AND COMMUNICATION TECHNOLOGIES MANAGEMENT AND NIGERIAN BANKING SECTOR LIQUIDITY
N. N. Ugoani,
of Management and Social Sciences,
of Mechanical Engineering,
of Engineering and Engineering Technology,
Okpara University of Agriculture, Nigeria
The study sought to explore the relationship between
ICTs management and NBS liquidity. ICTs management helps the business to effect
proper planning, coordinating, controlling and decision-making. Liquidity is
important for banks to meet the demands of customers and a means of public
confidence. The Internet connectivity in the NBS discouraged incentives for
manipulations and other inefficiencies that characterized the paper and pen
banking of the pre-reform era. The e-FASS approach and heavy investments and
application of quality ICTs management by banks restored national and
international confidence in the NBS which in a great measure, helped to lure
back capital and liquidity into the system. Previous studies have found
positive relationship between ICTs management and business productivity, bank
profitability and economic growth. Through theoretical and empirical results
this study found a high positive relationship between ICTs management and NBS
Keywords: Financial leadership, First Bank, Information systems
literacy, Liquidity management, Management activities
and Communication Technologies (ICTs) management has evolved with the advent of
affordable information technology. Consequently, information systems have
continued to change as technology develops in many different directions.
present time, ICTs enable greater use of information throughout an
organization, but yet, they generate some unique challenges in planning,
organizing, analyzing, as well as protecting both official and personal data.
And to minimize the dangers posed by these challenges, organizations often fall
back on Management Information System (MIS).
related to the study of the design, implementation, management, and use of
information technology applications in organizations (GOMEZ-MEJIA; BALKIN,
2002). It is a system to convert data from internal and external sources into
information and to communicate that information, in an appropriate form, to
managers at all levels and all functions, to enable them to make timely and
effective decisions for planning, organizing, directing, and controlling the
activities for which they are responsible.
integration of business processes with the web has brought about remarkable
improvements in service delivery in many different organizations. In Nigeria,
for example, the banks among the service organizations that have been in the
forefront of ICTs management and MIS application to enhance their operational
efficiency, liquidity and profitability.
the banking sector have improved operations management, including productivity,
efficiency and customer responsiveness. ICTs have created new markets, new ways
of servicing customers, and more effective delivery channels like the automated
teller machines (ATMs) Point of Sales (PoS), e-commerce, e-banking, mobile
banking, among others in the Nigerian banking sector (NBS). In the NBS, ICTs
include equipment, networks, and software.
to Gomez-Mejia and Balkin (2002) management of ICTs requires the establishment
of policies to guide usage so as to avoid misuse by misguided employees’ which
can lead to hardware and software damage. In the banking system, employees’ use
of computers for unethical or illegal purposes often puts the bank at serious
risk of loss of huge amounts of money and data.
Internet which is a network of networks has helped banks in connecting
thousands of transactions including risk-management, credit-card management,
service delivery channels, among others. ICTs management also helps the banks
with new ways to deal with the challenges of globalization.
to Kenny, et al (2002) ICTs management has the potential for huge business
opportunities. Such opportunities include employment, access to credit, and
distribution of goods, among other entrepreneurial activities. According to
them ICTs management also offers an opportunity to provide investment resources
to groups previously denied them, provided that the fundamentals of a sound
financial system are put in place.
posit that South Africa’s AutoBank E has developed a fully automated savings
system aimed at the poorest depositors. Also customers could open an account
with a deposit equivalent to only US$8 and benefit from a wide range of
electronic banking services. And since all transactions are completed through
automated teller machines, paperwork and transaction costs are kept to a
presents the important case for the fact that ICTs are needed for high deposit
mobilization and high level of liquidity which is almost indispensable for
successful banking operations. Banks in Nigeria started experiencing distress
in the late 1980s through 1990s and upto 2009, when liquidity dried up in NBS.
to the Nigeria Deposit Insurance Corporation (NDIC, 1996) liquidity profile of
licensed banks in Nigeria deteriorated from 0.49 percent in December 1995 to
minus 15.92 percent in December 1996. On the average, both the commercial and
merchant bank sub-sectors could not meet the 30 percent minimum prudential
liquidity ratio for banks in Nigeria. While the commercial bank sub-sector
recorded liquidity ratios of minus 22.25 percent and minus 38.42 percent in
December, 1995 and December 1996 respectively, the merchant bank sub-sector
recorded positive liquidity ratios of 29.02 percent and 12.32 percent for the
same periods. However, the total number of banks that could not meet the
prudential minimum liquidity ratio set for banks by the regulatory authorities,
decreased from 50 in December 1995 to 41 in December 1996.
significant differences between the liquidity positions of commercial and
merchants banks underscores the importance of ICTs management to bank liquidity
because as at that time, only the merchant banks in Nigeria were almost ICTs
compliant, while the commercial banks were still romancing with mainly manual
or at best mechanized operations, supported in some few cases, with standalone
local area networks (LAN).
position has been reversed by the adoption of different ICTs by many banks
since the late 1990s through 2000s. Consequently, this resulted to all the
banks in Nigeria meeting the 30 percent minimum liquidity ratio as at 2011.
According to Laudon and Laudon (2006) from a business perspective, ICTs
management is part of a series of value-adding activities for acquiring,
transforming, and distributing information that managers can use to improve
decision-making, enhance organizational performance, and, ultimately increase
customers in Nigeria are now more sophisticated with high expectations, and to
increase the business value chain, banks are employing alternative delivery
channels (ADCs) through ICTs management. This then requires a better
understanding of information processing activities and creative management
activities, to forestall the criminal activities of hackers and crackers who
are giving banks sleepless nights because such financial saboteurs keep vigil
at various websites hacking cracking, spoofing and sniffing financial
information for criminal activities (HOFFMAN, et al, 2004; KAMEL, 1998;
is recognized that earlier scholars have worked on the relationship of ICTs and
bank liquidity among others, this study sought to emphasize the importance of
ICTs management and NBS liquidity. For example, as banks are now relying more
on the Internet bank frauds through the Internet are also on the rise (UMOREN,
2000; SALO, 2006).
in this global competitive market environment, bank management at all levels
needs a deeper understanding of the handling and applicability of ICTs to drive
their liquidity and at the same time, be able to safeguard depositors funds’ as
well as shareholders’ equity. This study strongly believes that there is a
difference between the deployment of ICTs by banks and the ability of
management to maintain and operate such facilities in the most effective and
point cannot be overstated because of the necessity of liquidity to the banking
system and other organizations. For example, according to Ibe (2013) among the
“striking goals of corporate organization include to maximize profit, maintain
high liquidity in order to guarantee safety, attain the highest level of
owners’ networth, coupled with the attainment of their corporate objectives.
ICTs management trade-off needs fuller appreciation because it is a
prerequisite for providing the required and efficient mechanism for the
effective mobilization of resources and properly channeling them across
productive investments (BASSEY; MOSES, 2015).
of the Problem
is very important for banks to meet expected and unexpected balance sheet
fluctuations and to provide adequate funds for growth and stability. Liquidity
represents a bank’s ability to efficiently meet depositors’ demands and other
liabilities including the accommodation of loan demands.
to Greuning and Bratanovic (2003) most banking activity depends on a bank’s
ability to provide liquidity to its customers. They posit that most financial
transactions or commitments have implications for a bank’s liquidity. However,
banks are particularly vulnerable to liquidity problems, on an
institution-specific level, and from a systemic or market viewpoint.
they believe that liquidity management is a key banking function and an
integral part of the asset and liability management process. In managing a
bank’s balance sheet, it is always important, first of all, to ensure that
there is adequate liquidity to cover all obligations.
years of banking sector distress, many banks in Nigeria deployed some kinds of
ICTs so as to upgrade their service offerings to serve customers better, and by
so doing won more new customers that helped in shoring up their liquidity
are customer friendly, combining service delivery through the traditional
branch network, with the ease of ADCs to create customer service experience
that is strong on choice, with mass customization. The advent of e-banking,
e-business or e-commerce is not without its peculiar benefits and challenges.
coming of Internet banking, consumer behavior is being transformed rapidly. It
is now characterized by individuality, mobility, independence of place and
time, and flexibility. This poses significant challenge for providers of
financial services who are now turning to the Internet as a strategic service
extent, it is dangerous for banks and other financial institutions to
underestimate the impact of Internet technology and electronic banking. Despite
the benefits of e-banking, Internet banking and all other e-banking facilities
now available some serious problems like frauds still exist. There is need for adequate systems security
to reduce the activities of hackers who always try to steal information.
expense of many banks, the lack of secure ICTs has given rise to multiple
frauds. System frauds range from hijacking of sensitive information, customers
dishonestly, denying making transactions on their accounts, hackers gaining
access to customers card numbers, among others (ABOLO, 2000; UMOREN, 2000).
of these challenges posed by ICTs in Nigeria, the Central Bank of Nigeria (CBN)
according to Ogbonna (2016) mandates that with the increasing transformation in
the day-to-day operations in the NBS, through the Internet, all financial
institutions must ensure that their Internet Service Providers (ISPs) implement
a firewall to protect their institutions websites where outsourced, and that
banks should ensure that installed firewalls are properly configured with
procedures for continued monitoring and maintenance arrangements.
problems of protection of information and other valuables make it necessary for
banks to deploy necessary MIS. According to Laudon and Laudon (2006) using
information systems effectively requires an understanding of the organization,
management, and information technology systems. They posit that an information
system creates value for the firm as an organizational and management solution
to challenges posed by the environment.
and empirical studies like those of Abiola (2003) Laudon and Laudon (2006) have
shown that there is a visible positive correlation between ICTs management and
productivity, organizational performance and profitability, thereby creating
the gap for investigation on the relationship between ICTs management and
liquidity. Prior to NBS recapitalization and consolidation between 2004 and
2009, the NBS was largely characterized by paper and pen (PP) operations by the
manual use of “ledgers” and “journals”.
brick and mortar approach provided the necessary incentives for falsification
of accounts, forgeries, frauds and gross mismanagement of depositors’ funds
that led to widespread distress in the NBS. According to Okorie and Uwaleke
(2010) prior to 2004, the NBS comprised 89 banks, many of which were
characterized by low or eroded capital base; poor corporate governance;
insolvency as evidenced by negative capital significantly eroded by losses;
over dependence on public sector funds and income from foreign exchange
trading; neglect of small and mediun scale savers, lack of capacity to support
the real sector of the economy, due mainly to gross illiquidity in the NBS.
posit that the key elements of the NBS reform among others; included: increase
in the minimum capitalization for banks from N2.0billion to N25billion and
withdrawal of public sector funds from banks, mergers and acquisitions, zero
tolerance for non-compliance with regulatory framework; and full automation of
the process of rendering reports through the electronic Financial Analysis and
Surveillance System (e-FASS) among others.
critical innovative point in the NBS reform that has raised the methods of
improving NBS liquidity is the full automation of the system. ICTs management
provided the gateway for the NBS to reap the benefits of globalization through
new foreign business partnerships that were accompanied with huge capital
inflows. As was expected, the major outcomes of the NBS reform included the
emergence of 25 well capitalized banks, and the liquidity brought by this
process brought down interest rates.
banks had the capacity to deal with large volume and value transactions, and
also had good access to credit or liquidity from foreign banks and partners.
The NBS reform enhanced and deepened the operations of the capital market and
at the same time raised public confidence in the entire financial system (FS).
wake of full automation in the NBS, sound ICTs management, as well as
reengineered regulatory mechanisms huge liquidity leakages through PP frauds,
forgeries, account manipulation in the NBS were reduced to the bearest minimum,
thereby raising the confidence of foreign partners and donors to inject funds
into the system for new business ventures that invariably cushioned the effects
and Laudon (2006) state that investment in ICTs is the largest component of
capital investment in the US and many industrialized societies, accounting for
about 50 percent of invested capital. They believe that firms that invested
wisely in ICTs experience continued growth in productivity and efficiency. In
the quest for liquidity, productivity, growth, efficiency and profitability
banks since the reform period have made huge investments in ICTs.
Longe (2001) First Bank of Nigeria Plc embarked on huge ICTs project to provide
on-line real time services, enhance consumer banking, SMEs financing, corporate
banking, commercial banking, agricultural finance, among other e-banking and
e-commerce activities of the bank.
to him, the ICTs project tagged “Century 11: New Frontier” was not just to
re-invent the bank, but also to reshape the banking industry because the bank
has the obligation as the oldest and the most prosperous bank”. Today the bank
operates a ICTs architecture that is customer focused, and among the three
banks with the highest liquidity position in the NBS.
bank in Nigeria like the First City Monument Bank Plc (FCMB) that has invested
heavily in ICTs management is proud of
high customer patronage. According to Nelson and Orioha (2015) FCMB is among
the banks in Nigeria that is highly ICTs complaint with e-banking services,
serving money transfers, PoS, SMEs finance, private e-banking, among others.
These modalities, typically linked to the Internet, and monitored through
efficient MIS have helped in great measure in building liquidity in the NBS.
believed that ICTs management is important in transforming the banking sub-sector
to actually touch the lives of people. According to Jibrin (2015) most of the
commercial banks in the country, some over 100 years of existence; have some
form of challenges. And there are some powerful forces that are transforming
this sub-sector. With the Bank Verification Number (BVN) that was done, it
brought home the fact that the country is still under-banked.
further: “We have decided that technology would be the biggest platform that
will drive our business. We will focus largely on the retail market. We will be
deepening the use of mobile phones as a means of access to banking services. We
are also a licensed Mobile Money Bank.
the real sense, we do not need a brick and mortar bank to provide banking
services. You can open your account on your phone and transact your business.
He believes that in a country with a population of about 180 million, an annual
population growth rate of about three percent, certainly, it is clear that the
country is heavily under-banked.
Internet and web development provide efficiency and unprecedented flexibility
gains to organizations involved in deploying it. The Internet-based information
technologies structure helps in sharing
information through the telecommunication network and used by both customers
and members of the organization” (SALO, 2006; BAKER, 2000; ALDRICH, 1972;
of the study
was designed to explore the relationship between ICTs management and NBS
of the study
was delimited to the 24 deposit money banks in Nigeria (DMBs).
of the study
will help students, academics, researchers, bankers, consultants and the public
to have a deeper understanding of the relationship between ICTs management and
of the Study
was constrained by lack of current literature in the areas of investigation and
research funds. These limitations did not however, dilute the academic potency
of the study.
Is there any evidence of relationship between ICTs
management and NBS liquidity?
Is there any evidence that ICTs management helps in high
bank liquidity in Nigeria?
There evidence of positive relationship between ICTs
management and NBS liquidity.
There is evidence that ICTs management helps in high bank
liquidity in Nigeria.
2. LITERATURE REVIEW
Nigeria began to patronize ICTs in the beginning of the century in an attempt
to join the rest of the world as competition rules the global financial market.
For example, Mutallab (2001) while addressing the shareholders of First Bank of
Nigeria Plc states: “After a careful examination of the emerging Nigerian
economy in the context of the increasing globalization, the board and management
of our bank have concluded that the required response is not restructuring or
repositioning but a comprehensive strategic redirection.
therefore, embarked on a new strategy that builds on our past while projecting
sharply into the future. The new initiative century II The New Frontier, the
implementation of which has begun with the approval and backing of the Board
will enable us to optimize our strengths including a large customer base,
experience and extensive branch network to tap current and emerging
opportunities in and outside financial services.
promises to engender the significant leap required by our bank to truly provide
the modern Nigerian economy the financial leadership it requires”. Since that
time, more banks in Nigeria have been deploying and updating ICTs
infrastructure as a competitive tool. The need to provide quality banking
services to customers has been the main driver of significant ICTs investments
in the NBS in the last sixteen years.
drivers have been globalization, increasing liberalization and keener
competition in Nigeria’s Financial System (NFS) and phenomenal growth of the
Internet which offers immense opportunities for business and banking. The
Internet has greatly altered the shape of business and banking globally and the
development of e-capabilities is positively impacting on the way banking
business is conducted generally.
as 2000 according to Longe (2001) the management of First Bank of Nigeria Plc
commenced the process of selecting a new banking application to improve service
delivery including ADCs, and to operate on a one-branch basis by networking
branches to provide “on-line real time” services.
according to Ajekigbe (2002) the bank acquired the Finacle banking application
software developed by Infosys Technologies of India to meet new operational
challenges. The new software operates from a centralized database and all the
branches on the network have access to the centre, thereby transforming the Big
Bank into “One Branch Bank”.
to Abiola (2003) information systems are very important in today’s business
because they affect how managers decide, how senior managers plan, and in many
cases, what products are produced and how they are produced. Information
systems enable new forms of organization, new ways to work and new ways to
compete. The Internet has helped organizations to become more flexible,
eliminate layers of management, separate work from location, and restructure
workflows, giving new powers to both line workers and management (NELSON, 2015;
NWAERONDU; GODWIN, 1987).
and Management Perspectives of ICTs
is gaining recognition in Nigeria as banks want to meet the challenges of
competition in the global financial market (GFM). ICTs have created new
business windows, novel ways of serving customers at the points of their needs.
Consequent upon this are new regulations and challenges that task the ability
ICTs management is critical for a bank to engage on projects like branchless
banking that helps to build competitive advantage, where traditional banking
can nolonger guarantee a deepening of the customer base. The ICTs and Internet
facilities have the perspectives of two models of Internet banking system which
may be developed simultaneously.
either an already existing bank with branch networks connected on-line real
time or a new banking site with no formal physical branch offices. This can be
made possible through BPR. While global banking has gone beyond the four walls
of branch banking, Nigeria is still experimenting on how to consolidate on ICTs
management and liquidity generation.
management enhances the applicability of the three categories of on-line
banking which increases the ability to circulate information among customers,
allow customers to view their account balances and at the third level allow
customers to perform transactions on their accounts including paying their
utility bills and funds transfer,
without hindrance. Through this process, bank liquidity is often enhanced.
to Abubakar, et al (2015) “electronic banking is gaining patronage where
information from the central server is made accessible to the account holder
using a PIN or PASSWORD. Account statements, account transfer facilities bulk
payment facilities, loan facilities international bank transfer are made
available to customers”. They posit that the value of electronic payments rose
by 25.6 percent to N1,416 billion in 2013 over the level of 2012.
to them, there is a close association between electronic banking with bank
liquidity. According to Dawodu and Osondu (2013) the application of ICTs
management and implementation strategies to the banking system has became of
fundamental importance to all banks and a prerequisite for local and global
posit that ICTs directly affect the various management functions of planning
organizing, directing controlling and the nature of services offered in the
banking industry. It is believed that ICTs management has emerged as a catalyst
in the various industries of the world to aid the process and procedure
required to ensure the realization of organizational goals.
to Laudon and Laudon (2006) managers and business firms invest in information
technology and systems because they provide real economic value to the
business. The decision to build or maintain an information system assumes that
the returns on this investment will be superior to other investments in
buildings, machines, or other assets.
posit that in some cases, firms invest in ICTs because such investments are
necessary to stay in business. For example, banks may be forced to invest in
ATMs to offer better services to customers. From the business and management
perspectives, it is clear that ICTs are important for creating value for the
company. ICTs enable the business to increase its revenue or decrease its cost
by providing information that helps managers make better decisions or that
improves the execution of business processes.
and Laudon (2006) emphasize that the value of an information system to a
business, as well as the decision to invest in any new information system is,
in large part, determined by the extent to which the system will lead to better
management decisions, more efficient business processes, and higher firm
profitability. Accordingly, business and management perspectives of ICTs
require attention to the organizational and managerial nature of ICTs and an
understanding of the three dimensions of information systems – organization,
management, and technology crucial for ICTs management and business prosperity.
of ICTs Management
to Laudon and Laudon (2006) information systems must be properly organized to create
the needed value for the business. This could be achieved through organization,
management and technology.
Organization: Organizations are composed of
different levels; their structures reveal a clear-cut division of labour.
Experts are employed and trained for different functions. The major business
functions performed by business organizations consist of sales and marketing,
manufacturing and production, finance and accounting, and human resource
management. All organizations co-ordinate work through a structured hierarchy
and through its business processes. The hierarchy arranges people in a pyramid
structure of rising authority and responsibility. Each organization has a
unique culture, or fundamental set of assumptions, values, and ways of doing things,
that has been accepted by most of its members.
Management: Generally, management’s job is to make sense out of the
many situations faced by organizations, make decisions, and formulate action
plans to solve organizational problems. Laudon and Laudon (2006) posit that
managers perceive business challenges in the environment; they set the
organizational strategy for responding to those challenges; and they allocate
the human and financial resources to co-ordinate the work and achieve success.
Always and almost, managers exercise responsible leadership. Managerial roles
and decision-making vary at different levels of an organization. Typically,
senior managers make long term strategic decisions; middle managers carry out
the decisions of senior management, while the lower or operational managers are
responsible for carrying out instructions and monitoring the day-to-day
activities of the business. However, each level of management has different
ICTs needs and information system requirements for effective operations on the
Technology: According to Laudon and Laudon (2006) IT is one of many
tools managers use to cope with change. By this implication, IT is only an aid
to management in the discharge of managerial functions. ICTs consisting of both
physical devices and software link the various pieces of hardware and transfer
data from one physical location to another. They suggest that the world’s
largest and most widely used network is the Internet. The Internet is an
international network of networks that are both commercially and publicly
owned. The Internet connects hundreds of thousands of different networks from
more than 200 countries around the world. Today, more than 900 million people
working in science, education, government, and business including banking, use
the Internet to exchange information or business transactions with other
organizations around the world. Through this way ICTs management has
revolutionized the NBS and provided it with the necessary competitive
and Management Perspectives of ICTs and Liquidity
and Laudon (2006) emphasize that ICTs rely on both technology and knowledge of
the business to enable the company and its suppliers to respond instantly to
change in the market place or other events. ICTs management provides the
ability to monitor and react to data as events unfold, and intimately linked
with systems of its suppliers and related companies.
ICTs approach, managers can see into these systems and, when the need arises,
make any adjustments in efforts to keep providing goods and services aligned
with customer needs and expectations. The transformation of business the
Internet has made management and related data to flow seamlessly among
different parts of an organization, streamline the flow of work, and create
e-links, with customers, suppliers and other organizations.
example, First Bank has direct e-link with its blue-clip customers like Shell
Petroleum Development Company (SPDC) United African Company Nigeria Plc (UACN
Plc) and other high net-worth individuals (HNI). For the SPDC, the bank
extended its fully automated branch network, ATMs, Point of Sales (PoS)
terminals and to deepen savings among the unbanked and underbanked, operate the
Micro Credit Scheme for Agricultural Development (MISCAD) promoted by SPDC, and
also, the National Group Farmers Program of the Society for Shelter, Education,
Food and Agricultural Development (ASSEFAD) (LONGE, 2001).
management forms the basis for business in the twenty-first century, against
the motion of tall buildings, filing cabinets, etc, in the twentieth century,
the use of ICTs and the management ability to implement corporate strategies
hold the torch for increasing market share, becoming the high-quality or
low-cost service provider, developing new products, increasing employment,
productivity and organizational liquidity and profitability.
to Ibe (2013) liquidity is the life blood of a banking set up. He states that
adequate liquidity serves as vehicle for profitable operations, especially to
sustain confidence of depositors in meeting the short term obligations, Bassey
and Moses (2015) contend that bank management should always pay attention to
the conflicting goals of liquidity and profitability.
posit that profitability and liquidity as performance indicators are very
important to the major stakeholders. Also, the shareholders are interested in
the profitability of banks because it determines their returns on investment.
Depositors are concerned with the liquidity position of their banks because it
determines the ability to respond to their cash withdrawal and money transfer
requirements at any given time.
insist that in the Nigerian case, any DMB that wants to succeed needs to put in
place sound management of its profitability based on its liquidity level as
both are critical variables for growth and sustainability. A foundational
significance of business and management perspectives of ICTs and the
relationship with liquidity, productivity and profitability is the
understanding of the basic differences between information systems literacy and
computer literacy in Nigeria.
large extent, there is a misunderstanding of the two related concepts even by
top management in Nigeria. According to Laudon and Laudon (2006) it is
important to understand the different dimension. They posit that information
system literacy includes a behavioral as well as a technical approach to
studing information systems, while computer literacy, in contract, focuses primarily
on knowledge of information technology.
these perspectives, it is clear that ICTs management is distinct, and necessary
for efficient, productive, profitable and very liquid bank management. The
Nigerian banking crisis of the 1990s was exacerbated by inefficient liquidity
management by banks (BASSEY; MOSES, 2015).
investment in ICTs by banks and the inflow of capital can be explained because
all economic units need better sources of liquidity for its operations. Thus,
the attraction of foreign capital consequent upon Internet connectivity, and
the availability of bank credit are important sources of liquidity in the NBS (AGBADA,
Nigeria embraced the mobile money (MM) facility and now ranks among the big
three of South Africa and Kenya. This facility changed consumer behavior and
built robust confidence with regard to national and international funds
to Uduma (2012) “the nation is transiting from cash payment to electronic
payment system, and the overriding vision of mobile money is to achieve a
nationally utilized and internationally recognized payments system”. Because of
the relevance of the Internet in national economic growth, in 2012, the
Ministry of Communications sought to upgrade the broadband in Nigeria by 50
percent, as the speed available in the country was the lowest in Africa.
to Johnson (2012) “All over the world, universal access to broadband is
becoming significant indicator of development and competitiveness, amongst nations.
Therefore, any country seeking growth, jobs and wealth creation must work
toward increasing access to broadband”. She posits that with strategies in
place, ICTs would contribute at least 1.5 percent to the GDP by 2015.
from major financial crisis, and with a mindset of Internet connectivity, the
NBS is regaining global confidence and funds are being lured back into the
system to replenish liquidity that was dried up during the crisis, when about
$4billion was used by the CBN to bail out nine illiquid banks (IBRAHIM, 2012).
emphasize the critical nature of ICTs management to business, the Nigerian
Communication Commission (NCC) and Digital SENSE Africa, hosted a forum on
Internet Governance for Development (IG4D), (Ailuoria, 2012). According to
Olaleye (2013) ICT sector has attracted investment of over N387billion into
Nigeria since 1999. Such money passed through the NBS, and no doubt had
positive impact on its liquidity.
exploratory research design was used for the study. The nature of exploratory
research requires the use of a flexible research process. It is evolutionary
and historical in nature and it rarely involves the employment of large samples
or use of structured questionnaire (ASIKA, 2004).
and secondary data were collected from the Annual Reports and Accounts of
Banks, NDIC, CBN Reports, journals, newspapers, books, and other publications.
Population and Sample
population and sample of the study comprised all the 24 DMBs as at December
Methods of Data Analysis
analyzed through descriptive statistical methods and the results presented in
4. PRESENTATION OF RESULTS
showed the list of DMBs as at 2013.
Table 1: List of
Name of Bank
Keystone Bank Plc
Diamond Bank Plc
Fidelity Bank Plc
First Bank of
Monument Bank Plc
Skye Bank Plc
Stanbic IBTC Bank
Stering Bank Plc
Union Bank Plc
United Bank For
Unity Bank Plc
Wema Bank Plc
Zenith Bank Plc
Jaiz Bank Plc
FSDH Merchant Bank
Rand Merchant Bank
Source: NDIC Annual
showed that the liquidity profile of licensed banks in Nigeria deteriorated
from 0.49 percent in December, 1995 to minus 15.92 percent in December, 1996.
Table 2: Liquidity
position of insured banks as at 1996
Number of Banks
Ratio of loans and
advances to total deposits
Number of banks
with average liquidity ratio of less than 30%
Nigeria Deposit Insurance Corporation (1996)
compliance with the CBN automation requirements, the liquidity position in the
NBS was strong in 2011 as the available liquidity ratio rose from 51.77 percent
in 2010 to 65.69 percent in 2011, against minus 15.92 percent in 1996.
Table 3: Liquidity
ratio of insured banks as at 2010
Average liquidity ratio
Loans and advances to deposit ratio
No of banks with less than the 30% minimum liquidity
Source: NDIC Annual
Figure 1: Management
Laudon and Laudon (2006)
Figure 2: Dimensions
of Information System
Laudon and Laudon (2006)
connectivity to the Internet and the development of a robust ICTs architecture
brought greater improvements in all ramifications of the NBS, particularly in
the core areas of productivity, profitability and liquidity growth. Prior to
the 2004 – 2009 NBS recapitalization and consolidation programme, most of the
89 banks had little or no access to Internet connection.
created high incentives for falsification of accounts and records, overload of
nonperforming loans, advances and discounts (LAD), frauds and forgeries,
diversion of depositors’ funds, among other unethical banking behaviours that
contributed to illiquidity in the NBS, and ultimately the financial crisis of
the background of distress in the NBS, major banks like the First Bank of
Nigeria Plc and others like the First City Monument Bank Plc. started to invest
heavily in ICTs development as a possible means of enhancing their liquidity
positions, productivity and profitability.
banks hooked on to Finacle software to link their entire operations with the
Internet and they are today among the banks with high liquidity in the NBS. In
addition to raising the capital formation of banks from N2bn to N25bn so as to
bring in liquidity into NBS, another giant feat that helped to shore up global
confidence in the entire FS was the mandate by the CBN for all banks to
compulsorily automate their processes.
began with the automation of the process for rendition of returns and reports
by banks and other financial institutions through the e-FASS. This single
measure to a very high extent reduced the rate at which reports and returns
through manual measures were being falsified through the CBN and other major
regulatory authorities like the Nigeria Deposit Insurance Corporate, and the
Securities and Exchange Commission (SEC).
e-FASS compliance and effective ICTs management by banks helped in encouraging
and raising the confidence of the banking public both nationally and
internationally, that ensured the inflow of deposits and capital from foreign
partners and donors that made the banks to measure up to the prescribed minimum
liquidity requirements of 30 percent. Prior to the NBS reforms in 1996, the
liquidity position of the NBS was minus 15.92 percent, and most of the banks
could not meet the 30 percent minimum prudential requirement set by the CBN.
serious illiquidity status preceded the NBS distress that ultimately led to
mass bank failures which consumed about $4bn in an unprecedented bailout
exercise by the CBN in 2009. The CBN also guaranteed foreign loans to Nigerian
banks as well as provided guarantee for interbank placement between 2009 and
2010, as measures to restore the needed liquidity to the NBS.
after these processes the average liquidity ratio in the NBS rose from 51.77
percent in 2010 to 65.69 percent, in 2011, with all the banks meeting the 30
percent prudential minimum liquidity ratio. In actual figures, shareholders’
funds supported by strong liquidity position in the NBS, rose from
N312.36billion in 2010 to N1,934.93bn in 2011.
economic units need liquidity for its operations, including banks, therefore,
the attraction of foreign capital, and the available of bank credit made easier
by the Internet connectivity represent an important source of bank liquidity
for financing production, and providing services. Even though other factors
like macroeconomic policies and CBN monetary policies can affect bank liquidity
either positively or negatively, the ICTs management perspective more
especially engendered the spirit of globalization; partnerships and
diversification of equity structures.
now reflected by the courage of major banks like Citibank Ltd, Standard
Chartered Bank Plc, Stanbic IBTC Plc, and Union Bank of Nigeria Plc, holding
substantial foreign equity in excess of 50 percent of total equity capital that
in no small measure helped to beef up the liquidity profile of the NBS as at
December 2011 (NDIC, 2011).
beauty of the situation is that good organizational structure, management as
well as sound ICTs architecture contributed in the upward swing in the
liquidity position in the NBS, after the banking sector reforms. The power of
ICTs management in organizational performance had already been identified by
Laudon and Laudon (2006) and Abiola (2003) among others. Others like Johnson
(2012) believes that ICTs management can contribute at least, 1.5 percent to
Nigeria’s GDP. These earlier theoretical and empirical studies lend credence to
the actions of bank management that made substantial investments in ICTs at the
beginning of the century, such as the First Bank Century II: New Frontier
Project of the 2000s. The common e-banking operations in Nigeria today include
the ATMs, PoS terminals, cash transfers, interbank money transfers, foreign
money transfers, like the Western Union Money Transfer, pioneered by the First
Bank, among others.
by the Nigeria Interbank Settlement System state that out of more than 100,000
PoS terminals registered in Nigeria about 62000 were active as at December
2015. It also put the value of transactions on PoS at N53billion in 3.95billion
deals. Without any other magic wand, these are critical areas of deposit
mobilization and liquidity build up. According to Nelson and Orioha (2015) FCMB
Plc is among the banks in Nigeria that is highly ICTs positive.
to them, the bank has ungraded its IT infrastructure to Finacle 10 core banking
solution. The advanced service-oriented application is already optimizing the
processes, enhancing system capability, performance scalability and security
among other things. With such infrastructure-technology upscale, the bank’s
electronic banking and card products are now of much benefit to consumers.
report that the bank’s Internet banking services also cover small and medium
scale enterprises (SMEs) and other corporate customers, and provide 24/7 access
to FCMB accounts. In recognition of the important role of ICTs management in
the NBS and the economy as whole, major stakeholders like the NCC, the CBN as
well as the IG4D are working round the clock to ensure the protection of the
study supports the positions of earlier researchers like Dawodu and Osondu
(2013) Abubakar et al (2015) and Oluwasanya (2014) that ICTs management has
positive relationship with bank liquidity.
Top management should focus on good ICTs management and
not necessarily on computer literacy to reap the full benefits of Internet
ICTs management is important to economic growth, therefore
the federal government need to enforce rules and regulations to guide its
applications and not to leave it to the whims and caprices of private
The CBN should enforce strict compliance of banks and
other financial institutions with e-FASS to avoid a relapse to the
preconsolidation era that brought doom to the NBS.
Foreign equity is healthy for the NBS, and efforts need to
be geared towards credible partnerships so as to enlarge NBS liquidity position
to enable banks create more credit needed for the development of the economy.
Banks should explore the possibility of expanding Internet
and e-banking facilities to remote areas of the country to tap the deposits of
numerous small savers as cheap funds, to beef up liquidity in the NBS.
Scope for further studies
studies should examine the relationship between ICTs management and tax
administration in Nigeria to see if a solution can be found to the constant
problems of tax leakage and evasion in the private and public sectors of the
management helps organizations in providing better services to their customers
and others. Globalization has a strong bearing on the importance of ICTs
management as a gateway to international markets, partnerships foreign capital
among others. The NBS is a beneficiary of this phenomenon because prior to the
NBS reform most banks were involved in manual operations that did not allow
them to see the outside world and the potential business and banking
banking approach encouraged falsification of reports, frauds among other
corrupt activities that led to illiquidity in the NBS which culminated in
distress and ultimately mass bank failures in the 1990s through 2009. A major
outcome of the NBS reform was the CBN mandate for banks and other financial
institutions to adopt the e-FASS reporting system which no doubt blocked liquidity
leakages, restored national and international confidence in the NBS that helped
to lure liquidity back to the system.
example, the liquidity ratio in the NBS before the reform was minus 15.92
percent in 1996, with many banks not meeting the 30 percent CBN prudential
minimum requirement for banks. But after the reforms and all the banks
complying with the e-FASS reporting and the banks embracing superior ICTs
management, the liquidity ratio in the NBS was 65.69 percent, with all the
banks meeting the CBN minimum 30 percent prudential liquidity requirement as at
a huge theoretical and empirical report to show that ICTs management
contributes to enterprise productivity, bank profitability and economic growth.
In contribution to knowledge over the importance of ICTs management, this study
based on theoretical and empirical results found a positive relationship
between ICTs management and NBS liquidity.
results support the work of Abubakar, et al (2015) among others, that ICTs
management has positive correlation with bank liquidity.
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