“Impact of Information Technology on
the Banking Sector in Ghana”
UNIVERSITY OF GHANA BUSINESS SCHOOL
WEEKEND MBA (FINANCE)
A research summary submitted to Professor Eva
Shalin (Head Department of BBA, Bluecrest
College)
BY ALOYSIOUS W.GIZE
Introduction
• GCB Bank Limited was licensed by the Bank of Ghana—the national Banking
regulator—in 1953. Initially, with twenty seven (27) employees as the bank of Gold
Coast, it focused on serving Ghanaian traders, farmers and businessmen and
women who could not obtain financing from the expatriate banks. In 1957, when
Ghana attained independence, the bank re-branded itself and became Ghana
Commercial Bank in order to concentrate on commercial Banking. Finally, in 2013,
the bank renamed itself GCB Bank Limited (GCB Bank Limited, 2016).
• Over the years, Ghanaian businesses have been undergoing significant changes as a
result of technological innovation, increased technological awareness, and
resulting technological demands from customers (Reynolds, 2014). The most
obvious example is perhaps the banking industry where through the introduction
of information technology (IT), banks can now provide more diverse products and
services to customers with less manpower. Examples of such products / services
include Internet banking, electronic payments, security investments, and
information exchanges (Schwalbe, 2013).
Introduction
• Information technology (IT) is a form of technology that can consist of hardware,
software, telecommunications and office equipment, and is normally used for the
purpose of producing, storing, retrieving, processing and sending information
(Turban et al., 2013). Ghana Commercial Bank, like other banks in the industry, has
its own share of IT influence (GCB Bank Limited, 2016).
• Laudon and Laudon (2007) indicated that the managers of companies cannot ignore
information technology due to the fact that it plays a critical role in contemporary
organizations. They further went on to state that the entire cash flow of most of the
Fortune 500 companies is linked to information technology.
Introduction
• Regarding IT in the banking industry, it has led to the introduction of
automated teller machines (ATMs), Internet banking and mobile banking,
among other things. It also assists banks in collecting, storing, processing
and analyzing data, as well as in supporting decision making processes.
Furthermore, it helps them to control their basic functions and provide
periodic reports to their sales planning, payroll, budget forecasting,
manpower planning, production planning and arbitration departments
(Rose & Hudgins, 2008).
• Another major benefit of information technology is that it can help banks to
reduce their operational costs. For example, it can facilitate transactions
among customers within the same network (Hankir et al., 2011). Agboola
(2003) added that the adoption of the information technology in banks has
improved customer service, facilitated accurate records, improved banks’
image and led to a wider, faster and more efficient market.
Purpose of the Study
• The purpose of this study was to determine the impact of information
technology on the performance of banks in Ghana, with a focus on Ghana
Commercial Bank Ltd. (GCB).
Statement of the Problem
In recent times:
• The issue of the stability of the Ghana cedi has been at the forefront of topical
discussions about the socio-economic environment in Ghana (Kwakye, 2012).
• The Ghana cedi has lost value against most of its trading partners; especially the
United States dollar (USD) for which it depreciated by over 30 per cent during the
first nine (9) months of 2014 from a depreciation of about 4.2 per cent in 2013
(Quartey & Afful Mensah, 2014).
• The rapid depreciation of the Ghana cedi against the dollar has even led to sharp
increases in price of goods and services in the economy (Quartey & Afful Mensah,
2014); and
• Consumer Price Inflation (CPI) increased from 13.5 per cent in December of 2013
to 16.5 per cent in September of 2014 (Quartey & Afful Mensah, 2014).
Statement of the Problem
• Moreover, due to the high import dependence of Ghana, the sudden and
sustained depreciation in the external value of the domestic currency has
been affecting the price of imports, and hence, inflation (Kwakye, 2012).
• The issue of exchange rate management, the kind of exchange rate regime
in operation in Ghana and the institution in charge of the management of
the exchange rate has therefore assumed national importance in view of
recent developments in the economy (CEPA, 2012).
• It is in light of this that this study seeks to investigate the key drivers
affecting exchange rate stability in Ghana, the reasons behind the
implementation of the different exchange rate regimes, and the factors
necessary to achieve the stability of the Ghana cedi.
Objectives of the Study
• The specific objectives of the study were to:
▫ Identify the various types of information technology-based products at GCB Bank
Ltd.;
▫ Investigate how information technology has helped to improve the performance of
GCB Bank Ltd.; and
▫ Provide suggestions to Ghanaian banks on how to upgrade their IT products,
thereby improving their performance.
Research Questions
• The specific objectives of the study begged the following research questions:
▫ What are the various types of information technology-based products at GCB Bank
Ltd.?
▫ How has information technology helped to improve the performance of GCB Bank
Ltd.?
▫ How can Ghanaian banks upgrade their IT products, and thereby improve their
performance?
Significance of the Study
• This study will benefit society in several ways. However, the most
predominant ways are as follows:
▫ First off, by providing an adequate understanding of the impact of
information technology on the performance of banks in Ghana, this
study can heighten the understanding of banking institutions in Ghana
on some of the advantages and disadvantages of information technology
in the industry.
▫ This study can also add to the existing literature on the subject matter as
well as serve as a source of reference for further research.
▫ Furthermore, where it concerns society at large, the study keeps citizens
up-to-date on information regarding the impact of information
technology on the performance of banks in Ghana
Scope of the Study
• The scope of a study refers to “the extent to which a problem area is covered in
a single research study” (Simon & Goes, 2013, p.177).
• The study deals with the impact of information technology on the performance
of banks in Ghana. Moreover, every material presented in this study is limited
to this subject. Concerning this particular subject, not everything has been
covered except for:
▫ The various types of information technology-based products in Ghanaian
banks;
▫ How information technology has helped to improve the performance of
firms in Ghana’s banking industry; and
▫ How Ghanaian banks can upgrade their IT products, thereby improving
their performance.
Limitations of the Study
• Limitations of a study refer to “the matters and occurrences that arise in a study
which are out of the researcher’s control” (Simon & Goes, 2013, p.174).
• This study faced only two (2) major limitations:
• First of all, this study concentrated on only one (1) banking institutions in the
Republic of Ghana—Ghana Commercial Bank Ltd. This was mainly because of the fact
that the researcher was not able to survey all of the individual banking institutions in
Ghana due to constraints in time and resources. The results of the study, therefore, do
not necessarily represent the general situation in Ghana and, as such, one has to be
cautious in making generalizations based on the findings of the study
Limitations of the Study
• Another major limitation was that besides being busy, some of the executives at GCB
were suspicious of the researcher having ulterior motives for collecting the data. This
slowed down the collection of the data.
Research Approach / Design
• Creswell (2002) identified four (4) main approaches to research: (1) The
quantitative approach, (2) the qualitative approach, (3) the mixed methods
approach and (4) the emancipator approach.
▫ This study relied on the qualitative approach due to the fact that it was felt
by the researcher that it would be more accurate to conduct interviews with
managers of GCB rather than to administer questionnaires to its employees.
• Concerning the research design, this study employed the use of a descriptive
research design as it sought to depict the managers of GCB in an accurate way.
• According to Salkind (2013), there are three (3) ways in which a researcher
can proceed with a descriptive research project; namely: (1) observational, (2)
case study, and (3) survey. This study, however, utilized the survey approach.
Research Population
• The term research population refers to “the totality of all subjects that conform to a
set of specifications, comprising the entire group of persons that is of interest to the
researcher and to whom the researcher’s results can be generalized” (Salkind, 2013, p.
34).
• The research population of this study comprised of the entire management team of
GCB.
Sample and Sampling Procedures
• Since it is normally impossible to study an entire population, researchers normally
rely upon sampling in order to acquire a section of a population to perform an
experiment or observational study on. This sample is used to represent the whole
studied population (Salkind, 2013).
• The research sample of this study consisted of: (i) the Managing Director of GCB,
(ii) the IT Manager of GCB, and (iii) The Financial Controller of GCB. This
sample was selected using purposive, non-probability sampling. It was felt by the
researcher that due to their knowledge and experience, their involvement was
appropriate for the study.
• The term eligibility criteria refers to the specific attributes that those in the
population must possess in order for them to be included in the study (Kothari,
2004). In this particular study, it was required that all of the managers had to have
worked in their respective positions for at least two (2) years to ensure that their
answers were relevant.
Sample and Sampling Procedures
• Since it is normally impossible to study an entire population, researchers normally
rely upon sampling in order to acquire a section of a population to perform an
experiment or observational study on. This sample is used to represent the whole
studied population (Salkind, 2013).
• The research sample of this study consisted of: (i) the Managing Director of GCB,
(ii) the IT Manager of GCB, and (iii) The Financial Controller of GCB. This
sample was selected using purposive, non-probability sampling. It was felt by the
researcher that due to their knowledge and experience, their involvement was
appropriate for the study.
• The term eligibility criteria refers to the specific attributes that those in the
population must possess in order for them to be included in the study (Kothari,
2004). In this particular study, it was required that all of the managers had to have
worked in their respective positions for at least two (2) years to ensure that their
answers were relevant.
Summary of the Findings
• Regarding the various types of information technology-based products at GCB Bank
Ltd.:
▫ GCB is now providing its customers with: (i) self-inquiry facilities, (ii) remote
banking, (iii) anytime banking-anywhere banking, (iv) tele-banking, and (v)
electronic banking.
Summary of the Findings
• Regarding how information technology has helped GCB to improve its performance:
▫ For the bank, it has led to: the availability of a wide range of inquiry facilities, which have
assisted the Bank in business development and follow-up; immediate replies to customer
queries without reference to ledger-keeper as terminals are provided to Managers and
Chief Managers; automatic and prompt carrying out of standing instructions on due date
and generation of reports; the generation of various MIS reports and periodical returns
on due dates; and fast and up-to-date information transfer enabling speedier decisions,
by interconnecting computerized branches and controlling offices.
▫ For the bank’s employees, it has led to: accurate computing of cumbersome and time-
consuming jobs such as balancing and interest calculations on due dates; automatic
printing of covering schedules, deposit receipts, pass book / pass sheet, freeing the staff
from performing these time-consuming jobs, and enabling them to give more attention
to the needs of the customer; signature retrieval facility, assisting in verification of
transactions, sitting at their own terminal; and avoidance of duplication of entries due to
existence of single-point data entry.
Conclusion
• Before the study was conducted, it was ascertained that over the years, Ghanaian
businesses have been undergoing significant changes as a result of technological
innovation, increased technological awareness, and resulting technological demands
from customers. Moreover, that the most obvious example is the banking industry in
Ghana where, through the introduction of information technology (IT), banks can
now provide more diverse products and services to customers with less manpower.
This led the researcher to beg the following questions:
▫ What are the various types of information technology-based products at GCB Bank Ltd.?
▫ How has information technology helped to improve the performance of GCB Bank Ltd.?
▫ How can Ghanaian banks upgrade their IT products, and thereby improve their performance?
▫ Through conducting the study, it was discovered that information technology (IT) has not
only benefited the customers of GCB Bank Ltd., but also the employees of the bank and the
bank itself. Therefore, it can be said that the implementation of information technology at
GCB has been overall beneficial.
Study Recommendations
• The study has reached a number of recommendations for the owners and managers of
GCB Bank Ltd. concerning how to upgrade the Bank’s IT products:
• GCB must create performance measurement systems to assure the mix products and
services they offer are beneficial to both the customer and the Bank.
• GCB must determine whether to deploy new technologies themselves or with other
service providers.
• Any new technology must be integrated in the Bank with the change management
issues linked to people resisting new concepts and ideas. It must also support a clearly
defined and well-communicated business strategy.
References
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