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 guid
ance.
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 wishe
r’s indeed, for many people that assist me financially and other ways towards th
e successful 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. PAGE
Title page.
Dedication.
Acknowledge.
Abstract.
Table of Content.
CHAPTER ONE: GENERAL INTRODUCTION.
1.1 Introduction.
1.2 Statement of the problems.
1.3 Objectives of the study.
1.4 Scope and limitation of the study.
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: I
t was used to describe those humans’ beings (predominantly women) whose job it w
as to perform the repetitive calculations required to compute such things as nav
igational 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 card
s, 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 RESAERCH QUESTION

(a) Does computer have any role to play in Enhancing Banking Services?
(b) Does Banks use different types of computer in carrying out their work?
(c) Does computer have the advantage of speed and accuracy over manual opera
tion?
1.7 DEFINATION OF TERMS
ATM: Automated Teller machine
CBN: Central Bank Of Nigeria.
EFTPOS: Electronic Funds Transfer at Point of sale.
ERMA: Electronic Recording Method of Accounting
FMA: Financial Market.
MICR: Magnetic Ink Character Recognition
OCR: 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
arising from the good performance of the African Banking Corporation, another Ba
nk 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 a
n 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 resilien
t institution which has served as a veritable number financial intermediation pr
ocess. 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 argua
bly the tallest and the most beautiful concrete structure along the west coast o
f Africa. In preparation for challengers of this millennium, the Bank is current
ly re-engineering and re-aligning it’s system and process, an exercise which wil
l when completed, not only reposition the institution but will also make it’s fi
tter and swifter 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 rat
e 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 i
nvestment for him completely, if he wishes them to do so, switching in and out o
f stock and shares as they think fit or alternatively he may simply consider the
ir recommendation and make his own decision about buying and selling securities
and 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 the
ir experience or expert knowledge of tax allowances they may be able to reduce h
is 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 processin
g system. ERMA began as a project for the Bank of American in an effort to compu
terize the banking industry. ERMA computerized the manual processing checks and
account management and automatically updated and posted checking accounts. Stanf
ord Research Institute also invented MICR (Magnetic Ink Character Recognition) a
s part of ERMA. MICR allowed computer to read special numbers at the bottom of c
hecks 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 co
mputer 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
as of April 1/2002 as on autonomous authority not bound by any instructions to
supervise the field of banking.
Insurance, pension funds and securities in it’s activities that is required to a
ct according to the provision of Nigeria banking act and with due attention to f
inancial stability the smooth functioning of the banking system and creditor pro
tection. Along with historical division of supervisory tasks between the Union B
ank and the banking supervisory authority formally integrated into the legal mis
sion to ensure financial stability is the main reason for the chose co-operation
between 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 instruct
ed act governs crucial activities such as granting of banking license i.e. the f
reedom 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 banki
ng systems as a payment instrument. This has lead to legal theorists to suggest
that the cheque based definition should be broadened to include financial instit
utions 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 ex
ample in Hong Kong, Most ATM’s enables any one to deposit cash to any customer o
f the bank by feeding in the notes and entering the accounts number to be credit
ed. Also, Most ATM’s enable cardholder from other Bank to get their balance and
withdraw cash. Telephone banking is a service provided by a financial institutio
n, which allows it’s customer to perform their transactions over the telephone.
This normally includes bill payment for bills from major billers e.g. for electr
icity.
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 Responses Percentage
Yes 20 100%
No ---- -----
Total 20 100%
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 Percentage
Mini Computer 8 40%
Micro Computer 10 50%
Total 18 90%
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 Responses Percentage
Yes 20 100%
No
Total 20 100%
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 Percentage

Micro Computer 10 50%
Mini Computer 5 25%
Main-frame Computer 4 20%
Total 19 95%
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, improveme
nt of the quality of work and reduce volumes of papers, files, with computing pa
y 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 ne
ed for development”.
5.3 CONCLUSION
At times customers of the bank complain about the bank’s delay in transaction, e
rror in computing record, keeping wrong financial information and staff of the b
ank not doing their work as required by committing mistakes due to representatio
n and handling involved etc. this accuracy may be attributed to the fact that th
ese are done manually, the technological innovation has speed to nearly all sect
or 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 se
rvices because of the bank’s work.
It also used as teller system, balances of account and pictures are show
n over the screen.
Most generally, the method of computer used now a days, is a promoting t
ool for enhancing the banking service and it’s roles can never be over emphasize
d.

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 sho
uld 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.
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