most merciful, praise be to Allah w ho perfected his blessing on us. May the blessing and peace of Allah be upon his servants and apposities who called upon people to obey their lord and cautioned against disobedience. And may Almighty Allah bless his prophet (P.B.U.H), his c ompanions and these who follows his footstep until the Day of Judgment. I wish to express my gratitude to my project supervisor in person of Malam Nazir u Alhassan for taking his constructive time and guidance, which made the project more qualitative. However, my gratitude also goes to our brother’s sister’s friends and well wisher’s in deed, for many people that assist me financially and other ways towards the succ essful completion of our project. May Allah bless you all, Ameen. ABSTRACT Computer is basically introduced and the basics of its purpose are the processin g of data to information, it works under the control of stored programs automati cally accepting, storing and processing data to produce information. Infact the importance of information cannot be over emphasized in carrying out d ay-to-day activities. Both Banks and other financial institution are heavy users of computer. Banks use computers to process the huge amount of cheques and cred it card transactions that takes place daily there by bringing efficiency in oper ation. This project research looks into the Role of Computer in Enhancing Banking Servi ces, with special focus on Union Bank of Nigeria Plc, Gusau. TABLE OF CONTENT. Title page. Dedication. Acknowledge. Abstract. Table of Content. CHAPTER 1.1 1.2 1.3 1.4 ONE: GENERAL INTRODUCTION. Introduction. Statement of the problems. Objectives of the study. Scope and limitation of the study. PAGE
1.5 Significance of the study. 1.6 Research question. 1.7 Definition of terms. CHAPTER TWO: LITERATURE REVIEW. 2.1 Introduction. 2.2 Brief historical development of banking in Nigeria. 2.3 Brief historical background of Union Bank of Nigeria Plc. 2.4 Banking services. 2.5 Computer and banking industry. CHAPTER THREE: INTERPRETATION OF DATA. 3.1 Introduction. 3.2 Analysis of data and involvement of the union bank supervisory activitie s. 3.3 On site inspection. 3.4 Individual bank analysis. 3.5 Business analysis. 3.6 Banking channels. CHAPTER FOUR: METHOD OF DATA ANALYSIS. 4.1 Introduction. 4.2 Re-Statement of problems. 4.3 Data analysis and interpretation. CHAPTER FIVE: SUMMARY, CONCLUSION AND RECOMMENDATION. 5.1 Introduction. 5.2 Summary. 5.3 Conclusion. 5.4 Recommendation. 5.5 References. CHAPTER ONE: GENERAL INTRODUCTION 1.1 INTRODUCTION The first computers were people! That is, electronic computers (and the earlier mechanical computers) were given this name because they performed the work that had previously been assigned to people. “Computer” was originally a job title: It wa s used to describe those humans’ beings (predominantly women) whose job it was to perform the repetitive calculations required to compute such things as navigatio nal tables, tide charts and planetary positions for astronomical almanacs. A long time ago, people charged with the duty of collection and disbursements of tax were encountering problems in calculations. In those days, the problems fac ed by the early method of data processing involves the use of animal skin, feath er, grains e.t.c were very difficult for them to handle. These were later replac ed by the use of pens, inks, papers, chalk e.t.c just to supplement human effort s in counting, recording, manipulating, sorting e.t.c of data these methods were so boring, frustrating, time consuming and also associated with some errors. So further research continues, in France 1642 Blaise Pascal, at age 19 invented th e pascaline as an aid to his father who was a tax collector in calculating colum ns of figure. Computer is probably being introduced and the basic of its purpose is the proces sing of data into information. The term data is a symbolic representation of fac ts about people, object or place. A computer is a programmable electronic machin e that performs high-speed mathematical or logical operation or other wise proce ss information. Infact the importance of information to an individual or organiz ation cannot be over emphasized, in carrying out day-to-day activities. Every in dividual organization needs information. Banks and other financial institution a re heavy users of computers in maintaining customer’s accounts, ledger, updating, electronic fund transfer and processing of huge amount of cheques, credit cards, and the major transactions that takes place daily. The up coming automatic teller machines (ATM) already installed by some banks ar e the most visible symbols of computer in the banking sector in Nigeria. They ar e of course everywhere in Europe, America and Asia. The Automatic Teller machine (ATM) enable bank customer to withdraw, transfer funds from their various accou nts even when the bank is closed physically. Each transaction made, the customer’s
record is updated and he or she is provided with a printed receipt. However the use of computer in banking sector can be an efficient tool in speedi ng up the process and reducing the cost of producing and undertaking figure work s. More effective control procedure in computerized system can bring about sales bu dgeting and credit control. Many credit cards, smart cards, master cards can als o be used to withdraw money in an ATM and the online banking against the credit limit extended to the card. 1.2 STATEMENT OF THE PROBLEMS Computer contributes greatly in enhancing banking services but many bank are yet to be computerized due to the fact that some banks are ignorant of the role of computer which could sake time, keeps accurate records and reducing the absence of variety of works. Some banks neglect it because of financial commitments that involve computerization. This research work wants to find answer through questions such as: • What role computer plays in enhancing banking service? • Why some banks are yet to be computerized? 1.3 OBJECTIVES OF THE STUDY The objectives of this research work are as follows: (a) To maintain the operation of customer accounts. (b) To make funds transfer safer by reducing the needs for people to carry c ash. (c) To maintain accurate record keeping and effective issuing of cards. 1.4 SCOPES AND LIMITATION OF THE STUDY Due to time and financial constraints, the study is only limited to Union Bank P lc Gusau Branch in Zamfara State. This is also because of transportation, it is not convenient to travel for dista nce in different part of the country coupled with the unwillingness of the peopl e to produce or release some information. 1.5 SIGNIFICANCE OF THE STUDY a) To develop a general framework for computer applications in Banks. (i.e. identify short coming of present level of computer application and proper possi ble solution to improve it). b) Analyses and asses the overall performance of Computer in Baking. c) To study various types of computers used by banks. d) The importance of computer on time saving and reducing of workload.
1.6 (a) (b) (c) tion? 1.7 ATM: CBN: EFTPOS: ERMA: FMA: MICR: OCR:
RESAERCH QUESTION Does computer have any role to play in Enhancing Banking Services? Does Banks use different types of computer in carrying out their work? Does computer have the advantage of speed and accuracy over manual opera DEFINATION OF TERMS Automated Teller machine Central Bank Of Nigeria. Electronic Funds Transfer at Point of sale. Electronic Recording Method of Accounting Financial Market. Magnetic Ink Character Recognition Optical Character Recognition
CHAPTER TWO: LITERATURE REVIEW 2.1 INTRODUCTION This chapter is set/organized to review some previous texts and contributions ma de by some authors on the subject matter. It also looks into the Historical Deve lopment of Banks in Nigeria, Banking Services and various computer applications in Banking industry. 2.2 BREIF HISTORICAL DEVELOPMENT OF BANKING IN NIGERIA.
According to Central Bank of Nigeria (CBN) economic and financial review (Oct/De c 1990/36/37) Banking came with the advent of colonial master and introducing th e first modern banking dated back to 1892 when the African Banking corporation w as established in Lagos at the invitation of Elder’s Dumpsters Company properly ar ising from the good performance of the African Banking Corporation, another Bank opened it’s branch office in Lagos in 1894. The Bank of British and west Africa Limited now First Bank of Nigeria Plc enjoye d monopoly over banking business in Nigeria until 1916 when another Colonial Ban k known as Move Aggressive was established in 1925, the assets by a consortium o f the Bank to form a new Bank named Barclays Bank now changed to Union Bank of N igeria was established. The discriminary attitude of those Banks is to acquire indigenous men, women and enterprises lied to protect and establish the first indigenous Banks in 1929, w hich went into liquidation in 1993. 2.3 BREIF HISTORICAL BACKGROUND OF UNION BANK OF NIGERIA PLC Union Bank of Nigeria was established in 1917 as a colonial Bank with its first branch in Lagos, in 1925 Barclays Bank Dominion Colonial and over seas with form ed to take over the activities of the Bank between 1959 and 1979. Fifty new bran ches were established to bring the total number to 1089 in 1969. The bank was le gally incorporated in Nigeria as a wholly owned subsidiary of Barclays Bank Inte rnational Limited and remained unchanged until 1971 where 8.33% of the Banks sha re where offered to Nigeria. A landmark in Banks history in 1979 when Barclays Bank sold 50% of its share hol ds in the bank to Nigeria. This resulted in the change of the name to Union Bank of Nigeria Limited. To affect its new progressive image and ownership today, Un ion Bank is one of the eldest independent and non-governmental banking instituti on i.e. 100% owned and wholly managed by Nigeria. In 1986, it becomes the first bank in Nigeria to hit the N1 Billion mark in savi ng deposit as at 31st March 2001.It’s saving deposit of N3.79 Billion was also an industry record, it has won the Nigeria stock exchange president’s merit award in the financial sector more time than any other bank in Nigeria. In the year 2000 and 2001, it was named by financial times of London as the best and number one Bank in Nigeria. Since it’s establishment in 1917, the bank has stored out strongly as a resilient institution which has served as a veritable number financial intermediation proc ess. In Nigeria’s financial system, it remains a colossus, not only in Nigeria but also in Africa, it’s new head office building as 32-story building is arguably th e tallest and the most beautiful concrete structure along the west coast of Afri ca. In preparation for challengers of this millennium, the Bank is currently reengineering and re-aligning it’s system and process, an exercise which will when c ompleted, not only reposition the institution but will also make it’s fitter and s wifter structure remained unchanged. 2.4 BANKING SERVICES As for private, individuals are concerned to have the need of an account (Saving , Current, Domiciliary, etc) in which their various items of income can be paid (possibly a monthly salary is credited directly to the account) and from which c ash can be drawn as required by slips or cheques at the counter, or more likely in these days by using an Automated Teller machine and cheques can be drawn to p ay major transactions. An account holder may also valid him self on a number of other services, which c an be briefly listed below: (1) STANDING ORDER OR DIRECT DEBITS: Regular payments will be made to the Bank on behalf of the customer by the metho d of his choice in conjunction with the beneficiary. (2) DEPOSIT ACCOUNT, INVESTMENT ACCOUNT OR BUDGET ACCOUNT. In addition to an account holder he may wish to keep some surplus funds on depos it account on which interest is paid and to which immediate access on usually al lowed subject to the loss of interest for the days. In addition, if he has funds
to invest on a longer term basis, an investment account would be appropriate (s ome Banks have various names for such accounts) on which higher rate of interest is paid, but a period of notice is provided/insisted upon to provide of notice is provided for payment of his un-even flow of house bill, the customer may wish to transfer a sum of money from his normal current or saving account to budget account each month to cover, these over the year, he will receive interest if an d when he is over drawn. For children’s also there are specified saving accounts on which a favorable rate of interest is paid and a home safe may be provided. (3) TRANSFER FACILITIES When traveling abroad the personal customer may obtain a supply of foreign curre ncy. Traveling cheques and euro cheques are arranged and also travel insurance t hrough his Bank (4) LOANS AND OVERDRAFT The customer may wish to supply for temporary over draft from time to time over or during an expensive period or until some expected payment is received, or a l oan for a specific purpose, such as cars, funds or home improvement. When buying a house the account holder may also apply for mortgage from the Bank on alterna tives going to a building society. (5) STOCK AND SHARES Where a customer has no account, with a stock dealer he may instruct the Bank to buy or sell stocks or shares on his belief. He may also ask his bank to look af ter share certificate for him as well as other valuables on safe custody. A cust omer with an approvable amount of capital invested in stock and shares may wish to use the services of the Bank’s investment development. They will manage his inv estment for him completely, if he wishes them to do so, switching in and out of stock and shares as they think fit or alternatively he may simply consider their recommendation and make his own decision about buying and selling securities an d instruct accordingly. (6) STATUS ENQUIRY A private account holder may wish to make status enquiry concerning some person or firm with which he is going to have dealing. It is more likely however that h e will want the bank to answer status enquiries on him from business firm who (f or instance) are supplying him with goods on credit. (7) INCOME OR TAX SERVICES A bank will look after a customer’s income or tax return for him and through their experience or expert knowledge of tax allowances they may be able to reduce his tax burden. (8) EXECTUTOR AND TRUSTEE SERVICES A customer may, if he wishes appoint his bank executor and if applicable a trust ee of his will. 2.5 COMPUTERS AND BANKING Historically, during the 1950s, researchers at the Stanford Research Institute i nvented “ERMA”, the Electronic Recording Method of Accounting computer processing sy stem. ERMA began as a project for the Bank of American in an effort to computeri ze the banking industry. ERMA computerized the manual processing checks and acco unt management and automatically updated and posted checking accounts. Stanford Research Institute also invented MICR (Magnetic Ink Character Recognition) as pa rt of ERMA. MICR allowed computer to read special numbers at the bottom of check s that allowed computerized tracking and accounting of check transactions. ERMA was first demonstrated to the public in 1955 (September), and first tested on real banking accounts in the fall of 1956. Production models (ERMA Mark II) o f the ERMA computer were built by General Electric. Thirty-two units were delive red to the Bank of American in 1959 for full time use as the ban’s accounting comp uter and check handling system. According to Stanford Research Institute website: The forty year old project (ER MA), provided a vision of what business could expect from the application of dat a-processing machines, and illustrates how and why some of the key capabilities were invented including bookkeeping, checks with pre-printed account numbers, Op
tical Character Recognition (OCR or scanning), and robotic document sorting (ten checks per second). The automated teller machine (ATM) is the natural descenden t of this work, and illustrates the progression away from paper checks toward al l electronic banking. CHAPTER THREE: INTERPRETATION OF DATA 3.1 INTRODUCTION This chapter is organized to supervise the fields of banking according to the pr ovision of the Nigeria Banking Act and with due attention to financial stability and the smooth functioning of banking system and creditor protection. 3.2 ANALYSIS OF DATA AND INVOLVEMENT OF THE UNION BANK IN SUPERVISORY ACTIVT IES The paramount legal objectives of the Union Bank under the federal act of Nigeri an Union Banks are to maintain price stability and to ensure the stability of Ni geria’s financial market. These objectives are closely linked to the goal set up a s of April 1/2002 as on autonomous authority not bound by any instructions to su pervise the field of banking. Insurance, pension funds and securities in it’s activities that is required to act according to the provision of Nigeria banking act and with due attention to fin ancial stability the smooth functioning of the banking system and creditor prote ction. Along with historical division of supervisory tasks between the Union Ban k and the banking supervisory authority formally integrated into the legal missi on to ensure financial stability is the main reason for the chose co-operation b etween Union Bank and FMA. 3.3 ON SITE INSPECTIONS The Union Bank is commissioned to carry out on site inspections pursuant by the FMA these inspections are carried out in Union Bank, in addition the banking ana lysis and inspection division is responsible for writing expert opinion on the u se of market risk models which serve as the basics for approval processes. 3.4 INDIVIDUAL BANK ANALYSIS On the basic of supervisor reporting, the Union Bank periodically accesses the r isk levels of individual banks and review the banks compliance with legal regula tions in this context we distinguish between technical (systematic bank analysis , individual bank analysis and miscellaneous analysis (product analysis) e.t.c. The legal frameworks of the most essential basic adhere to regulations of Nigeri an Union Bank to ensure the security of the deposited funds. The bank’s instructed act governs crucial activities such as granting of banking license i.e. the fre edom of establishment and the role of regulatory authority 3.5 BUSINESS ANALYSIS This held organization to improve how it conducts its function and activities in order to reduce overall costs, provided more efficient used score resource and better customer. It introduce the action of process of orientation, concentratio n and re-thinking of end to end activities that create value of customer while r emoving unnecessary non-value added work. The person who carries out his tasks i s called Business Analyst. 3.6 BANKING CHANNELS Since the advents of EFTPOS (Electronic funds transfer at point of sale) direct credit, direct debit and Internet the check has lost it’s priority in most banking systems as a payment instrument. This has lead to legal theorists to suggest th at the cheque based definition should be broadened to include financial institut ions that conduct current accounts for customer’s and enable customers to pay and be paid by third parties, even if do not pay and collect cheques. Banks offer many different channels to access their banking and other services, A branch, banking center or financial center is a retail location where bank or financial institutions offers a wide array of face-to-face services to its custo mer’s. ATM is a computerized telecommunication that provided a financial instruction. T his is a method of financial transactions in a public space without the need for a human clerk or bank teller. Most banks now have more ATMS than branches and A TMs are providing a wider range of services to the wider range of user’s. For exam
ple in Hong Kong, Most ATM’s enables any one to deposit cash to any customer of th e bank by feeding in the notes and entering the accounts number to be credited. Also, Most ATM’s enable cardholder from other Bank to get their balance and withdr aw cash. Telephone banking is a service provided by a financial institution, whi ch allows it’s customer to perform their transactions over the telephone. This nor mally includes bill payment for bills from major billers e.g. for electricity. Online baking is a term used for performing payments e.t.c over the Internet thr ough master cards or credit cards. CHAPTER FOUR: METHOD OF DATA ANALYSIS 4.1 INTRODUCTION In this chapter the data collected and interpreted used the simple percentage me thod and determine the total score of each question. The formula used for the calculation of responses collected (percentage) appear thus: Number of Responses X 100. Total Number of Response 4.2 RE-STATEMENT OF PROLEMS. Computer contributes greatly in Enhancing Banking Service but many banks are yet to be computerized due to the fact that some banks are ignorant of the role of computer which could sake time, keeps accurate records and reducing the absence of variety of works. Some Banks neglect it because of financial commitments that involve computerization. This research work wants to find answers through questions such as:• What role computer plays in Enhancing Banking Service? • Why are some Banks yet to be computerized? 4.3 DATA ANALYSIS AND INTERPRETATION. This section deals with the Analysis and the Interpretation of Data collected as opinion and expression of all the Enhancing Banking Services Questions. The que stions were distributed in this order: 20 to the staffs of the bank and 30 to the customers, this gives the total of 50 Questionnaires in conducting the research. The analysis of the data gathered in the research carried out were tabulated in percentage through the use of the fo rmula below:Number of Responses X 100 Total Number of Responses Table of Analysis. Table 1: Staff Questionnaire Question: - Do you operate computerized banking system? Alternatives Yes 20 No ---Total 20 Responses 100% ----100% Percentage
From the above table we can see that all the respondents agreed they operate com puterized banking system. This gives the total percentage of 100% of the sample. It is assured that the respondents were fully involved in Computerized Banking System. Table 2 Question: If yes what types of computer do you operate/use? Alternatives Responses Mini Computer 8 40% Micro Computer 10 50% Percentage
From the table above it can be seen that 40% of the respondents use Mini Compute r in computerizing their Bank while 50% of the respondents makes use of Micro Co mputer in their Bank. The above table also shows that two types of computer are appropriate in Enhanci ng Banking Service. Table 3 Question: - Does the type of computer used enhance banking services? Alternatives Yes 20 No Total 20 Responses 100% 100% Percentage
The above table shows that all the responses from the management i.e. (100%) agr eed that the type of computer used enhance their services. Table 4 Question: - Do the types of computer used make work done easier for you? Alternatives Response Percentage Yes 20 100% No Total 20 100% It is shows in the above table that all 100% of the respondents agree that the u se of computer makes customers to enjoy their service better. Table 5 Question:- What type of computer do you adopt in your bank? Alternatives Responses Micro Computer 10 50% Mini Computer 5 25% Main-frame Computer 4 Total 19 95% Percentage 20%
From the above table it is shows that 50% of the respondents prefer Micro Comput er to be adopted most in their banks, 25% of the respondents prefer Mini Compute r to be adopted most in their banks while 20% of the respondent like Main-frame Computer to be adopted in their banks. Do you mind me highlighting most of the reasons give by those respondents choosi ng Micro Computer as their preferred choice? It is easy to use and keeps work speed. It is more comfortable to the nature and speed. Clear and accuracy. It is cheaper to be installed. Easy to be maintained. It is used as teller system, balances at accounts and picture are shown over the screen CHAPTER FIVE: SUMMARY, CONCLUSION AND RECOMMENDATION. 5.1 INTRODUCTION In this chapter a summary, conclusion and the recommended services to be offered by computer in Enhancing Banking Services is done, considering the numerous ben efits of Computer in Enhancing Services. 5.2 SUMMARY The use of computer is very vital in banking sector because of the demanded impo rtance attached to it which includes among other’s a relief from work, improvement of the quality of work and reduce volumes of papers, files, with computing pay
roll within minimum or limited time. However, the problems which prevent banks from computerizing their services incl udes:Poor attitude of management. Due to financial commitment that involve computerization Due to the ignorant of the role of computer etc All this problems can be over come only if the management take relational decisi on knowing fully well that “Nation can develop if it’s start willing for it’s need for development”. 5.3 CONCLUSION At times customers of the bank complain about the bank’s delay in transaction, err or in computing record, keeping wrong financial information and staff of the ban k not doing their work as required by committing mistakes due to representation and handling involved etc. this accuracy may be attributed to the fact that thes e are done manually, the technological innovation has speed to nearly all sector of the economy. Considering the numerous benefit of Computer in Enhancing Banking Service such a s: Bring about simplicity in term of worrying condition. Reduce stress of work and consuming less in the bank. It also helps customers to rely and have more confident in the bank’s services bec ause of the bank’s work. It also used as teller system, balances of account and pictures are shown over t he screen. Most generally, the method of computer used now a days, is a promoting tool for enhancing the banking service and it’s roles can never be over emphasized. 5.4 RECOMMENDATION Having made a comprehensive study of the Role of Computer in Enhancing Banking S ervice, the research recommend as follows:It is advisable that other banks that have not yet been computerized should make the use of this wonderful machine called ‘Computer’. The types of computer that are best used in banking sector among others are the Micro Computer’s. REFERENCES 1. About.Com (Inventors): Inventors of modern computer. The Electr onic Method of Accounting at Standard Research Institute. 2. Adekunle E.T.: Computer Studies 1990 Page 26-38. 3. Bridgestone F. A.: Computer and information Weekly publish Page 98-100. 4. Chris W. wand: You and Computer comes in computer literacy London Franklin watt Press 1998 page 218-300. 5. Computer Science Lab: Computer History (http:// www. Computer science Lab. Com/computer history /History. Htm). 6. French C.S.: Computer Study third Edition London D publication. Page 21-30. 7. K.Noel: An introduction to Computer studies frat Britain seat. Page 77-98. 8. Shield R.: Computer and programming Singapore, Grew Hills
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