ABSTRACT The study is a comprehensive evaluation of the impact of ICT on the banking industry (a case study of FIRST CAPITAL PLUS). Three categories of variables that relate to the adoption and implementation of information technology devices were used for the study. These include the nature and degree of adoption of innovative technologies, degree of utilization of the identified technologies, and the impact of the adoption of ICT devices on banks operation.

These developments in technology have resulted in new delivery channels for banking products and services such as Automated Teller Machines (ATMs), Telephone Banking, Speed Banking, and Electronic Funds Transfer at Point of Sale. This study evaluates the views of banking customers regarding the effects of technological innovations on banking services in Ghana. The main research instruments used are questionnaire and personal interview with customers of the bank, using qualitative method to analyze the data collected.

The study revealed that Information Technology has been the main driving force of competition in the banking industry and the results of the study generally indicate that, technological innovation has contributed positively to the provision of quality banking services. However, there are some challenges which need to be addressed. Keywords: IT (Information Technology), First Capital Plus, Electronic delivery Channels. Introduction In Sub-Saharan Africa, developments in information and communication technology are radically changing the way business is done.

The usage of information technology (IT), broadly referring to computers and peripheral equipment, has seen tremendous growth in service industries in the recent past. The most obvious example is perhaps the banking industry, where through the introduction of IT related products in internet banking, electronic payments, security investments, information exchanges (Berger, 2003), banks now can provide more diverse services to customers with less manpower.

Seeing this pattern of growth, it seems obvious that IT can bring about equivalent contribution to profits and customer satisfaction. Our research was narrowed down to First Capital Plus, a newly established savings and loans institution in Ghana. First Capital Plus (FCP) is a wholly-owned Ghanaian Savings and Loans institution, duly Licensed by the Bank of Ghana (License Certificate No. FNB 0050) under the Financial Institutions (Non-Banking) Law 1993 (P. N. D. C L 328).

The company commenced operations as a savings and loans institution on October 29, 2009. This marked a major transition in operations, having operated for two years as a financial NGO specializing in micro finance. As a savings and loans institution, the company is authorized to provide a wide variety of banking service to the public including checking accounts, savings accounts, investments, e-banking services such as ATMs, SMS Banking, Electronic Bill Payments, Funds Transfers and Speed Banking etc. The Importance of the study

This study has become important to us in that over time, information technology has helped increase the customer base, reduce transaction costs, improve the quality and timeliness of response, enhance opportunities for advertising and branding, facilitate self-service and service customization, and improve customer communication, profits and competitiveness in the banking industry of which first capital plus is no exception. However, ‘speed banking’ which is a special service peculiar to first capital plus is what informed our decision to study the bank. OBJECTIVES OF THE STUDY How Ghanaian banks are using ICT to improve their services * Response of customers to usage of ICT * Impact of ICT on small scale businesses e. g. Market women, taxi drivers, mechanics etc. * Problems associated with ICT in the banking industry Literature review Business organizations, especially the banking industry of the 21st century operates in a complex and competitive environment characterized by these changing conditions and highly unpredictable economic climate. Information and Communication Technology (ICT) is at the centre of this global change curve.

Laudon and Laudon, (1991) contend that managers cannot ignore Information Systems because they play a critical role in contemporary organization. This revolution in the market place has set in motion a revolution in the banking sector for the provision of a payment system that is compatible with the demands of the electronic marketplace (Balachandher et al, 2001). Innovations in information processing, telecommunications, and related technologies – known collectively as “information technology” (IT) – are often credited with helping fuel strong growth in the many economies (Coombs et al, 1987).

Dabholkar (1994) claims that when the customer is in direct contact with the technology there is greater control such as with Internet banking. However, if there is an absence of direct contact, such as with telephone banking (since the technology itself is not visible to customers who are able only to press numbers on their telephone keypad) it is assumed that there is less control perceived by the customer during this transaction. Bateson (1984) has conducted a number of studies on the need for consumers to have control during service encounters.

When a consumer freely chooses to use technology as a form of service delivery the impact is high in terms of quality attributes. Some of the quality factors that are highly important to consumers are efficiency and speed (Bateson, 2000). Thus making customers more active in bank transactions involves its access, storage, processing, transportation or transfer and delivery (Ige, 1995). According to Alu (2002), IT affects financial institutions by easing enquiry, saving time, and improving service delivery.

In recent decades, investment in IT by commercial banks has served to streamline operations, improve competitiveness, and increase the variety and quality of services provided. According to Yasuharu (2003), implementation of information technology and communication networking has brought revolution in the functioning of the banks and the financial institutions. It is argued that dramatic structural changes are in store for financial services industry as a result of the Internet revolution; others see a continuation of trends already under way.

First Capital Plus are making what seem like huge investments in technology to maintain and upgrade their infrastructure, in order not only to provide new electronic information-based services, but also to manage their risk positions and pricing. At the same time, new off-the-shelf electronic services such as online retail banking are making it possible for very small institutions to take advantage of new technologies at quite reasonable costs. These developments may ultimately change the competitive landscape in the financial services.

Now we would analyze the effects of IT on First Capital Plus Bank and how it has created value for its customers Research Methodology Using the descriptive process of collecting information, the methodology adopted involved the issuance of questionnaire and personal interview for customers of the bank, using the qualitative method to analyze the data collected. The questionnaires were designed to ascertain customers’ views on the effect of IT innovations or electronic delivery channels on First Capital Plus Bank using open ended questions, to analyze responses qualitatively.

Our target locations and sample size was headquarters (Tesano), branches (Newtown and Makola) of First Capital Plus Bank. Our study bank was sampled on the basis that it has a special form of IT innovation thus the speed banking that most banks in Ghana do not have. In our research we interviewed banking IT executives of the bank to ascertain the effectiveness of IT innovation introduced by their respective branches. A ‘grab sampling’ technique was used to select the customers from the bank. The result of the interview conducted for the customers also showed their positive response towards the adoption of ICT.

Customers were happy with great improvement on statement generation, accounts reconciliation and balance enquiry making. Manual recording system through the use of ledger, cash books have been replaced by computerized information system. Some comments made by some customers of First Capital Plus Bank during our interviews were very remarkable pertaining to the fact that information technology has been of great help in easing customer’s time, stress and inconvenience in carrying out bank transactions.

Stating directly, a taxi driver we met at the bank, after the interview said ‘‘sisiaa min bre kraa se mi ye ejuma na ewo se mi ye sikaa min ko bank ho num mee koa ko ye nu wo atm” to wit ‘‘now I don’t feel stressed up when working because when I need money I don’t have to go to the bank but rather use an ATM”. ‘‘In fact no one can dispute the positive effect of Technology on the people who bank in this technological age because I now pay my bills online through the internet , quick ,smooth and simple’’ these were the words of a female teacher we met at the bank.

Technological History of Ghanaian Banking Industry Over time, technology has increased in importance in Ghanaian banks. Traditionally, banks have always sought media through which they would serve their clients more cost-effectively as well as increase the utility to their clientele. Their main concern has been to serve clients more conveniently, and in the process increase profits and competitiveness. Electronic and communications technologies have been used extensively in banking for many years to advance agenda of banks

In Ghana, the earliest forms of electronic and communications technologies used were mainly office automation devices. Telephones, telex, facsimile and manual recording system through the use of ledger, cash books have been replaced by computerized information systems employed to speed up and make more efficient, the process of servicing clients. For decades, they remained the main information and communication technologies used for transacting bank business. Forms of IT Innovations In First Capital Plus (Electronic Delivery Channels)

This section describes the various forms of technological innovations or electronic delivery channels adopted by our study bank. Technological innovations have been identified to contribute to the distribution channels of Banks. The electronic delivery channels are collectively referred to as Electronic Banking. Electronic Banking is really not one technology, but an attempt to merge several different technologies. Bankers now see a kind of evolution in their business, partly, because the world has taken a quantum leap in the use of technologies in the last several years.

The various electronic delivery channels are discussed below: Automated Teller Machines (ATMs) Rose (1999), describes ATMs as follows: “an ATM combines a computer terminal, record-keeping system and cash vault in one unit, permitting customers to enter the bank’s book keeping system with a plastic card containing a Personal Identification Number (PIN) or by punching a special code number into the computer terminal linked to the bank’s computerized records 24 hours a day”. Once access is gained, it offers several retail banking services to customers.

They are mostly located outside of banks, and are also found at airports, malls, and places far away from the home bank of customers. They were introduced first to function as cash dispensing machines. However, due to advancements in technology, ATMs are able to provide a wide range of services, such as making deposits, funds transfer between two or accounts and bill payments. Our study bank tends to utilize this electronic banking device, as all others for competitive advantage. The combined services of both the Automated and human tellers in First Capital Plus imply more productivity for the bank during banking hours.

Also, as it saves customers time in service delivery as alternative to queuing in bank halls, customers can invest such time saved into other productive activities. ATMs are a cost-efficient way of yielding higher productivity as they achieve higher productivity per period of time than human tellers. At First Capital Plus ATM performs an average of about 3,200 transactions per month as compared to 2,300 for human tellers. Furthermore, as the ATMs continue when human tellers stop, there is continual productivity for the bank even after banking hours.

Telephone Banking At First Capital Plus telephone banking can be considered as a form of remote or virtual banking, which is essentially the delivery of branch financial services via telecommunication devices where the bank customers can perform retail banking transactions by dialing a touch-tone telephone or mobile communication unit, which is connected to an automated system of the bank by utilizing Automated Voice Response (AVR) technology. Again, telebanking has numerous benefits for both customers and the bank as stated earlier.

As far as the customers are concerned, it provides increased convenience, expanded access and significant time saving. On the other hand, from our study banks’ perspective, the costs of delivering telephone-based services are substantially lower than those of branch based services. It has almost all the impact on productivity of ATMs, except that it lacks the productivity generated from cash dispensing by the ATMs. For, as a delivery conduit that provides retail banking services even after banking hours (24 hours a day) it accrues continual productivity for the bank.

It offers retail banking services to customers at their offices/homes as an alternative to going to the bank branch/ATM. Personal Computer Banking “PC-Banking is a service which allows the bank’s customers to access information about their accounts via a proprietary network, usually with the help of proprietary software installed on their personal computer”. Once access is gained, the customer can perform a lot of retail banking functions. First Capital Plus being innovative and new in the system continuous to increase the awareness of the importance of computer literacy.

This has resulted in increasing the usage of personal computers. This certainly supports the growth of PC banking which virtually establishes a branch in the customers’ home or office, and offers 24/7. Internet Banking The idea of Internet banking according to Essinger (1999) is: “to give customers access to their bank accounts via a web site and to enable them to enact certain transactions on their account, given compliance with stringent security checks”. Internet banking by its nature offers more convenience and flexibility to customers coupled with a virtually absolute control over their banking.

Service delivery is informational (informing customers on bank’s products, etc) and transactional (conducting retail banking services). As an alternative delivery conduit for retail banking, it has all the impact on productivity imputed to Telebanking and PC-Banking. Aside that it is the most cost-efficient technological means of yielding higher productivity. Furthermore, it eliminates the barriers of distance, time and provides continual productivity for the bank to unimaginable distant customers. Financial Calculators

First Capital Plus Bank offers a wide range of services to its customers including the use of financial calculators. These calculator functions as a savings estimator by entering how much you can afford to save each month, how long you can save this amount, and the interest rate you can get on your savings and this script will display your total savings. Also this IT innovation serves as a loan payment calculator which helps you determine the loan financing amount and payment options that are best for you. Furthermore saving time and stress in calculating their savings and debts and other investments.

Business Banking and Online Bill Payment Access and manage all your business accounts online hassle free anywhere, anytime 24/ 7, at no cost. Through Online Banking you may subscribe to its optional Bill Payment Service. The Bill Payment Service allows you to schedule payments through the Internet for current, future, and recurring bills from your checking account with us. Bill Payment is intended for use only by individuals and sole proprietors. First Capital Plus Online Bill Pay helps customers control and manage their finances and monthly bills easily.

Customers only need to sign in to Online Banking, access and pay their Bills anywhere, anytime—24 / 7, at no cost. Branch Networking Networking of branches is the computerization and inter-connecting of geographically scattered stand-alone bank branches, into one unified system in the form of a wide area network for the creating and sharing of consolidated customer information/records. It offers quicker rate of inter-branch transactions as the consequence of distance and time are eliminated. Hence, there is more productivity per time period.

Also, with the several networked branches serving the customer populace as one system, there is simulated division of labour among bank branches with its associated positive impact on productivity among the branches. Furthermore, as it curtails customer travel distance to bank branches it offers more time for customers’ productive activities Debit Card Travel to U. S. and the world with no ATM fees with First Capital Plus Visa Debit Card. The Card pays for all types of purchases online and at point of sale merchants.

It makes shopping and travel easy and convenient. Speed Banking Speed Banking is a 24 hour cash deposit service which allows customers to deposit cash directly into their bank account in real time through an SMS ( text message) anywhere anytime any day. The customer must go through the following procedure in order to effectively use this service. * The customer must buy a speed banking voucher equivalent to the amount of money they want to deposit from an accredited vendor. * Scratch the back of the voucher to reveal a 12 digit number. Create a new text message as follows; 123 leave space followed by 12 digit voucher number and send to short code 1945 on all networks. Advantages of this service It is the most secure and fastest way to deposit money, it saves you from the risk of attacks by thieves; it saves you time and transportation costs; you can deposit money anytime, anywhere, any day at your convenience . Results and Discussions A total of 22 questionnaires were sent out. But 20 responses were received. In order to ascertain the views of banking customers with respect to the ffect of technological innovation on banking services, a descriptive analysis was employed in the presentation and analysis of results. An analysis of the types of electronic delivery channels utilized by banks in Ghana is presented below. The focus of the analysis is on the seven main delivery channels identified in literature namely ATMs, Telephone Banking, PC-Banking, Internet Banking, Speed Banking, Online Bill Payment and, Debit cards. The information was basically from personal interviews with Bank Executives and customers from the study bank.

From the case study we found out , that ATMs are the most popular electronic banking delivery channel in Ghana, and that the other banking services such as online bill payment, internet banking etc. are used by mostly the literate percentage of our respondents whilst the semi literate and illiterates patronized the ATMs more . Most of the respondents clearly stated that frequent use of technology services has reduced the interpersonal relationship with bank executives and bank employees, which is very vital because communication plays an important role in business to create competitive advantage over competitors.

We had the opportunity to interview some top officials of the bank. One of them being Mr. William Ato Essien, the Chief Executive officer of First Capital Plus (FCP),who pointed out that their strategic intent is to partner SME businesses in the region by providing them with holistic financial solutions and helping them develop core management competencies to sustain growth. He said FCP has been at the forefront of pioneering innovation and is deepening the intermediation through flexible, affordable and timely bank solutions.

He also pointed out that the bank has a product called speed banking, explaining that “speed banking is a service that enables customers of FCP to deposit money directly into their bank accounts through a scratch card and their mobile phones anytime, anywhere. ”  Mr. Essien added that a customer of the bank can buy a speed banking voucher equivalent to the amount of money to be deposited from an accredited vendor. The customer then scratches the voucher and texts the amount to be deposited, after which the customer receives a text message confirming that it has been deposited into the account.

When asked the rationale behind the introduction of the speed banking service this was what He had to say, “it is the most secured and fastest way to deposit money; it saves time and eliminates transportation cost to the bank, as well as saving customers from the risk of attack by thieves. ” We also interviewed the Director of Media and Communications, Mr Antoh who said through the efficiency of the mobile banking staff, FCP was able to meet their funds mobilization targets in the 2009/2010 financial years, adding “we believe the new mobile phone service will help us mobilize and give out at least GHC3 million this year in loans. He also noted that FCP was passionate about having a competitive urge, saying contrary to the normal practice where banks charge Cost of Transfer (COT) on current accounts and sometimes even on saving accounts, FCP does not charge COT but rather gives interest on current accounts. This makes First Capital Plus the first and only financial institution in Ghana that pays interest on current accounts even though there are a few banks which do not charge COT on current accounts. We give interest on current account because we understand that many Ghanaians work hard for their money but prefer current accounts to savings because of the urgent need for money for business and personal effects,” he said. The implication of all these is that, the impacts of information technology on the operational efficiency of our study bank are numerous and cannot be overrated. Hence, it should constantly develop on its banking services to remain relevant in the industry. For example creating a blog on all the major social media platform etc.

Challenges Facing the Application of Information Technology in Banks. Information technology foster relationship as it provides for instantaneous online exchange of information dialogue. This will enable faster resolution of conflict and quicker determination of a customer need. However, banks face a lot of challenges. Below are few of them. Inadequate Information and Knowledge on Electronic Bank Services Though there is a reflection of growing dependence on internet technology, ost of the public are not well informed or do not have adequate knowledge on some bank services ,like the debit card ,financial calculators etc. This has narrowed most users to the usage of ATMs leaving the other IT services dormant Security The greatest fear of bank executives and customers is hackers gaining unauthorized access to bank servers. It is not enough to acquire sophisticated information equipment but explosive to information technology related failure shouldn’t be high. Inefficiencies of the network systems.

A closer observation of the networked banks such as First Capital Plus revealed that, though there is a good reflection of IT efficiencies on banking activities, they however encounter some difficulties during working hours and most especially at payment times as a result of rampant freezing of their networked systems which does not only affect the bank’s productivity but the customer as well. Computer illiteracy Most customers of First Capital Plus are computer illiterates which makes it difficult for them to access IT related products such as pc banking, internet banking etc.

Situations of this nature normally lower the banks market share and productivity. Recommendation The banks should pay special attention to convenience by providing the customers with electronic banking service at points which can be easily accessible. For instance, some ATMs should be installed in supermarkets, learning institutions and medical centres. The banks’ management should also improve their ATM systems so as to minimize waiting time in the queue. This will improve the efficiency in the service delivery hence boosts customer confidence. Banks should also provide customers with a toll free number.

This could handle customers with complaints and general feedback about the electronic banking services or even create a blog on any major social media network. This would not only provide a service to a customer that is free, but also provide the bank with valuable information for future development on electronic service. The bank’s management should revise their resource allocation in light of Importance/Performance findings. Having banking needs included in the option menu, and accurate performance of the transactions lies in the “possible overkill” quadrant, which means that management thinks it is more important than customers do.

The banks should provide statements for every transaction that has been conducted electronically. This will enable customers to verify accuracy of all transactions including transaction confirmation. According to Lovelock (1991), customer feedback is an established concept of strategic planning. Also banks should make effort to educate their customers on the services they offer in order to increase patronage. Our research revealed that most customers were very ignorant on most of the services especially speed banking.

Even though majority of our respondents were not victims of internet fraud we still recommend banks to educate their customers on the types of bank frauds like spoofing etc in order to prevent future problems for both the bank and its customers. We also recommend that as part of their social responsibilities, banks should provide free ICT training to their customers in order to enable them patronize their electronic banking services. Conclusion IT development has undoubtedly brought-in enormous benefits to banks, particularly in terms of productivity increases, cost reduction and increased profitability.

Consequently, IT development in banks has become more product- centric, retail and wholesale IT products have positively influenced productivity and profitability. IT use has increased outputs and reduced costs as both IT capital investments and IT human resources have a positive relationship to productivity. Banks should stay ahead of the game and sustain growth by taking bold decisions to survive and beat competition. The time has come to move towards a customer-centric approach, as customers should be given an opportunity to enjoy their share of benefits stemming from IT development. This would ncrease banks’ competitiveness through differentiation and customer service improvement, reduced transaction costs, better risk avoidance, and maintaining a stable customer base and market share. References 1. Alu, A. O. (2000). Effects of Information Technology on Customer Services in the Banking Industry in Nigeria. 2. Balachandher Krishnan Guru, Santha Vaithilingam, Norhazlin Ismail, and Rajendra Prasad, (2001) “Electronic Banking in Malaysia: A Note on Evolution of Services and Consumer Reactions” 3. Chorofas, Dimitris N. , (1988) “Electronic Funds Transfer”, Butterworths, London, UK. . Coombs, R. , Saviotti, P. and Walsh, V. (1987) Economics and Technological Change, Macmillan: London. 5. Essinger, James, (1999) “The Virtual Banking Revolution”. The Customer, the Bank and the Future. 1st ed. , International Thomson Business Press, London, UK. 6. Hunter, William C. and Stephen G. Timme (1991), “Technological Change in Large Commercial Banks. ” 64, no. 3 Journal of Business. 331-362. 7. Idowu, P. A. , A. O. Alu, E. R. Adagunodo (2002), The Effect of Information Technology on the Growth of the Banking Industry in Nigeria. 8. Ige, O. 1995), Informtion Technology in a De-regulated Telecommunications Envornment, Keynote address, INFOTECH 95, First International Conference on Information Technology Management, Lagos, November 16-17. 9. “Internet Banking Handbook” Federal Reserve Board of Chicago’s Office of the Comptroller of the Currency (OCC), (2001). 10. Leow, Hock Bee (1999), “New Distribution Channels in banking Services. ” Banker’s Journal Malaysia, No. 110, June 1999, p. 48-56. 11. Rose, Peter S. , (1999) “Commercial Bank Management”, 4th ed. , Irwin/McGraw-Hill, Boston, USA. 12. Yasuharu UKAI (2003), The Effects of Information System Investment in Banking Industry.

UNIVERSITY OF GHANA BUSINESS SCHOOL INTERVIEW SCHEDULE ON: THE IMPACT OF IT ON CONSUMERS A CASE STUDY ON FIRST CAPITAL PLUS BANK Instruction: Please write your views as appropriate. Questionnaires. SECTION A: Personal data. 1. Age of respondent …………………. 2. Sex of respondent Male ( ) Female ( ) 3. Educational Qualification ……………………………………………….. 4. Working experience ………………………………………………… 5. Position/Cadre. ………………………………………………… SECTION B: Information Technology. 6. Are you a user of any type of Information Technology in your bank? …………………………………………………………………… 7.

What type of IT innovation do you frequently use? ……………………………………………………………………. 8. How frequent do you use ATMs in month? ……………………………………………………………………… if not then specify ………………………………….. 9. How does IT enhance quick response to your requirement? ……………………………………………………………………………………………… 10. Does technological innovation reduce the time involved in bank transactions? ………………………………………………………………………………………………………………………………………… 11. How has the quality of the service of banks improved with IT innovation? ………………………………………………………………………………………………………………………………………… 12. In what way has your satisfaction improved due to technology usage in banks? ……………………………………………………………………………………………………………………………………… 13. How has Information Technology strengthen your loyalty to the bank? …………………………………………………………………………………………………………………………………….. 14 Are human tellers still very important in the technological age of the banking system? Explain answer …………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………. 15 What difficulties do you face accessing any IT related product in the bank? …………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………… 6. How has the adoption of IT affected your Interpersonal Relationships with bank staff? …………………………………………………………………………………………………………………………………… 17. How has the accuracy in bank transaction records changed with improved IT services? .. ……………………………………………………………………………………………………………………………………….. 18. Do you know First Capital Plus is on any major social network like facebook, yahoo etc. Yes…………….. No……………… 19. If yes how often do you visit the site …………………………………………………. 20. How has this changed your loyalty and dedication to the bank? ……………………………………………………………………..