CHAPTER IINTRODUCTION 10 INTRODUCTION This paper sets forth the benefits of successful adoption of

Information andC o m m u n i c a t i o n T e c h n o l o g i e s ( I C T s ) i n t o r u r a l b a n k i n g a n d e x p l o r e s t h e challenges posed in the quest to fully adopt ICTs into the banking operations. The paper considers a case study of one bank as a means of understanding the realissues on ground as regarding as of ICT adoption by in rural the

banks.I n f o r m a t i o n Information is "the

technology

(IT),

defined America

TechnologyA s s o c i a t i o n design,

(ITAA),

study,

d e v e l o p m e n t , implementation, support or

management of computer-based information systems, particularly software applications and computer hardware". IT deals with the useof electronic computers and computer software to convert, store, protect, process,transmit, and securely retrieve information. 'Information Technology is a generalt e r m t h a t d e s c r i b e s t h e t e c h n o l o g y t h a t h e l p s t o produce, manipulate, s t o r e , communicate, and/or disseminate

information. Nwabiagya Rural Bank Ltd. was founded in 1984 at Barekese where it has itsh e a d q u a r t e r s . I t w a s t h e n i n c o r p o r a t e d a n d i s s u e d a c e r t i f i c a t e t o operate the business of banking on June 4, 1987 but started operation o n A u g u s t 4 , 1 9 8 7 under the chair of Professor Kwame Arhin. Through well focused direction and planning, coupled with the well-motivated staff and enviable customers the bank can now boast of five additional outlets located at Sagoe Lane Adum, Offinso,Magazine, Bohyen and Abuakwa. Nwabiagya Rural Bank was rated the second in3

the ranks of rural banks in Ghana after Atwima Kwanwoma Rural Bank in the2009 ranking.Yamajala Krishna Murty (Vice-President and Centre Head for Virtusa, India),avers that over the last decade or so, IT has been central to the way organizationruns, and the current economic recession has reinforced IT to be the key businessenabler in an interview. (www.virtusa.com).

1.1 BACKGROUND TO THE STUDY The introduction of ICT has had a dramatic effect on the banking industry ande m p l o y m e n t p a t t e r n s w i t h i n i t . I C T a s a b u s i n e s s e n a b l e r i s s l o w l y but surelyf i l t e r i n g i t s w a y i n t o t h e c o r p o r a t e p s y c h e . T h e f a c t t h a t I T c a n t r a n s f o r m businesses in radically different and more effective ways is undisputed.R u r a l Banks (RBs) in Ghana are unit banks owned by

m e m b e r s o f t h e r u r a l community through the purchase of shares and are licensed to provide financiali n t e r m e d i a t i o n in rural areas of Ghana

( A d d e a h , 1 9 8 9 ) . T h e R B s w e r e s e t u p because of the failure of the traditional banks to provide banking services to therural community. In other words, financial support in the rural areas has largely b e e n p r o b l e m a t i c , d e s p i t e t h e c o n t r i b u t i o n m a d e b y r u r a l s e c t o r t o t h e s o c i o - economic development of the country. Over the years, the few commercial banksthat originally had branches in the rural areas have closed these branches due to low profitability and the perceived risk of rural financing (Adom Adu-Amoah etal, 2008). Thus according to Adu-Amoah et al (2008) RBs have served as the gapfillers in the area of banking as most of these rural banks are rather seeking higher and a more profitable prospect.4

It is therefore the need of this research to face out these problems facing rural banks in Ghana via the adoption of ICTs into the operations of the banks. 1.2 STATEMENT OF PROBLEM With the inception of technology in businesses since the past two decades, the benefits of technology in businesses cannot be over-emphasised. The inception of t e c h n o l o g y has remarkably changed the way businesses are

c o n d u c t e d a n d transacted all over the globe. Technology alone had not achieved much until itsintegration with information and communication. This integration has highly beenaccentuated by the knowledge-based environment the world has evolved into.The promise of ICTs in the banking sector has been seen in terms of its potentialt o i n c r e a s e c u s t o m e r base, reduce transaction costs, improve the quality andtimeliness of

response,

enhance

opportunities

for

advertising

and

branding,f a c i l i t a t e s e l f - s e r v i c e a n d s e r v i c e c u s t o m i z a t i o n , a n d i m p r o v e c u s t o m e r communication and relationship (Garau, 2002). A major facet when ICTs ismentioned, is electronic business (e-

b u s i n e s s ) w h i c h a c c o r d i n g t o B a s u a n d Muyelle (2007) could reap two major benefits for organizations which are: valuecreation and enhancement; and Cost

minimization. Nwabiagya Rural Bank, a leading ranking member in the grades of rural banksh a s s e e n s o m e o f t h e b e n e f i t s o f I C T s a d o p t i o n i n rural banking since t h e introduction of ICTs in May 2000 in their

operations. It has yet higher prospects of fully computerised systems with extranets to other branches and vital externalalliances. The bank has not fully automated its systems as customers are not fullyi n c o r p o r a t e d i n t h e i r I C T s s t r a t e g y . C u s t o m e r s w o u l d rather have to visit the5