Effect of Information and Communication Technology on Financial Performance of Deposit Money Banks in Nigeria

Abstract

This study investigated the impact of information and communication technology (ICT) on financial performance of deposit money banks (DMBs) in Nigerian. The research link the idea in ICT productivity literature to that of ICT financial performance by exploring the role of complementary investment and externalities on ICT financial performance relationship in a factor modelling framework. The study adopt an Ex-post-facto research design that is entrenched in post-positivist ontology. Data for the study is obtained from Central Bank of Nigeria (CBN) annual report or statistics bulletin for 16 years, i.e. 2005-2020, and annual report of 14 DMBs in Nigeria. Analyzing the data using iterative interactive fixed effect (IIFE) model reveals that complementary investment reduces the strong positive effect of POS, and reverse the weak negative effect of IB to become positive, while the strong negative effect of MB to becomes weak and positive. Externalities on the other hand increases the weak negative effect of ATM on financial performance. Therefore, the study recommended that banks co-invest more in complementary capital, such as learning to build the necessary organisation knowledge needed to benefit from ICT investment adequately. In addition, the bank should also co-innovate and re-organise its operational process and structure to withstand any eventual security challenges.

Technology and banking operations: Perspectives of international students in a Ghanaian University

“…Information technology makes the banking operation more efficient because it makes the work easier and faster for both bankers and customers. Marcus (2018) revealed that technology boosts profitability and efficiency while also reducing customer wait times in banking halls. According to Kwami (2020), technology is the latest obsession in Ghana, and it will continue to be relevant as the country grows.…”

“…Though it cannot be denied that computerization has harmed some organizations, it has greatly benefited mankind. Marcus (2018) explained what computers can do to make the banking business more profitable. It was proven that the adoption of magnetic ink character readers (MICR) cheques will aid in the faster clearing by reducing errors caused by incorrect sorting.…”