DEPARTMENT OF INFORMATION STUDIES
UNIVERSITY OF GHANA, LEGON
THE IMPACT OF INFORMATION SYSTEMS STRATEGY
ON BANK PERFORMANCE IN GHANA
BY
EBENEZER ANKRAH
(10015482)
A THESIS SUBMITTED TO THE DEPARTMENT OF
INFORMATION STUDIES OF THE UNIVERSITY OF
GHANA, LEGON, IN FULFILMENT OF THE
REQUIREMENTS FOR THE AWARD OF DOCTOR OF
PHILOSOPHY DEGREE (PhD) IN INFORMATION
STUDIES.
FEBRUARY, 2014
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iDECLARATION
I do hereby declare that this thesis is my own original work and has not been submitted
either in whole or in part to any institution for any degree. Where references are made to
works of other researchers, due acknowledgements are given.
………………….......................
EBENEZER ANKRAH
(STUDENT)
……………………………………………………
PROF. E. E. BADU
(SUPERVISOR)
DATE: …………………………….
…………………………………………………….
DR. F. Y. BANURO
(SUPERVISOR)
DATE: ………………………………...
……………………………………………………
PROF. A. A. ALEMNA
(SUPERVISOR)
DATE: ………………………………..
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DEDICATION
This thesis is dedicated to the Sovereign God Almighty,
My late father;
Ebenezer Nii Ardey Ankrah
And finally
My lovely children Lorthar, Laura and Lilybell.
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ACKNOWLEDGEMENT
I give all praise and thanks to God Almighty for the gift of life and abundant grace
throughout this study. To all those who have helped to make this research possible,
gratitude must be expressed. My sincere gratitude goes to Prof. E. E. Badu the
University of Ghana Librarian, Dr. F. Y. Banuro of the University of Ghana Business
School and Prof. A. A. Alemna of the Department of Information Studies under whose
expert supervision through critical remarks, suggestions and guidance this work was
carried out. I am so grateful and may God richly bless you all.
I am particularly grateful to Prof. H. Akussah (the Deputy Dean of the Graduate School
and Former Head of the Department of Information Studies) for his encouragement,
advice, guidance, fatherly love and continued support to the end. Prof, I say a big thank
you.
A very special thank you goes to Dr. (Mrs.) Perpetual Dzadze (Head of the Department
of Information Studies), Dr. A. Musah (former Head of the Department of Information
Studies), Dr. E. Adjei (Senior Lecturer, Department of Information Studies) and Mr. M.
Dzandu (Lecturer, Department of Information Studies) for their immense support and
encouragement during the period of this project. I wish to express my appreciation to the
administrative staff of the Department of Information Studies for the support provided
while undertaking this research work.
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Lots of appreciation also goes to all the banks and officials especially Mr. Emmanuel
Kwarteng (GCB) and Miss Madelyn Mawuenyegah (Stanbic). I also wish to
acknowledge the immense support and motivation received from my family and friends
towards the completion of this research work especially, Mr. Emmanuel Inkoom (Shell
Ghana), Mr. Stephen Kortei (Liberty Mutual), Miss Joyce Darke, Miss Believe Darke
and the entire Darke family.
Finally, I wish to state that, I take full responsibility for all shortcomings,
misinterpretation and weakness that may be indentified in this work.
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vTABLE OF CONTENTS
Declaration i
Dedication ii
Acknowledgement iii
Table of Contents v
List of Abbreviations xvi
List of Tables xix
List of Figures xxii
Abstract xxiii
CHAPTER ONE: INTRODUCTION 1
1.1 Background to the Study 1
1.1.1 Strategic Information Systems 3
1.1.2 Early Banking Operations in Ghana 6
1.1.3 Ghanaian Banks 7
1.1.4 Technology and Banking 10
1.1.5 Bank Customers 11
1.2 Motivation of the Study 13
1.3 Statement of the Problem 13
1.4 Purpose of the Study 15
1.5 Objectives of the Study 15
1.6 Research Questions 16
1.7 Central Hypotheses 17
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1.8 Significance of the Study 17
1.9 Scope and Limitations 18
1.10 Ethical Considerations 20
1.11 Theoretical Framework 20
1.12 Chapter Outline 24
References 27
CHAPTER TWO: LITERATURE REVIEW 32
2.1 Introduction 32
2.2 Information Systems 32
2.2.1. Information Systems Governance 33
2.2.2 Information Technology (IT) 34
2.2.3 Information Technology Infrastructure 34
2.2.4 Electronic Products and Services 35
2.2.4.1 Website 35
2.2.4.2 Internet Banking 36
2.2.4.3 Mobile Banking (M-banking) 37
2.2.4.4 Automated Teller Machines (ATMs) 38
2.2.4.5 Telephone Banking 39
2.2.4.6 Personal Computer Banking (PC Banking) 39
2.2.4.7 Branch Networking 40
2.2.4.8 Electronic Funds Transfer at Point of Sale 40
2.3 Information Systems and Strategy 43
2.3.1 Strategy 43
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2.3.1.1 Vision and Mission Statement 44
2.3.2 The Strategic Planning Process 44
2.3.2.1 Mission and Objectives 45
2.3.2.2 Environmental Scan 46
2.3.2.3 Strategy Formulation 46
2.3.2.4 Strategy Implementation 47
2.3.2.5 Evaluation and Control 47
2.3.3 Hierarchical Levels of Strategy 51
2.3.3.1 Corporate Level Strategy 51
2.3.3.2 Business Unit Level Strategy 52
2.3.3.3 Functional Level Strategy 53
2.3.3.4 Competitive Strategy 53
2.3.4 Information Systems Strategy 54
2.3.5 Information Systems Strategy Alignment with
Business Strategy 57
2.3.6 Strategic Information Systems 61
2.3.7 SISP Success Predictors 63
2.3.8 The Miles and Snow Typology 67
2.4 Bank Performance 68
2.4.1 Performance Indicators 68
2.4.2 Clash of Expectations – Productivity Paradox of IT 71
2.4.3 Information Systems and Performance 72
2.4.4 Bank Operations and Cost Reduction 76
2.4.5 Customer Satisfaction 77
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2.4.7 Impact of Information System Strategy on
Banks Performance 78
2.5 Conclusion 80
References 81
CHAPTER THREE: BACKGROUND INFORMATION ON THE
SELECTED BANKS 98
3.1 Introduction 98
3.2 Overview of Banking in Ghana 98
3.2.1 Banking in the Colonial Era: 1890 – 1945 98
3.2.2 Entry of the Colonial Bank / Barclays Bank DCO 99
3.2.3 The Nature and Content of Banking Services Offered 100
3.2.4 Banking in the Post-War Era: 1945-1960 101
3.2.5 Banking in a Closed Economy: 1960 -1983 102
3.2.6 Banking in the Era of Structural Adjustment: 1983 – 1997 102
2.2.7 The Banking Act 2007, Act 738 103
3.3 Profile of National Investment Bank 106
3.4 Profile of Ghana Commercial Bank 107
3.5 Profile of Agricultural Development Bank 109
3.6 Profile of Barclays Bank of Ghana 110
3.7 Profile of Standard Chartered Bank 111
3.8 Profile of Stanbic Bank Ghana 112
Conclusion 113
References 114
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CHAPTER FOUR: METHODOLOGY 115
4.1 Introduction 115
4.2 Research Design 116
4.2.1 Theories Underpinning Survey Methodology 118
4.3 Selection of Cases 120
4.4 Selection of Subjects 121
4.4.1 Population 121
4.4.2 Sample Size Determination 123
4.4.2.1 Sample Size of the Strategic Staff of the Banks 125
4.4.2.2 Sample Size for Operational Staff of the Banks 125
4.4.2.3 Sample Size for Bank Customers 126
4.4.3 Sampling Techniques 127
4.4.3.1 Sampling Techniques for Operational Staff 128
4.4.3.2 Sampling Techniques for Bank Customers 129
4.5 Instrumentation 129
4.5.1 Questionnaire 129
4.6 Pre-Testing 133
4.7 Mode of Data Collection 134
4.7.1 Questionnaire Administration and Collection 134
4.7.2 Method of Data Analysis and Presentation of Results 135
References 138
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xCHAPTER FIVE: ANALYSIS OF DATA AND FINDINGS ON
ASPECTS OF STRATEGY 141
5.1 Introduction 141
5.2 Demographics 141
5.2.1 Gender of Respondents 142
5.2.2 Educational Level of Operational Staff 143
5.2.3 Number of Years of Working with the Bank 145
5.3 Information Systems Strategy and Information Systems Assets 147
5.3.1 Information System (IS) Strategy 147
5.3.2 Types of Business Strategy 150
5.3.3 Competitive Advantage of Information Systems 152
5.3.4 Types of Competitive Strategies 152
5.2.5 IS Strategy Alignment to Business Strategy 154
5.3.6 Concept of IS Strategy Typology 156
5.3.7 Time Frame of Strategy 158
5.3.8 Human Resource Requirement 159
5.3.9 Financial Resource Requirement 160
5.3.10 Information System Infrastructure 161
5.3.11 Improved Technology 163
5.3.12 Willingness of Staff to Use New Technology 164
5.4 Staff Participation and SISP Success Predictors 166
5.4.1 Staff Participation in the IS Strategy Formulation 167
5.4.2 Strategic Information System Planning (SISP)
Success Predictors 168
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5.4.3 Staff Perception of Bank Vision 170
5.4.4 Perception of Bank Staff Mission 173
5.5 Barriers to Strategy 175
5.5.1 Environmental Scanning 175
5.5.2 Barriers to the Formulation of IS Strategy 179
5.5.3 Information System Strategy Implementation 182
5.5.4 Success of Information System Strategy Implementation 184
5.6 Logistic Regression Analysis 185
5.7 Benefits of IS Strategy 188
5.7.1 Bank Operations 188
5.7.2 Products and Services 189
5.7.3 Bank Staff 189
5.7.4 Bank Customers 189
5.8 Conclusion 190
References 191
CHAPTER SIX: ANALYSIS OF DATA AND FINDINGS ON
ASPECTS OF INFORMATION SYSTEMS 194
6.1 Introduction 194
6.2 Electronic Banking 195
6.2.1 Products and Services of the banks 195
6.2.2 Website Usage by Customers 195
6.2.3 SMS and Internet Banking by Customers 197
6.2.4 Automated Teller Machine (ATM) 199
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6.2.5 Length of Bank Transaction 200
6.3 Technology and Customer Satisfaction 201
6.3.1 Microcomputers at the Departments 201
6.3.2 Server Computers at the Banks 203
6.3.3 Operating Systems of Banks Client Stations 204
6.3.4 Network Operating Systems of Banks 205
6.3.5 Level of IS Security in the Bank 206
6.3.6 Current Information System 207
6.3.7 Updating of Information Technology System by the Banks 209
6.3.8 Customer Satisfaction 209
6.3.9 Modern Technology Usage 211
6.3.10 New Policy and Customer Suggestions 212
6.3.11 IS and Bank Cost Reduction 212
6.3.12 Cost Reduction in Banking 213
6.4 Conclusion 213
References 215
CHAPTER SEVEN: ANALYSIS OF DATA AND FINDINGS ON
ASPECTS OF BANK PERFORMANCE 217
7.1 Introduction 217
7.2 Investment in Information Systems 217
7.2.1 IS/IT Investment in the Past Three Years 217
7.2.2 IS/IT Investment in Recent Times 219
7.2.3 Modes of Training Staff 222
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7.3 Efficiency and Profitability 223
7.3.1 Bank Performance in the Past Three Years 223
7.3.2 Effect of IT/IS Investment on Bank Performance 224
7.3.3 Problems Associated with IT/IS Investment 226
7.3.4 Return on Assets (ROA) 226
7.3.5 Return on Equity (ROE) 228
7.4 Hypothesis Testing 229
7.5 Conclusion 234
References 235
CHAPTER EIGHT: DISCUSSION OF MAJOR FINDINGS 237
8.1 Introduction 237
8.2 Major Findings on IS Strategy and Bank Performance 239
8.2.1 IS Strategy and Information Systems Assets 239
8.2.2 Staff Participation and SISP Success Predictors 242
8.2.3 Barriers and Strategy 245
8.3 Major Findings on Electronic Products and Bank Performance 247
8.3.1 Electronic Banking 247
8.3.2 Technology and Customer Satisfaction 249
8.4 Major Findings on Indicators of Bank Performance 250
8.4.1 Information Systems Investment 251
8.4.2 Efficiency and Profitability 252
References 255
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CHAPTER NINE: SUMMARY, CONCLUSION AND
RECOMMENDATIONS 261
9.1 Introduction 261
9.2 Summary of Findings 261
9.2.1 Findings on IS Strategy and bank performance 261
9.2.1.1 IS Strategy and Information Systems Assets 262
9.2.1.2 Staff Participation and SISP Success Predictors 262
9.2.1.3 Barriers to Strategy 263
9.2.2 Findings on Electronic Products and Bank Performance 264
9.2.2.1 Electronic Banking 264
9.2.2.2 Technology and Customer Satisfaction 264
9.2.3 Findings on Bank Performance 265
9.2.3.1 Information Systems Investments 265
9.2.3.2 Efficiency and Profitability 266
9.3 Conclusion 267
9.4 Recommendations 272
9.5 Areas of Future Research 278
References 279
Bibliography 280
Appendices 310
Appendix A: Glossary 311
Appendix B: Self Introduction 315
Appendix C: Introductory letter from DIS 316
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Appendix D: Strategic staff questionnaire 317
Appendix E: Operational staff questionnaire 329
Appendix F: Bank customer questionnaire 339
Appendix G: Coding scheme for strategic staff 343
Appendix H: Coding scheme for operational staff 350
Appendix I: Coding scheme for bank customers 359
Appendix J: Random number table 362
Appendix K: ROA and ROE ratios 364
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LIST OF ABBREVIATIONS
ACCA – Association of Certified Chartered Accountants
ADB – Agricultural Development Bank
AIS – Accounting Information System
ATM – Automated Teller Machine
AVR – Automated Voice Response
BBG – Barclays Bank Ghana
BSC – Balanced Score Card
CCS – Consumer Credit Scheme
CEO – Chief Executive Officer
CIB – Chartered Institute of Bankers
CIM – Chartered Institute of Marking
COR – Correlation Coefficient
CSF – Critical Success Factors
CSR – Corporate Social Responsibility
DBMS – Database Management System
DBS – Diploma in Business Studies
DF – Degree of Freedom
DIS – Department of Information Studies
eBBS – Electronic Business Solution
EFTPoS – Electronic Funds Transfer at Point of Sale
ELAC – Enterprise Life Assurance Company
EMV – Europay MasterCard and Visa
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FOS – Front Office System
GCB – Ghana Commercial Bank
HND – Higher National Diploma
HR – Human Resource
ICA – Institute of Chartered Accountants
ICT – Information and Communication Technology
IE – Information Engineering
IS – Information Systems
ISS – Information System Strategy
IT – Information Technology
LAN – Local Area Network
MA – Master of Arts
MBA – Masters in Business Administration
MSc – Masters of Science.
No – Number of Operational Staff
NOS – Network Operating System
NIB – National Investment Bank
Ns – Number of Strategic Staff
OS – Operating System
OTP – One Time Password
PD – Primary Dealer
PIN – Personal Identification Number
PM – Profit Margin
POS – Point of Sale
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i
PR – Public Relations
ROA – Return on Assets
ROE – Return on Equity
SCB – Standard Chartered Bank
SLA – Service Level Agreement
SPSS – Statistical Package for Social Sciences
STC – Straight Through Processing
SWOT – Strengths, Weakness, Opportunities, and Threats
WAN – Wide Area Network
WAP – Wireless Access Point
WATM – Wireless Automated Teller Machine
WVT – Website Visitor Tracking
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LIST OF TABLES
Table 4.1: Distribution of staff and Customers of the Bank 123
Table 4.2: Proportionate Sample Size for Operational Staff for each Bank 126
Table 4.3: Proportionate Sample Size for Bank Customers 127
Table 5.1: Number of Years of Working 146
Table 5.2: Availability of Information Systems Strategy 148
Table 5.3: Components of IS Strategy by Banks 149
Table 5.4: Reponses on Business Strategy by banks 151
Table 5.5: Responses on Competitive Strategy by Banks 153
Table 5.6: Responses on Alignment of Information System
Strategy by Business Strategy 155
Table 5.7: Responses on Alignment of Information System Strategy by banks 155
Table 5.8: Information Systems Strategy Typology by Banks 157
Table 5.9: Responses on Quality of Human Resource Quality by Banks 160
Table 5.10: Responses on the Strategic Staff on Financial Position by Banks 161
Table 5.11: Levels of Information System Infrastructure by Banks 162
Table 5.12: Responses on Work Experience by Willingness of Staff to Use New
Technology 165
Table 5.13: Staff Participation in the IS Strategy Formulation 167
Table 5.14: Responses of SISP Success Factors by Operational Staff 169
Table 5.15: One-Sample Statistics 176
Table 5.16: One-Sample Test 177
Table 5.17: Correlation of Environmental Factors 178
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Table 5.18: Responses on Barriers to IS Strategy Formulation by Banks 180
Table 5.19: Responses of Barriers to IS Strategy Implementation by Banks 182
Table 5.20: Regression Coefficients (Business Strategy) 186
Table 5.21: Regression Coefficients (Outcome of IS Strategy) 187
Table 6.1: Responses on Internet Banking Usage by Banks 198
Table 6.2: Responses of SMS Usage by Banks 199
Table 6.3: Number of Hours Spent in Transactions by Banks 200
Table 6.4: Responses on the Number of Microcomputers at Departments 202
Table 6.5: Responses on the Number of Server Computers at the Banks 203
Table 6.6: Responses on Operating Systems Usage by Banks 204
Table 6.7: Responses on the Levels of IS Security by Banks 207
Table 6.8: Responses on Effectiveness of IS Systems by Banks 208
Table 6.9: Responses on Levels of Customer Satisfaction by Banks 210
Table 7.1: Responses of Levels of IS/IT Investment by banks in the
Past Three Years 218
Table 7.2: Response on Information System Investments in Recent
Times by Banks 220
Table 7.3: Responses on bank Performance by IT/IS Investment 221
Table 7.4: Responses on Bank Performance in the Past Three Years by Banks 223
Table 7.5: Responses on Effect of IT/IS Investment on Bank Performance 225
Table 7.6: Return on Assets (ROA) by Banks 227
Table 7.7: Return on Equity (ROE) by Banks 228
Table 7.8: Observed and Expected Values of IS Strategy by Bank Performance 230
Table 7.9: Observed and Expected Values of Profit Margins by IT/IS Investment 232
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Table 7.10: Observed and Expected Values for Modern Technology and
Customer Satisfaction 233
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LIST OF FIGURES
Figure 1.1: Updated Information Systems Success Model 22
Figure 2.1: The Strategic Planning Process 45
Figure 5.1: Gender Distribution of Respondents (Operational Staff) 142
Figure 5.2: Educational level of Respondents (Operational Staff) 144
Figure 5.3: IS Strategy Time Frame 158
Figure 5.4: Operational Staff Perception of Bank Vision 171
Figure 5.5: Banks Mission of Operational Staff 174
Figure 6.1: Frequency of Website Visitation by Customers 196
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i
ABSTRACT
Today’s business environment is very dynamic and undergoes rapid changes as a result
of technological innovation, increased awareness and demands from customers.
Information system strategy is a plan that aims to (1) identify the required IS assets,
structures, monetary resources, and technologies and (2) Allocate the existing
Information System assets in the most efficient way. The purpose of this study is to
determine the impact of information system strategy on bank performance of six banks
in the Greater Accra Region of Ghana. There are two measures of performance that
relate to how efficient and profitable a business entity is and these are Return on Asset
(ROA) and Return on Equity (ROE).
The study adopted a cross-sectional survey design and was comfortably placed within a
scientific epistemology of logical positivism. The cases or study settings investigated
were local and foreign banks. This study has three categories of population; the strategic
staff, the operational staff and the bank customers from the six banks all selected at their
Head Offices in Greater Accra region. A proportionate sample size of 62, 348, and 1,352
were used for the strategic staff, operational staff, and bank customers respectively.
Simple random sampling was used for the selection of the operation staff whilst
purposive sampling was used for the selection of the bank customers. The instrument
used in this study was the questionnaire. The Statistical Package for Social Sciences
(SPSS) was used for the analysis of the data. A frequency, percentages, charts and Chi-
square test of independence to ascertain the significance of the relationship between
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variables has been used to present the results of the study. Logistic regression is also
used to predict the value of a dependent variable using more independent variables.
The findings revealed that, the foreign banks (Bank D, Bank E, and Bank F) have
invested more in IS than the local banks (Bank A, Bank B, and Bank C). All the foreign
banks exhibited increasing trends in the ROA but this trend did not occur in the local
banks. This is in line with the second hypothesis that statistically concluded that banks
with higher levels of information systems investments have increasing operating profits
than banks with low level information systems investments. The effects of IT investment
on increasing profitability (ROA and ROE) for banks are significantly great. Strategy
appears to have direct effect on IT and IT has direct effect on ROA. The analysis
suggests that IT can play a meaningful role in the strategy-ROA relationship. Despite
these caveats, the strategic context makes a significant difference in the correlations
observed between IT adoption and ROA. Without strategy variable in the model, the
correlations would have been underestimated.
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1CHAPTER ONE
INTRODUCTION
1.1 Background to the Study
Today’s business environment is very dynamic and undergoes rapid changes as a result
of technological innovation, increased awareness and demands from customers.
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, (2007) contend
that managers cannot ignore information systems because they play a critical role in
contemporary organization. They point out that the entire cash flow of most Fortune 500
companies is linked to information systems. The application of information and
communication technology concepts, techniques, policies and implementation strategies
to banking services has become a subject of fundamental importance and concerns to all
banks and indeed a prerequisite for local and global competitiveness. ICT directly
affects how managers decide, how they plan and what products and services are offered
in the banking industry. It has continued to change the way banks and their corporate
relationships are organized worldwide and the variety of innovative devices available to
enhance the speed and quality of service delivery.
The banking sector has seen considerable transformation in the 1980s starting from the
United States, then Europe and now the global village. The main forces behind this
significant transformation in the banking industry, according to Reixach (2001), are
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2deregulation and innovation in IT. These forces have brought about increased
competition, not only among banks, but also in other financial and non-financial
industries. Over the years, IT has contributed to the blurring differences in retail,
corporate and investment banking all over the world as universal banking seems to be
the most favoured and preferred form of banking to specialized banking. Harold and Jeff
(1995) contend that financial service providers should modify their traditional operating
practices to remain viable in the 1990s and the decades that follow. They claim that the
most significant shortcoming in the banking industry today is a wide spread of failure on
the part of senior management in banks to grasp the importance of technology and
incorporate it into their strategic plans accordingly. Woherem (2000) claimed that only
banks that overhaul the whole of their payment and delivery systems and apply ICT to
their operations are likely to survive and prosper in the new millennium. He advices
banks to re-examine their service delivery systems in order to properly position them
within the framework of the dictates of the dynamism of information and
communication technology. The banking industry in Ghana has witnessed tremendous
changes linked with the developments in ICT over the years. The quest for survival,
global relevance, maintenance of existing market share and sustainable development has
made exploitation of the many advantages of ICT through the use of automated devices
imperative in the industry. This study looks at the impact of information systems
strategy on bank performance in Ghana.
Information and Communication Technology has changed the approaches to conducting
business transactions and meeting the growing demands of customers for most
organizations. The promise of information system in the banking sector has been seen in
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3terms of its potential to increase 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
and relationship (Garau, 2002).
Agboola (2003) indicated that the adoption of Information and Communication
Technology in banks has improved customer services, facilitated accurate records,
provided for home and office banking services, ensured convenient business hours,
prompt and fair attention, and enhanced faster services. The adoption of ICT improves
the banks’ image and leads to a wider, faster and more efficient market. It has also made
work easier and more interesting, improved the competitive edge of banks, improved
relationship with customers and assisted in solving basic operational and planning
problems. Technology is making a tremendous impact on service companies in general
and the financial sector is no exception. The application of information and
communication technology concepts, techniques, policies and implementation strategies
to banking services has become a subject of fundamental importance and concerns to all
banks and indeed a prerequisite for local and global competitiveness in the banking
industry.
1.1.1 Strategic Information Systems
The term Strategic Information System (SIS) has for many become synonymous with
“the strategic use of information technology”. But unlike the short cycles of summer
files or the similarly brief lives of buzzwords buried soon after birth, the SIS concept
now enters its second decade firmly entrenched world-wide. Yet the meaning and
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4reference of this idea remains a bit elusive. Current approaches to designing a strategic
information system aim to obtain top management awareness, and to identify and
implement applications that may generate competitive advantage. The systematic
approaches are based on two main ingredients: a set of guidelines indicating how
information technology (IT) can support the business vis-à-vis the competition and a
planning and implementation strategy. The guidelines refer to specific models of
competition, while planning and implementation methodologies are grounded on the
understanding of how an effective business strategy should be formulated and carried
out (Wiseman, 1988).
As the pace of competition is intensifying, the use of strategic information systems as
competitive weapons is increasing day by day. Today, business operations and
information systems (IS) are so tightly integrated with each other that it would almost be
impossible to improve business processes unless corresponding IS support the change.
To support any change in the organization, information should be properly planned,
developed, implemented and maintained in any organization. The designing of
information system is an important phase because, if IS are not properly designed it may
lead to organization’s failure.
The decreasing cost of the technology and the power of imitation may quickly curtail
any competitive advantage acquired through a SIS. On the other hand, the iron law of
market competition prescribes that those who do not imitate superior solutions are
driven out of business. This means that any successful SIS becomes a competitive
necessity for every player in the industry. Tapping standard models of strategy analysis
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5and data sources for industry analysis will lead to similar systems and enhance, rather
than decrease imitation. How then should “true” SIS be developed? It is not surprising,
by the way, that business organizations should ask themselves:
 Is SIS offering true competitive advantage, or do they just represent a
competitive necessity?
 How can one implement systems that cannot be easily copied, thus generating
returns over a reasonable period of time?
Information systems strategy is concerned mainly with aligning IS development with
business needs and with trying to gain a strategic advantage through the proper using of
IT in the firm. It is a planning process for the development of systems towards some
future vision of the role of information systems in the organization. IS strategy defines
the organization’s demand for IS/IT – the requirements or ‘demand’ for information and
systems to support the overall business strategy. It brings together the business aims of
the organization, a clear understanding of the information needed to support those aims,
and the implementation of computer systems to provide that information. IS strategy is
firmly grounded in the business, taking into consideration both the competitive impact
and alignment requirements of IS/IT. Basically, IS strategy defines and prioritizes the
investments required to achieve the ‘ideal’ application portfolio, the nature of the
benefits expected and the changes required to deliver those benefits, within the
constraints of resources and systems interdependencies (Ward and Peppard, 2002).
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61.1.2 Early Banking Operations in Ghana
The banking industry in Ghana has undergone far reaching changes from colonial times
through independence to the present. Banks are financial institutions that provide a range
of services to their customers: savings, money transmission and credit services, safe
custody and portfolio management functions, and in the process making profits. Before
the 1950s, the number of bank accounts in Ghana was very few and what mattered most
was the personal contact between the Bank Manager and his customers. There was
hardly any urgent demand for information because of the low volumes of transactions.
This made it possible to satisfy customers with manually kept records. Thus the majority
of banking services were performed using manual operations and personal contact with
customers without much information transfer and handling of customer data.
As commercial activities increased and people developed more banking awareness, the
volume of work grew and so did the demands on the bankers’ services from the
customers. The manual system could no longer cope with the demands from customers.
Neither did it meet managements’ need for timely and accurate information to cater for
the dynamic business environment (Andoh, 1998). For instance, within the banks, a lot
of mundane and boring jobs like interest rate calculation and long tedious additions were
still being done manually by staff. In the early 1950s, however, electro-mechanical
machines were introduced into the banking industry in Ghana. This enabled customers to
have their bank statements on time and within the banks, tedious jobs like interest rate
calculation were taken over by machines, making their jobs more enjoyable and boosting
staff morale. Prior to technological development, banks used the manual system for their
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7operations and customers had to travel to banking halls where they have opened their
account to transact business with that particular bank.
1.1.3 Ghanaian Banks
The banking sector is comprised largely of commercial banks, savings and loans
associations as well as rural and community banks. The Central Bank often called Bank
of Ghana (BOG) exercises oversight responsibility over all the financial institutions in
the country. In an effort to ensure systematic development of the banking system, the
Central Bank has the responsibility of ensuring that banking is responsive to the needs of
the Ghanaian public. The banking system is by far the largest component of the financial
system. The banking sector has undergone several structural changes following the
implementation of a series of reforms in the sector.
The Bank of Ghana pursues a liberal policy with regard to entry into the banking system.
Rose (1999) defines banks as “those financial institutions that offer the widest range of
financial services, especially credit, savings and payment services and performs the
widest range of financial functions of any business economy”. Over the years the
banking industry has experienced several losses. Banks that had been performing well
suddenly announced large losses due to credit exposure that turned sour, interest rate
position taken, or derivatives exposures that may or may not have been assumed to
hedge balance sheet risk. In response to this, banks have almost universally embarked
upon an upgrading of their risk management and control systems (Santomero and Mello,
1996).
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8The Ghanaian economy has experienced high influx rate of foreign banks in recent
times. Banking operations are characterized with complexity and competition. To
remain competitive, there is the need for a scientific approach in operations. One such an
approach is information systems strategy. Ghana has 27 universal banks, 135 rural banks
and 49 non-bank financial institutions, including leasing firms, mortgage providers,
finance houses, and savings and loan institutions and that is without counting the
thousands of ‘susu’ collectors, who serve as informal, small-scale depository institution
for market traders and shopkeepers. Of the 27 universal banks, 10 are locally owned
while the remaining are backed by international owners; a mixture of European,
American and African banking groups (The Report, Ghana 2012). Many business
managers operate in an information fog bank, never really having the right information
at the right time to make an informed decision. Instead, managers rely on forecast, best
guesses, and luck. The result is over or underproduction of products and services,
misallocation of resources, and poor response time.
The banks used in this study are National Investment Bank (NIB), Ghana Commercial
Bank Limited (GCB), Agricultural Development Bank (ADB), Barclays Bank of Ghana
Limited, Standard Chartered Bank Ghana Limited (SCB), and Stanbic Bank Ghana.
National Investment Bank (NIB) Limited was established in March 22, 1963. The
National Investment Bank Limited was the first development bank in Ghana to promote
and strengthen rapid industrialization in all sectors of the Ghanaian economy. NIB
Limited now operates as a universal bank in focusing on development / commercial
banking activities. Ghana Commercial Bank Limited (GCB) started operations in 1953
as the Bank of the Gold Coast to provide banking services to the emerging nation for
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9socio-economic development. The Bank was to provide special attention to Ghanaian
traders, business people and farmers who could not elicit support from the expatriate
banks. In 1957, when Ghana attained independence, Bank of Ghana was established as
the Central Bank whiles the Bank of the Gold Coast was renamed Ghana Commercial
Bank to focus solely on commercial banking services. The Agricultural Development
Bank (ADB) was set up by an Act of Parliament (Act 286) in 1965 to promote and
modernize the agricultural sector through appropriate but profitable financial
intermediation. Its original name then was the Agricultural Credit and Co-operative
Bank and the establishing Act gave its main object as “to provide credit facilities to
agriculturists and person for connected purposes”.
Barclays has operated in Ghana for ninety four years. It is a wholly owned subsidiary of
Barclays Bank PLC. Its vision is to become the best bank for every customer, in every
branch, for every product and every time. Barclays Bank of Ghana Limited has an
expansive retail and commercial banking network in the country with 92 branches and
over 130 ATMs in all regional capitals and major towns. Standard Chartered Bank
Ghana Limited (SCB) has been in operation since 1986 when it was known as the Bank
of British West Africa. The bank is 80% owned by Standard Chartered PLC, and the
remainder of the stock is owned locally and traded on the Ghana stock exchange.
Stanbic Bank Ghana takes pride in being part of a large banking group rooted in Africa
but reaching out to all corners of the world. Stanbic proactively provides solutions for
clients through creative people and effective technology. Stanbic aims to simplify
financial transactions to spend more time on client business and less time on banking.
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10
1.1.4 Technology and Banking
Information technology (IT) has provided the banking industry with the wherewithal to
deal with the challenges the new economy poses. Information technology has been the
cornerstone of recent financial sector reforms aimed at increasing the speed and
reliability of financial operations and of initiatives to strengthen the banking sector.
Technology has brought about a complete paradigm shift in the functioning of banks and
delivery of banking services. Gone are the days when every banking transaction required
a visit to the bank branch. Today, most of the transactions can be done from the comfort
of one’s home and customers need not visit the bank branch for anything. Technology is
no longer an enabler, but a business driver. The growth of the internet, mobiles and
communication technology has added a different dimension to banking. The information
technology available today is being leveraged in customer acquisitions, driving
automation and process efficiency, delivering ease and efficiency to customers.
The IT revolution has set the stage for unprecedented increase in financial activity across
the globe. Contemporary technology in banking comes in the form of computer based
application and information technology. From the banking customer’s perspective, two
of the practical purposes of banking are convenience and accessibility to both funds and
account information. Technology in commercial banking comes in the form of
automatic/Electronic Networks and Electronic Funds Transfer Systems (EFTs). The
basic components of EFTs are Automated Teller Machines (ATM), Point of Sale (POS)
Terminals and Automated Clearing Houses (ACHs). The advent of technology has
enabled the provision of banking products and services through electronic delivery
channels known as electronic banking. E-Banking comes in the form of internet
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11
banking, telephone banking and other electronic delivery channel like On-line virtual
terminals. Internet banking may be explained as banking through the World Wide Web.
Talmor (1997) explains the motive of banking on the World Wide Web as first
providing banks with a delivery channel for selling banking services to their customers,
and secondly, helping the development of the electronic commerce infrastructure.
Technology is the traditional stimulus to change and it is powerful in financial market.
Commercial banking is being revolutionized by new technology. For banks to remain
major players in the financial services industry, they must carefully harness the vast
potential of emerging technology. By so doing, they can reach new markets, deliver new
products, mobilize revenue, reduce costs, and satisfy customers. Technology seems to be
particularly appropriate in commercial bank operations. The operations departments of
banks are usually responsible for managing and protecting the physical facilities owned
or used by the bank for daily routine. Today’s bank customers demand ever-increasing
levels of convenience. They expect seven days a week, a twenty-four hour service a day,
full service, ATMs everywhere and telephone-home banking. Adding a sharp edge to the
urgency for banks to adapt technologically is stiff competition, high technology and low
cost competitors. To survive and succeed, banks must recognize the importance of
technology and invest in it.
1.1.5 Bank Customers
Customers are the key to a bank’s activities, as they are the most important source of a
bank’s deposit mobilization and revenue generation in the form of credit lending. These
customers may be individuals or institutions. Amid sweeping regulatory change, slow
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12
economic growth and tightened margins, banks today are increasingly focused on their
most important stakeholders - their customers. Yet, despite their best efforts to attract
and retain customers, customer confidence levels in banks remain low. In response,
customers are changing their behavior and demanding lower fees for higher levels of
service or other improvements. If these demands are not met, they are increasingly likely
to shop around at other banks for competitive rates for services and products. A
customer’s choice of bank is influenced by the innovativeness of the bank, the
convenience of services provided, the efficient processing of customer information, and
improved customer turnaround. Thus, a bank’s survival rests on its ability to attract and
maintain customers through the offering of innovative and technologically improved
banking services and products in an efficient, speedy, convenient and accurate manner.
For these requirements to be met, banks need to upgrade their services – automate their
transactions so as to turn transactions and customer data quickly into information for
timely presentation to satisfy customer needs.
However, this involves investing more in advanced technological banking systems and
doing away with manual banking systems. in the past, banks executives have attributed
delays in implementing computer technology to, among other things, the lack of trained
personnel to operate and manage computer sections, lack of electricity at most district
and rural parts of the country, high customer illiteracy in the use of systems like
automated teller machines (ATMs), huge cost in implementing the computer technology,
poor telecommunication development and the vagaries of the natural and social elements
like the humidity, dust, erratic power supply that might easily break down computers,
etc. Notwithstanding the above assertions, these factors cannot be wholly true now, in
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view of recent improvements in electric power supply, communication, computer
education and literacy, availability of computer experts, consults, technicians and
instructors and accessibility to computers and accessories.
1.2 Motivation of the Study
Information systems strategy is an emerging phenomenon which has a little exposure in
terms of banking practices. The researcher is motivated by the fact that, much has not
been written on the impact of IS strategy on bank performance. This study is also
breaking grounds in the area of information systems strategy and has contributed to the
scanty literature in this area of study.
1.3 Statement of the Problem
In Ghana, all the banks have business strategies. They also have information technology
(IT) departments that support the various departments technologically. What still
remains uncertain is whether the banks information systems strategies assist to achieve
the expected business performances. It is certainly true that many intended strategies are
ill conceived, the problem often lays one step beyond, in the distinction between
formulation and implementation of the information systems strategy. For a long time,
relationship between information system functions and corporate strategy was not of
much interest to top management of firms. Information systems were thought to be
synonymous with corporate data processing and treated as some back-room operation in
support of day-to-day mundane tasks. In the 1980’s and 1990’s, however, there was a
growing realization of the need to make information systems of strategic importance to
organizations including banks.
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Much attention has not been given to returns on information systems investment in the
banking industry. Banks in Ghana have been generally slow in adopting new and
modern technology to improve their services to their customers. A customer’s choice of
bank is often influenced by the innovativeness of the bank, the convenience of services
provided, the efficient processing of customer information, and improved customer
turnaround. Thus, a bank’s survival rests on its ability to attract and maintain customers
through the offering of innovative and technologically improved banking services and
products in an efficient, speedy, convenient and accurate manner (Andoh, 1998). For
these requirements to be met, banks need to upgrade their services – automate their
transactions, so as to turn transactions and customer data quickly into information for
timely presentation to satisfy customer needs.
In Ghana, some banks do not recognize the importance of an information systems
strategy and do not have any and even those who have information systems strategy, do
not relate it to their business aims. Some banks have major difficulties in the formulation
and implementation of information system strategies and for that matter they cannot use
IS to gain competitive advantage. Some banks can not reduce cost pertaining to their
operations because they have not incorporated IS strategy into their corporate strategy.
Some information systems strategies are formulated by top management and do not
involve tactical and operational staff. This poses a problem when it comes to
implementation. Since some staff are left out during the strategy formulation stage, they
also feel reluctant in its implementation which may result as a flaw. Some banks are also
using manual approaches in some of their operations. This could result in delayed
transactions or loss of data which could frustrate customers.
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Information system strategy is now widely recognized as a key factor in economic
growth in most advanced countries. However, the problem associated with IS strategy in
banking circles is that, it is rarely seen as a key issue in strategy formulation. The
underlying problem appears to be an overall lack of relevant IS strategy that eventually
sustains the bank in this technological dispensation.
1.4. Purpose of Study
The purpose of this study was to determine the impact of information system strategy on
bank performance of six banks in the Greater Accra Region of Ghana, namely: Ghana
Commercial Bank, Agricultural Development Bank, National Investment bank, Stanbic
Bank, Standard Chartered Bank and Barclays Bank Ghana. Information system strategy
is a plan (Mintzberg 1987) that aims to (1) identify the required IS assets, including
personnel (e.g., IT staff and capabilities), structure (e.g., IS processes), monetary
resources (e.g., budget), and technologies (IS applications and infrastructures): and (2)
allocate the existing Information System assets in the most efficient way. There are two
measures of performance that relate to how efficient and profitable a business entity is.
These are Return on Assets (ROA) and Return on Equity (ROE).
1.5 Objectives of the Study
The following are the specific objectives of the study:
1. To determine the relationship between IS strategy and business strategy and also
find out the state of the required IS assets.
2. To explore the success predictors of strategic information system planning and to
investigate the staff participation in IS strategy formulation.
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3. To determine the barriers to the formulation and implementation of information
system strategy.
4. To determine the level of usage and satisfaction of electronic banking products
among bank customers.
5. To determine the relationship between IS investments and bank’s performance.
6. To determine the effectiveness of strategies in terms of efficiency and
profitability of banks.
7. To recommend an appropriate model for aligning information system strategy
with business strategy as well as recommendations to overcome the barriers to
the formulation and implementation of information system strategy.
1.6 Research Questions
Based on the research objectives the following questions were posed:
1. How does information systems strategy relates to business strategy?
2. What are the required information systems assets?
3. What are the success predictors of strategic information system planning?
4. Which level of staff participate in IS strategy formulation?
5. What are the barriers to the formulation and implementation of information
system strategy?
6. What are the electronic banking products and services in the Ghanaian banks?
7. How does information systems investments relate to bank’s performance?
8. What are the indicators of efficiency and profitability of banks in Ghana?
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1.7 Central Hypotheses
Based on the objectives of the study, the following hypotheses guided the study:
 Information systems strategy has a positive relationship with bank performance.
 Banks with higher levels of information systems investments have increasing
operating profits than banks with low levels of information systems investments.
 Bank customers are satisfied with the services of banks with modern technology
than banks without modern technology.
1.8 Significance of the Study
As an academic work, this research has contributed to already existing knowledge in the
area of study. This study would act as a source of future reference, and it would also add
to existing knowledge in this area since “the meaning and reference of this idea remains
a bit elusive” (Ciborra and Jelassi, 1994). Even though much has been written on the
connection between business strategy and information technology and information
systems (IT/IS), very little has been done on the impact of ISS on performance. This
research has filled that gap.
The study is significant also in terms of its contribution to understanding the significance
of information technology investments in the Ghanaian banking industry. This would
enable investors, management and IT managers to be able to deal with and justify the
resources spent on technology as well as planning, implementation and evaluation of
information system strategy. This study would help bank managers to recognize the
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importance of information systems strategy and its use to gain competitive advantage,
increase profit margins, and relate business aims to the information systems strategy.
The benefits of information system strategy to banks discovered by the study would be
beneficial to the banking industry. The information system model recommended at the
end of the study would also assist the banking industry to gain competitive advantage in
modern banking. Scholars interested in the development and implementation of ISS
would also benefit from this research work. Information systems professionals would as
well benefit from this research since it has revealed many issues about information
systems. Policy makers would not be left out of the benefit from this research work. It
would also help banks to determine the relationship between information systems
investment and bank performance. This study has also bring to the fore the level of
electronic products and services patronage (Ankrah, 2012).
1.9 Scope and Limitations
The study was limited to six banks all selected from Accra in the Greater Accra Region,
since all the banks have their Head offices in Accra. However, the focus was on the
impact of information systems strategy on bank performance. The research was
restricted to only the operations of banks in their respective Head Offices in Accra.
However, the research, comprehensively looked at the formulation and implementation
of IS strategy and how this is used to gain competitive advantage in modern banking and
eventually on performance. Information systems strategy resides in the Head Offices,
hence the selection of the Heads Offices in Accra.
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Other major limitations were funds and time. The conduct of a survey requires extensive
resources and time beyond the means of a single student or independent research
investigator. This was a major research involving purchasing of books, software for
analysis, visitation to the field and printing of various materials such as questionnaires.
For this reason, the library and the computer laboratory were relied on heavily. The
researcher also encountered some constraints on the field. All the strategic staff from the
various banks declined to grant interviews to the researcher leading the researcher to rely
strongly on questionnaire as the instrument. Most of the respondents were reluctant in
responding to the questionnaire so the researcher paid constant visit to the banks.
With the current surge in development and wide expansion of banking services and
network coupled with certain problems for good corporate governance on the part of
stakeholders, the researcher was faced with the lack of willingness on the part of the
banks to provide information on information systems / technology expenses and
investment they consider confidential. There was also a difficulty in getting access and
audience with strategic level staff of the bank. The construct measurements in this
research were adopted from prior studies as they have been extensively validated. A
rigorous construct development and validation methodology was adopted in this
research in order to eliminate bias as much as possible. Despite these limitations the
findings and recommendations are still valid.
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1.10 Ethical Considerations
Ethics are norms or standards of behavior that guide moral choices about the
researcher’s behavior and relationship with others. The goal of ethics in research is to
ensure that no one is harmed or suffers adverse consequences from research activities
(Cooper and Schindler, 2008). Ethics were observed accordingly in conducting this
research. Introductory letters were taken from the Department of Information Studies
and were sent to all the banks for permission to use them in the study. In the data
collection process, informed consent of the respondents was sought and respondents
were guaranteed anonymity and confidentiality by the researcher. All citations were duly
acknowledged and all participants treated respectfully.
1.11 Theoretical Framework
A theory can be defined as a set of definitions and propositions that specify the
relationship among variables. They help to explain or predict phenomena that occur in
the world. A theory for a study guides the entire study, an organizing model for the
research questions and for the data collection procedure (Creswell, 2003). In other
words, a theory guides the research process. A theoretical framework is a collection of
interrelated concepts, like a theory but not necessarily so well work-out (Borgatti, 1999).
A theoretical framework guides one research determining what things to be measured,
and what statistical relationships to look for. Radhakrishna (2007) asserts that almost all
research studies in social and behavioral science regardless of disciplines or programmes
require a rationale or base for conducting research. This rationale or base is often called
theoretical framework. A theoretical framework is a conceptual model of how one
theorizes or makes logical sense of the relationships among several factors that have
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been identified as important to the problem. In essence, it attempts to integrate key
pieces of information especially variables in a logical manner, and thereby
conceptualizes a problem that can be tested. A theoretical framework tells the big picture
of the study. It identifies literature review categories and directs research objectives. A
typical theoretical framework provides a schematic description of relationships between
and among independent, dependent, moderator, control, and extraneous variables so that
a reader can easily comprehend the theorized relationships (Radhakrishna, 2007). This
study uses the Delone and Mclean (2003) IS success model.
Delone and McLean IS success model
DeLone and McLean (1992) introduced an alternate taxonomy to understand the
different dimensions of IS success. The authors aim to make IS success research more
coherent and to provide a well-defined outcome measure that can be used to evaluate IS
practice, policies, and procedures. DeLone and McLean (1992) use the taxonomy
developed by Mason (1978), which grew out of Shannon and Weaver’s Information
Theory (1949). Even though Mason‘s work is largely based on Shannon and Weaver‘s
Information Theory, Mason‘s framework focuses on the actual output of information
instead of in the whole process. Mason‘s adapts Shannon and Weaver‘s Information
Theory and sets the basis for the fundamental terminology for what would be the
DeLone and McLean Model of IS Success. They used that framework as a foundation to
build up their analysis of the MIS success literature and their own model of IS success.
In the private sector, information system literature, taxonomy was described as being
comprehensive enough to take into account all dimensions of information systems
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success (Seddon, 1997). As such, in the following subsections, DeLone and McLean's
taxonomy will be used to organize findings of studies that investigated information
system success in organizations. The focuses on two things: (1) identifying key variables
and relationships among them, and (2) how the variables were operationalized and
measured. The new model incorporates the following dimensions: systems quality,
information quality, and service quality, intention to use, user satisfaction, and net
benefits. The updated information systems success model (Delone and Mclean, 2003) is
presented in Figure 1.1 below.
Figure 1.1: Updated Information Systems Success Model
Source: DeLone and McLean (2003)
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This new model is composed of:
Service quality refers to the support that the users of the system receive from their IT
area personnel (i.e. responsiveness and knowledge).
System Quality is an important dimension of information system impact and success.
System Quality includes ease of use, response time, data accuracy, reliability,
completeness, and flexibility.
Information quality deals with the accuracy, timeliness, reliability, relevance and
currency of the information.
Intention to use is a traditional variable (intent to use).
Use is another known measure of information system success. Examples of use include
frequency of use, number of functions used, number of records processed, number of
hours IT is used and number of computer queries. Use in this study is measured using
the number of hours per week for which the application is utilized.
User satisfaction refers to the overall satisfaction one gains from the use of an
application. There are numerous measures of user satisfaction (Gefen, 2000,
Bhattacherjee, 2004, Wixom and Todd, 2005).
Net benefits include the various impacts such as societal impact, individual impact, and
organizational impact. This concept defines net benefits as an idealized comprehensive
measure of the sum of all past and expected future benefits, less all past and expected
future costs, attributed to the use of an information technology application.
This theoretical framework was selected because it fits perfectly into the study and many
authors have also used this model. Many studies have empirically tested the updated
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model (Tsai et al., 2012, Shareef et al., 2011, Pitt et al., 2011, Lin et al., 2011,
Floropoulos et al., 2010).
1.12 Chapter Outline
The chapters have been arranged as follows:
Chapter One serves as the introduction to the work and this puts the work in
perspective. It provides the background to the study, problem statement of the study, the
purpose and the objectives of the study as well as the significance of the study. The
theoretical framework that guides the study is also contained in this same chapter. The
limitations as well as the organization of the various chapters are spelt out explicitly in
this same chapter.
Chapter Two focuses on the review of literature. The chapter surveys relevant and
pertinent literature relating to the central problem of the study. It discusses generally,
literature on the formulation and implementation of information system strategy,
electronic bank products and services, and information systems and competitive
advantage. The chapter looks also at researched literature closely associated with the
problem being investigated.
Chapter Three presents an overview of banking in Ghana and the profile of the six
banks under study. The chapter also looks at the history of the six banks as well as the
products and services available in each bank.
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Chapter Four presents the research methodology used to execute the study. The chapter
touches on areas such as the target population, sample size and sampling techniques,
data collection instruments, pre-testing research instruments, mode of data collection,
and method of data analysis and presentation of results. This chapter was responsible for
the design and the implementation of the survey.
Chapter Five focuses on the analysis of data and findings on aspects of strategy. It
analyses the data in relation to the objectives of the study. The chapter has been
organized under the following major sub-headings: demographics and strategy, vision
and vision, business strategy and IS strategy, success predictors and IS strategy,
competitive advantage and IS strategy, and barriers to strategy.
Chapter Six focuses on the analysis of data and findings on aspects of information
systems and related issues like information technology usage, technology and cost
reduction, electronic banking, and customer satisfaction. It analyses the data in relation
to the objectives of the study.
Chapter Seven focuses on the analysis of data and findings on aspects of bank
performance taking into consideration information technology investment and bank
turnover.
Chapter Eight looks at the discussions of the findings and relates them to the literature
reviewed.
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Chapter Nine provides the summary, conclusion and presents recommendations for the
solution of problems identified.
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IS success. Information System Research, 8 (3), 40-53.
Shannon, C., & Weaver, W. (1949). The mathematical theory of information. Urban:
University of Illinois Press.
Shareef, M. A., Kumar, V., Kumar, U., & Dwivedi, Y. K. (2011). E-Government
adoption model (GAM): Differing service maturity levels. Government
Information Quarterly, 28(1), 17-35.
Talmor, S. (1997). Information technology. The Banker, 147(859), 102.
The Reporter, Ghana (2012, January), 224-234.
Tsai, W. H., Lee, P. L., Shen, Y. S., & Lin, H.L. (2012). A comprehensive study of the
relationship between enterprise resource planning selection criteria and
enterprise resource planning system success. Information & Management, 49(1),
36-46.
Ward, J., & Peppard, J. (2002). Strategic planning for information systems (3rd ed.). John
Willey & Sons, Ltd.
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Wiseman, C. (1988). Strategic information systems. Homewood, IL:Irwin.
Wixom, B. H., & Todd, P. A. (2005). A theoretical integration of user satisfaction and
technology acceptance. Information Systems Research, 16, 85-102.
Woherem, E. W. (2000). Information technology in the Nigeria banking industry.
Ibadan, Spectrum.
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CHAPTER TWO
LITERATURE REVIEW
2.1 Introduction
This chapter reviews relevant literature that relate to the phenomenon under study. The
literature review discovers conflicts, contradictions and variables in other research work.
It shows gaps in the research to pinpoint areas worthy of additional study. It also
explains the ramifications of the problem to show how each research contributes another
aspect of the problem and solution. The relevant literature classifies current research to
show relationships. The review focuses on the following cardinal areas; Information
Systems, Information Systems Strategy, Bank Performance and the Impact of
Information Systems Strategy on Bank Performance.
2.2 Information Systems
Information Systems (IS) can be defined technically as a set of interrelated components
that collect (or retrieve), process, store, and distribute information to support decision
making and control in an organization (www.eHow.com). In addition to supporting
decision making, coordination, and control, information systems may also help
managers and workers analyze problems, visualize complex subjects, and create new
products. Information means data that have been shaped into a form that is meaningful
and useful to human beings. Data, in contrast, are streams of raw facts representing
events occurring in organizations or the physical environment before they have been
organized and arranged into a form that people can understand and use. Information
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systems contain information about significant people, places, and things within the
organization or in the environment surrounding it.
Limited research has been conducted on how system administrators actually can affect
information systems (IS) after they have been implemented. Edlund and Lövquist (2012)
identified a system administrator´s effect on the three IS quality dimensions in the
DeLone and McLean IS success model. The empirical findings were based on a single
case study where the data was collected through interviews with the system
administrator and the system assistants, but also through a questionnaire answered by the
users of the IS. The empirical findings suggested that the system administrator can affect
IS success through the IS quality dimensions both directly and indirectly. The system
administrator´s effect on IS success proved to be highly dependent on the external
system vendor and the structure of the internal support unit.
2.2.1. Information Systems Governance
Governance is a fundamental framework that must be in place for an information
systems (IS) strategic plan and strategic planning process to be successful. Governance
provides a decision-making and accountability framework for effective management of
IS. There may be many components to IS governance, but the basic purpose of
governance is to identify what decisions will be made, and by whom, and to define how
activities will be monitored against the plan. The IS strategic plan is a very important
component to effective governance. Conversely, a good IS strategic plan will include a
clearly documented process for IS governance. Governance ensures that IS delivers
value to the business and that risks are sufficiently managed. A variety of individuals or
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groups may be involved in these decisions and processes, such as an IS steering
committee, executive management, board of directors, the CIO, IS management,
business line management, or business liaisons.
2.2.2 Information Technology (IT)
Information Technology (IT) consists of all the hardware and software that a firm needs
to use in order to achieve its business objectives. This includes not only computer
machines, disk drives, handheld personal digital assistants and iPods (where they are
used for a business purpose) but also software, such as the Windows or Linux operating
systems, the Microsoft office desktop productivity suite, and the many thousands of
computer programs that can be found in a typical large firm.
Johnston and Vitale (1988) assert that, there are many well-known examples of the use
of information technology for competitive advantage. This involves systems that link an
organization to suppliers, distribution channels, or customers. In general, these systems
use information or processing capabilities in one organization to improve the
performance of another or to improve relationships among organizations. Declining
costs of capturing and using information have joined with increasing competitive
pressures to spur numerous innovations in use of information to create value.
2.2.3 Information Technology Infrastructure
Information Technology Infrastructure consists of the shared technology resources that
provide the platform for the firm’s specific information system applications. Most IT
infrastructure components include computer hardware, software, data management
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technology, networking and telecommunications technology, and technology services.
Computers are categorized as supercomputers, mainframes, midrange computers, and
microcomputers. The principal secondary storage technologies are magnetic disk, optical
disc, and magnetic tape. The two major types of software are system software and
application software. System software coordinates the various parts of the computer
system and mediates between application software and computer hardware. Application
software is used to develop specific business application. Increasingly, computing is
taking place over a network with computing and telecommunications platforms
increasingly integrated. Managers and information systems specialists need to pay
special attention to hardware capacity planning and scalability to ensure that the firm has
enough computing power for its current and future needs. Businesses also need to
balance the cost and benefits of building and maintaining their own hardware and
software versus outing or using an on-demand computing model. The total cost of
ownership (TCO) of the organization’s technology assets includes not only the original
cost of computer hardware and software but also costs for hardware and software
upgrades, maintenance, technical support, and training.
2.2.4 Electronic Products and Services
The electronic products and services are the products and services backed by
technology. These include: website, internet banking, mobile banking etc.
2.2.4.1 Website
A website is a collection of web pages having images, videos and other digital assets
that is hosted on one or several web servers usually accessible via Internet, cell phone or
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a LAN. All publicly accessible websites are seen collectively as constituting the World
Wide Web. The pages of websites can usually be accessed from a common root URL
called the homepage, and usually reside on the same physical server. The URLs of the
pages organize them into a hierarchy, although the hyperlinks between them control how
the reader perceives the overall structure and how the traffic flows between the different
parts of the sites. Some websites require a subscription to access some or all of their
content. At the basic level, internet banking can mean the setting up of a web page by a
bank to give information about its products and services.
2.2.4.2 Internet Banking
The idea of internet banking is to give customers access to their accounts via a website
and to enable them to enact certain transactions on their account, given compliance with
stringent security checks. Internet banking may be explained as banking through the
World Wide Web, which is the interconnectivity of computers and telecommunication
equipment. Simply put, internet banking is described as “the provision of traditional
services over the internet” (Internet Banking handbook, 2001).
Talmor (1997) explains the motive of banking on the World Wide Web as first
providing banks with a delivery channel for selling banking services to their customers
and secondly, helping the development of the electronic commerce infrastructure.
Internet banking by its nature offers more convenience and flexibility to customers
coupled with a virtually absolute control over their banking. Services delivery is
informational (informing customers on bank’s products, etc) and transactional
(conducting retail banking services). Internet banking involves consumers using the
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internet to access their bank account and to undertake banking transactions. At an
advance level, it involves provision of facilities such as accessing accounts, funds
transfer, and buying financial products or services online. This is called “transactional”
online banking (Sathye, 1999). As an alternative delivery conduit for retail banking, it
has all the impact on productivity imputed to telephone banking and PC banking. Aside,
it is also the most cost-efficient technology means of yielding higher productivity.
Furthermore, it eliminates the barriers of distance/time and provides continual
productivity for the bank to unimaginable distant customers.
Internet banking has emerged as a major banking channel. Most of the large and medium
banks offer internet banking and funds transfer facilities. While the large banks have
specific infrastructure to handle large value transactions, even the small banks operate
through shared resources. The positive fact is that most of the electronic transactions are
through STP (straight through processing) in the larger banks. This trend will result in
enhanced service delivery and quick settlement. Banks are offering several value-added
services through their electronic channels such as tax collections, trading, bill payments,
and viewing accounts, etc. Certain services such as prepaid mobile recharge have
become extremely popular among consumers.
2.2.4.3 Mobile Banking (M-banking)
In one academic model, Tiwari and Buse (2007) defined mobile banking as “the
provision of banking and financial services with the help of mobile telecommunication
devices. The scope of offered services may include facilities to conduct bank and stock
market transactions, to administer accounts and to access customized information”.
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Mobile banking can be considered also virtual banking, alongside telephone where
branch financial services are delivered via mobile phone where the bank customers can
perform retail-banking transactions. Mobile banking can be in the form of SMS-banking
or WAP-banking. However, SMS-banking is accessed by sending text messages
whereas WAP-banking is a form of mobile internet service accessed via GPRS (internet)
connection.
Ankrah (2012) states that SMS banking services provide instant notification about
transactions as and when it happens. It helps to keep a watch on account with a round
the clock service. Every debit or credit in account over a limit desired is intimated by
SMS. Now, with SMS Banking service, one is always in a position to detect
unauthorized access to account. Additionally, SMS banking also helps to know balances
and mini statements instantly by just sending an SMS. Features of SMS banking are:
 Safety: All transactions above a value desired are intimated as and when they
happen, so one is always be kept updated on ones transactions
 Convenience: No need to queue in at a branch or ATM to check account.
 Updates: Get automatic updates on deposits/loan installments due, interest rate
changes and new products.
 Availability: This service is available from anywhere in the world.
2.2.4.4 Automated Teller Machines (ATMs)
An automated teller machine (ATM) is a computerized telecommunications device that
provides the customers of a financial institution with access to financial transaction in a
public space without the need for a human clerk or bank teller. Rose (1999), describes
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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”. The ATM card has a magnetic stripe or a plastic smartcard with
chip that contains a unique card and some security information. Once access is gained, it
offers several retail banking services to customers.
2.2.4.5 Telephone Banking
Telebanking (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. This is
connected to an automated system of the bank by utilizing Automated Voice Response
(AVR) technology (Balachander et al., 2001). According to Leow (1999), telebanking
has numerous benefits for both customers and banks. As far as the customers are
concerned, it provides increased convenience, expanded access and significant time
saving. On the other hand, from the banks’ perspective, the costs of delivering
telephone-based services are substantially lower than those of branch based services.
2.2.4.6 Personal Computer Banking (PC Banking)
PC-Banking is a service which allows the bank’s customers to access information about
their accounts for transactions by subscribing to and dialing into the banks’ intranet
proprietary network, usually with the help of proprietary software installed on their
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personal computer with a use of passport. Once access is gained, the customer can
perform a lot of retail banking functions. The increasing awareness of the importance of
computer literacy has resulted in increasing the use 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-hour services, seven days a week. It also has
the benefits of Telephone Banking and ATMs.
2.2.4.7 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 (WAN) or Enterprise Network (EN), for creating and sharing of consolidated
customer information/records. It offers quicker rate of inter-branch transactions as the
consequences of distance and time are eliminated. Hence, there is more productivity per
time. In addition, 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. Furthermore, as it curtails customer travel
distance to bank branches, it offers more time for customers’ productive activities.
2.2.4.8 Electronic Funds Transfer at Point of Sale (EFTPoS)
An Electronic Funds Transfer at the Point of Sale is an on-line system that allows
customers to transfer funds instantaneously from their bank accounts to the merchant’s
accounts when making purchases (at purchase points). Increased banking productivity
results from the use of EFTPoS to service customers shopping payment requirements
instead of clerical duties in handling cheque and cash withdrawals for shopping.
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The banking industry believes that by adopting new technology, they will be able to
improve customer service level and tie to their customer. Pikkarainen, Karjaluoto, and
Pahnila, (2004) defines internet banking as an internet portal, through which customers
can use different kinds of banking services ranging from bill payment to making
investment’. With the exception of cash withdrawal, internet banking gives customer
access to almost any type of banking transaction at the click of a mouse (De Young,
2001). Mia, Rahman and Debnath (2007) observed that the latest development in
financial services by banks is electronic banking, where banks have now put themselves
in the World Wide Web to take advantage of the Internet’s power and access to cope
with the accelerating pace of change of business environment. Indeed the use of the
internet as a new alternative channel for the distribution of financial services has become
a competitive necessity instead of just a way to achieve competitive advantage with the
advent of globalization and fiercer competition (Flavián, Torres, and Guinalíu, 2004).
Banks use online banking as it is one of the cheapest delivery channels for banking
products (Pikkarainen et al., 2004). Huda, Momen and Ahmed (2004) commented that
the banking sector in Bangladesh is clearly recognizing the importance of information
technology to their continued success.
As Karjaluoto et al. (2002) argued that ‘banking is no longer bound to time and
geography. Customers over the world have relatively easy access to their accounts, 24
hours per day, and seven days a week’. The author further argued that, with internet
banking services, the customers who felt that branch banking took too much time and
effort are now able to make transactions at the click of their fingers. There are other
numerous advantages to banks offered by e-banking such as mass customization to suit
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the likes of each user, innovation of new products and services, more effective
marketing and communication at lower costs (Tuchilla, 2000). Stewart (1999) claimed
that the failure of the internet in retail banking is largely attributable due to the lack of
trust consumers have in the electronic channels. Provision of infrastructural facilities is
another factor that could lead to quicker diffusion of innovation. Tomiuk and
Pinsoneault (2001) concurred that the lesser degree of ‘richness’ and ‘sound presence’ of
banking environment will affect banks ability to create a trusting relationship between
their customer and employees. On the other hand for those customers whose relationship
is primarily based in efficiency services, e-banking will be an attractive alternative.
Ahmed and Islam (2008) observed that adopting e-banking services, banks in
developing countries are faced with strategic options between the choice of delivery
channels and the level of sophistication of customer services provided by these delivery
channels. The relationship between banks and corporate customers is the most important
factor in the success of new financial services (Easingwood and Storey, 1993). Mobile
and wireless communication devices are becoming enablers for organizations to conduct
business more effectively and efficiently. One of the most effective applications is
mobile banking (m-banking). The increased flexibility and mobility feature of wireless
ATM and its bandwidth on demand function is motivating a large number of carriers
towards deployment of the WATM networks.
Electronic banking provides alternatives for faster delivery of banking services to a
wider range of customers. The increasing popularity of internet banking, have attracted
the attention of both legitimate and illegitimate e-banking practices. Hua (2009)
conducted a survey to investigate how users’ perception about online banking is affected
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by the perceived ease of use of website and the privacy policy provided by the online
banking website. Nyangosi, Arora and Singh (2009) argued that banking through
electronic channels has gained increasing popularity in recent years. This system,
popularly known as 'e-banking', provides alternatives for faster delivery of banking
services to a wide range of customers. The overall result indicates that customers in
India and Kenya have developed positive attitudes and they attach much importance to
the emergence of e-banking. Wise and Ali (2009) argued that many banks in Bangladesh
want to invest in ATMs to reduce branch cost since customers prefer to use them instead
of a branch to transact business. Rahman (2010) who is the Governor of Bangladesh
Bank argued that Bangladesh Bank has achieved a historic milestone in the trade and
business arena, departing from conventional banking with the introduction of e-banking
recently; a giant stride towards digital Bangladesh.
2.3 Information Systems and Strategy
This section establishes the relationship between information systems and strategy.
2.3.1 Strategy
A strategy is the pattern or plan that integrates an organization’s major goals, policies
and action sequences into a cohesive whole. A well-formulated strategy helps to marshal
and allocate an organization’s resources into a unique and viable posture based on its
relative internal competencies and shortcomings, anticipated changes in the environment
and contingent moves by intelligent opponents. Goals (or objectives) state what is to be
achieved and when results are to be accomplished, but they do not state how the results
are to be achieved. All organizations have multiple goals existing in a complex hierarchy
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from value objectives, which express the broad value premises towards which the
company is to strive: through overall organizational objectives, which establish the
intended nature of the enterprise and the directions in which it should move: to a series
of less permanent goals that define targets for each organizational unit, its subunits, and
finally all major programme activities within each subunit. Major goals that affect the
entity’s overall direction and viability are called strategic goals (Collins and Porras,
1997).
2.3.1.1 Vision and Mission Statement
While a business must continually adapt to its competitive environment, there are certain
core ideals that remain relatively steady and provide guidance in the process of strategic
decision-making. These unchanging ideals form the business vision and are expressed in
the company mission statement. In their 1996 article entitled Building Your Company's
Vision, Collins and Porras (1997) provided a framework for understanding business
vision and articulating it in a mission statement. The mission statement communicates
the firm's core ideology and visionary goals, generally consisting of the following three
components:
 Core values to which the firm is committed
 Core purpose of the firm
 Visionary goals the firm will pursue to fulfill its mission
2.3.2 The Strategic Planning Process
In today's highly competitive business environment, budget-oriented planning or
forecast-based planning methods are insufficient for a large corporation to survive and
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prosper. The firm must engage in strategic planning that clearly defines objectives and
assesses both the internal and external situation to formulate strategy, implement the
strategy, evaluate the progress, and make adjustments as necessary to stay on track. A
simplified view of the strategic planning process is shown in Figure 2.1.
Figure 2.1: The Strategic Planning Process
Source: Simplified Strategic Planning
2.3.2.1 Mission and Objectives
The mission statement describes the company's business vision, including the
unchanging values and purpose of the firm and forward-looking visionary goals that
guide the pursuit of future opportunities. Guided by the business vision, the firm's
leaders can define measurable financial and strategic objectives. Financial objectives
involve measures such as sales targets and earnings growth. Strategic objectives are
Mission and objectives
Environmental Scanning
Strategy Formulation
Strategy Implementation
Evaluation and Control
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related to the firm's business position, and may include measures such as market share
and reputation.
2.3.2.2 Environmental Scan
The environmental scan includes the following components:
 Internal analysis of the firm
 Analysis of the firm's industry (task environment)
 External macro environment (PEST analysis)
The internal analysis can identify the firm's strengths and weaknesses and the external
analysis reveals opportunities and threats. A profile of the strengths, weaknesses,
opportunities, and threats is generated by means of a SWOT analysis. An industry
analysis can be performed using a framework developed by Michael Porter known as
Porter’s five forces. This framework evaluates entry barriers, suppliers, customers,
substitute products, and industry rivalry.
2.3.2.3 Strategy Formulation
Given the information from the environmental scan, the firm should match its strengths
to the opportunities that it has identified, while addressing its weaknesses and external
threats. To attain superior profitability, the firm seeks to develop a competitive
advantage over its rivals. A competitive advantage can be based on cost or
differentiation. Michael Porter identified three industry-independent generic strategies
from which the firm can choose, namely: cost leadership, differentiation and focus
strategies.
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2.3.2.4 Strategy Implementation
The selected strategy is implemented by means of programs, budgets, and procedures.
Implementation involves organization of the firm's resources and motivation of the staff
to achieve objectives. The way in which the strategy is implemented can have a
significant impact on whether it will be successful or not. In a large company, those who
implement the strategy are likely to be different people from those who formulated it.
For this reason, care must be taken to communicate the strategy and the reasoning
behind it. Otherwise, the implementation might not succeed if the strategy is
misunderstood or if lower-level managers resist its implementation because they do not
understand why the particular strategy was selected.
2.3.2.5 Evaluation and Control
The implementation of the strategy must be monitored and adjustments made as needed.
Evaluation and control consist of the following steps:
1. Define parameters to be measured
2. Define target values for those parameters
3. Perform measurements
4. Compare measured results to the pre-defined standard
5. Make necessary changes
Environmental analysis (scanning or appraisal) is very important to modern
organization. It is used by corporate planners to monitor the economic factors,
competition, government legislation, suppliers, technology and market setting to
determine the opportunities for and threats to the enterprise. Organizations scan the
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environment in order to understand external forces of change so that they may develop
effective responses which secure or improve their position in the future. The importance
of environmental analysis lies in its usefulness for evaluating the present strategy, setting
strategic objectives, and formulating future strategies. The banking industry is a very
strategic catalyst for the overall economic growth in any country. In Nigeria, the
industry is generally regarded as an engine room for economic growth and development
because of the crucial role it plays in linking all segments of the economy in the main
stream (Udoaja, 2002). The fortunes of business enterprise are known to have been
determined by changes in the social, economic, political, technological, business and
industrial conditions. It is therefore pertinent that a thorough and careful analysis be
carried out on these factors.
The general problem of environmental scanning faced in the industry however, could
anchor on total ignorance of environmental characteristics which affect them or
inadequacy of information for management to plan, implement and control certain
events within and outside the organization’s environment. A number of studies have
been conducted on the subject of environmental scanning and corporate performance.
Miller (1994) carried out analysis on eighty-one detailed case studies of successful and
failing businesses. The study found that environmental scanning was by far the most
important factor in separating the successful companies from the unsuccessful, that this,
it accounted for more than half of the observed variance. Environment creates both
problems and opportunities for organization. Organization depends on the environment
for scarce and valued resources, and organization must cope with unstable and
unpredictable external and internal events. The environment itself perhaps, more than
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any other factor, affected organizational structure, internal processes and managerial
decision making. From an information processing perspective, the environment is
important because it creates uncertainty for managers. Environmental uncertainty
increases information processing within organization because managers must identify
opportunities, detect threats, interpret problem areas and implement strategic or
structural adaptation.
Before an organization can begin strategy formulation it must scan its environmental for
strengths and weaknesses. Strategic managers view environmental scanning as a
prerequisite for formulating effective business strategies (Beal, 2000). Environmental
scanning includes both looking at information (viewing) and looking for information
(Benczur, 2005). Strategic managers are challenged to anticipate changes in the
environment and be flexible enough to adjust strategies to creatively seek out new
opportunities. The process of environmental scanning creates the opportunity to weave
together the past, present, and future change (Mason, 2001). A corporation uses this tool
to avoid strategic surprise and to ensure its long-term health. It is against this
background that, researchers believe that there is a positive relationship between
environmental scanning and corporate performance. Wheelen and Hunger (2006),
defined environmental scanning as the evaluation, monitoring, and dissemination of
information from the external and internal environments to key people within the
corporation. The term environmental analysis refers to the process of picking up signals
from the larger environment, analyzing their significance for the organization and
tracking the most relevant of these signals. Environmental analysis also referred to an
organized activity of the group responsible for strategy, which improves a firm’s
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competitiveness by gathering, processing and internally diffusing information, in order
to rule the environment. Choo (1999) defines environment scanning as the acquisition
and use of information about events, trends, and relationships in an organization’s
external environment, the knowledge which would assist management in planning the
organization’s future course of action.
Every business organization operates in an environment that transcends its official
boundaries. Organization’s environment can be defined as all the forces and conditions
within and outside the organization that affect the organization in its day-to-day
activities. Meanwhile the environment of business is a highly dynamic, complex, and
competitive one. The forces a business is to contend with are varied as they are
continually changing. Thus managers must take into account the influence of the
environmental forces that can affect the performance of their organizations. They must
have sufficient knowledge to be able to identify, evaluate and cope with environmental
forces that may affect the operations of their organizations. A thorough understanding
and analysis of the business environment by managers will enable the business to cope
with the changing forces within the environment. To adequately understand
organizational environments, one must borrow some concepts from system theory. One
of the basic assumptions of system theory is that organizations are neither self sufficient
nor self contained. Rather, they exchange resources with and are depended upon the
external environment, which is defined as all elements outside an organization that are
relevant to the physical operations (some of these element connect the organization to
the physical world) (Stoner, 2004). Organizations take ‘input’, that is raw materials,
money, labour and energy from the external environment, transform them into products
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and / or services and then send them back as ‘output’ to the external environment. The
external environment has both direct-action and indirection-action elements, also called
shareholder including shareholders union, suppliers and many others who directly
influence an organization. Indirect action elements; such as the technology, economy,
and politics of a society, affects the climate in which an organization operates and have
the potential to become direct element.
2.3.3 Hierarchical Levels of Strategy
Strategy can be formulated on three different levels:
 Corporate level
 Business unit level
 Functional or departmental level
While strategy may be about competing and surviving as a firm, one can argue that
products, not corporations compete, and products are developed by business units. The
role of the corporation then is to manage its business units and products so that each is
competitive and so that each contributes to corporate purposes. While the corporation
must manage its portfolio of businesses to grow and survive, the success of a diversified
firm depends upon its ability to manage each of its product lines.
2.3.3.1 Corporate Level Strategy
Corporate level strategy fundamentally is concerned with the selection of businesses in
which the company should compete and with the development and coordination of that
portfolio of businesses. Corporate level strategy is concerned with:
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 Managing Activities and Business Interrelationships - Corporate strategy seeks to
develop synergies by sharing and coordinating staff and other resources across
business units, investing financial resources across business units, and using
business units to complement other corporate business activities. Igor Ansoff
introduced the concept of synergy to corporate strategy.
 Management Practices - Corporations decide how business units are to be
governed: through direct corporate intervention (centralization) or through more
or less autonomous government (decentralization) that relies on persuasion and
rewards.
2.3.3.2 Business Unit Level Strategy
A strategic business unit may be a division, product line, or other profit center that can
be planned independently from the other business units of the firm. At the business unit
level, the strategic issues are less about the coordination of operating units and more
about developing and sustaining a competitive advantage for the goods and services that
are produced. At the business level, the strategy formulation phase deals with:
 Positioning the business against rivals
 Anticipating changes in demand and technologies and adjusting the strategy to
accommodate them
 Influencing the nature of competition through strategic actions such as vertical
integration and through political actions such as lobbying.
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Michael Porter identified three generic strategies (cost leadership, differentiation, and
focus) that can be implemented at the business unit level to create a competitive
advantage and defend against the adverse effects of the five forces.
2.3.3.3 Functional Level Strategy
The functional level of the organization is the level of the operating divisions and
departments. The strategic issues at the functional level are related to business processes
and the value chain. Functional level strategies in marketing, finance, operations, human
resources, and R&D involve the development and coordination of resources through
which business unit level strategies can be executed efficiently and effectively.
Functional units of an organization are involved in higher level strategies by providing
input into the business unit level and corporate level strategy, such as providing
information on resources and capabilities on which the higher level strategies can be
based. Once the higher-level strategy is developed, the functional units translate it into
discrete action-plans that each department or division must accomplish for the strategy
to succeed.
2.3.3.4 Competitive Strategy
When a firm sustains profits that exceed the average for its industry, the firm is said to
possess a competitive advantage over its rivals. The goal of much of business strategy is
to achieve a sustainable competitive advantage. Porter (1985) identified two basic types
of competitive advantage:
 Cost advantage
 Differentiation advantage
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A competitive advantage exists when the firm is able to deliver the same benefits as
competitors but at a lower cost (cost advantage), or deliver benefits that exceed those of
competing products (differentiation advantage). Thus, a competitive advantage enables
the firm to create superior value for its customers and superior profits for itself. Cost and
differentiation advantages are known as positional advantages since they describe the
firm's position in the industry as a leader in either cost or differentiation. A resource-
based view emphasizes that a firm utilizes its resources and capabilities to create a
competitive advantage that ultimately results in superior value creation. Competitive
advantage is created by using resources and capabilities to achieve either a lower cost
structure or a differentiated product.
2.3.4 Information Systems Strategy
The literature on Information system strategies is extensive, much of it anecdotal in
character, or exhorting managers or chief executives to make more use of information
technology. The function of an information Systems (IS) strategy itself is best described
by Wilson (1999) who states that: “An information systems strategy brings together the
business aims of the company, an understanding of the information needed to support
those aims, and the implementation of computer systems to provide that information. It
is a plan for the development of systems towards some future vision of the role of
information systems in the organization”. An IS strategy is something which is
essentially a planning process in the minds of the decision makers, users and developers
of the systems. It is supported with written reports and plans, but they are of secondary
importance.
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The IS strategy is concerned mainly with aligning IS development with business needs
and with trying to gain a strategic advantage through the proper using of IT in the firm.
It is a planning process for the development of systems towards some future vision of
the role of information systems in the organization. IS strategy defines the organization’s
demand for IS/IT – the requirements or ‘demand’ for information and systems to support
the overall business strategy. It brings together the business aims of the organization, a
clear understanding of the information needed to support those aims, and the
implementation of computer systems to provide that information. IS strategy is firmly
grounded in the business, taking into consideration both the competitive impact and
alignment requirements of IS/IT. Basically, IS strategy defines and prioritizes the
investments required to achieve the ‘ideal’ application portfolio, the nature of the
benefits expected and the changes required to deliver those benefits, within the
constraints of resources and systems interdependencies (Ward and Peppard, 2002).
Information systems strategy is of central importance to IS practice and research. Chen
et al., (2010) in their extensive review of the literature suggest that the concept of IS
strategy is a term that is used readily. However, it is also a term that is not fully
understood. In their study, they follow a perspective paradigm based on the strategic
management literature to define IS strategy as an organizational perspective on the
investment in, deployment, use, and management of IS. Through a systematic literature
search, they identified the following three conceptions of IS strategy employed
implicitly in 48 articles published in leading IS journals that focus on the construct of IS
strategy:
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(1) IS strategy as the use of IS to support business strategy;
(2) IS strategy as the master plan of the IS function; and
(3) IS strategy as the shared view of the IS role within the organization.
They find that the third conception best fits the IS strategy. As such, they consequently
propose to operationalize IS strategy as the degree to which the organization has a
shared perspective to seek innovation through IS. Specifically, they proposed IS
strategic typology and suggest that an organization’s IS strategy falls into one of the two
defined categories (i.e. IS innovator or IS conservative) or is simply undefined. They
also developed measures for this new typology. They argue that the proposed
instrument, which was cross validated across both chief information officers and senior
business executives, has the potential to serve as a diagnostic tool through which the
organization can directly assess its IS strategy. They contend that their
reconceptualization and operationalization of IS strategy provides theoretical and
practical implications that advance the current level of understanding of IS strategy from
extant studies within three predominant literature streams: strategic IS planning,
IS/business strategic alignment, and competitive use of IS.
Salmela and Spil (2002) indicate that early attempts to formulate information systems
(IS) strategies concentrated on the analytical task of deriving IS strategies from business
plans. The limitations of the static plans that often resulted from these formal studies
were, however, soon discovered. The critics suggested informal and incremental
planning to ensure flexibility, creativity and strategic thinking to comprise emergent
strategies as well as planned strategies. In previous IS planning research, there appears
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to be a contradiction between the published planning methods and the generally held
views about effective implementation of IS planning process. The explicit methods
described in IS literature predominantly assume a comprehensive IS planning process.
Despite the fact that many researchers consider incremental approaches to be more
effective, methods that can be used to facilitate incremental IS planning are few, not
detailed enough and not comprehensive. The four cycle’s method introduced attempts to
combine the strengths of both the comprehensive and incremental planning to be able to
recognize emerging trends and to make an e-business strategy. The method provides a
basic schedule for organizing planning activities. IS planning is seen as a continuous
process that is periodically adjusted to the expectations of the participating managers.
Practicing managers can use the method to facilitate implementation of an incremental
and continuous IS planning process. For e-business strategy research, Salmela and Spil
(2002) provide a theoretically based method that can be tested in future action research
projects. The first results of conducted action research show that the method should not
be used as a checklist but as a choice list. Each period had a constant focus on external
developments and the fit with internal possibilities. The method provided a flexible and
dynamic basis for actions. The emergent nature of the changes and the difficulty of
formalizing creativity and innovation placed restrictions on the planning process. They
learned that a thematic approach where each cycle is given a creative subject helped to
‘‘open up’’ the users in the organization.
2.3.5 Information Systems Strategy Alignment with Business Strategy
Strategic business and information technology (IT) alignment has many synonyms such
as alignment (Silvius, 2007), harmony (Luftman et al; 2005), linkage (Reich and
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Benbazat, 1996) and business – IT alignment (Maes et al; 2000). Tallon and Kraemer
(1998) define strategic alignment as the extent to which the information system (IS)
strategy supports and is supported by the business strategy. Silvius (2007) defines
strategic alignment as the degree to which the IT applications, infrastructure and
organization, the business strategy and processes enables and shapes, as well as the
process to realize this. Reich and Benbazat (1996) define strategic alignment as the
degree to which the IT mission, objective and plans support and are supported by the
business mission, objectives and plans. Strategic alignment has consistently appeared as
a top concern for IT practitioners and company executives (Luftman et al., 2005) and it
has been constantly and repeatedly ranked as the most important issue facing
corporations since the mid- 1980s (Benbya and McKelvey, 2006). Despite the
importance of strategic alignment, there is debate in the literature about what strategic
alignment actually is (Avison et al., 2004). Luftman (2000) argues that strategic
alignment refers to applying information technology in an appropriate and timely way,
in harmony with business strategies, goals and needs.
Aligning information systems to the organizational strategy goals has appeared to be a
concern for managers over the last decade. Alignment is defined as “the capacity to
demonstrate a positive relationship between information systems and the accepted
financial measures of performance” (Strassmann, 1997). One of the most extensively
used models of alignment is the strategic alignment model proposed by Henderson and
Venkatraman (1999). This multidimensional model identifies the internal and external
dimensions and how these can be integrated functionally with the organizational strategy
(Henderson and Venkatraman, 1999). Basically, the majority of alignment models are
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based on the organizational structure and their objectives. This model places alignment
at the heart of the organization’s needs. Many of these models also reveal the influence
of the organization’s objectives on the alignment and this type of model focuses on the
connection between strategy and technology. To develop an attainable level of
alignment within an organization, the IT/IS purpose has to be located within the
organizational structure. A direct advantage of strategic alignment is a perception of
higher business value of IT/IS. Segars and Glover (1998) suggest that alignment
produced by strategically positioned IT/IS improves the stature of IT/IS within an
organization. Henderson and Venkatraman (1999) advocate the importance of
strategically positioning of IT/IS within organizations. They argued that successful
applications of this model result in organizational capability to leverage IT/IS resources
on a continuous basis to support competitive advantage in the marketplace. They also
indicate the need for a change in IT/IS orientations from an exclusively internal focus to
one that fits strategically with the external IT/IS domain environment (Bhatnagar, 2007).
Managers should foresee to achieve a good alignment between information systems and
business for smooth work of the organization. Many organizations structure IT/IS and
information flow in a way to be centralized thus resulting in the control of information
which in turn may result significant power structure within the company (Bhatnagar,
2007). Technology is an important aspect in the alignment of information systems with
business strategy. This is dependent on the type of information systems infrastructure
used as a resource to assist in granting business goals. Slater (1999) argues that in
aligning infrastructure with business strategy it is the hardest when changing business
strategy and information systems infrastructure. For business and information systems
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strategies to be aligned it is necessary to clearly define business and IT/IS goals and
review the formulation of these goals (Slater, 1999). It is important for good alignment
that IT/IS professionals be involved during business planning and business professionals
to be involved during IT/IS planning (Bhatnagar, 2007). King and Teo (2000) suggested
that information systems planning is becoming important as the “organizations attempt
to leverage IS applications to improve efficiency, reengineer business processes, gain
competitive advantage, and compete more effectively”. It was interesting to know that
there was no particular strategy being used for the development of plans. King and Teo
(2000) reported that there is no actual model or theory available for developing the IS
plan but one have to keep the IT staff trained up to date and fully aware of new
technologies, along with the business needs and requirements.
According to Henderson et al., (2012), the potential for using information technology to
affect the competitive position of the firm has served to highlight the importance of
effective information systems planning. As the criticality of effectively linking the
strategic IS plan to the strategic business plan has increased, the need to better
understand the nature of strategic planning, in general, and strategic IS planning, in
particular, has also increased. It is now particularly relevant to ask how strategic IS
planning adds value to efforts to devise a strategic business plan. A better understanding
is required of both the types of products produced by a strategic IS plan as well as the
impact on the overall planning process. Venkatraman (1989) argues that the intersection
of interest between IS planning and strategic planning stems not only from a common
critical assumption, i.e., a belief that planning positively affects the performance of the
firm, but also from the similarity in the research questions and methodological issues
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that have been pursued. Strategic planning is often approached from a systems view of
planning and design.
2.3.6 Strategic Information Systems
A Strategic Information System (SIS) is a system that helps companies change or
otherwise alter their business strategy and/or structure. It is typically utilized to
streamline and quicken the reaction time to environmental changes and aid it in
achieving a competitive advantage. Key features of the Strategic Information Systems
are as following:
1) Decision support systems that enable organizations to develop a strategic
approach to align Information Systems (IS) or Information Technologies (IT)
with an organization's business strategies
2) Primarily Enterprise resource planning solutions that integrate/link the business
processes to meet the enterprise objectives for the optimization of the enterprise
resources
3) Database systems with the "data mining" capabilities to make the best use of
available corporate information for marketing, production, promotion and
innovation. The SIS systems also facilitate identification of the data collection
strategies to help optimize database marketing opportunities.
4) The real-time information Systems that intend to maintain a rapid-response and
the quality indicators.
Earl (1993) studied the experiences in strategic information systems planning. Strategic
information systems planning (SISP) remains a top concern of many organizations.
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Accordingly, researchers have investigated SISP practice and proposed both formal
methods and principles of good practice. SISP cannot be understood by considering
formal methods alone. Earl (1993) examined SISP experience in 27 companies and,
unusually, relies on interviews not only with IS managers but also with general
managers and line managers. By adopting this broader perspective, the investigation
reveals that companies were using five different SISP approaches: business-led, method-
driven, administrative, technological, and organizational. Each approach has different
characteristics and, therefore, a different likelihood of success. The results show that the
organizational approach appears to be most effective.
Segars and Grover (1998) researched into strategic information systems planning
success: An investigation of the construct and its measurement. Strategic information
systems planning (SISP) requires significant outlays of increasingly scarce human and
financial resources. Yet, there exists very little understanding of how the success of this
planning activity is measured. Using classical frameworks for measurement
development as well as contemporary statistical techniques for assessing dimensionality,
Segars and Grover (1998) study theoretically develops and empirically tests a
measurement model of SISP success. The results suggest that SISP success can be
operationalized as a second-order factor model. The first order constructs of the model
are termed alignment, analysis, cooperation, and improvement in capabilities. These
factors are governed by a second-order construct of SISP success. The results of the
study are framed as a tool, for benchmarking planning efforts as well as a foundation for
operationalizing a key dependent variable in SISP research.
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Hopkins and Hopkins (1997) conduct a research into strategic planning and financial
performance in banks. An integrative model of relationships among managerial,
environmental, and organizational factors, strategic planning intensity, and financial
performance was developed and tested using data from 112 banks. The results suggested
that the intensity with which banks engage in the strategic planning process has a direct,
positive effect on banks' financial performance, and mediates the effects of managerial
and organizational factors on banks' performance. Results also showed a reciprocal
relationship between strategic planning intensity and performance. That is, strategic
planning intensity causes better performance and, in turn, better performance causes
greater strategic planning intensity. The results hold implications for other financial
services institutions subject to similar conditions that banks must operate under.
2.3.7 SISP Success Predictors
There is an overwhelming consensus in the literature that no other process predicts the
SISP success as well as top management commitment and active participation (Ang &
Teo, 2001; Bechor et al., 2010). Top management plays a key role at enabling good
communication and cooperation between different departments and different
stakeholders which have specific information needs and opinions about IT issues. Other
important areas of top management involvement are: the promotion of the commitment
to change, the control of the SISP implementation and the initiation of regular updates of
the SISP plan. Strategic business planning represents the most sophisticated and
complete process of strategic thinking that provides the enterprise with the capability of
continuous control and analysis of the long term alignment between all relevant
environmental and enterprise characteristics (Ruohonen, 1996). This process is
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composed of four phases (Hunger & Wheelen, 1998): environment scanning, strategy
formulation, strategy implementation and strategy evaluation and control. Top
management sophistication measured as the quality of top management knowledge and
know-how through all four phases of the strategic business planning process was proven
to have an important positive effect on the efficiency and spread of IT use in the
enterprises (Gupta et al., 1997).
Until the 1990s, most authors considered the role of IT limited to the operational level of
planning (Garg et al., 2002) and did not consider IT as a technology that could create
important competitive strategic advantages (Griffiths et al., 1990). However, in the last
20 years, such views significantly changed. Today, IT is considered one of the key
general purpose technologies (Bresnahan, 2001) that can deliver strategic advantages
through all the four phases of strategic planning (Garg et al., 2002) and radically change
the process of the creation of goods in the enterprises (Hit & Snir, 1999). Thus, it has
become essential that the top managers themselves become power users of IT since
without the first-hand knowledge and personal experience, top managers can hardly be
able to successfully manage SISP and capture the potential of IT. The need to align the
business strategy and the IT strategy has long been advocated as necessary for an
enterprise to gain sustainable competitive advantages by both researchers and
practitioners (Chan & Sabherwal, 2001; Garg et al., 2002). For this reason, copying the
IS from competitors does not create large benefits unless the enterprises have very
similar business strategies (Chan & Sabherwal, 2001). The need to align IT with
business needs is thus a recognized SISP objective (Earl, 1993) present in several SISP
success models (Grover & Segars, 1998).
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Enterprises have limited resources to invest in IT. Consequently, evaluating and
prioritizing IT projects become important in order to ensure efficient and effective
allocation of the available resources. For this reason, a priority system positively
influences the success of the IS/IT strategy implementation (Hartono et al., 2003) and is
thus recognised as an important activity that influences SISP success (Ang & Teo 2001;
Bechor et al., 2010). Such a system should not be a reflection of the power of any
stakeholder group, but rather reflect the importance of an IT project for the achievement
of a business strategy. Good personal and professional competences of project team
members lead to successful management of IT and result in projects that are, with high
probability, completed on time and on budget. The ability to obtain sufficiently
competent project leaders and team members from the ranks of the middle management
was thus soon recognized as a critical SISP success factor (Nelson and Somers, 2001).
In SISP, competence includes more than just familiarity with the technical aspects of
systems development. Business process identification, knowledge about business
processes, as well as interpersonal skills are even more important since they facilitate
greater integration between the business planning and the SISP process (Ang et al.,
1997).
There is a wide spread consensus in the literature that enterprises can only gain the
majority of benefits from IT investments if they complement such investments with
changes in business strategy, structure, processes and culture (OECD, 2004). The
successful design and implementation of the organizational changes required for a
productive use of IT is, however, one of the hardest SISP success predictors to manage
successfully because it is accompanied by significant risks, increased complexity and
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large costs (Appleton, 1999). Thus, it is not surprising that the underestimation of the
magnitude and number of difficulties an enterprise encounters while managing this SISP
success predictor is the most common reason that the deployment of IT ends
unsuccessfully (Nelson & Somers, 2001). Several authors include the design and
implementation of technical changes in the overall success predictor of change
management (Kuang et al., 2001; Nelson & Somers, 2001). However, establishing IS
goals, planning software functionality, choosing appropriate applications and managing
the conversion from the old to the new IS require specific know-how which differs from
the know-how needed to manage organizational change. Since monitoring these two
“change” success predictors separately enables a clearer attribution of task responsibility
to individual internal stakeholders (IT management vs. top management).
The importance of user satisfaction and acceptance of the new IS as a predictor of a
successful SISP implementation is well documented (Bechor et al., 2010). When an
enterprise involves key users in the SISP process, they get a broader understanding of
the significance of the SISP process for the enterprise as a whole and better comprehend
the necessity to change their tasks (Bingi et al., 1999) which lowers their overall
resistance to change. User involvement in SISP thus positively impacts the flexibility of
the IS, which in today’s uncertain environment is often an important benefit
(Palanisamy, 2005). End user training is necessary when enterprises implement SISP
because it provides the necessary knowledge to end users for efficient execution of their
tasks within the newly deployed IS. The goal of the training should be to enable the
users to perform new tasks, do existing tasks faster and increase their quality of work.
Good user training also significantly reduces the resistance to change from the end users
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(Mahrer, 1999). Gottschalk (1999) also found out that if enterprises pay attention to user
training during the planning stages of SISP, user training becomes a good predictor of
the success of SISP implementation.
2.3.8 The Miles and Snow Typology
Raymond Miles and Charles Snow suggest that business level strategies generally fall
into one of four categories: prospector, defender, analyzer, and reactor.
i. Prospector: An organization that follows a prospector strategy is a highly
innovative firm that is constantly seeking out new markets and new opportunities
and is oriented toward growth and risk taking.
ii. Defender: Rather than seeking new growth opportunities and innovation, an
organization that follows a defender strategy concentrates on protecting its
current markets, maintaining stable growth, and serving its current customers.
iii. Analyzer: An organization that follows an analyzer strategy both maintains
market share and seeks to be innovative, although usually not as innovative as an
organization that uses a prospector strategy. Most large companies fall into the
third category, because they want both to protect their base of operations and to
create new market opportunities
iv. Reactor: According to Miles and Snow, an organization that follows a reactor
strategy has no consistent strategic approach; it drifts with environmental events,
reacting to but failing to anticipate or influence those events. Not surprisingly,
these organizations usually do not perform as well as organizations that
implement prospector, defender, or analyzer strategies. Most organizations
would probably deny using reactor strategies.
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2.4 Bank Performance
Banks have different performance measurements. Some of which are profitability, sales
growth, IT infrastructure etc.
2.4.1 Performance Indicators
The result of effective strategic management should be evident in the performance of the
organization. Various works support the sustained evolution towards positions, which
are more optimistic about the impact of IT (Brynjolfsson and Hitt, 2001; Brynjolfsson,
Hitt and Yang, 2000). The researchers involving Hitt and Brynjolfsson, admitted that
investment were associated with an increase in productivity of works who work with
information and additionally they claim that investments in computing generates greater
levels of productivity than any other type of investments, despite the short life-span of
this type of tool. However, the researchers maintain that the results obtained do not
imply that investing in IT guarantees net productivity gains, but that other factors may
influence the relation (Bruque et al., 2002). Hitt and Brynjolfsson (19965) discovered
within the same period that there is no relation between growth in market share or
business profit and investment in IT and even found slight negative correlation
coefficients between both variable pairs.
Evidence showed a relationship between investment in IT and improvement in global
business performance and productivity. (Brynjolfsson, Hitt and Yang, 2000;
Brynjolfsson and Hitt, 2001). Using a global results indicator (Tobin’s Q ratio) based on
the firm’s value in the stock market, they concluded that those firms, which invested
more in IT in the period 1987 – 1994, achieved superior results. More so the correlation
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was stronger when the firm, along with the investment in IT, underwent a structural
reorganization involving interdisciplinary workgroups, increase in independent decision
making and support for employee training. More recently, researchers began to find
positive relationships between IT investment and various measures of economic
performance.
Ratios and trend analysis were arrived at using data from annual accounts. Specially, the
ROA (return on assets) and ROE (return on equity) models were employed to measure
performance. These are two measures of performance that relate to how efficient and
profitable a business entity is. ROA measure efficiency and tells how well a firm’s
resources (assets) have been employed to generate income. Efficiency reflects higher
ROA which is composed of profit margin (PM) and assets utilization. ROE measures
returns to shareholders.
Return on Assets (ROA) Ratio
Return on assets is the ratio of annual net income to average total assets of a business
during a financial year. It measures efficiency of the business in using its assets to
generate net income. It is a profitability ratio. The formula to calculate return on assets
is:
ROA =
Annual Net Income
Average Total Assets
Net income is the after tax income. Total assets at the beginning and at the end of the
year can be obtained from year ending balance sheets of two consecutive financial years.
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Return on Equity (ROE) Ratio
Return on equity or return on capital is the ratio of net income of a business during a
year to its stockholders' equity during that year. It is a measure of profitability of
stockholders' investments. It shows net income as percentage of shareholder equity. The
formula to calculate return on equity is:
ROE =
Annual Net Income
Average Stockholders' Equity
Net income is the after tax income whereas average shareholders' equity is calculated by
dividing the sum of shareholders' equity at the beginning and at the end of the year by 2.
Harris and Katz (1991) found positive relationship between IT expense ratios and
various performance ratios although at times the relationship was quite weak. Alpar and
Kim (1991) in their study of 759 banks indicated that investment in IT has a cost
reducing effect. They also found a 10% increase in IT capital is associated with 1.9%
decrease in total costs. Increase in economics of scale as a contributing factor of IT was
found in Pulley and Braunstein’s (1984) study of information services firm as well.
Barua et al., (1991) found IT was positively related to measures of performance,
although the magnitude of the effect was generally too small to measurably affect final
output.
Alpar and Kim (1991) undertook a study and found out that, the problem of measuring
the impact of information technology on economic performance at the business unit or
enterprise level is receiving increased attention. Alpar and Kim (1991) developed a
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methodology based on the microeconomic theory of production and applied the model to
data from the banking industry. In addition, they compare their methodology to
approaches based on key ratios of information technology deployment. Both procedures
were applied to the same set of data. The results show that reasoning about information
technology value based on key ratios may be misleading, especially when the figures are
only calculated for a cross-section of data.
2.4.2 Clash of Expectations – Productivity Paradox of IT
Productivity is the fundamental measure of a technology’s contribution, which creates
room for competitive advantage. While major success stories exist, so do equally
impressive failures (Kemerer and Sosa, 1991). Since the beginnings of the computing
era (Kaufman, 1966) people have suggested that, the implementation of computing
technologies would have a series of positive effects (Cash and Konsynski, 1986). These
authors according to Bruque et al., (2002) claimed that IT could play a role as a strategic
tool. From the strategic point of view, IT could affect every one of Porter’s competitive
strategies whether cost leadership, differentiation or specialization in a market niche
(Bruque et al, 2002).
Thus, the Productivity Paradox phrase came into being when large investments in
information technology apparently failed to produce the much expected significant
increases in productivity in the 1980s and early 1990s and the early acclaimed positive
effects on two levels. The first is at the industry or economy wide level. This was
summed up in 1987 by Nobel Prize winning economist Robert Solow, who wrote, “we
see the computer age everywhere except in the productivity statistics, as quoted in
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Brynjolfsson and Hitt’s (1998) ‘beyond the Productivity Paradox’ (1998)” the second
productivity paradox was observed at the company level, where “there was no
correlation whatsoever between expenditures for information technologies and any
known measure of profitability” (Strassmann, 1990). The equivocal results of IT
investments, in many cases are caused by the inconsistency in IT firm performance
measurement issues (Willcocks and Lester, 1999).
Many connoisseurs of early studies examined the correlation between IT spending ratios
and various performance measurements, such as profits or stock returns (Dos Santos et
al., 1993; Strassmann, 1997). Since the correlation was either zero or very low, some
concluded that computer investments has been unproductive. However, spending more
on computers should generate higher profitability or stock market returns (Lim et al.,
2004).
2.4.3 Information Systems and Performance
The performance of financial firms refers to the ability of meeting the needs of
stockholder and stakeholder. The success or failure of these institutions is usually
revealed by a careful study of their financial statements. The most important dimensions
of performance are profitability and risk. Banks are businesses organized to maximize
the value of the shareholders' wealth invested in the firm at an acceptable level of risk.
Such an objective requires looking for new opportunities for revenue growth, greater
efficiency, and more effective planning and control (Rose and Hudgins, 2008). The
determinants of banks’ profitability can be divided into two main categories namely the
internal determinants which are management controllable and the external determinants
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which are beyond the control of the management of these institutions. (Guru, Staunton,
and Balashanmugam, 2002).
Lee (2012) tried to find out whether the success of information systems really matters to
firm performance. Many failed listed enterprises had strong information capabilities and
resources. However, such advantage did not help these enterprises survive during the
economy difficult times. Previous research of DeLone and McLean (2003) implied the
success of information systems will enhance the performance of enterprises. Based on
this implication, many enterprises continuously invested resources on information
systems as a strategy trying to gain advantage over competitors. The net benefits in
D&M model resulted from the success of information system does not always
significantly improve the enterprise performance but rather has a limit on it. In fact, such
an excess investment cannot improve the enterprise performance but exhausts more
valuable resources instead.
Ho and Mallick (2006) developed and tested a model to examine the effects of
information technology (IT) in the US banking industry. It is believed that IT can
improve bank’s performance in two ways: IT can reduce operational cost (cost effect),
and facilitate transactions among customers within the same network (network effect).
The empirical studies, however, have shown inconsistency in this hypothesis. Some
agree with the Solow Paradox, some are against. Since most empirical studies have
adopted the production function approach, it is difficult to identify which effect has
dominated; hence the reasons attributed have been the difference in econometric
methodology and measurement. Ho and Mallick (2006) attempt to explain the
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inconsistency by stressing the heterogeneity in banking services in a differentiated
model with network effects. Ho and Mallick (2006) characterize the conditions to
identify these two effects and the conditions for the two seemingly positive effects to
turn negative in the equilibrium.
Parsons et al., (1990) estimated a production function for banking services in Canada
and found that the overall impact of IT on multifactor productivity was quite low
between 1974 and 1987 and they posited that IT has positioned the industry for greater
growth in the future. Franke (1987) reaching similar conclusions, found that IT was
associated with a sharp drop in capital productivity and stagnation in labour
productivity, but remained optimistic about the future prospects of IT, citing the long
time lags associated with previous “technological transformation”.
Karimi et al., (1996) argue that, recently the globalization of competition has caused
many firms in the financial services industry to integrate their information systems.
According to a survey of 213 managers, they find that competitive strategy, information
technology (IT) maturity and size influence firms' perceived increase in IT investment.
Further, they find that the degree of IT integration within firms is a primary determinant
of firms' willingness to use IT as part of their strategic response to globalization. It
suggests that the new competitive strategies will be increasingly technology-based
global initiatives that are affected by the firms' IT maturity.
Harris and Katz (1991) looked at organizational performance and information
technology investment intensity in the insurance industry. They consider whether there
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75
existed a significant and systematic relationship between firm performance and
information technology investment intensity in the home office operation of 40 systems
technology leaders in the life insurance industry for the period 1983-1986. It is
hypothesized that in top performance insurance firms (1) information technology costs
as a proportion of total operating costs were higher, and (2) information technology
costs as a proportion of premium income were lower, than in weak performance firms.
Evidence is presented that indicates that firm performance was linked to the level of
information technology investment intensity.
Floyd and Wooldridge (1990) undertook a path analysis of the relationship between
competitive strategy, information technology, and financial performance.  They evaluate
the impact of competitive strategy on information technology (IT) and of it on
organizational performance. In addition, the research model incorporates indirect
performance effects from strategy and IT alignment. Data is drawn from the survey
responses of 127 banks and interviews with 68 bank CEOs. Path analysis separates
direct, indirect, and spurious effects. Interview data support the quantitative analysis.
The results lend statistical support to the strategy-IT relationship described in case
studies, and in addition, provide an explanation for inconsistent findings in previous IT
performance research.
Beccalli (2007) conducted a research into whether IT investment improves bank
performance?” He investigates whether investment in information technology (IT);
hardware, software and other IT services influence the performance of banks. Using a
sample of 737 European banks over the period 1995–2000, He analyzed whether IT
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76
investment is reflected in improved performance (measured using both standard
accounting ratios and cost and alternative profit efficiency measures). Despite banks
being major investors in IT, he found little relationship between total IT investment and
improved bank profitability or efficiency indicating the existence of a profitability
paradox. However, the impact of different types of IT investment (hardware, software
and services) on banks’ performance is heterogeneous. Investment in IT services from
external providers (consulting services, implementation services, training and education,
support services) appears to have a positive influence on accounting profits and profit
efficiency, while the acquisition of hardware and software seems to reduce banks’
performance.
2.4.4 Bank Operations and Cost Reduction
Several banks use IT to automate their key business and operations and help reduce
operational costs. Revenues are largely increased with the introduction of more channels
such as ATMs, internet banking or mobile banking to bring more customers or to retain
existing customers by offering convenience to banks on a 24x7 basis. Banks have also
placed a strong emphasis on IT to improve customer service, security, efficiency and
competitiveness of the business. Some of the initiatives to reduce costs or increase
revenues that the banks have implemented include consolidation of data centers and
servers, virtualization, network bandwidth management tool, installation of solid state
hard disks or implementation of advanced data replication tools. The proactive
monitoring of the infrastructure and applications has also helped banks reduce costs and
improve customer service. Infrastructure monitoring helps to reduce the potential
downtime and cost of servicing. The implementation of dashboards for various
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77
applications helps the senior management to monitor the status of applications on a real-
time basis. E-Procurement or reverse auction has also helped the bank’s IT team to
reduce their procurement related expenditure.
2.4.5 Customer Satisfaction
Customer satisfaction, a term frequently used in marketing, is a measure of how
products and services supplied by a company meet or surpass customer expectation.
Customer satisfaction is defined as “the number of customers or percentage of total
customers, whose reported experience with a firm, its products, or its services (ratings)
exceeds specified satisfaction goals”. It is seen as a key performance indicator within
business and is often part of a balanced scorecard. In a competitive marketplace where
businesses compete for customers, customer satisfaction is seen as a key differentiator
and increasingly has become a key element of business strategy. Within organizations,
customer satisfaction ratings can have powerful effects. They focus employees on the
importance of fulfilling customers’ expectations. Furthermore, when these ratings dip,
they warn of problems that can affect sales and profitability. Therefore, it is essential for
businesses to effectively manage customer satisfaction. To be able do this, firms need
reliable and representative measures of satisfaction. In researching satisfaction, firms
generally ask customers whether their product or service has met or exceeded
expectations. Thus, expectations are a key factor behind satisfaction. When customers
have high expectations and the reality falls short, they will be disappointed and will
likely rate their experience as less than satisfying.
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78
2.4.6 Impact of Information System Strategy on Banks Performance
Amoako (2012) examines the impact of ICT on banking operations in Ghana and makes
recommendations for the improvement in the banking sector. The surfacing of
technological advancement coupled with Globalization has call for the implementation
of ICT into business process of which financial institutions is no exception. The increase
in customer base as well as increase in demand for more innovative products and
services has also required the need for ICT in banking industry. In Ghana, however,
banking institutions have been subjected to criticism for not providing their customers
with innovative and convenient banking services, with the results that some customers
especially business women, find it more convenient keeping their savings at homes than
in the banks Amoako (2012).
Wilson (1999) carried out a study into the Implementation of Information Systems
strategies in UK companies. The overall objective of the study was to discover the extent
to which major UK companies had adopted a strategic view of information systems
development. In addition to this main objective there were a number of subsidiary aims.
For companies that claimed to have a strategy they wished to know:
1) How the link to business strategy was maintained.
2) The organizational level at which strategy was initiated.
3) How the effectiveness of a strategy was monitored.
4) What aspects of information systems development featured in existing strategies,
and what were future plans for investment.
5) How successful strategies were deemed to have been, and what barriers to the
establishment and implementation of strategy had been experienced.
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79
6) How far the idea of competitive advantage was incorporated in strategy, and
what particular competitive ends were pursued.
Wilson (1999) concluded that:
 The strategy should be formally documented, should be initiated by the Board,
monitored by planned reviews, and should base information provision on key
indicators, critical success factors, or on a detailed analysis of management
information needs.
 As a large diverse corporation, IS strategy has tended to be dealt with major
grouping levels. Acquisitions have carried on, or developed, independent
strategies. A major review is currently in progress to determine the degree to
which a corporate strategy is required
 The central plank is the continuing evolution of a master set of operational
systems for the office. It was the original development of these in the late
seventies that first established IT as a strategic weapon for the office. And it is
still seen by the management that those operational systems are the cornerstone
of our IT strategy. The primary additional objective this time round has been to
replace existing systems in an evolutionary fashion with systems which will cope
with a much higher volume of business in an equally efficient manner and yet
will allow rapid product introduction, evolution of product, and evolution of
organizational structure. The second major plank is concentrating on the
competitive edge, strategic advantage.
 Another aspect of corporate style is the attitude to cost. The organization will
quite happily invest millions almost at the drop of a hat in large-scale technology
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80
for big operational systems. One can get authority to spend a million or two on
new hardware to improve the system in a ten minutes meeting with the managing
director.
 Difficulty in gaining full approval of strategy. This makes long-term, integrated
systems development difficult.
2.5 Conclusion
From the review of the literature, it is clear that a lot of work have been done in the areas
of information system strategy, information systems investment, and bank performance.
It is evident that studies outside African are more in-depth than those undertaken in
Africa. It is also very clear that very little has been done in the area of information
system strategy and bank performance particularly in Ghana and Africa as a whole.
Thus, financial services are gradually moving out of the high streets into cyberspace and
the realms of electronic commerce. This is accompanied by huge investments in IT for
varied reasons. However, the most seemingly reason may be the returns on productivity,
profitability, and market share. The uniqueness of this study is derived from the fact that
besides determining bank performance and information system strategy as have been the
case in earlier studies, this research establishes the relationship between information
system strategy, bank information systems, and bank performance. The study seeks to
add on to the scanty literature on the impact of information systems strategy on bank
performance in the banking industry in Ghana. Even though much has been written on
the connection between business strategy and information technology and information
systems (IT/IS), very little has been done on the use of IT/IS in the banking sector. This
research is an attempt to fill this gap.
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81
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companies: Aims and barriers to success. International Journal of Information
Management, 9, 245-258.
Wise, V., & Ali, M. M. (2009). Customer relationship management in banks with
special reference to Bangladesh. Southwest Review of International Business
Research, 19(1), 45-57.
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CHAPTER THREE
BACKGROUND INFORMATION ON THE SELECTED BANKS
3.1 Introduction
This chapter provides an overview of banking in Ghana and discusses the various stages
that banking in Ghana has gone through over the years. It provides background
information on the selected banks in Ghana: National Investment Bank, Ghana
Commercial Bank and Agriculture Development Bank which constitute the local banks
as well as Barclays Bank Ghana, Standard Chartered Bank Ghana and Stanbic Bank
Ghana which also constitute the foreign banks.
3.2 Overview of Banking in Ghana
The Ghanaian banking system comprises of the Bank of Ghana (the Central Bank), the
banks, the non-bank financial institution (NBFI), the rural banks, the community banks
and forex bureau (Anin, 2000). The profile of the banking industry in Ghana is viewed
in terms of colonial era, post war era, banking in a closed economy, banking in the era of
structural adjustment, post structural adjustment era, banking laws and prospects of bank
risk management in Ghana.
3.2.1 Banking in the Colonial Era: 1890 – 1945
The economic developments in the Gold Coast during the 1800’s were underpinned by
the use of un-uniform currency. Until 1880, trade was conducted along the West Coast
of Africa in a bewildering array of money tokens such as cowries, manilas, and brass
rods. The cowries’ shells were originally imported from the Maldives Islands but their
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use as currency declined in the early 19th Century in favour of expressing the value of
goods and services in gold weight values. These were determined according to the
generally recognized Asante gold weights.
British coins were first exported to the Gold Coast Colony in 1818. In 1822, dollars were
also introduced to pay soldiers’ salaries and to meet the cost of their upkeep. In 1825,
British silver coins were introduced. These coins eventually became the common
currency of the Gold Cost a decade after the passing of the Demonetization Ordinance.
The various forms of currency used had various problems, for instance the gold dust had
the practical problem of weighing and thus was not always convenient in commercial
transactions. Cowries had the setback of being too bulky and were also not always
convenient medium of exchange. The Colonial Authorities attempted to resolve the
problem with the passing in 1880, of the Demonetization Ordinance which restricted
currency to: all Gold and British Sterling, Spanish and South America Doubloons,
American Double Eagles, French 20-franc pieces and Gold Dust and Nuggets. The real
effect of the Demonetization Ordinance was the virtual elimination from circulation of
the traditional local currency tokens.
3.2.2 Entry of the Colonial Bank / Barclays Bank DCO
The Bank of British West Africa (BBWA) was registered as a limited liability company
by the directors of Elder Dempster and began trading on March 31, 1894, initially in
England, then in Lagos and finally in 1896, opened a new branch of the bank in Accra,
Gold Coast. Shortly after the bank was established in Accra it was able to acquire the
business of maintaining the Government accounts. In addition, it was able to pioneer the
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use of cheques in settlement of Government accounts which helped to advertise the
usefulness of the bank to the public (Anin, 2000). The banking monopoly enjoyed by
BBWA ended in 1917 with the establishment in Accra a branch of the colonial bank
which had since 1836, operated in the West Indies. Its London Board decided in the
course of the First World War to expand its operations to other parts of the British
Colonial Empire. The Board obtained the consent of the United Kingdom Parliament
through the amendment of the Colonial Bank’s Charter. In 1925, Barclays concluded all
the financial agreement which led to the merger of the colonial bank, the Anglo
Egyptian Bank and The National Bank of South Africa to form a new bank known as
Barclays Bank DCO (Dominion, Colonial and Overseas). In 1926, the six branches of
the Colonial Bank henceforth became branches of Barclay Bank (DCO).
3.2.3 The Nature and Content of Banking Services Offered
The type of foreign banking services offered by the two banks during this era comprises
documentary credits, discounting of Bills of Exchange, Collections and Remittances.
Domestic banking transactions consisted of the maintenance of numerous current
accounts for individuals and corporate customers. The indigenous customers of the two
banks consisted mainly of the merchants, senior civil servants and members of the
British educated professional’s classes who were known colloquially as “been-tos”.
Saving accounts were also opened for customers who were usually literate. (Anin,
2000). Until the introduction of mechanized bank accounting machines in 1953 by the
newly established Bank of Gold Coast, all bank transactions were recorded manually.
Interest calculations on all accounts were made by reference to Interest Tables. Another
interesting feature of branch accounting in the pre-1950 era was that all branches of the
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two banks of the West Coast were controlled from London. Until the establishment of
the Bank of Ghana at independence, the currency duties of the West African Currency
Board were taken by BBWA on an agency basis (Anin, 2000).
3.2.4 Banking in the Post-War Era: 1945-1960
According to Anin (2000), the end of the Second World War marked a decisive turning
point in the history of the Gold Coast. It was not a mere transition from war to peace. In
both, the political and economic spheres, there were momentous developments. Banking
operations were actively involved in financing the increased demand for West African
produce and also for financing a much larger volume of imports. The Bank of Gold
Coast Ordinance was passed by the legislature in October 1952. Four months after the
Ordinance came into force (February 1953), the first branch of the Bank of God Coast
opened its doors to the public on the 20th May 1953. The reaction of the two existing
expatriate banks to the new Bank of the Gold Coast was interesting to note. BBWA was
more accommodating even though it stood to lose the Government accounts to the
newcomer. Barclays DCO’s reaction was most strange since it made complaints of the
fact that the bank had lost all government businesses which they had previously handled
and lost most of their well trained and loyal staff; a practice they had indulged in when
they came into existence and it took the treat of an injunction from BBWA’s London
Office before DCO’s poaching of BBWA staff ceased (Anin, 2000). The Bank of Gold
Coast was transformed in 1957 into two autonomous institutions with different functions
of which the Ghana Commercial Bank and the Bank of Ghana emerged.
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3.2.5 Banking in a Closed Economy: 1960 -1983
The period is characterized by the incorporation of state banks which were established to
fulfill the development objectives of the government. In addition, to the Ghana
Commercial Bank which had been established as a state-owned banking institution as far
back as 1953, the Nkrumah administration of the First Republic incorporated specialist
banks for the development of industry and agriculture. These banks were the
Agricultural Credit and Co-operative Bank and National Investment Bank. Nkrumah’s
policy of establishing a bank to provide finance for a specific area of the national
economy was continued by Col. I. K. Acheampong with the passing, in 1972 of the
Bank for Housing and Construction.
3.2.6 Banking in the Era of Structural Adjustment: 1983 – 1997
In April 1983, the government performed a volte-face and dramatically changed the
course and content of economic policy and management. It announced a series of reform
measures and agreed on a short-term stabilization programme with the World Bank and
the IMF. A vital component of the Economic Recovery Programme was the World
Bank’s determination to carry out a thorough reform of Ghana’s banking system, paying
special attention to the state owned banking sector.
By 1983, the banking system was reflecting the serious problems of the national
economy. The large state-owned industrial and agricultural sectors had run up massive
overdrawn position with the state Owned banking institutions. More ominously, these
loans and overdrafts had degenerated into the “non-performing” loan categories in the
books of these banks. The World Bank and the Government of Ghana agreed that a
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reform and restructuring of Ghana’s banking industry were indispensable components of
Economic Recovery Programme. With technical and financial assistance from the
International Development Association (IDA), the Government embacked upon a
financial sector reform programme in 1988. The broad odjectives of the programme
were:
1. To undertake the restructuring of financially distressed banks;
2. To enhance the soundness of the banking system through an improved regulatory
and supervisory framework;
3. To improved the mobilization and allocation of financial resources including the
development of money and capital markets (Anin, 2000).
3.2.7 The Banking Act 2007, Act 738
The banking Act 2007 is an Act to amend the Banking Act, 2004 (Act 673) to facilitate
the establishment of an international financial services centre that seeks to attract foreign
direct investment, income from licence fees payable in foreign currencies, create
employment, enhance local skills and knowledge, strengthen the financial sector through
expansion in the use of investment banking instruments and to provide for related
matters.
The Bank of Ghana (BOG) shall issue to the applicant a final approval and a licence to
carry on business, after the BOG is satisfied with the organizational infrastructural
arrangements made by the applicant, and that the applicant has compiled with the terms
and conditions stipulated in the provisional approval. A licence issued under this Act
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shall be issued subject to the terms and conditions that the Bank of Ghana may impose
and shall be in one of the following categories:
a) General Banking Licence;
b) Class I Banking Licence; or
c) Class II Banking Licence;
Subject to this Act or any other enactment, the holder of a Class II Banking Licence
shall not:
i. Take deposits or placements from any person resident in Ghana other than
another bank holding a General Banking Licence with respect to its Class II
banking business, or another bank holding a Class II Banking Licence;
ii. Invest in an asset that represents a claim on any person resident in Ghana except
a claim resulting from
iii. Carry on business in Ghana other than the business for which its Class II
Banking Licence has been issued.
In the case of a bank holding a General Banking Licence, the bank is not authorized to
carry on business in any office or branch, other than its principal place of business,
unless it has obtained a prior approval. The bank holding the Class I Banking Licence
shall at all times while in operations maintain a capital adequacy ratio of ten
percent10%. In the case of holding a Class II Banking Licence, not authorize banks to
have more than one place of business for the purpose of Class II banking. In terms of
capital required for these various categories of banks to hold, the various licence banks
are expected to hold a minimum initial paid up capital after deduction of accumulated
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losses: for a General Banking Business GH¢ 70 billion in relation to its class I banking
business in a currency and other amount as the BOG may determine. For a class II
Banking Lincence an amount in a currency as the bank of Ghana determine from time to
time and for Rural Banks GH¢ 500 million.
Whilst a bank holding a Class II Banking Licence shall at all times while in operations
maintain a capital adequacy ratio of the percentage that the bank may determine. This
percentage shall be determined by the Bank of Ghana from time to time, after
discussions with the bank, and shall not necessarily be the same for all banks or all
banks of that class. The BOG uses the criteria of other financial resources available to
the bank in question, the mature, scale and risks of the bank’s operations and the amount
and nature of net own funds required, in the banks judgment to protect the interest of
depositors and potential depositors and the public. This can be found in section 23 of the
banking act. A licence shall not be granted by the Bank, unless it is satisfied with;
a) The technical knowledge, experience, financial conditions and history of the
applicant;
b) The adequacy of the capital structure of the applicant;
c) The character of the business and its management;
d) The adequacy of the applicants accounting control systems and records;
e) In the case of an applicant incorporated outside Ghana, that the applicant is a
branch or related company of a foreign bank of established international
reputation.
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To sum up, the recent adoption of the Banking Law has tightened risk exposure limits,
established higher minimum capital adequacy ratios, strengthened accounting standards,
broadened the scope of audits and imposed more stringent reporting requirements for
banks.
3.3 Profile of National Investment Bank (NIB)
National Investment Bank (NIB) Limited was established in March 22, 1963. The
National Investment Bank Limited was the first development bank in Ghana to promote
and strengthen rapid industrialization in all sectors of the Ghanaian economy. NIB
Limited now operates as a universal bank in focusing on development/commercial
banking activities. NIB has undergone management, institutional and financial
restructuring, which has strengthened the organization and now, has 27 branches
nationwide. NIB Ltd. has in the past participated in foreign lines of credit, which were
administered by Bank of Ghana to meet term loan and working capital needs of the
Bank’s customers (www.nib-ghana.com). NIB is now one of the designated financial
institutions, which sources funds from Export Development and Investment Fund
(EDIF) for lending to exporters as term and Working capital loans. The Bank was
awarded the prestigious Euromarkets Award in 1994 and won the 2003 Best Bank of the
Year for Long Term Loan Financing. NIB plays a leading role in developing a member
of highly successful industrial projects in Ghana, through equity and debt financing.
Some of these are Nestle Ghana Ltd., Nexans Kabelmetal (Ghana) Ltd., Merchant Bank
(Ghana) Ltd., and Total Ghana Ltd.
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Apart from development banking activities, NIB Ltd. also provides corporate and
commercial banking facilities involving both domestic and foreign transactions at very
competitive rates and on flexible terms. These include Current and Savings Account,
Call Deposit, Fixed Deposits, Loans and Advances, Personal Services and Warehousing.
NIB Ltd. is networked nationwide and renders efficient banking services. NIB ensures
that the customers receive consistent and efficient services. In addition, highly trained
personnel of the bank attend to standard banking needs promptly. NIB also delivers
quantity customer service, tailored to meet requirements of customers. (www.nib-
ghana.com).
3.4 Profile of Ghana Commercial Bank (GCB)
Ghana Commercial Bank Limited (GCB) started operations in 1953 as the Bank of the
Gold Coast to provide banking services to the emerging nation for socio-economic
development. The Bank was to provide special attention to Ghanaian traders, business
people and farmers who could not elicit support from the expatriate banks. In 1957,
when Ghana attained independence, Bank of Ghana was established as the Central Bank
whiles the Bank of the Gold Coast was renamed Ghana Commercial Bank to focus
solely on commercial banking services. Since then GCB branches have been opened
across the length and breadth of the nation tapping the potential of the regions that make
Ghana. The Bank had been wholly government owned until 1996 when under the
economic recovery programme, part of the government ownership was divested. Today
government ownership stands at 21.36% while institutional and individual holdings add
up to 78.64% (www.gcb.com.gh).
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From the one branch of the 1950s, GCB now has over 150 branches and 11 agencies
throughout the country with high quality human resource. Currently, there are
professionals of various disciplines who work in tandem to achieve the objectives of the
Bank. The growth of the Bank has been synonymous with its customer base. During the
first five years of the Bank’s operations, the customers were mainly small Ghanaian
traders (now turned SMEs) and other nationals who were expected to maintain credit
balance accounts because the Bank was then not adequately capitalized. From the small
trader as customer, GCB now has customer profile that ranges from salaried workers
through small and medium scale entrepreneurs to large trading concerns, quasi-
governmental institutions and corporate customers (www.gcb.com.gh). The bank’s
mission is to be the established leader in banking, satisfying the expectations of
customers and shareholders, providing a full range of cost efficient and high quality
services, through the optimization of information technology and efficient branch
network (www.gcb.com.gh).
GCB provides a wide range of products and services for the benefit of its customers.
From the traditional products of the Current/Savings Accounts, GCB now offers
specialized products and services. There are also investments products like treasury bills
as well as fixed and call deposits. These are cut to suit the individual needs of the
customers. In addition, GCB has taken advantage of an enhanced information
technology system to introduce Internet Banking (Commernet Plus), Royal Banking,
Smart Pay (Fee Payments), Kudi NKosuo, GCB Inland Express Money Transfer,
International Money Remittance Payments, GCB Kidistar Account and MasterCard. All
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these have been done to increase profits and enhance shareholder value. Today GCB can
boast of being the widest networked Bank in Ghana (www.gcb.com.gh).
3.5 Profile of Agricultural Development Bank (ADB)
The Agricultural Development Bank (ADB) was set up by an Act of Parliament (Act
286) in 1965 to promote and modernize the agricultural sector through appropriate but
profitable financial intermediation. Its original name then was the Agricultural Credit
and Co-operative Bank and the establishing Act gave its main object as “to provide
credit facilities to agriculturists and person for connected purposes”
(www.agricbank.com). ADB has 50 branches nationwide whose locations reflect the
level of agricultural activities and the flow of deposits. The Bank also has 4 Farm Loans
Offices (FLO) and 10 Agencies. ADB has opened thirty nine (39) ATMs so far. ADB
customers are assured of a lot of convenience, since it is possible for card holders to get
access to accounts any time and at any of these ATM locations, irrespective of one’s
own branch (www.agricbank.com).
ADB primarily provides specialized financial intermediation and related services with
the objective of promoting a sustained and diversified agricultural and rural development
foundation for the country’s overall development. In addition, to cultivate effective
linkages between the agricultural sector and the rest of the economy and to complement
the provision of banking services throughout the country. ADB also provides ordinary
commercial banking services as well as servicing other sectors of the economy
(www.agricbank.com).
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3.6 Profile of Barclays Bank of Ghana (BBG)
Barclays has operated in Ghana for ninety four years. It is a wholly owned subsidiary of
Barclays Bank PLC. Its vision is to become the best bank for every customer, in every
branch, for every product and every time. Barclays Bank of Ghana Limited has an
expansive retail and commercial banking network in the country with 92 branches and
over 130 ATMs in all regional capitals and major towns. Its products and services are
targeted particularly at the business and corporate, as well as retail customers. Barclays
offers a wide range of commercial, retail and treasury products and services. It also
offers a wide range of commercial products and services for Small Medium Enterprises
and indigenous businesses (www.barclays.com/africa/ghana).
The Bank of Ghana in February, 2010 named Barclays Bank of Ghana Limited the
biggest foreign bank and also the largest bank in terms of capacity to handle transactions
in Ghana. In June 2009, Barclays launched its Banc assurance proposition in partnership
with Enterprise Life Assurance Company Limited (ELAC) to enhance product range
with insurance product range with insurance product such as Term, Family Funeral Plan
and Education Plan for convenience of customers. The Bank’s premier banking offers
tailor made solutions and one-on-one banking to its high net worth. In addition, Premier
Life, a new service proposition to replace Prestige Banking has been introduced. It is
targeted at customers who require convenient banking, quick and efficient service as a
level of privacy and recognition. The Bank’s sustainability programme focuses on three
pillars. Banking for brighter futures; Looking after local communities and charity begins
at work (www.barclays.com/africa/ghana).
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3.7 Profile of Standard Chartered Bank (SCB)
Standard Chartered Bank Ghana Limited (SCB) has been in operation since 1986 when
it was known as the Bank of British West Africa. The bank is 80% owned by Standard
Chartered PLC, and the remainder of the stock is owned locally and traded on the Ghana
stock exchange. SCB provides a wide range of services in the consumer and corporate
and institutional banking sectors, including comprehensive trade finance, cash
management services and foreign exchange products through treasury operations. SCB
has 19 branches and two agencies in the country. Standard Chartered Bank Ghana offers
a wide range of personal banking products and services nationwide through a network of
19 branches, 6 excel centers, one agency on the Kwame Nkrumah University of Science
and Technology campus and alternate channels such as ATMs, call centers, transaction
banking, debit cards, personal loans, and SMS banking. These are fully computerized
and networked. Automated teller machines are located at most branches. Corporate and
institutional banking services are provided in three main locations in
(www.standardchartered.com.gh).
Standard chartered bank is the only bank which has 2 SME centers in the country.
Customers enjoy the privilege of a banking partner that is flexible and tailors solutions
to take care of their specific banking needs. Standard Chartered services are backed by a
strong commitment to providing its customers with effective and reliable banking
services and out serving their expectations (www.standardchartered.com.gh).
Standard Chartered Bank offers its corporate and institutional clients comprehensive
banking solutions with particulars emphasis on relationship banking. Corporate clients
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benefit from a full range of flexible financial propositions that address individual needs.
Clients can access traditional as well as structured products in the areas of lending, trade
finance, cash management and treasury. Customers also have access to cross-border
payments, treasury services, transaction banking and custodial services-all supported by
electronic funds transfer and cash management systems. Wholesale Banking provides
innovative solutions to address the needs of valued customers. An extensive knowledge
of international markets combined with a deep local insight puts the bank in a unique
position to provide quality advice and information on currencies, interest rates and risk
management. The bank has always been at the forefront of creative product offerings.
Products offered include foreign exchange forwards and spots, high yield deposits and
foreign currency options. The Bank is an authorized Foreign Exchange Dealer of the
Central Bank (www.standardchartered.com.gh).
3.8 Profile of Stanbic Bank Ghana (STANBIC)
Stanbic Bank Ghana takes pride in being part of a large banking group rooted in Africa
but reaching out to all corners of the world. Stanbic proactively provides solutions for
clients through creative people and effective technology. Stanbic aims to simplify
financial transactions to spend more time on client business and less time on banking.
Every business is unique and needs its own combination of banking services. Whether
you are starting or growing your business, Stanbic has the solutions to meet your needs.
Stanbic offers a team of business bankers and business managers who, backed by a
global network, are committed to supporting the success of your business. These
business bankers and managers can offer you the guidance and expertise you need
(www.stanbic.com.gh).
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Stanbic Bank is part of Standard Bank group, which delivers services across Africa and
extends to the key financial centers of Europe, the United States, and Asia through a
network that spans 37 countries. Business Banking aligns the resources of this integrated
global financial services group in order to share expertise. Stanbic Bank is committed to
providing its customers with the security, the convenience, and value for money. Stanbic
offers a range of products and services that enhances banking experience. Stanbic share
customer aspirations and trained branch staff are ready to discuss with customers the
best options available for saving and borrowing where appropriate from the bank
(www.stanbic.com.gh).
3.9 Conclusion
A relatively large number of banks are active in the Ghanaian banking sector. In addition
to universal banks, rural and community banks which are much smaller than universal
banks but also much more numerous play an important role. The products, services and
policies should promote within the industry, efficiency and competition, financial
deeping and enhance transparency. This will culminate in the promotion of the
development of the banking industry and reduce asymmetric information problems.
Though currently, there is no law regarding technological electronic banking, that sector
has also been developed with the banking industry. It is the fastest growing industry in
the economy due to the huge and successful investment in information technology.
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References
Anin, T. E. (2000). Banking in Ghana. Accra: Woeli Publishing Services.
Other Sources: Web
1. http://www.agricbank.com/en/financials/annual-reports.php [12/11/2012]
2. http://gh.barclays.com/ebanking-solutions/index.html [12/11/2012]
3. https://www.gcb-ebank.com.gh/netbanking/CorporateLogin.html [12/11/2012]
4. http://www.nib-ghana.com/en/internet-banking.php [12/11/2012]
5. http://www.stanbic.com.gh/ghana/Business-banking [12/11/2012]
6. https://www.sc.com/gh/sme-banking/en/ [12/11/2012]
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CHAPTER FOUR
METHODOLOGY
4.1 Introduction
This chapter presents the methodology used in carrying out the study. The major
consideration in social science research is to obtain adequate information or data that
allows accurate descriptions of situations or relationships between certain variables.
Social science research seeks to understand the attitudes of people about whom facts are
collected and to account for the resultant opinions. Research methodology refers to the
method adopted in carrying out a research. According to Kothari (2004), it is a
systematic way applied to solve a research problem. A method, according to Leedy
(1993) is a way of accomplishing an end result. He further mentioned that the word
method is coined from two Greek elements: meth and odos. The meth means “after” and
odos means “way”. “A method is therefore a following after the way someone found to
be effective in solving a problem or reaching an objective in getting a job done” (Leedy,
1993).
A research in a scientific community is undertaken to attack or solve problems of
significance or to increase theoretical knowledge. The primary objective of research is to
develop a general and systematic set of theories from which hypotheses can be generated
and tested (Busha and Harter, 1986). The methodology covers the research design,
population and sample size, sampling techniques, instrumentation and data analysis.
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A research is important in any discipline and it is critical to the growth of any profession
(Aina, 2002). He contends that the survey research is carried out through a systematic
and comprehensive collection of information about the opinions, attitudes, feelings,
beliefs and behaviours of people. Kumekpor (2002), stated that when the term ‘survey’
is applied to social phenomena, it implies a careful scrutiny or investigation of a
demarcated geographical area in order to have a comprehensive view of the nature,
conditions and composition of the social groups, institutions or premises within such a
defined area. The methodology for this study was treated under the following sub-
headings: research methods, research design, positivism, population, sample size,
sampling technique, instrumentation, mode of data collection and method of data
analysis.
4.2 Research Design
For any research to be carried out successfully there is the need to plan as to how to
carry out the research. This is usually referred to as a research design. Thus, once the
problem has been correctly formulated, a design is developed in order to provide a
format for the steps in the study. The nature of the problem defines the type and plan
that will be used.
A research design is the overall plan for collecting data in order to answer research
questions. It involves the specific data analyzing techniques or methods the researcher
intends to use. Several research strategies can be adopted in a social science research
such as case study, experiments, surveys, histories, and analysis of archival information.
The choice of strategy according to Leedy (1993) is guided by four questions. These are:
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what are the data needed, where the data are located, how will the data be collected, how
will the data be interpreted. This study adopted the survey methodology. The method
allows the results of the study to be generalized from the sample perspective, to the
entire population. Due to the large size of the intended population, the survey method
was employed to aid the collection of quantitative data for analysis and the results obtain
also gives high level of reliability. Survey research was adopted because it does not
require a huge financial outlay and it allows collection of data within a short period of
time which facilitate the generalization from a sample to a population. Leedy (2001)
maintains that the survey has the advantage of wider application as it allows data to be
collected on a large population within a short space of time. A survey research allows
for comparison of responses on which conclusions can be based (Creswell, 2003). For
the purposes of this study, a cross-sectional survey was adopted. This is the method
where by information is collected at one point in time.
A research design consists of two essential processes, research methods and data
collection (Aina, 2002). For this study, the elements of the research design are as
follows:
 Population
 Sample size and sampling techniques
 Data collection instruments
 Pre-testing research instruments
 Mode of Data collection
 Method of Data analysis and presentation of results
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4.2.1 Theories Underpinning Survey Methodology
A research philosophy is a belief about the way data about a phenomenon should be
collected and analyzed (Levin 1988). To interpret and understand the world we are
living, we certainly need ‘ways of viewing’ and ‘ways of interpreting’ to grasp the
surrounding facts, ideas, and events. The social world, therefore, can be interpreted and
understood via many schools of thoughts. In whatever manifestation, for a theoretical
model to explain anything there must be an appropriate relationship between the
statements made, the methods used to make such statements, and the philosophical
perspective deployed to inform the methods (Abbott 1998). In each of these respects,
there are issues pertaining to ontology, epistemology, and methodology. Ontology is
concerned with the nature of reality. Its central question is whether social entities can, or
should, be considered social constructions built-up from the perception and action of
social actors. Epistemology, on the other hand, concerns what constitute acceptable
knowledge in an area of study. The key epistemological question is “can the approach to
the study of the social world be the same as the approach to studying the natural
sciences?” (Saunders, Lewis and Thornhill, 2007). Epistemology provides the
philosophical underpinning the credibility which legitimizes knowledge and the
framework for a process that will produce through a rigorous methodology. Another
research paradigm is critical realism which views the world in terms of three
components: the reality, the actual, and the empirical. In behavioural sciences, the
positivist posits that human behaviours can be explained and predicted in terms of cause
and effect (May 1997).
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Positivists believe that the collection of data has to be performed in the social
environment and involve reactions of people to it (May, 1997). Principal positivist
methods consist of observations, experiments and survey techniques, and often involve
complicated statistical analysis in order to generate the findings and to test hypotheses
empirically (Schiffman and Kanuk, 1997). The main aim of the positivistic researcher is
to generalizing the results to the larger population, ‘the deductive approach’.
Quantitative Positivist Research (QPR) is a set of methods and techniques that allow
information systems (IS) researchers to answer research questions about the interaction
of humans and computers.
There are two cornerstones in this approach to research. The first cornerstone is the
emphasis on quantitative data. The second cornerstone is the emphasis on positivist
philosophy. Regarding the first cornerstone, these methods and techniques tend to
specialize in quantities in the sense that numbers come to represent values and levels of
theoretical constructs and concepts and the interpretation of the numbers is viewed as
strong scientific evidence of how a phenomenon works. The presence of quantities is so
predominant in QPR that statistical tools and packages are an essential element in the
researcher's toolkit. Sources of data are of less concern in identifying an approach as
being QPR than the fact that empirically derived numbers lie at the core of the scientific
evidence assembled. A QPR researcher may use archival data or gather it through
structured interviews. In both cases, the researcher is motivated by the numerical outputs
and how to derive meaning from them. This emphasis on numerical analysis is also key
to the second cornerstone, positivism, which defines a scientific theory as one that can
be falsified. Taking into account the purpose of the study and the research questions, this
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study is comfortably placed within a scientific epistemology of logical positivism
because it allows IS researchers to answer research questions about the interaction of
humans and computers and it also emphasis on quantitative data.
4.3 Selection of Cases
The cases or study setting investigated were local banks and foreign banks. The local
banks consist of Ghana Commercial Bank (GCB), Agricultural Development Bank
(ADB), and National Investment Bank (NIB). The foreign banks consist of Stanbic Bank
Ghana (Stanbic), Standard Chartered Bank (SCB) and Barclays Bank Ghana (BBG). The
justification for the selection of these local banks is that they are the top local banks in
the country and the foreign banks also are the top foreign banks in the country.
Furthermore, these banks are accessible to the researcher and such data collection was
feasible. In terms of branches, GCB has the highest number of branches. NIB on the
other hand, leads the Investment banks when it comes to the local banks. ADB is also
the second highest bank in the country in terms of size and resources.  For the foreign
banks in terms of profitability, size and resources Stanbic, SCG and BBG are the market
leaders, hence, their inclusion in the cases. The researcher had series of meetings with
the HR Managers, Corporate Affairs Managers and the PROs of these banks before
finally it was agreed that the researcher could use these banks for the study. This was
because there is a fierce competition in the banking industry and no bank wants to give
its strategy out. A synopsis together with the three set of questionnaires were also
submitted to the banks for their perusal. Some of the questions that the banks were not
comfortable with were flagged and the researcher reframed them.
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Efforts were made to preserve the anonymity of respondents and ensure the
confidentiality promised during the data collection. In this regard, the six banks used
were named Bank A, Bank B, Bank C, Bank D, Bank E, and Bank F. The researcher
submitted a letter of introduction obtained from the Head of the Department of
Information Studies (see Appendix C) to the various Human Resource (HR) Managers.
In addition to the Department’s letter, the researcher also attached a covering letter,
introducing him, the topic and the purpose of the research to the banks. The researcher
also provided his official address, cell phone number and e-mail address to facilitate
communication with respondents.
4.4 Selection of Subjects
The selection of subjects covers population, sample size determination, and sampling
techniques.
4.4.1 Population
A population can be defined as all the units for which information is required. The
survey research is characterized by the selection of random samples from populations to
obtain empirical knowledge of a contemporary nature. This knowledge allows
generalizations to be made about characteristics, opinions, beliefs, and attitudes of the
entire population being studied. Busha and Harter (1980) have stated that the concept of
population is fundamental to research. They define population as any set of persons or
objects that possesses at least one common characteristic. Kumekpor (2002) considers
population as the total number of all units of the phenomenon to be investigated that
exists in the area of investigation.
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This study has three categories of population. These are the Strategic level (Unit Heads
and above), the Operational level (Junior staff) and the bank customers from all the six
banks all selected at their head offices in Greater Accra region. The decision of the
researcher to focus on the strategic staff is justified by the fact that information systems
strategy is a functional strategy that emanates from the departmental level and it is also
formulated at the strategic level therefore it make sense to use this population. It is
important to note that every bank has strategic staff that heads the various units and there
is sometimes a General Manager (GM) and Managing Director (MD).
The decision to use operational staff could be justified by the fact that information
systems strategy is a functional strategy that emanates from departments and therefore
the involvement of all staff would ensure the success of the implementation of the
strategy. The involvement of bank customers at the Head Offices could be justified by
the fact that, bank customers are also stakeholders and literature has revealed that the
success of information system strategy implementation is incomplete without the
involvement of bank customers. The number of strategic staff, operational staff, and
bank customers at the Head Office in Accra of each bank is presented in Table 4.1.
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Table 4.1: Distribution of Staff and Customers of the Bank
Bank Strategic Staff Operational
Staff
Bank
Customers
Bank A 12 230 1,200
Bank B 12 200 1,080
Bank C 9 180 980
Bank D 9 160 1,000
Bank E 10 200 1,300
Bank F 10 190 1,200
Total 62 1,160 6,760
Source: Field data, 2013
The above table is a summary of the population of strategic staff, operational staff and
bank customers from the respective banks.
4.4.2 Sample Size Determination
Sampling is the process of selecting study units from the target population as a complete
survey of the entire population is usually extremely difficult if not impossible.
According to Aina (2002) sampling is the selection of some units from a study’s
population of interest. It is a technique that allows a researcher to make inference about
a population based on the nature of the sample. Kumar (2005) states that sampling is the
process of selecting a few (a sample) from a bigger group (the sampling population) to
become the basis for the estimating or predicting the prevalence of the unknown piece of
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information, situation or outcome regarding the bigger group. According to Aina (2004),
it involves selecting an unbiased and representative unit from a population. The
following four factors affect the sample size of the population and this is also confirmed
by Aina (2004).
 The size of the population
 The variation in the characteristics being measured
 The number of ways in which data are stratified
 The parameters required of the data
Alreck and Settle (1985) have proposed the following sampling ratios for different
population sizes: sampling ratio of 30% is adequate for a population of less than 1,000;
sampling ratio of 20% is adequate for a population between 1,000 and 10,000; and a
sampling ratio of 10% is adequate for a population greater than 10,000. The decision to
take a sample for the study instead of surveying the total population was informed by the
fact that, a saturation survey would have been difficult considering the size of the
customers, the availability of all the strategic staff and the operational staff. Limited time
as well as other limited resources did not allow for a complete survey. Sampling has the
advantage of saving time, financial and human resources. Also, the findings would be
reasonably accurate. According to Alreck and Settle (1985), only a small fraction of the
entire population ordinarily provides sufficient representation of the group as a whole
and enough accuracy to base decisions on the results with confidence.
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4.4.2.1 Sample Size of the Strategic Staff of the Banks
The total of all the strategic staff from all the banks is sixty two (62) (See Table 4.1).
According to Alreck and Settle (1985), a sampling ratio of 30% which is approximately
nineteen (19) strategic staff is appropriate. But because the population is relatively
small, the researcher decided to use all the staff instead of a sample.
4.4.2.2 Sample Size for Operational Staff of the Banks
The grand total of the operational staff for all the banks is one thousand one hundred and
sixty (1,160) (See Table 4.1). An approximate sample size according to Alreck and
Settle (1985) is 232 for the given population size. The researcher decided to increase the
sample size to 348 (sampling ratio of 30%) because the researcher needed more of the
operational staff to respond to the questionnaire to hedge against low rate of return. This
was considered because of the busy and tight schedules of the operational staff. To
calculate the proportionate sample size for the operational staff for each bank, the
following formula was used (Babbie, 2010):
. = 	 Population	of	Operational	staff	for	each	bank	 	 	 	 	 	348
Where P.S = Proportionate sample size. The result is shown in Table 4.2.
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Table 4.2: Proportionate Sample Size for Operational Staff for each Bank
Bank Opt. staff
Population
Proportionate
Sample
Bank A 230 69
Bank B 200 60
Bank C 180 54
Bank D 160 48
Bank E 200 60
Bank F 190 57
Total 1,160 348
Source: Field data, 2013
Table 4.2 shows the proportionate sample size of the operational staff from the
respective banks.
4.4.2.3 Sample Size for Bank Customers
The grand total of the bank customers is six thousand seven hundred and sixty (6,760)
(See Table 4.1). An approximate sample size of 1,352 is quite adequate for the study
according to Alreck and Settle (1985). To determine the proportionate sample size for
the bank customers from each bank, the following formula was used (Babbie, 2010):
. = 	 Customer	population	for	each	bank	 	 	 	 	 	1,352
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Where P.S = Proportionate Sample Size. The result is shown in Table 4.3.
Table 4.3: Proportionate Sample Size for Bank Customers
Bank Bank Customers
Population
Proportionate
Sample
Bank A 1,200 240
Bank B 1,080 216
Bank C 980 196
Bank D 1,000 200
Bank E 1,300 260
Bank F 1,200 240
Total 6,760 1,352
Source: Field data, 2013
Table 4.3 shows the proportionate sample size of the bank customers from the respective
banks.
4.4.3 Sampling Techniques
Sampling is the selection of a fraction of the total number of unites of interest to
decision makers for the ultimate purpose of being able to draw general conclusions
about the entire body of units (Parasuraman, Grewal and Krishnan, 2004). A conclusion
can be made from the sample about the population to achieve the research objective”
(Saunders et al., 2007). Sampling must be done correctly or it would introduce bias or
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error in the results. The sample must be selected properly, or it will not represent the
whole (Alreck and Settle, 1985). There are different sampling techniques that can be
used in selecting a sample from a population. These include simple random sampling,
stratified sampling, accidental sampling, quota sampling, cluster sampling and purposive
sampling. The sampling techniques adopted for the study is discussed in the next sub-
section.
4.4.3.1 Sampling Techniques for Operational Staff
The sampling technique for the operational staff was simple random sampling. Random
sampling includes choosing operational staff from a population through unpredictable
means. In its simplest form, all operational staff have an equal chance of being selected
out of the population being researched. The operational staff were sampled by a random
process, using a sampling frame and random number table (see appendix J), so that each
operational staff remaining in the population has the same probability of being selected
for the sample. Random sampling assumes that the staff to be sampled are included in a
list, also termed a sampling frame. The list is numbered in sequential order from one to
the total number of operational staff. One of the biggest benefits of using random
sampling is the fact that, since the operational staff are obviously randomized, it is the
best way to ensure that the results are unbiased. Additionally, random sampling
consistently provides results that are valid, making it easy for the researcher to draw
conclusions about large populations.
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4.4.3.2 Sampling Techniques for Bank Customers
An ideal sampling strategy for each bank would have been a simple random sampling
since it offers every member of the population an equal chance to be selected in the
sample. However, purposive sampling was used in each bank for collecting data from
customers. With purposive sampling, the researcher selects sampling units subjectively
in an attempt to obtain a sample that appears to be the representative of the population.
In other words, the chance that a particular sampling unit is selected for the sample
depends on the subjective judgment of the researcher. The choice of purposive sampling
is justified by the fact that, the customers’ population is heterogeneous and has different
competence levels. Some of the customers were busy whilst others were not interested in
the survey. Furthermore, some were only interested in their bank transactions and were
not ready to respond to any survey. The purposive sampling is warranted by the fact that
some of the customers are illiterates and could not read, write and understand the survey
instrument. Those customers were excluded in the sample. Further, customers selected
for the study had a minimum educational level of junior high school.
4.5 Instrumentation
With adherence to a survey research methodology, this study used the questionnaire
instrument.
4.5.1 Questionnaire
A questionnaire according to Kumar (2005) is a written list of questions, the answers to
which are recorded by respondents. He further stated that it is important that the
questions are clear and easy to understand. Kumekpor (1999) states that the use of
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questionnaire as a choice of research instrument for data collection has a special
advantage over other methods of data collection especially quantitative studies. Other
advantages are that questionnaires are completed at the leisure of respondents and help
to eliminate the variation in the questioning process due to its fixed format (Kemoni,
2006). However, using questionnaires, according to Kothari (2004), for data collection
has certain disadvantages. This position is also shared by Shepherd and Yeo (2003) who
have stated that even though questionnaires may be easy to administer, they usually
achieve low rates of return. Additionally, personal contact is lacking and the usefulness
of the data collected will depend on the understanding of the respondents. To overcome
these disadvantages, the competence of the staff in terms of level of education and work
experience were taken into consideration in designing the questionnaire.
Questionnaire was used in this study because it is appropriate for the respondents and it
facilitates the collection of large amount of data in a relatively short period. It is also
easier to quantify and treat statistically. For the purpose of this study, a combination of
structured and unstructured questionnaire designed by the researcher was used. A
structured questionnaire is the type that has multiple answers provided and the
respondents will be expected to tick one or as many as are relevant or applicable. An
unstructured questionnaire on the other hand gives respondents the freedom to express
their opinion without any restraint. Three different sets of questionnaires were
administered; one to the strategy staff (see Appendix D), another to the operational staff
(see Appendix E) and the last to bank customers (see Appendix F).
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The questionnaire for the strategic staff and the operational staff were designed in
sections along the main lines of the objectives of the study and they are;
Section 1: Bank Size and Demographics. This handled the general questions about the
bank. The answers for these questions were used to ascertain the bank size and also to
portray the demographics of the bank staff.
Section 2: Business Strategy and IS Strategy. This section explored the relationship
between the IS strategy and the overall business strategy of the bank. It was also to
establish, if any, the importance of the IS strategy to the Vision and Mission of the bank.
Section 3: Key Features of IS Strategy. To every strategy there are key features and
this section seeks to solicit the key features of the IS strategy of the bank from the
respondents. This section also found out among others the staff that are involved in the
formulation and the implementation of the IS strategy.
Section 4: Competitive Advantage. This section established the various competitive
strategies of the banks and how the banks are benefiting from the competitive strategies.
Section 5: Barriers to Strategy. This section dealt with the challenges that are
associated with the formulation and implementation of an IS strategy and the way
forward. The researcher also wishes to find out what matters most in IS formulation and
implementation.
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Section 6: Information Technology Issues. Basic information technology issues were
determined in this section. The emphasis was on how information technology is used to
carry out certain banking operations and also the benefits derived from using
information technology.
Section 7: Product and Services. This section examined various products and services
available at the bank and how they are linked to information technology.
Section 8: Bank Performance. This section explored the level of Information
Technology investment of the bank in the short term, medium term and the long term.
The section also examines critically the turnover of the various banks and measures the
performance in terms of the profitability ratios.
The questionnaire for the bank customers consisted of five sections. The questions were
developed bearing in mind the objectives underlying the survey. Section one dealt with
the demographic data of respondents. Section two dealt with the information and
communication technology products and services available to the customers. Section
three covered the involvement of bank customers in the formulation of policies (interest
and service charges) of the bank. Section four tried to establish the relation between ICT
and customer satisfaction and finally, section five sought ideas from the customers on
how the services of the bank could be improved.
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4.6 Pre-Testing
Testing is important to establish the face validity of an instrument and to improve
questions, format and the scale (Creswell, 2003). Once the research design had been
decided upon, it was wise to try out the technique chosen as the main data collection
device (Kumar, 2005). A pre-test or pilot survey of the research instrument is what Aina
(2002) terms “a dress rehearsal” to the main survey and it helps to clarify certain
problems inherent in the survey instruments.
For the purpose of this study, a pilot study was conducted using five strategic staff,
twenty operational staff and 50 customers from HFC Bank and Zenith Bank. The
selection of HFC Bank and Zenith Bank could be justified by their proximity to the
researcher and also the fact that, they have similar structures and perform similar
functions as any other local bank and foreign bank respectively. Introductory letters
accompanied the questionnaires explaining the reason for carrying out the pre-test and
soliciting the cooperation of the participants. They were also requested to make
suggestions and comments that could help improve the quality of the instrument.  Out of
seventy five (75) copies of the questionnaire sent out to the two banks, thirty four were
returned fully completed whilst the rest were incomplete, blank or never returned. This
gave a response rate of 45.3%. The low response rate was due to the fact that the bank
staff were always busy and did not have the time to respond to the questionnaire. The
bank customers on the other hand, were only engrossed in their bank transactions and
were not interested in the survey and these led to the low responses rate.
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Some of the comments made were that some of the open ended questions should be
changed to closed ended questions. The number of pages was also to be reduced. On the
basis of pilot study or pre-testing, the questionnaire was further improved and
standardized. In other words, the pre-testing helped to identify and eliminate ambiguous
questions and duplications.
4.7 Mode of Data Collection
This consists of questionnaire administration and collection as well as method of data
analysis and presentation of results.
4.7.1 Questionnaire Administration and Collection
Survey questionnaire are administered in two ways. These are self-administered
questionnaire survey and mail surveys. The self-administered questionnaire survey is the
process whereby the researcher either personally or with the help of assistants gives out
the questionnaire to the participants to fill. The completed questionnaire could be
collected right after it has been completed or at a later date. The mail survey method is
the process whereby the researcher mails the questionnaire directly to the participants
for them to complete and return.
The researcher was allowed to administer the questionnaire to the strategic staff
personally to those the researcher met on that day. The rest of the copies of the
questionnaire were given to the HR managers of the various banks, who helped to
administer the remaining copies of the questionnaire. Respondents were entreated to
drop completed questionnaires later at a place in the HR department. Each of the banks
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has a special unit within HR Department that handles such issues. Respondents were
given reasonable period of about three weeks to complete and return the questionnaire to
HR Departments at their respective banks. After the expiration of the period, the
researcher went for the completed copies of questionnaire. The same procedure was
followed for the administration of the questionnaire to the operational staff at the various
banks. After the expiration of the period, the researcher went for the completed copies of
the questionnaire. For the bank customers, the researcher administered the questionnaire
to the bank customers personally at a strategic position in the banking hall of the various
banks on different days of the week. Respondents were given reasonable time (about 30
minutes) to complete and return the questionnaire to the researcher in the banking hall
on the same day for each bank.
4.7.2 Method of Data Analysis and Presentation of Results
Quantitative data collected needs to be organized and manipulated to get them to reveal
things of interest about the social world. The researcher subjected the raw data to
different processes in order to trim the data, reorganize them into a form suitable for
computers, present them in charts or graphs to summarize their features, and interpret or
give theoretical meaning to results. To draw inferences, meaning, comparison and
conclusions from the data collected, the Statistical Package for Social Sciences (SPSS)
was used for data capturing and analysis due to its ease of use. The SPSS is the most
widely used statistical software in the social sciences (Healey, 1993). After retrieving
the completed questionnaires administered to the strategic staff, the operational staff and
bank customers, consistency in responses were checked and questionnaires were
subjected to the following processes:
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A. The completed copies of questionnaire were sorted into strategic staff,
operational staff, and bank customers.
B. The copies of questionnaire were then numbered serially to help in identification
in case of error in the data capturing process.
C. Coding scheme (manual) was designed for each set of questionnaire (see
Appendix G, H, and I) to translate the categorical responses to numbers in order
to facilitate the analysis.
D. The copies of the questionnaire were then coded based on the coding scheme.
(Assigning numbers to the responses provided by the respondents for each
question).
E. The coded responses were then captured using SPSS.
F. The data entered into the SPSS is then used for all statistical analysis.
The data analysis is in three parts. The first part analyzes data on the strategy and related
issues like; demographics and strategy, vision and mission, business strategy and IS
strategy, success predictors and IS strategy, competitive advantage and IS strategy, and
barriers to strategy. The second part analyzes data on information technology and related
issues like information technology usage, technology and cost reduction, electronic
banking, and customer satisfaction whilst the third part analyzes data on bank
performance, taking into consideration IT investment and bank turnover. Organizational
performance is a multifaceted construct that defies measurement by a single number.
The choice of return on assets (ROA) and return on equity (ROE) as the dependent
variables for this study was based on two considerations. First, profitability is the most
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frequently used measure of firm performance in the strategic management literature.
Second, ROA and ROE are widely used measures of financial performance in banking.
The Statistical Package for Social Sciences (SPSS) was used for the analysis of the data.
Simple frequencies, percentages, charts, cross tabulations, correlations, regression
models and Chi-Square test of independence to ascertain the significance of the
relationship between variables was used to present the results of the study. Suppose that
there are I rows and J columns, let Pi. and P.j be their respective marginal probabilities.
Then pij = Pi. * P.j and Eij =n*pij
Let Ti = Total for row i
Tj = Total for column j
Then Pi. = and P.j =
Where n = Total number of observations
Pij = Propability of the ith row and jth column
Eij = Expected Value of the ith row and jth column
The test statistic is a chi square, χ2 with (I-1)*(J-1) degrees of freedom.
     
 

I
1i
J
1j ij
2
ijij2 1J*1Idfwithvalue
E
EOχ
Where Oij are the observed values
Eij are the expected values and
df is the degrees of freedom
The significance level used for this study is 0.05.
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References
Abbott, K. (1998). Critical realism in industrial relations theory: Current research in
industrial relations. Proceeding of the 10th AIRAANZ Conference, Waikato
University, NZ.
Aina, L. O. (2002). Research in information sciences: An African perspective, Ibadan:
Stirling-Horden Publishers (Nig.) Ltd.
Aina, L. O. (2004). Library and information sciences text for Africa. Ibadan: Third
World Information Services Limited.
Alreck, P., & Settle, R. B. (1985). The survey research handbook. Illinois; IRWIN.
Babie, E. R. (2010). The Practice of Social Research (12th ed.). Portland: Cengage
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Busha, C. H., & Harter, S. P. (1980). Research methods in librarianship: Techniques
and interpretation. New York: Academic Press.
Busha, C. H., & Harter, S. P. (1986). Research methods in librarianship. London:
Academic Press.
Creswell, J. (2003). Research design: qualitative, quantitative and mixed methods
approaches (2nd ed.). London; Sage Publications.
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Healey, P. (1993). The communicative work of development plans. Environment and
Planning B: Planning and Design, 20(1), 83-104.
Kemoni, H. N. (2006). Records management practices and public service delivery in
Kenya (Unpublished Doctorate thesis). University of Kwazulu-Natal, South
Africa.
Kothari, C. R. (2004). Research methodology: Methods and techniques. New Delhi:
Wiley Eastern Limited.
Kumar, R. (2005). A Research methodology: A step by step guide for beginners (2nd ed.).
London; Sage Publication.
Kumekpor, T. K. B. (1999). Research methods & techniques of social research. Accra:
Son Life Press.
Kumekpor, T. K. B. (2002). Research methods & techniques of social research. Accra:
Son Life Press & Services.
Leedy, P. D. (1993). Practical research planning and design (5th ed.). New York:
Macmillan Publishing Company.
Leedy, P. D. (2001). Practical research: planning and design. New Jersey: Prentice
Hall.
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Levin, D. M. (1988). The opening of vision: Nihilism and the postmodern situation.
London: Routledge.
May, T. (1997). Social research: Issues, methods and process (2nd ed.). Trowbridge:
Redwood Books.
Parasuraman, A., Grewal, D., & Krishnan, R. (2004). Marketing research. Boston:
Houghton Mifflin.
Saunders, M., Lewis, P., & Thornhill, A. (2007). Research methods for business students
(4th ed.). London: Prentice Hall.
Schiffman, L. G., & Kanuk, L. L. (1997). Consumer behaviour. London: Prentice Hall.
Shepherd, E., & Yeo, G. (2003). Managing records: A Handbook of Principles and
Practice. London: Facet Publishing.
.
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CHAPTER FIVE
ANALYSIS OF DATA AND FINDINGS ON ASPECTS
OF IS STRATEGY AND BANK PERFORMANCE
5.1 Introduction
This chapter looks at the analysis and the presentation of the data collected through
questionnaire as well as the discussion of the findings on aspects of strategy. It analyses
the data in relation to the objectives of the study. Response rate (also known as
completion rate or return rate) in survey research refers to the number of people who
answered the survey divided by the number of people in the sample. For the strategic
staff, 62 copies of questionnaire were administered. Out of the 62 copies, 32 (51.6%)
copies of questionnaire were completed and returned. Similarly, for the operational staff,
348 copies of questionnaire were administered, and 216 (62.1%) copies were completed
and returned. The total number of questionnaire returned was 248 out of 410, presenting
a response rate of 60.5%. The chapter has been organized under the following major
sub-headings:
i. Demographics
ii. Information Systems Strategy and Information Systems Assets
iii. Staff Participation and Success Predictors
iv. Barriers to Strategy
5.2 Demographics
This handled the general questions of demographics about bank staff. The answers to
these questions were used to portray the demographics of the bank staff.
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5.2.1 Gender of Respondents
Gender was relevant to the study as earlier studies have shown that it influences the
patronage of information systems (Davis, 2000). For this reason, the operational staff
respondents were asked to indicate their gender. Figure 5.1 depicts the gender
distribution of the respondents from all the banks.
Figure 5.1: Gender Distribution of Respondents (Operational Staff)
Source: Field data, 2013
Out of the 216 of the operational staff respondents, 90 (41.7%) are males whilst 126
(58.3) are females. This suggests that most of the bank staff at the operational level who
responded to the questionnaire are females. This is different at the strategic level. For the
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strategic level, 20 (60%) out of the 32 respondents indicated males, and 12 (40%) out of
the 32 respondents indicated females. The female population mainly came from Human
Resource, Legal and Services Excellence departments and the rest of the departments
were populated with males. It is palpable that whilst at the operational level there are
more females, at the strategic level there are more males which suggest that there are
more males in management positions than females.
5.2.2 Educational Level of Operational Staff
Information system is a global phenomenon that is increasing very fast globally. Any
staff working in any information system environment must have a certain level of
education. For this reason, the operational staff respondents were asked to indicate their
level of education. Figure 5.2 shows the responses from the operational staff.
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Figure 5.2: Educational level of Respondents (Operational Staff)
Source: Field data, 2013
From the above figure, most of the operational staff 142 (65.7%) hold first degrees in
different disciplines such as Banking and Finance, Marketing, Human Resource,
Accounting, Computer Science, Information Technology, Statistics, Mathematics, and
Economics. The number of respondents with first degrees may suggest that most of the
operational positions require first degrees in the relevant fields. A significant number of
41 (19.0%) indicated that they hold different certificates some of which are; Association
of Certified Chartered Accountants (ACCA), Institute of Chartered Accountants (ICA),
Chartered Institute of Marketing (CIM), Chartered Institute of Bankers (CIB), Diploma
in Business Studies, (DBS), and Higher National Diploma (HND). For ACCA, ICA,
CIM, and CIB some of the respondents stated that they hold part one, part two and very
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few are chartered with part three. The respondents with second degree, stated the
following field for their second degree programs; MBA (Finance), MBA (Accounting),
MBA (Marketing), MBA (Human Resource) and some MA and MSc. programs. For the
strategic staff, almost all of the respondents have second degrees and professional
certificates in the relevant fields of study. The strategic staff indicted the following fields
of study; Information Technology, Human Resource, Banking and Finance, Customer
Services, Credit Management, Legal and Treasury Management.
5.2.3 Number of Years of Working with the Bank
In the banking sector, working experience is very important. Most of the banking
activities are carried out at the operational level. Every activity at the operational level is
structured hence the decision taken at this level is structured decision. The operational
level is synonymous with routine and repetitive operations hence the more a staff stays
on the job the more experienced the staff becomes. Unlike the operational level, the
strategic level is unstructured and every activity at the strategic level is unstructured
hence the decisions taken at this level are unstructured decisions. The number of years of
working plays a very significant role in modern banking since almost all the banking
transactions are repetitive. For this reason, both the strategic and operational staff
respondents were asked to indicate their number of years of working with the bank. In
order to paint the general picture of the number of years of staff, the responses of the
strategic staff have been put together as well as the operational staff responses in Table
5.1 for the analysis.
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Table 5.1: Number of Years of Working
Ns = 32
No = 216
Strategic Staff Operational Staff
Frequency Percent Frequency Percent
Less than 1 Year - - 15 7.0
1 – 5 Years 7 21.9 80 37.0
6 – 10 Years 15 46.9 100 46.3
11 – 15 Years 5 15.6 16 7.4
16 – 20 Years 3 9.4 5 2.3
More than 20 Years 2 6.2 - -
Total 32 100 216 100
Source: Field data, 2013
None of the operational staff had worked for more than twenty years.  Fifteen (7.0%) of
the respondents have worked for at most one year in the banking sector. It is
understandable from the above table that, most of the operational staff had worked
between six to ten years. Relatively small number 5 (2.3%) of the operational staff had
worked with the bank for almost twenty years. For the strategic staff, all the respondents
had more than one year working experience with the bank. In other words, none of the
strategic staff has been employed for less than a year. Fifteen (46.9%) out of 32 strategic
staff have been working with the bank for about six to ten years. Most of the staff, both
strategic and operational staff have been working for about six to ten years which is
significant since, the more staff are retained in the banking sector the better for the
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performance of the staff. It is always said that, experience increases with number of
working years.
5.3 Information Systems Strategy and Information Systems Assets
This section examined the relationship between the IS strategy and the overall business
strategy. The required information systems assets were also identified.
5.3.1 Information System (IS) Strategy
An information systems strategy brings together the business aims of the company, an
understanding of the information needed to support those aims, and the implementation
of computer systems to provide that information. It is a plan for the development of
systems towards some future vision of the role of information systems in the
organization. Information System must be structured and documented to fulfill certain
standards and requirement. The documentation may be either in a software or hard form.
If Information Systems is not structured, it would be very difficult to follow and
implement. It was for this reason that the strategic staff were asked whether they have
information system strategy. The researcher presents the responses of the strategic staff
by banks in Table 5.2.
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Table 5.2: Availability of Information Systems Strategy
N = 32 Bank A Bank B Bank C Bank D Bank E Bank F
Freq % Freq % Freq % Freq % Freq % Freq %
Yes 6 100.0 6 100.0 5 100.0 5 100.0 5 100.0 5 100.0
No - - - - - - - - - - - -
Total 6 100.0 6 100.0 5 100.0 5 100.0 5 100.0 5 100.0
Source: Field data, 2013
In response to the question, all the operational staff 216 (100.0%) indicated that they
have IS strategy. All the responses from the strategic staff 32 (100.0%) affirmed the
presence of information system strategy in the banks. It is apparent from the above table
that both the local banks (Bank A, Bank B, and Bank C) and the foreign banks (Bank D,
Bank E, and Bank F) all have IS strategy. This finding supports that of Wilson (1999),
when 75 percent of the respondents claimed to have an information system strategy,
suggesting that the idea of an information system strategy has been widely adopted. He
further stated that, in general, financial services companies are most likely to have
adopted information system strategies than other industrial firms. Subsequently, since
the strategic staff are more linked to IS strategy formulation, they were asked to indicate
the components that are present in the IS strategy. Table 5.3 shows the response from the
strategic staff by banks.
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Table 5.3: Components of IS Strategy by Banks
Ns = 32 Bank A Bank B Bank C Bank D Bank E Bank F
Freq % Freq % Freq % Freq % Freq % Freq %
IS Manual - - 6 100.0 - - 5 100.0 5 100.0 5 100.0
IS Training 6 100.0 6 100.0 5 100.0 5 100.0 5 100.0 5 100.0
IS Formulation 6 100.0 6 100.0 5 100.0 5 100.0 5 100.0 5 100.0
IS
Implementation
6 100.0 6 100.0 5 100.0 5 100.0 5 100.0 5 100.0
IS Monitoring - - 6 100.0 - - - - 5 100.0 5 100.0
IS Control 6 100.0 6 100.0 5 100.0 5 100.0 5 100.0 5 100.0
Source: Field data, 2013
Any structured IS strategy must have IS Training, IS Formulation, IS Implementation, IS
Monitoring, and IS Control. In the same way, any documented IS strategy has a manual.
It could be inferred from the above table that, IS monitoring was absent in three banks.
This suggests that some of the banks do not monitor their IS strategy to satisfaction. All
the foreign banks have IS manuals in the IS strategy but only one of the local banks
(Bank B) has IS manual in the IS strategy. All the foreign banks (Bank D, Bank E, and
Bank F) have all the components of IS strategy except Bank D which does not have IS
monitoring. Only one of the local banks (Bank B) has all the components of IS. The
remaining two banks (Bank A and Bank C) do not have IS manual and IS monitoring in
the IS strategy. Both the foreign and the local banks have IS training, IS formulation and
implementation, and IS control in the IS strategy. Only three of the banks (Bank B, Bank
E, and Bank F) have all the components present in the IS strategy.
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Wilson (1999), found out that, the IS strategy was said to be a ‘formal, documented part
of business strategy’ by fewer than half of those claiming to have a strategy. He
concluded that, the strategy should be formally documented, should be initiated by the
Board, monitored by planned reviews, and should base information provision on key
indicators, critical success  factors, or on a detailed analysis of management information
needs. According to a study conducted by Chen et al., (2010), IS strategy is a term
routinely used among organizations, but its meaning is not clearly articulated. Davis
(2000) states that there are multiple components collectively addressed by an
information system strategy which includes the IT infrastructure, data, software
applications, and IT personnel. Other research indicates that the information system
strategy must also address the planning, design, and implementation of the systems,
themselves (Davis, 2000). Somewhere between these two ideologies, it appears that the
information system strategy must not only address the technical side, but the business
process aspects of information systems, as well.
5.3.2. Types of Business Strategy
Every business has a philosophical strategy that it drives on. Miles and Snow (2007),
classify firms within a given industry into four groups, i.e. defenders, prospectors,
analyzers and reactors, depending on how a firm responds to the three major problems
facing the firm (entrepreneurial, engineering, and administrative problems). Defenders
have a limited range of products and focus on efficiency and process improvement;
Prospectors have a broad market/product domain and tend to lead change in the industry;
Analyzers fall between the above two groups and are likely to follow a second-but-better
strategy; Reactors have no consistent strategy and they merely respond passively to
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environment pressure. IS strategic issues are more synonymous to strategic staff, so they
were asked to indicate the type of business strategy that the bank is deploying. The
analysis of the responses by banks is presented in Table 5.4.
Table 5.4: Reponses on Business Strategy by Banks
N = 32 Bank A Bank B Bank C Bank D Bank E Bank F
Freq. % Freq. % Freq. % Freq. % Freq. % Freq. %
Prospector 6 100.0 - - - - - - 5 100.0 5 100.0
Analyzer - - 6 100.0 - - 5 100.0 - - - -
Defender - - - - 5 100.0 - - - - - -
Reactor - - - - - - - - - - - -
Total 6 100.0 6 100.0 5 100.0 5 100.0 5 100.0 5 100.0
Source: Field data, 2013
Banks A, B and C constitute the local banks whilst Banks D, E and F constitute the
foreign banks. Two of the foreign banks (Bank E and Bank F) use prospector business
strategy meaning that they have a broad market/product domain and tend to lead changes
in the industry. The third foreign bank (Bank D) uses analyzer business strategy which is
a second but better strategy. It is noticeable that, none of the foreign banks use the
defender and reactor business strategy. All respondents for each of the local banks
indicated that the bank uses one strategy. One of the local banks (Bank A) uses prospect
business strategy. Another bank uses the analyzer business strategy whilst the third bank
uses defender business strategy meaning that they have a limited range of products and
focus on efficiency and process improvement. The absence of a reactor business strategy
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suggests that the banks have consistent business strategy. In effect, Bank A, Bank E and
Bank F use the same prospector business strategy whilst Bank B and Bank D also use
the same analyzer business strategy. Bank C is the only bank that uses defender business
strategy.
5.3.3 Competitive Advantage of Information Systems
A company is said to have a competitive advantage over its rivals when its profitability
is greater than the average profitability of all other companies competing for the same
set of customers. It can also be said that, competitive advantage occurs when an
organization acquires or develops an attribute or combination of attributes that allows it
to outperform its competitors. Information technology has become such a prominent part
of the modern business world that it can also contribute to competitive advantage by
outperforming competitors with regard to internet presence. For this reason, the strategic
staff respondents were asked to give out sale values and profit margins for the past three
years. After analyzing these figures it came to light that the IS strategy of the banks
(both foreign and local) is being used competitively and yielding results. Many
successful financial institutions have clearly demonstrated that information systems and
technologies can be a powerful competitive weapon that can be used to capture market
share, improve customer service, reduce operating costs, and create new products and
services.
5.3.4 Types of Competitive Strategies
Different banks use different competitive strategies in order to survive the competition.
A firm's relative position within its industry determines whether a firm's profitability is
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above or below the industry average. The fundamental basis of above average
profitability in the long run is sustainable competitive advantage. There are three basic
types of competitive advantage a firm can possess: cost leadership, differentiation, and
generic. In cost leadership, a firm sets out to become the low cost producer in its
industry. In a differentiation strategy a firm seeks to be unique in its industry along some
dimensions that are widely valued by buyers. It selects one or more attributes that many
buyers in an industry perceive as important, and uniquely positions itself to meet those
needs. It is rewarded for its uniqueness with a premium price. The generic strategy of
focus rests on the choice of a narrow competitive scope within an industry. Then
strategic staff respondents were asked to indicate the type of competitive strategy that
the bank uses. The researcher represents the responses of the strategic staff by banks in
Table 5.5 below.
Table 5.5: Responses on Competitive Strategy by Banks
Ns = 32 Bank A Bank B Bank C Bank D Bank E Bank F
Freq % Freq % Freq % Freq % Freq % Freq %
Cost
leadership
5 50.0 5 50.0 4 80.0 - - - - - -
Differentiat
ion
1 16.7 1 16.7 1 20.0 5 100.0 5 100.0 5 100.0
Generic - - - - - - - - - - - -
Total 6 100.0 6 100.0 5 100.0 5 100.0 5 100.0 5 100.0
Source: Field data, 2013
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Out of the three competitive strategies, Bank D, Bank E, and Bank F only use
differentiation strategy. These banks again constitute the foreign banks. All the local
banks; Bank A, Bank B and Bank C use a combination of cost leadership, and
differentiation strategy.
5.3.5 IS Strategy Alignment to Business Strategy
Alignment between business strategy and IS strategy is widely believed to improve
business performance. Information system strategy is a subset of the overall business
strategy and the two must be in harmony. Information system strategy must always be
aligned to the business strategy. When information system strategy is aligned with the
business strategy, it is apparent and widely accepted that the system has an important
role in achieving business’s goals. The organization’s members have an incentive to
ensure the system's successful implementation. Considering this alignment, both the
strategic and the operational staff were asked to indicate the level of IS strategy
alignment with business strategy. For the sake of clarity, the researcher decided to
present the responses of the strategic staff by banks in Table 5.7. The researcher also
analyzed all the responses from the strategic and operational staff and presents the
responses in Table 5.6 to bring out the general alignment of the banks.
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Table 5.6: Responses on Alignment of Information System Strategy by Business
Strategy
Ns = 32
No = 216
Strategic Staff Operational Staff
Frequency Percent Frequency Percent
Well Aligned 32 100.0 186 86.2
Semi Aligned - - 30 13.8
No Alignment - - - -
Total 32 100.0 216 100.0
Source: Field data, 2013
It is obvious from the operational staff perspective that, most of the banks have their IS
strategy well aligned to their business strategy even though 30 (13.83%) of the
operational staff stated semi alignment.
Table 5.7: Responses on Alignment of Information System Strategy by banks
Ns = 32 Bank A Bank B Bank C Bank D Bank E Bank F
Freq % Freq % Freq % Freq % Freq % Freq %
Well
Aligned
6 100.0 6 100.0 5 100.0 5 100.0 5 100.0 5 100.0
Semi
Aligned
- - - - - - - - - - - -
Total 6 100.0 6 100.0 5 100.0 5 100.0 5 100.0 5 100.0
Source: Field data, 2013
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It is obvious from the above table that, all of the banks have their IS strategy well
aligned to their business strategy. All the foreign banks (Bank D, Bank E, and Bank F)
and the local banks (Bank A, Bank B, and Bank C) have IS strategy fully aligned to the
business strategy. The potential for using information technology to affect the
competitive position of a firm has served to highlight the importance of effective
information systems planning (Henderson et al., 2012). As the criticality of effectively
linking the strategic IS plan to the strategic business plan has increased, the need to
better understand the nature of strategic planning, in general, and strategic IS planning,
in particular, has also increased.
5.3.6 Concept of IS Strategy Typology
A typology of IS strategy has recently emerged in the literature in which IS strategy is
categorized into three types: Innovative, Conservative, and Undefined. Swanson and
Ramiller (2004) argue that a mindful organization addresses IS innovation based on a
grounded understanding of its own specific organizational situation. Consequently,
mindful organizations are more likely to reach a shared organizational perspective and
the strategy they pursue is more likely to have meaningful implications to organizational
outcomes. In contrast, an organization with an undefined IS strategy, by definition,
appears to be representative of a “mindless” organization since this type of organization
has an undefined and/or inconsistent IS strategy. It is improbable that a mindless
organization would consistently outperform its competitors. It was for this reason that
the strategic staff were asked to indicate the type of IS strategy typology they have
adopted. The responses are analyzed by banks in Table 5.8.
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Table 5.8: Information Systems Strategy Typology by Banks
N = 32 Bank A Bank B Bank C Bank D Bank E Bank F
Freq % Freq % Freq % Freq % Freq % Freq %
IS Innovator 3 50.0 3 50.0 - - 5 100.0 5 100.0 5 100.0
IS
Conservative
3 50.0 3 50.0 5 100.0 - - - - - -
Undefined - - - - - - - - - - - -
Total 6 100.0 6 100.0 5 100.0 5 100.0 5 100.0 5 100.0
Source: Field data, 2013
All the banks do not use the Undefined IS strategy typology. From the above table, all
the foreign banks (Bank D, Bank E, and Bank F) use IS Innovator strategy typology. For
the local banks, only two banks (Bank A and Bank B) use IS Innovator strategy
typology. It is worth noting that in addition to the IS Innovator strategy typology
deployed by the local banks they also use IS Conservative strategy typology. Bank C is
the only bank that uses IS Conservative strategy typology alone. The presence of
inherent “first-mover” benefits provides the basis for the sustainability of an IT
advantage. Inevitably, the technology itself can be imitated. But given sufficient time
before followers catch up, a firm’s leadership position may allow it to use the
technology to unique advantage. In addition, innovators may achieve advantage that
continues even after the technology is widely diffused.
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5.3.7 Time Frame of Strategy
Every strategy must be reviewed with time. This is because of the changing scene of life.
The time frame may span from one year to ten years. The strategic staff normally review
the IS strategy. It was, therefore, important to find out the time frame for the IS strategy.
To find out the general time frame for the IS strategy, the researcher analyzed all the
responses to produce Figure 5.3.
Figure 5.3: IS Strategy Time Frame
Source: Field data, 2013
Most of the information system strategies according to the respondents have a time span
of five years. This implies that the IS strategy is reviewed every five years. Ten (31.3%)
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of the respondents indicated that the IS strategy is reviewed every three years. Relatively
small number of 2 (6.3%) of the respondents indicated that the IS strategy is reviewed
every year and every ten years.
5.3.8 Human Resource Requirement
In many organizations, IS and Human Resources Management (HRM) have become full
strategic partners at the governance level. The strategic potential of HRM is well
recognized as effective HRM practices support business goals and objectives. (Noe et
al., 2010; Wofford, 2002). Human resource is the set of individuals who make up the
workforce of an organization, business sector or an economy. In any information system
environment, people play a very pivotal role. In order to formulate and implement the
information system strategy, the human resource must be taken into consideration.  If the
right people are not used, it may affect the formulation as well as the implementation of
the IS strategy. For this reason, the strategic staff respondents were asked to indicate the
level of quality of their human resource to achieve their goals in the next five years. The
analysis of the responses by banks is presented in Table 5.9 below.
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Table 5.9: Responses on Quality of Human Resource Quality by Banks
N = 32 Bank A Bank B Bank C Bank D Bank E Bank F
Freq % Freq % Freq % Freq % Freq % Freq %
Low - - - - 1 20.0 - - - - - -
Moderate - - 2 33.3 - - - - - - - -
High 6 100.0 4 66.7 4 80.0 5 100.0 5 100.0 5 100.0
Total 6 100.0 6 100.0 5 100.0 5 100.0 5 100.0 5 100.0
Source: Field data, 2013
All the respondents from the foreign banks (Bank D, Bank E, and Bank F) indicated
high human resource quality. Four respondents from each of Banks B and C indicated
that the bank has high human resource quality. One (20.0%) respondent from Bank C
indicated that the banks have low human resource quality whilst 2 (33.3%) of the
respondents from Bank B also indicated that the human resource quality is moderate.
The quality of staff can affect the formulation and implementation of information system
strategy. Low quality staff can affect the information system strategy negatively whilst
high quality staff can affect the information system strategy positively. Some of the
banks also poach experienced staff from other banks.
5.3.9 Financial Resource Requirement
Strategic art is the skillful balancing of ends (objectives), ways (courses of action), and
means (resources) (Chen et al., 2010). The financial resources are the means by which
the bank can acquire the technology. The financial strength determines whether the bank
is in the position to acquire the technology or not. To find out whether the bank is in
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position to acquire new technology, the strategic staff respondents were asked to indicate
the financial position of the bank. The responses are presented in Table 5.10 and
analyzed on bank bases.
Table 5.10: Responses on the Strategic Staff on Financial Position by Banks
N = 32 Bank A Bank B Bank C Bank D Bank E Bank F
Freq % Freq % Freq % Freq % Freq % Freq %
Moderate - - - - 2 40.0 - - - - - -
High 6 100.0 6 100.0 3 60.0 5 100.0 5 100.0 5 100.0
Total 6 100.0 6 100.0 5 100.0 5 100.0 5 100.0 5 100.0
Source: Field data, 2013
Five out of the six banks have high financial position. Bank D, Bank E, and Bank F
which constitute the foreign banks all have high financial positions. Two of the local
banks (Bank A and Bank B) also recorded high financial performance. Bank C is the
only local bank that did not record hundred percent high financial positions. For this
bank, some of the respondents stated moderate whilst the remaining 3 (60.0%) also
indicated high financial position.
5.3.10 Information System Infrastructure
Infrastructure is basic physical and organizational structures needed for the operation of
an enterprise or the services and facilities necessary for an economy to function
(Sullivan et al., 2003). It can be generally defined as the set of interconnected structural
elements that provide framework supporting an entire structure of development. The
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information system infrastructure is very important when it comes to implementation.
For this reason, the operational staff respondents were asked to indicate the level of IS
infrastructure in the bank. Table 5.11 presents the responses from the operational staff.
Table 5.11: Levels of Information System Infrastructure by Banks
No = 216 Bank A Bank B Bank C Bank D Bank E Bank F
Freq % Freq % Freq % Freq % Freq % Freq %
Low - - - - 3 8.8 - - - - - -
Moderate 5 11.6 5 13.5 6 17.7 - - - - - -
High 38 88.4 32 86.5 25 73.5 30 100.0 37 100.0 35 100.0
Total 43 100.0 37 100.0 34 100.0 30 100.0 37 100.0 35 100.0
Source: Field data, 2013
Information technology (IT) infrastructure has been identified in recent years in some
businesses as having a critical impact on the firm's ability to use IT competitively.
Although a flexible infrastructure is considered highly valuable under certain
circumstances, it is difficult to plan and to measure because there is no common,
operational definition (Duncan, 1995). Relatively few of the operational staff 3 (1.4%)
described the level of IS Infrastructure as low. Most of the operational staff 197 (91.2%)
indicated that, the level of IS Infrastructure is high. This opinion is also shared by most
of the strategic staff 31 (96.9%). It could be inferred from the above table that, most of
the banks have a high information system infrastructure to implement their IS strategy.
The foreign banks (Bank D, Bank E, and Bank F) have a very high IT infrastructure to
implement the IS strategy whilst the local banks (Bank A, Bank B, and Bank C) do not
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have that high infrastructure for the IS strategy implementation. It is worth noting that
some of the respondents from Bank C indicated that the bank IS infrastructure is low.
Only the local banks (Bank A, Bank B, and Bank C) indicated that the banks have
moderate IS infrastructure. The level of IS infrastructure also affects the success of IS
implementation.
5.3.11 Improved Technology
Technology is the making, modification, usage, and knowledge of tools, machines,
techniques, crafts, systems, methods of organization, in order to solve a problem,
improve a preexisting solution to a problem, achieve a goal or perform a specific
function (www.eHow.com). Information technology has become a necessary component
in any organization with increasing strategic significance. All the banks use technology
one way or the other. Therefore, new technology could be bought to replace obsolete
technology or the existing technology could be upgraded. There are different types of
technology used in the banking sector to achieve their goals. To find out how the
respondents expect to achieve the goals of the bank in the next five years, the strategic
staff respondents were asked to indicate the type of technology that the bank would
need. From the responses, all the respondents from the foreign banks indicated that, the
technology needed by the bank to achieve its goals in the next five years are improved
network infrastructure, more servers and work stations. The respondents from the local
banks (Bank A, Bank B, and Bank C) also indicated that the banks need improved
banking software and IT outsourcing (to outsource some of the banking operations). The
technology needed by the foreign banks is completely different from that of the local
banks to achieve their respective goals.
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5.3.12 Willingness of Staff to Use New Technology
New technology is invading our lives at an ever-increasing rate. While many people find
new technology exciting and can't wait to get involved in it, some people may feel
intimidated by it, or feel that it only complicates their lives and puts more stress on
them. Some staff find it difficult to change from a manual system to a computerized
system. Changes are difficult to make, therefore it was important to find out whether the
staff, both strategic and operational are willing to use a new technology. Analyzing the
responses from the operational staff, 10 (4.6%) out of 216 respondents stated that, they
are not willing to use a new technology since they are already used to the existing
technology. Twenty (9.3%) respondents also indicated that they are indifferent using a
new technology, and 186 (86.1%) respondents affirmed their willingness to use a new
technology. For the strategic staff, the responses were not different, 2 (6.3%) out of 32
respondents were indifferent. This suggests that, even at the strategic level not all staff
are willing to use new technology whilst 30 (93.8%) respondents affirmed their
willingness of using a new technology. Karimi at al., (1996) found out that the degree of
IT integration within firms is a primary determinant of firms' willingness to use IT as
part of their strategic response to globalization.
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Table 5.12: Responses on Work Experience by Willingness of Staff to Use New
Technology
No = 216
Willingness of Staff to use New
Technology
Total
Not
Willing
Somehow
Willing
Most
Willing
Working
Experience
< 1 Year Count 10 5 0 15
Expected Count 0.7 1.4 12.9 15.0
1 – 5 Years Count 0 15 65 80
Expected Count 3.7 7.4 68.9 80.0
6 – 10 Years Count 0 0 100 100
Expected Count 4.6 9.3 86.1 100.0
11 – 15 Years Count 0 0 16 16
Expected Count 0.7 1.5 13.8 16.0
16 – 20 Years Count 0 0 5 5
Expected Count 0.2 0.5 4.3 5.0
Total Count 10 20 186 216
Expected Count 10.0 20.0 186.0 216.0
No = 216 Chi Square = 178.222 DF = 8 p = 0.000 COR = 0.569
Nf = 102 Chi Square = 73.578 DF = 4 p = 0.000 COR = 0.710
Nl = 114 Chi Square = 9.194 DF = 4 p = 0.056 COR = 0.245
Source: Field data, 2013
Change is difficult but it is also inevitable. To find out the relationship between work
experience and the willingness to use a new technology, a cross tabulation of the two
variables was constructed. Even though cross tabulation could be done for the responses
of both strategic and operational staff, the researcher chose to present that of the
operational staff (see Table 5.12) for lack of space. As the number of years increase, the
willingness to use new technology also increases. Of the fifteen operational staff with
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less than one year work experience, majority (10) of the respondents indicated their
unwillingness to use a new technology. Since the software (SPSS) has the capability of
testing for the relationship between the two variables, this was requested for. The
statistics at the bottom of Table 5.12 indicate that, there exists a relationship between
work experience and willingness to use a new technology. As can be seen from the
correlation coefficient, this relationship is positive and quite strong.
From the statistics at the bottom of Table 5.12 for the foreign banks (Nf = 102, Chi
Square = 73.578, DF = 4, p = 0.000, and COR = 0.710), there exists a relationship
between work experience and willingness to use a new technology. As can be seen from
the correlation coefficient, this relationship is positive and quite strong. For the local
banks (Nl = 114, Chi Square = 9.194, DF = 4, p = 0.056, and COR = 0.245) there also
exists a relationship between work experience and willingness to use a new technology
but this relationship is not strong. Comparing these two statistics, it could be suggested
that the foreign banks (Bank D, Bank E, and Bank F) staff are more willing to use new
technology that the local banks (Bank A, Bank B, and Bank C) staff.
5.4 Staff Participation and SISP Success Predictors
To every strategy there are key features and this section established the key success
predictors of the IS strategy of the bank. This section also found out among others the
staff that are involved in the formulation and the implementation of the IS strategy.
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5.4.1 Staff Participation in the IS Strategy Formulation
The formulation and implementation of IS strategy are very important phases in any IS
strategic cycle. The people involved are equally important as the process. Basic strategic
planning is comprised of several components that build upon the previous piece of the
plan, and operates much like a flow chart. However, prior to embarking on this process,
it is important to consider the players involved. The caliber of people involved can have
a great impact on the formulation of the IS Strategy. For this reason, the strategic staff
respondents were asked to identify the staff participation in IS strategy formulation. The
strategic staff responses are presented in Table 5.13.
Table 5.13: Staff Participation in the IS Strategy Formulation
Ns = 32 Bank A Bank B Bank C Bank D Bank E Bank F
Freq % Freq % Freq % Freq % Freq % Freq %
Mgt
Team
4 66.7 4 66.7 3 60.0 - - - - - -
IT Depart 2 33.3 2 33.3 2 40.0 - - - - - -
Tech Gp - - - - - - 5 100.0 5 100.0 5 100.0
Total 6 100.0 6 100.0 5 100.0 5 100.0 5 100.0 5 100.0
Source: Field data, 2013
From the above table, there are three participants in IS strategy formulation. The local
banks concentrate on management team and IT department for the formulation of IS
strategy. The story is different for that of the foreign banks. For the foreign banks they
solely depend on Technology Group for the formulation of IS strategy. The Technology
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Group is a group within each of the foreign banks that has the responsibility of
formulating IS strategy for the respective banks. It is also important to note that,
outsourcing and all staff are not considered in the formulation process. Wilson (1999)
also states that, 6.4 percent of the respondents claim that ISS is a function of individual
department, which is at odds with the organization-wide focus. Top management is
responsible for the development and implementation of IS strategy since information
systems can have a significant strategic impact on an organization’s performance
(Clemons and McFarlan, 1986). Top management also needs to take responsibility for
fostering information systems with the potential to provide this impact.
5.4.2 Strategic Information System Planning (SISP) Success Predictors
Strategy formulation involves designing and developing the company’s strategies.
Determining company’s strengths aids in the formulation of strategies. Strategy
formulation is generally broken down into three organizational levels: operational,
competitive, and corporate. The worryingly low implementation success rates lead to the
realization that SISP is a significantly more complex process that has to address not only the
relevant technological issues but also organizational, behavioural and managerial aspects. A
successfully implemented SISP process does not end with the implementation of a
technologically superior IS, but also encompasses appropriate organizational changes, business
process reengineering and organizational learning for a more productive use of IT. It is
especially important that the capabilities of the SISP process constantly improve to reflect
changing technology and business related developments. For this reason, the operational staff
respondents were asked to identify the important SISP success factors. The responses are
analyzed and presented in Table 5.14.
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Table 5.14: Responses of SISP Success Factors by Operational Staff
No = 216 Bank A Bank B Bank C Bank D Bank E Bank F
Freq % Freq % Freq % Freq % Freq % Freq %
Top Mgt
Involvement
- - - - - - 6 20.0 11 29.7 10 28.6
Staff Training
and Involve
12 27.9 6 16.2 9 26.5 - - - - - -
Resources 18 41.9 21 56.8 18 52.9 14 46.7 15 40.5 15 42.9
IS Strategy
Alignment
13 30.2 10 27.0 7 20.6 - - - - - -
Org and Tech
Changes
- - - - - - 10 33.3 11 29.7 10 28.5
Control and
Evaluation
- - - - - - - - - -
Total 43 100.0 37 100.0 34 100.0 30 100.0 37 100.0 35 100.0
Source: Field data, 2013
Different banks perceived SISP success predictors differently. This is also seen in the
origin of the banks. For the local banks (Bank A, Bank B, and Bank C), the most
important SISP success factors are resources, IS alignment to the business strategy and
staff training and staff involvement. The foreign banks (Bank D, Bank E, and Bank F)
also indicated that, the most important SISP success factors are resources, organizational
and technological changes and top management involvement. It could be inferred from
the above table that, according to the respondents, the most important SISP success
factors are resources, organizational and technological changes, IS alignment to the
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business strategy, top management involvement, and staff training and staff
involvement. It is worth noting that none of the banks considered control and evaluation
as an important factor. All the banks, both local and foreign, recognize the importance of
resources to the success of SISP, since majority of the respondents indicated that. In
response to the same question, the strategic staff also responded in a similar manner.
Segars and Grover (1998) researched into Strategic Information Systems Planning
Success and concluded that, strategic information systems planning (SISP) requires
significant outlays of increasingly scarce human and financial resources.
5.4.3 Staff Perception of Bank Vision
A vision statement is sometimes called a picture of the company in the future but it’s so
much more than that. A vision statement is an inspiration, framework for all strategic
planning. Any business vision has core values, core purpose and visionary goals. To
know the perception of staff in terms of vision, both the strategic and the operational
staff were asked to indicate their individual vision for the bank. Figure 5.4 shows the
responses from the operational staff.
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Figure 5.4: Operational Staff Perception of Bank Vision
Source: Field data, 2013
Most of the operational staff postulated that their vision for the bank is to be the best and
market leader in the banking sector. Another group of staff also stated that their vision is
to see the bank among the top five banks in the country. Thirty five (16.2%) of the
operational staff respondents indicated that their vision for the bank is to become a
multinational bank. Twenty (9.3%) respondents stated that, their vision for the bank is to
increase the infrastructure base, human resource concentration and increase profit
margins.
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From the strategic staff, 17 (53.1%) of the respondents stated that their vision for the
bank is to become a world-class bank, be among the top three performing banks in the
country, retain its position in the Club 100 and become the best international bank.
Fifteen (46.9%) of the respondents from the strategic staff also stated that their vision for
the bank is to balance the market orientation with a development focus on agriculture as
well as becoming very competitive in product delivery and pricing in the country. They
also added that their vision is to be a bank with quality assets (loans) and non-
performing ratio of less than 10% and profitable bank in the country. The vision is also
to be a bank in the next five years as delivering superior customer service and meeting
the demand of regulators.
The respondents went further to indicate how these visions could be achieved. The staff
vision could be achieved by:
 The improvement in both internal and external processes of the bank and
Investment in ICT infrastructure and human resources must be a cardinal focus
for the achievement of this vision.
 Raising customer’s loyalty and sustainable relationships as well as effective
processes systems and asset utilization
 Improvement in corporate governance and sustainable development and
leveraging IT as strategic tool and development of strategic competencies,
leadership capabilities and performance oriented culture
 Developing innovative and integrated products and services to increase revenue
significantly and effective loan appraisal and monitoring and adhering to bank of
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Ghana processes and strengthening best practices in the bank’s operations and
also using e-channels to roll out electronic banking products
 Technological improvement, brand differentiation and quality services to
customers and involving all the units and departments in the implementation of
all strategies and identifying all untapped financial potentials in the banking
industry.
 Training staff, engaging stakeholders in decision making and constant
communication of the vision and following the strategy at the business level,
departmental level and unit level.
 Staff focus, drive and leadership of the staff as well as setting targets on this
strategy as job objectives and developing the human resources of the bank and
improving the IT infrastructure as well as delivering efficient customer service.
5.4.4 Perception of Bank Staff Mission
A mission statement is a statement of the purpose of a company or organization, its
reason for existing. A mission statement is a brief description of a company's
fundamental purpose. It answers the question, "Why do we exist?" The mission
statement articulates the company's purpose both for those in the organization and for
the public. To know the perception of staff in terms of mission, both the strategic and the
operational staff were asked to indicate their individual missions for the bank. Figure 5.5
shows the responses from the operational staff.
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Figure 5.5: Banks Mission of Operational Staff
Source: Field data, 2013
Out of the 216 respondents, 126 (58.4%) avowed that their mission for the bank is to
provide quality customer service. Customers in modern times have become a very
important entity in the banking industry. It was not in any doubt that more than half of
the respondents indicated that the bank exists for customer service. All the responses
seek to suggest that, the staff have individual mission for the bank. From the strategic
staff perspective, 22 (68.7%)  of the respondents indicated that their mission for the bank
is service quality, customer satisfaction and growing strong customer-centric bank,
providing profitable and diversified financial services for a sustained contribution to
agricultural development and wealth creation. They also added that, their mission is in
line with provision of efficient banking services using efficient technology for the
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benefit of Ghana. Ten (31.3%) of the respondents also indicated that their mission lies in
development, universal, and retail banking and also to be the right partner in the
financial sector.
5.5 Barriers to Strategy
This section deals with the challenges that are associated with the formulation and
implementation of an IS strategy as well as environmental scanning and the way forward
as well as issues of environmental scanning.
5.5.1 Environmental Scanning
Environmental analysis (scanning or appraisal) is very important to modern
organization. It is used by corporate planners to monitor the economic factors,
competition, government legislation, suppliers, technology and market setting to
determine the opportunities for and threats to the enterprise. Organizations scan the
environment in order to understand external forces of change so that they may develop
effective responses which secure or improve their position in the future. The importance
of environmental analysis lies in its usefulness for evaluating the present strategy, setting
strategic objectives, and formulating future strategies. Strategic decisions are
synonymous with the strategic staff. For this reason, the strategic staff were asked to
identify the factors that impact on IS strategy and subsequently, whether the factors
could be used to achieve strategic fit. The responses are presented in Table 5.15, Table
5.16 and Table 5.17.
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Table 5.15: One-Sample Statistics
Bank Environmental Scanning
N Mean
Std.
Deviation
Std.
Error
Mean
Foreign
banks
Environmental scanning
deployment
15 1.07 0.258 0.067
Scanning helps to
achieve strategic fit
15 1.13 0.52 0.091
Local
banks
Environmental scanning
deployment
17 1.12 0.332 0.81
Scanning helps to
achieve strategic fit
17 1.24 0.437 0.106
Source: Field data, 2013
The above table shows the mean, standard deviation and the standard error of the
environmental scanning deployment and scanning as a strategic fit for both the foreign
banks and the local banks. The mean response for the foreign banks is 1.07 and that of
the local bank is 1.12 concerning the environmental scanning deployment. The standard
deviation for the foreign banks is 0.258 and that of the local banks is 0.332. The smaller standard
deviation of the foreign banks is an indication that the foreign banks deploy environmental
scanning more that the local banks. This position is different when it comes to the assertion that,
scanning helps to achieve strategic fit. For this, the standard deviation for the foreign banks is
0.52 which is more than that of the local banks (0.437). This implies that, the local banks believe
that scanning helps to achieve strategic fit more than the foreign banks.
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Table 5.16: One-Sample Test
Test Value = 0
Responses t df Sig.
(2-
tailed)
Mean
Differe
nce
95% Confidence
Interval of the
Difference
Lower Upper
Foreign
banks
Environmental
scanning deployment
16.000 14 0.000 1.067 0.92 1.21
Scanning helps to
achieve strategic fit
12.475 14 0.000 1.133 0.94 1.33
Local
banks
Environmental
scanning deployment
13.876 16 0.000 1.118 0.95 1.29
Scanning helps to
achieve strategic fit
11.649 16 0.000 1.235 1.01 1.46
Source: Field data, 2013
This is a two-tailed test with a degree of freedom (DF = n-1). The statistical value for
0.05 at DF= 14, and 16 give 2.145 and 2.120 respectively. With the foreign banks, the
calculated t-value, tf = 16.000 and for the local banks the calculated t-value, tl = 13.876.
This implies that, both the foreign banks and the local banks deploy environmental
scanning in IS strategy formulation. It could be inferred from the above table that, the
foreign banks deploy more environmental scanning in IS strategy formulation than the
local banks. Again, the significant t-values (tf = 12.475 and tl = 11.649) from both the
foreign and local banks are enough to conclude that environmental scanning helps to
achieve strategic fix. It is noticeable from the above table that, this assertion weights
more to the foreign banks than the local banks.
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Table 5.17: Correlation of Environmental Factors
N = 32 Technologic
al Political Economic
Socio-
Cultural
Technological Pearson Correlation 1 .266 .558** .339
Sig. (2-tailed) .141 .001 .057
N 32 32 32 32
Political Pearson Correlation .266 1 .246 .296
Sig. (2-tailed) .141 .175 .100
N 32 32 32 32
Economic Pearson Correlation .558** .246 1 .348
Sig. (2-tailed) .001 .175 .051
N 32 32 32 32
Socio-Cultural Pearson Correlation .339 .296 .348 1
Sig. (2-tailed) .057 .100 .051
N 32 32 32 32
**. Correlation is significant at the 0.01 level (2-tailed).
*. Correlation is significant at the 0.05 level (2-tailed).
Source: Field data, 2013
The above table indicates the degree of association between the perceived uncertainties
in each of the environmental sector – technological, regulatory, economic and socio-
cultural and the frequency with which organization scan the environment. Most of the
correlations are significant at 0.05 and 0.01 significant level. The analysis of the trends
and influences on strategy which emanate from the macro-environmental context of the
organization is important to the successes of strategy. The assumption of a link between
an organization’s strategic profile and its external context is consistent with the
principles of strategy paradigm (Venkatraman and Prescott, 1990). From the above
table, technology is ranked first among all the factors. This is an indication that
technology (COR = 1.000) has a great toll on IS strategy. Economic factor (COR =
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0.558) ranks second to technology. The third factor is the socio-cultural (COR = 0.339).
The least factor that impacts on IS strategy is political (0.266). The respondents believe
that political factor has less impact on IS strategy. This is not surprising because of the
peaceful transition of political power in Ghana. The technological and economic sectors
of Ghana’s environment have the greatest impact on IS strategy with the technological
factor having a greater impact than the economic.
5.5.2 Barriers to the Formulation of IS Strategy
Strategic information systems planning (SISP) is a continuous learning process,
encompassing the IS/IT strategy formulation and implementation activities, in which
various stakeholders tightly cooperate to assure maximum utilization of IT to gain
sustainable economic success of the enterprise. To know the barriers that intimidate
strategy, the operational staff were asked to state the barriers to the formulation of IS
strategy. The responses of the operational staff by banks are presented in Table 5.18.
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Table 5.18: Responses on Barriers to IS Strategy Formulation by Banks
No = 216 Bank A Bank B Bank C Bank D Bank E Bank F
Freq % Freq % Freq % Freq % Freq % Freq %
Lack of Policy 27 62.8 - - 3 8.8 - - - - - -
Lack of Staff
Involvement
- - - - - - 17 56.7 25 67.6 23 65.7
Lack of
Resources
- - 25 67.6 25 73.6 - - - - - -
Org. Culture 8 18.6 6 16.2 3 8.8 - - - - - -
Uncertainty 8 18.6 6 16.2 3 8.8 13 43.3 12 32.4 12 34.3
Total 43 100.0 37 100.0 34 100.0 30 100.0 37 100.0 35 100.0
Source: Field data, 2013
The major barriers to IS strategy formulation for the foreign banks (Bank D, Bank E,
and Bank F) are lack of staff involvement and uncertainties whilst with the local banks
(Bank A, Bank B, and Bank C); the barriers are lack of policy, lack of resources,
organizational culture, and uncertainties. The only barrier that affects all the banks is the
uncertainty. Bank A has the following barriers, lack of policy, organizational culture,
and uncertainty. The barriers to IS strategy formulation according to Bank B are lack of
resources, organizational culture, and uncertainties. The barriers that affect information
systems strategy formulation in Bank C are lack of policy, lack of resources,
organizational culture, and uncertainties. The responses from the strategic staff are also
similar to that of the operational staff.
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Mintzberg (1987) suggests that strategy formation is a craft, rather than a science, and
the process of crafting a strategy will involve negotiating various barriers. The barriers
suggested include those that affect any innovation, such as the hostile attitudes of
management levels in a company, and the problems of recruiting appropriate staff.
Wilson (1999) on the other hand states that, from the various ranking, the difficulties in
recruiting appropriate staff, the lack of resources to engage in user education, the nature
of the business, and the difficulties of measuring benefits, emerge as the key features of
IT strategies that are likely to cause problems for companies. Min et al., (2000) also
identified four general SISP methodology problems: lack of support for Information
Technology Architecture, under-emphasis on information technology opportunities,
duration of SISP, and lack of support for business process reengineering all associated
with IS Strategy formulation.
Barriers to the formulation of the IS strategy according to the operational staff could be
overcome by ensuring the following:
 There must be sufficient funds for IS operations and consultants must be used for
business process re-engineering and enterprise resource planning.
 Funding should be made available before the financial year ends.
 The Board and management must accept the IS strategy and the cost of the IT
equipment and infrastructure must be low.
 Bank staff quickly imbibing IT and high patronage by customers.
 The bank must conform to the regulatory standards.
 Needs of the customers must be understood as well as the technology trend and
business needs.
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5.5.3 Information System Strategy Implementation
The selected strategy is implemented by means of programs, budgets, and procedures.
Implementation involves organization of the firm's resources and motivation of the staff
to achieve objectives. Properly implemented information systems have become an even
more valuable strategic resource, one that any organization can use to improve its
competitive advantage. To find the barriers to strategy, the operational staff respondents
were asked to indicate what could obstruct the implementation of IS strategy. The
researcher presents the responses of the operational staff by banks in Table 5.19.
Table 5.19: Responses on Barriers to IS Strategy Implementation by Banks
No = 216 Bank A Bank B Bank C Bank D Bank E Bank F
Freq % Freq % Freq % Freq % Freq % Freq %
Lack of IT
Training
21 48.8 - - 6 17.6 - - - - - -
Lack of
Comm
- - - - - - 22 73.3 26 70.3 27 77.1
Lack of
Resources
- - 25 67.6 18 52.9 - - - - - -
Internal
Factors
11 25.6 6 16.2 4 11.9 - - - - - -
External
Factors
11 25.6 6 16.2 6 17.6 8 26.7 11 29.7 8 22.9
Total 43 100.0 37 100.0 34 100.0 30 100.0 37 100.0 35 100.0
Source: Field data, 2013
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The major barriers to IS strategy implementation for the foreign banks (Bank D, Bank E,
and Bank F) are lack of communication and external factors whilst with the local banks
(Bank A, Bank B, and Bank C), the barriers are lack of IT training, lack of resources,
internal and external factors. One barrier that affects all the banks is the external factor.
The lack of resources is the major barrier to the implementation of IS strategy for the
local banks. Most of the time it could be as a result of lack of funds, lack of capable
human force (humanware), or lack of appropriate technology. The internal and external
factors sometimes impede the implementation of the IS strategy.
Lederer and Sethi (1988) undertook a similar study and concluded that, the two
problems rated most severe were the difficulty in securing top management commitment
for implementing the plan and the need for substantial further analysis in order to carry
out the plan. Lederer and Sethi (1988) further suggest that the SISP methodologies may
often produce satisfactory plans but that organizations lack the management
commitment and control mechanisms to ensure that they follow the plans. The way in
which strategy is implemented can have a significant impact on whether it will be
successful. In a large company, those who implement the strategy are likely to be
different people from those who formulated it. For this reason, care must be taken to
communicate the strategy and the reasoning behind it. Otherwise, the implementation
might not succeed if the strategy is misunderstood or if lower-level managers resist its
implementation because they do not understand why the particular strategy was selected.
The barriers in the implementation of the IS strategy, according to the operational staff
could be overcome by the following;
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 Involving both the Board and top level management in the implementation.
 There must be more investment in IS infrastructure and decentralization of IS in
the bank.
 Staff education must also be intensified in order to overcome the barriers in the
implementation of IS strategy.
 By the upwards adjustment of the budget and increasing the human resource base
in terms of technical expertise.
 Another solution is to involve more technology partners and to involve end-users
in the implementation of the IS strategy.
 By outsourcing the skills and specializations that are not available in the
Information Technology Department.
5.5.4 Success of Information System Strategy Implementation
The outcome of Information System Strategy Implementation is very cardinal to the
monitoring and control of the strategy. Strategic information systems planning (SISP) is
one of the important management issues. The use of Information Technology associated
with proper planning would increase business success within the organization. SISP is
considered to be the best mechanism that would support the organization to ensure that
IT activities are attuned with those of the rest of the organizational needs. For the
researcher to find the success level, both the strategic and the operational staff
respondents were asked to indicate the bank’s level of success. Both the strategic and the
operational staff responses are akin, therefore, only the operational staff responses are
used for the analysis. From the responses, 196 (90.8%) of the operational staff stated
that, the Information System Strategy was successfully implemented and 20 (9.2%)
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stated that, the implementation was somehow successful. The number recorded suggests
that the information system strategy implementation is successful. CEO commitment
enhances IT success by making resources available for implementation, integrating IT
with business strategy and processes, and ensuring continuity in IT investments over
time (Kettinger et al., 1994).
5.6 Logistic Regression Analysis
This logistic regression is to determine whether the time frame of the strategic plan, the
IS strategy aligned to the business strategy and the participants of IS strategy formulation
are functions of the business strategy. Any independent variable with a p-value greater
than 0.05 is not significant and therefore cannot be used to explain the regression model.
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Table 5.20: Regression Coefficients (Business Strategy)
Model Unstandardized
Coefficients
Standardized
Coefficients
t Sig.B Std. Error Beta
1 (Constant) -.270 .373 -.723 .476
What time frame does
your strategic plan
covers?
.259 .166 .246 1.557 .131
How is your IS strategy
aligned to your business
strategy?
.302 .362 .100 .834 .412
The participants of IS
strategy formulation?
.272 .069 .592 3.955 .000
R Square = 0.706 DR = 31         F = 22.465 P-Value = 0.000   STD Error = 0.425
Source: Field data, 2013
From the coefficient table and considering the standardized coefficients, the time frame
for the strategic plan (b=0.246, p=0.131) is not significant. The IS strategy alignment
with business strategic (b=-0.100, p=0.412) is also not significant in the regression
model. The participants of IS strategy formulation (b=0.592, p=0.000) is significant in
the regression model. From the model summary, 71 percent of the variation in the
business strategy is accounted for by the model thus participants of IS strategy
formulation account for 71 percent of the variation in the business strategy. Hence, the
model is;
Y = -0.270 + 0.592 (Participants of IS formulation)
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The second logistic regression is to determine whether the types of competitive strategy,
business strategy, IS strategy, and IS strategy typology are functions of the outcome of
IS strategy implementation.
Table 5.21: Regression Coefficients (Outcome of IS Strategy)
Model
Unstandardized
Coefficients
Standardize
d
Coefficients
t Sig.B Std. Error Beta
1 (Constant) .608 .348 1.749 .092
What type of
competitive strategy
does your bank use?
How would you
describe your business
strategy?
-.030
-.093
.113
.122
-.051
-.234
-.266
-.760
.792
.454
Do you have
Information System (IS)
strategy in your bank?
.427 .261 .355 1.635 .114
What is the concept of
your IS strategy
typology?
.173 .176 .282 .984 .334
R Square = 0.162 DR = 31         F = 1.302 P-Value = 0.294 STD Error = 0.291
Source: Field data, 2013
From the coefficient table, the type of competitive strategy (b=-0.051, p=0.792) is not
significant to the regression model. The business strategy (b=-0.234, p=0.454) is not
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significant. The IS strategy (b=-0.355, p=0.114) is also not significant in the regression
model. The IS strategy typology (b=0.282, p=0.334) is not significant to the regression
model. It is concluded from the table below that, the independents variables could not
explain the dependent variable. From the model summary, 16 percent of the variation in
the outcome of IS implementation is accounted for by the model thus the predictors
account for 16 percent of outcome of IS implementation; meaning that the independent
variables are not good predictors of outcome of IS implementation.
5.7 Benefits of IS Strategy
There are many benefits that accrue to a bank as a result of using IS strategy. The
strategic staff gave the following benefits as the result of IS strategy. These benefits
have been categorized into bank operations and performance, products and services,
bank staff, and bank customers.
5.7.1 Bank Operations
 The banks have increased in size, profit margins, and market share.
 Information system has reduced the cost and time of doing business.
 Increased productivity and flow of information (communication).
 The bank has enhanced its processes and documentation.
 The banks’ operations are more effective and efficient.
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5.7.2 Products and Services
 The bank has efficient delivery of all products and services.
 Information system has enhanced the smooth selling of the bank’s products and
services.
 Unique products and services.
5.7.3 Bank Staff
 The information system has made the bank staff very efficient.
 The information system is reliable and it has improved the confidence of staff
members.
5.7.4 Bank Customers
 Fast, efficient, and improved customer services.
 Enjoyment of innovation and new products and services.
 Increased accessibility in terms of internet banking, SMS and electronic
platforms accessibility.
 Fast, convenient access to money and easy access to ATMs and banking
facilities.
 Faster transaction processing, reduction in processing time and door step
banking.
 Reached out to more customers.
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5.8 Conclusion
This chapter digested the following issues: Information systems strategy and information
systems assets, staff participation and success predictors and barriers to strategy. From
the data analysis, all the foreign banks (Bank D, Bank E, and Bank F) and the local
banks (Bank A, Bank B, and Bank C) have IS strategy fully aligned to the business
strategy. The analysis also revealed that, the local banks concentrate on management
team and IT department for the formulation of IS strategy whilst the foreign banks
depend solely on Technology Group for the formulation of IS strategy. The major
barrier to IS strategy formulation and implementation to both the foreign and local banks
is resources. The next chapter considers the analysis of data and findings on aspects of
electronic products and bank performance.
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References
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Clemons, E. K., & McFarlan, F. W. (1986). Telecom: Hook-Up or lose out. Harvard
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Davis, G. B. (2000). Information systems conceptual foundations: Looking backward
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Kluwer Academic Publishers.
Duncan, N. B. (1995). Capturing flexibility of information technology infrastructure.
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Karimi, J., Gupta, Y. P., & Somers, T. M. (1996). Impact of competitive strategy and
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Kettinger, W. J., Grover, V., Guha, S., &  Segars, A. H. (1994). Strategic information
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459-463.
Min, S. K., Suh, E. H., & Kim, S.Y. (2000). An integrated approach toward strategic
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Segars, A. H., & Grover, V. (1998). Strategic information systems planning success: An
investigation of the construct and its measurement. MIS Quarterly, 22(2), 139-
163.
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River, New Jersey: Pearson Prentice Hall.
Swanson, E. B., & Ramiller, N. C. (2004). Innovating mindfully with information
technology. MIS Quarterly, 28(4), 553-583.
Venkatraman, N., & Prescott, J. E. (1990). Environment- strategy co-alignment: An
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of Applied Management and Entrepreneurship, 7(1), 135.
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CHAPTER SIX
ANALYSIS OF DATA AND FINDINGS ON ASPECTS
OF ELECTRONIC PRODUCTS AND BANK PERFORMANCE
6.1 Introduction
This chapter presents the analysis of data and findings on aspects of information systems
from the data collected through questionnaire and the presentation of results as well as
the discussion of the findings. It analyses the data in relation to the objectives of the
study. Response rate (also known as completion rate or return rate) in survey research
refers to the number of people who answered the survey divided by the number of
people in the sample. For the bank customers, 1,352 copies of the questionnaire were
administered. Out of the 1,352 copies, 720 (53.3%) copies of the questionnaire were
completed and returned. The results have been presented in tables and charts showing
frequencies, percentages, and cross tabulations of the responses given by the respondents
who comprised the strategic staff, the operational staff and the customers of the various
banks. The discussion relates the findings to the literature review and theoretical
framework adopted for the study. The chapter has been organized under the following
major sub-headings:
i. Electronic Banking
ii. Technology and Customer Satisfaction
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6.2 Electronic Banking
This section examines various electronic products and services available at the bank and
how they are linked to information technology. It also covered website visitation, level
of SMS, internet, and ATM usage, the time spent at the banking hall among others.
6.2.1 Products and Services of the banks
All the banks have products and services that they render to their customers. Some of the
products and services are designed with IT whilst others are not. To find out whether the
bank’s products and services are backed by IT, the strategic staff respondents together
with the operational staff respondents were asked to state the products and services of
the bank. From the responses of the respondents (both foreign and local) it could be
inferred that IT is used to design products and services for the banks. Some of the
products and services, according to the respondents, are accounts, online banking,
money transfer, SMS banking, loans, e-zwitch, bank assurance, T-bills, ATM, and bills
payment.
6.2.2 Website Usage by Customers
A website is a collection of web pages having images, videos and other digital assets
that is hosted on one or several web servers usually accessible via Internet, cell phone or
a LAN (Ankrah, 2013). All publicly accessible websites are seen collectively as
constituting the World Wide Web. The pages of websites can usually be accessed from a
common root Uniform Resource Locator (URL) called the homepage, and usually reside
on the same physical server. Some websites require a subscription to access some or all
of their content (Ankrah, 2013). In information system strategy, electronic media plays a
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very significant role in banking. Most of the information about a bank is put on the
bank’s website for the customers and the public as a whole. In modern times, customers
do not have to visit the bank before accessing information. This information could be
products, services or general information. The study established that all the banks in the
study have websites. To find out whether the customers use the website, the 720
respondents were asked to indicate the number of times they visit the website. The
responses from the bank customers were put together for the analysis in Figure 6.1 and
subsequently analyzed in terms of banks to bring out the clear picture of website
visitations.
Figure 6.1: Frequency of Website Visitation by Customers
Source: Field data, 2013
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The internet can be used for e-banking of which internet banking is part. Less than half
of the customers visit the banks website once in a month. The respondents stating other
suggest that the number of times they visit the website was not among the one proposed
by the researcher. This may be justified by the availability of internet connectivity or
simply the customers are not interested in visiting the website. Further analysis revealed
that, most of the foreign bank customers visit the web site more than the customers of
the local banks. Some of the customers visit Bank D, Bank E, and Bank F websites once
a week, twice a week and once a month. Most of the customers do not visit the websites
of Bank A, Bank B and Bank C. even if they do, once in awhile.
6.2.3 SMS and Internet Banking by Customers
SMS banking service provides instant notification about transactions as and when it
happens. It helps to keep a watch on account with a round the clock service. Every debit
or credit to an account over a limit desired is intimated by SMS. With SMS banking
service, one is always in a position to detect unauthorized access to ones account.
Additionally, SMS banking also helps to check account balance and mini statements
instantly by just sending an SMS (Ankrah, 2013). Online banking refers to the
automated delivery of banking products and services directly to customers through
electronic communication channels, most notably the Internet (Ankrah, 2012). The bank
customers were asked whether they use the SMS and the internet banking or not. The
responses are analyzed on bank bases for the Internet banking (see Table 6.1) and SMS
bank usage (see Table 6.2).
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Table 6.1: Responses on Internet Banking Usage by Banks
N = 720 Bank A Bank B Bank C Bank D Bank E Bank F
Freq % Freq % Freq % Freq % Freq % Freq %
Yes - - - - - - 40 37.4 76 55.1 58 45.3
No 128 100.0 115 100.0 104 100.0 67 62.6 62 44.9 70 54.7
Total 128 100.0 115 100.0 104 100.0 107 100.0 138 100.0 128 100.0
Source: Field data, 2013
Internet banking by its nature offers more convenience and flexibility to customers
coupled with a virtually absolute control over their banking. For the local banks, all the
respondents indicated that they do not use the internet banking. The story is different
with the foreign banks. For these banks, some of the customers use internet banking. In
the case Bank E, the number of the customers 76 (55.1%) who use the facility is more
than the number of customers 62 (44.9%) who don’t use internet banking. For the
remaining two foreign banks, the number of customers who do not use the facility far
exceeds those that use it. Internet banking is the most cost-efficient technology means
of yielding higher productivity. Furthermore, it eliminates the barriers of distance/time
and provides continual productivity for the bank to unimaginable distant customers.
However, banks’ ability to reduce operating costs through the adoption of online
banking depends upon the extent to which customers are capable of using this service
(Polatoglu and Ekin, 2001; Karjaluoto, Mattila and Pento, 2002). Kaiming and
Enderwick (2000) argued that the more experience customers have with online banking,
the better understanding they will have about online banking technology. Agwu (2012)
found out that most customers who have adopted internet banking services believe that it
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has a lot of potentials in terms of its advantages, but most users also believe that there
are more problems attached to internet banking services than the advantages as
evidenced from the findings. This is mainly due to the security and privacy issues on one
hand and dearth of telecommunication infrastructures, poor education of the users and
poverty (low income) issues on the other.
Table 6.2: Responses on SMS Usage by Banks
N = 720 Bank A Bank B Bank C Bank D Bank E Bank F
Freq. % Freq. % Freq. % Freq. % Freq. % Freq. %
Yes 21 16.4 21 18.3 23 22.1 45 42.1 81 58.7 63 49.2
No 107 83.6 94 81.7 81 77.9 62 57.9 57 41.3 65 50.8
Total 128 100.0 115 100.0 104 100.0 107 100.0 138 100.0 128 100.0
Source: Field data, 2013
For SMS banking too, the percent of usage in the local banks is less than that of the
foreign banks. Again, there are more customers using this facility in Bank E than those
not using it. The reverse is true for Banks D and F. The usage rate of SMS banking in
Bank E is higher than the rest of the foreign banks.
6.2.4 Automated Teller Machine (ATM)
Automated Teller Machine (ATM) appears to be the most patronized tech-service by
bank customers. From the responses, the foreign banks ATMs are more patronized than
the local banks ATMs. Bank B has the minimum number of ATMs of thirty nine whilst
Bank F has the highest number of ATMs of one hundred and thirty. This finding
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supports the findings of Abor (2004), who found out that ATMs appeared to be the most
widely accepted and highly used form of electronic delivery services among Ghanaian
banking population.
6.2.5 Length of Bank Transaction
Banking information system is expected to facilitate all banking operations. The time
spent in banking transaction is very crucial and important to any customer. Customers
would like to have shortest response time and shortest time for any transaction. The time
spent in any transaction is a function of loyalty. For this reason, the bank customers were
asked to indicate the time spent for any transaction. The analysis of the responses is
based on banks and presented in Table 6.3.
Table 6.3: Number of Hours Spent in Transactions by Banks
N = 720 Bank A Bank B Bank C Bank D Bank E Bank F
Freq % Freq % Freq % Freq % Freq % Freq %
< 10 Min - - - - - - 60 56.1 70 50.7 80 62.5
10 – 20 Min 80 62.5 80 69.6 70 67.3 40 37.4 50 36.2 40 31.3
21 – 30 Min 40 31.3 30 26.1 20 19.2 7 6.5 18 13.1 8 6.2
31 – 60 Min 8 6.2 5 4.3 14 13.5 - - - - - -
> 60 Min - - - - - - - - - - - -
Total 128 100.0 115 100.0 104 100.0 107 100.0 138 100.0 128 100.0
Source: Field data, 2013
Some of the customers from the foreign banks indicated that they spend less than ten
minutes in bank transactions. None of the customers from the local banks indicated that
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they spend less than ten minutes in bank transaction. Bank A, Bank B and Bank C
recorded the highest transaction time of thirty one to sixty minutes. It is palpable from
the above table that most of the bank’s customers spend between ten to twenty minutes
for their banking transactions. It is noticeable that some of the customers spend almost
one hour in their banking transactions. At this era of IT, any transaction that takes more
than one hour is a cause for worry and management must rectify this abnormally with
immediate effect.
6.3 Technology and Customer Satisfaction
This section determined the level of customer satisfaction in relation to information
technology. It also covered issues like modern technology usage, service quality, bank
policies and customer suggestions.
6.3.1 Microcomputers at the Departments
A computer is a general purpose device that can be programmed to carry out a finite set
of arithmetic or logical operations. A microcomputer is a computer with a
microprocessor as its central processing unit (CPU). It includes a microprocessor,
memory, and input/output (I/O) facilities. This is the type of computers normally used
in offices. In any information system environment, microcomputers are used. The
microcomputers serve as the machine component of the information system
environment, that is the hardware and the software that process the data. To find out the
number of microcomputers in the bank, the strategic staff respondents were asked to
indicate the number of microcomputers in their respective departments since they head
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the various departments. The responses from the strategic staff are represented in Table
6.4 for the analysis.
Table 6.4: Responses on the Number of Microcomputers at Departments
No = 32 Bank A Bank B Bank C Bank D Bank E Bank F
Freq % Freq % Freq % Freq % Freq % Freq %
1 – 20 PCs - - 2 33.3 4 80.0 - - - - - -
21 – 50 PCs 2 33.3 2 33.3 1 20.0 3 60.0 3 60.0 3 60.0
51 – 70 PCs 2 33.3 2 33.3 - - 2 40.0 2 40.0 2 40.0
71 – 100 PCs 2 33.3 - - - - - - - - - -
Total 6 100.0 6 100.0 5 100.0 5 100.0 5 100.0 5 100.0
Source: Field data, 2013
From the table above, some of the respondents from Bank B and Bank C indicated 1 –
20 microcomputers in their departments. None of the foreign banks had 1 – 20
microcomputers in their department. Bank A is seen to have the highest number of
microcomputers in their departments. Apart from Bank C, all the banks fall within the
range of twenty one to seventy microcomputers. Hermanson and Edward (1992)
indicated that microcomputers are especially useful in accounting because of the great
need for fast and accurate information processing when dealing with large volumes of
financial data. Banks rely heavily on mainframes, minicomputers, microcomputers, and
workstations. (Gupta and Collins, 1997).
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6.3.2 Server Computers at the Banks
A server computer is a computer with a higher capacity and speed that can be linked to
other client stations. A server could also be a computer program that provides services to
other computer programs (and their users) in the same or other computers. In the
information system environment, client / server architecture is maintained. The
operational data, exchange, etc. are mounted on the server and are pulled to the various
client (work) stations. The requisition of servers is a strategic issue. For this reason, the
strategic staff respondents were asked to indicate the number of severs in their banks.
Table 6.5 presents their responses by banks.
Table 6.5: Responses on the Number of Server Computers at the Banks
N = 32 Bank A Bank B Bank C Bank D Bank E Bank F
Freq % Freq % Freq % Freq % Freq % Freq %
Three - - - - 5 100.0 - - - - - -
Five - - 6 - - - - - - - - -
Ten 6 100.0 - - - - 5 100.0 5 100.0 - -
Other - - - - - - - - - - 5 100.0
Total 6 100.0 6 100.0 5 100.0 5 100.0 5 100.0 5 100.0
Source: Field data, 2013
The foreign banks (Bank D, Bank E, and F) had more servers than the local banks (Bank
A, Bank B, and Bank C). Bank C has the least number of serves whilst Bank F has the
highest number of servers. The respondents from Bank F that chose other also indicated
that, the bank has fifteen servers. Bank A, Bank D, and Bank E have ten servers each.
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6.3.3 Operating Systems of Banks Client Stations
Software is a set of instructions that direct the hardware to perform specified actions. An
Operating System (OS) is a set of programmes through which the computer manages its
own resources. Every computer has an operating system. This software is usually hidden
from the user. The operating system is often referred to as the software environment or
platform. In the information system environment, the software (system software and
application software) is one of the components of IS environment and the hardware
cannot run without the software. The operational staff are more conversant with
operating systems. It was therefore more appropriate to ask for information pertaining
systems from them. Their responses are summarized in Table 6.6 below.
Table 6.6: Responses on Operating Systems Usage by Banks
No = 216 Bank A Bank B Bank C Bank D Bank E Bank F
Freq % Freq % Freq % Freq % Freq % Freq %
Windows
XP
38 88.4 30 81.1 26 76.5 19 63.3 26 70.3 22 62.9
Windows 7 4 9.3 4 10.8 3 8.8 6 20.0 6 16.2 7 20.0
Vista - - - - - - 5 16.7 5 13.5 6 17.1
Others 1 2.3 1 2.7 3 8.8 - - - - - -
Non-Res - - 2 5.4 2 5.9 - - - - - -
Total 43 100.0 37 100.0 34 100.0 30 100.0 37 100.0 35 100.0
Source: Field data, 2013
From the table above, all the banks use Windows XP and Window 7 on their client
stations. It is comprehensible that only the foreign banks use Vista on some of their
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clients’ stations. The latest OS for client stations is Window 8, but from the above table,
none of the banks use Window 8 but rather Windows 2000 and Windows ME which are
the older versions of Windows OS. This is typical with the local banks. These banks are
still using the older versions of the Windows OS because according to the respondents
certain applications are only compatible with these versions. Apart from Bank A, two of
the respondents from each of Bank B and C did not respond to the question. This could
be as a result of the fact that, these respondents do not know the type of OS being used.
This also exposes the computer illiteracy of some of the respondents.
6.3.4 Network Operating Systems of Banks
Networking Operating System (NOS) is the software that runs on a server and enables
the server to manage data, users, groups, security, applications, and other networking
functions (Dean, 2009). The network operating system is designed to allow shared files
and printer access among multiple computers in a network, typically a Local Area
Network (LAN), a private network or to other networks. NOS is an operating system
that includes special functions for connecting computers and devices into a Local Area
Network (LAN). The term network operating system, however, is generally reserved for
software that enhances a basic operating system by adding networking features. The
most popular network operating systems are Microsoft Windows Server 2003, Microsoft
Windows Server 2008, UNIX, Linux, Mac OS X, Novell NetWare, and BSD. In the
information system environment, client/server architecture is maintained. The
operational data, exchange, etc. are mounted on the server and are pulled to the various
client (work) stations through the assistance of a network operating system. The
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operational staff respondents were asked to indicate the type of network operating
system that the bank is uses.
All the respondents stated the following network operating systems; Microsoft Windows
Server 2000, Microsoft Windows Server 2008, Microsoft Windows Server XP,
Microsoft Windows Server NT, Linux, and UNIX. Further analysis of the type of
database management system revealed that, the foreign banks use BANKER, Oracle,
Bankmaster, Electronic Business Solution (eBBS), and payment system (eOpal) whilst
the local banks use BANKER, IBM Webshere, Front Office System (FOS), WINFOS,
EBOX and BWAC. The only DBMS used by both the foreign and the local banks is the
BANKER. The foreign banks use off the shelf packages whilst the local banks use
bespoke packages.
6.3.5 Level of IS Security in the Bank
Information Technology Security is the process of implementing measures and systems
designed to securely protect and safeguard information. The information system must be
protected against unauthorized usage. When the security is loose, it creates lapses in the
system and anyone can take advantage of it. To find out the security situation in the
banks, the operational staff respondents were asked to indicate the level of information
system security. Information on information system security is more likely to be
obtained from the operational staff. A summary of their responses is provided in Table
6.7.
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Table 6.7: Responses on the Levels of IS Security by Banks
Ns = 216 Bank A Bank B Bank C Bank D Bank E Bank F
Freq % Freq % Freq % Freq % Freq % Freq %
Low - - - - - - - - - - - -
Moderate 5 11.6 - - 5 14.7 - - - - - -
High 38 88.4 37 100 29 85.3 30 100.0 37 100.0 35 100.0
Total 43 100.0 37 100.0 34 100.0 30 100.0 37 100.0 35 100.0
Source: Field data, 2013
Security issues in banks are policies, procedures and technical measures used to prevent
unauthorized access, alteration, theft, or physical damage to information systems. All the
respondents from four banks indicated that they had high level of IS security in the bank.
Out of these four banks, three are foreign banks and one local bank (Bank B). Some of
the respondents from Bank A, 5 (11.6%) and Bank C, 5 (14.7%) also indicated moderate
IS security in the bank. The banks with high level of security have methods, policies,
and organizational procedures that ensure safety of organization’s assets, accuracy and
reliability of its accounting records; and operational adherence to management
standards. Both the foreign and the local banks have the following general controls:
Software, Hardware, Computer operations, Data security controls, Implementation, and
Administrative controls.
6.3.6 Current Information System
Information Systems (IS) is a set of interrelated components that collect (or retrieve),
process, store, and distribute information to support decision making and control in an
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organization. In addition to supporting decision making, coordination, and control,
information systems may also help managers and workers analyze problems, visualize
complex subjects, and create new products. Information systems contain information
about significant people, places, and things within the organization or in the
environment surrounding it. In the information system environment, any system that is
not effective would affect the output from the system. An effective information system
is a desired system in any organization. To find out the state of the IS, the operational
staff were asked to indicate the effectiveness of the current information system. The
operational staff responses are summarized in Table 6.8.
Table 6.8: Responses on Effectiveness of IS Systems by Banks
N = 216 Bank A Bank B Bank C Bank D Bank E Bank F
Freq % Freq % Freq % Freq % Freq % Freq %
Not
Effective
- - - - - - - - - - - -
Somehow
Effective
5 11.6 - - 5 14.7 - - - - - -
Very
Effective
38 88.4 37 100 29 85.3 30 100.0 37 100.0 35 100.0
Total 43 100.0 37 100.0 34 100.0 30 100.0 37 100.0 35 100.0
Source: Field data, 2013
The effectiveness of any information system affects the output from the system. In
effect, the effectiveness of any system is a function of its performance. All the foreign
banks and one of the local banks, Bank B had a very effective IS in the bank. Bank A
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and Bank C also had effective IS but cannot be compared to the four just mentioned.
This is because some of the respondents 5 (11.6%) and 5 (14.7%) respectively also
indicated that the information system was somehow effective. The response “Somehow”
stated by some of the respondents for Bank A and Bank C suggests that the information
system was not hundred percent effective. The responses, however, recorded by all the
banks suggest that the information systems in the banks were effective.
6.3.7 Updating of Information Technology System by the Banks
Information system strategy calls for the update of information systems periodically
since technology is constantly changing to make current systems more efficient. In any
organization, the question is whether you need to upgrade to the latest technology to be
more profitable and competitive. Since IT systems upgrading is a strategic issue, the
strategic staff respondents were asked to indicate how often their systems are updated.
For the foreign banks, Bank D updates its IT systems once in two years, Bank E updates
its IT systems twice a year and Bank F updates its IT systems once in a year. For the
local banks, Bank A updates its IT systems once in five, Bank B and C do not have a
definite time for updates but updates their systems as at when it’s necessary. It could be
said that the foreign banks do better than the local banks in terms of systems update.
6.3.8 Customer Satisfaction
Information systems are expected to provide unique products and services and also
satisfy the bank customers in all aspects. Customer‘s satisfaction is the company's ability
to fulfill the business, emotional, and psychological needs of its customers (Pairot,
2008). However, customers have different levels of satisfaction as they have different
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attitudes and experiences as perceived from the company. Customer’s satisfaction is
affected by the importance placed by the customers on each of the attitudes of the
product/service. Customer satisfaction is one of the cardinal principles in modern
banking. In a competitive marketplace where businesses compete for customers,
customer satisfaction is seen as a key differentiator and increasingly has become a key
element of business strategy. Customer satisfaction measurement allows an organization
to understand the key drivers that create satisfaction or dissatisfaction (Ankrah 2013).
The user satisfaction can be seen as the sum of the user’s feeling and attitudes toward
several factors that affect the usage situation (Bailey and Pearson, 1983). To know the
level of satisfaction of the bank customers, they were asked to indicate their level of
satisfaction with the services of the bank. The analysis of the responses is based on
banks and presented in Table 6.9.
Table 6.9: Responses on Levels of Customer Satisfaction by Banks
N = 720 Bank A Bank B Bank C Bank D Bank E Bank F
Freq % Freq % Freq % Freq % Freq % Freq %
Not Satisfy - - - - - - - - - - - -
Somehow
Satisfy
48 37.5 25 21.8 10 9.6 17 15.9 38 27.5 20 15.6
Very
Satisfy
80 62.5 90 78.2 94 90.4 90 84.1 100 72.5 108 84.4
Total 128 100.0 115 100.0 104 100.0 107 100.0 138 100.0 128 100.0
Source: Field data, 2013
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From the above table, most of the respondents from all the banks indicated that they are
satisfied with the services of the bank. In addition, some of the respondents from the
local banks and the foreign banks indicated that they are somehow satisfied with the
services of the banks. In the global consumer banking survey in 2011, it came to light
that, customers are changing their behavior and demanding lower fees for higher levels
of service or other improvements. If these demands are not met, they are increasingly
likely to shop around other banks for competitive rates for services and products.
6.3.9 Modern Technology Usage
Technology has brought about a complete paradigm shift in the functioning of banks and
delivery of banking services. Gone are the days when every banking transaction required
a visit to the bank branch. Today, most of the transactions can be done from the comfort
of one’s home and customers need not visit the bank branch for anything. Technology is
no longer an enabler, but a business driver (Ankrah, 2012). The growth of the internet,
mobiles and communication technology has added a different dimension to banking. The
information technology (IT) available today is being leveraged in customer acquisitions,
driving automation and process efficiency, delivering ease and efficiency to customers
(Ankrah, 2012). Contemporary technology in banking comes in the form of computer
based application and information technology. From the banking customer’s perspective,
two of the practical purposes of banking are convenience and accessibility to both funds
and account information. It was based on this that the bank customers were asked
whether their bank has modern technology or not. The responses showed that, all the
foreign banks (Bank D, Bank E, and Bank F) have modern technology. Two of the local
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banks (Bank A and Bank B) also have modern technology whilst Bank C’s technology is
not up to date.
6.3.10 New Policy and Customer Suggestions
Policy is a statement of intent, and is implemented as a procedure or protocol. Policies
are generally adopted by the Board of or senior governance body within an organization.
New policies must be communicated to the people involved.  When new policies are not
disseminated well, it hinders the smooth implementation. Customers are also
stakeholders of any given bank and therefore their views must be taken into account. For
this reason, the bank customers were asked whether they are informed before new
policies are introduced and also whether their suggestions are considered in decision
making. From the responses, Bank A, Bank B, and Bank F inform their customers ahead
of time before new policies are introduced. Bank C, Bank D, and Bank E do not inform
their customers ahead of time before new policies are introduced. In this regard the local
banks do better than the foreign banks. The analysis also revealed that most of the
customers’ suggestions are not considered in decision making by the foreign banks. All
the local banks consider customers’ suggestions in decision making.
6.3.11 IS and Bank Cost Reduction
Information technology plays a central role in businesses by saving costs, making
processes more efficient and allowing firms to stay competitive. A startup business must
learn how to use IT to differentiate itself from the competition and offer value to
customers that others cannot duplicate. This involves getting the right people, aligning
IT strategy with business strategy, exploring clustering opportunities and maintaining
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focus on driving sales growth (www.eHow.com). To determine whether IS can be used
to reduce cost in the banking industry, both the strategic and the operational staff were
asked to indicate areas that IS has been used to reduce cost. From both the strategic and
the operational staff responses, it could be inferred that information systems can be used
to reduce cost in banking operations.
6.3.12 Cost Reduction in Banking
Many businesses have used information system to reduce cost. The banking sector is not
an exception. Banking cost has been reduced in form of automation, accurate interest
calculations, maintaining data integrity, acquiring banking software among others. Cost
reduction is a strategic issue and very dear to all business organizations. For this reason
the strategic staff respondents were asked to indicate the means by which the bank can
reduce cost. All the respondents from the banks indicated systems automation as a
means of reducing cost in the banking sector. In addition to systems automation, the
foreign banks, also stated e-products and services, and effective IS whilst the local banks
also added staff training.
6.4 Conclusion
The major considerations of this chapter were electronic banking, technology and
customer satisfaction. After the IS strategy formulation, the IS strategy would be
realized in the form of information systems and electronic banking. The findings
revealed that, for the local banks, all the respondents indicated that they do not use the
internet banking whilst with the foreign banks some of the customers use the internet
banking.  For SMS banking too, the percent of usage in the local banks is less than that
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of the foreign banks. The next chapter covers the analysis of data and findings on
aspects of bank performance indicators.
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References
Abor, J. (2004). Technology innovations and banking in Ghana: An evaluation of
Customers’ perceptions. American Academy of Financial Management, 1, 1-16.
Agwu, E. (2012). A qualitative study of the problems and prospects of online banking in
developing economies: Case of Nigeria. Journal of Internet Banking and
Commerce, 17(3), 46-59.
Ankrah, E. (2012). Technology and service quality in the banking industry in Ghana.
Information and Knowledge Management, 2(8), 52-60.
Ankrah, E. (2013). Customer satisfaction of electronic products and services in
Ghanaian banks. Information and Knowledge Management, 3(1), 7-18.
Bailey, J., & Pearson, S. (1983). Development of a tool for measuring and analyzing
computer user satisfaction. Management Science, 29(5), 530-545.
Dean, T. (2009). Network Operating Systems. Network+ guide to networks,
infrastructure, Online Compact Oxford English Dictionary. Retrieved from
http://www.askoxford.com/concise_oed/infrastructure [12/03/2013].
Hermanson, H. R., & Edward, J. (1992). Financial Accounting (5th ed.). Boston:Irwin
Inc.
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Gupta, U. G., & Collins, W. (1997). The impact of information systems on the efficiency
of banks: An empirical investigation. Industrial Management and Data Systems,
97(1), 10-16.
Kaiming, A. A., & Enderwick, P. (2000). A cognitive model on attitude towards
technology adoption. Journal of Managerial Psychology, 15(4), 226–282.
Karjaluoto, H., Mattila, M., & Pento, T. (2002). Factors underlying attitude formation
towards online banking in Finland. International Journal of Bank Marketing,
20(6), 261-272.
Pairot, R. (2008). Members’ satisfaction of fitness service quality: A case study of
California wow experience Public Company Limited (Unpublished master’s
dissertation). Srinakharinwirot University.
Polatoglu, V. N., & Ekin, S. (2001). An empirical investigation of the Turkish
consumers’ acceptance of internet banking services. International Journal of
Bank Marketing, 19(4), 156-165.
Retrieved from http://www.emeraldinsight.com/10.1108 [20/07/2010].
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CHAPTER SEVEN
ANALYSIS OF DATA AND FINDINGS ON ASPECTS
OF BANK PERFORMANCE INDICATORS
7.1 Introduction
This chapter looks at the analysis and the presentation of the data collected through
questionnaire as well as the discussion of the findings. The analysis of data is in relation
to the objectives of the study. The chapter has been organized under the following major
sub-headings:
I. Information Systems Investment and bank performance
II. Efficiency and Profitability and performance
7.2 Investment in Information Systems
This section explores the level of Information Technology investment of the bank in the
short term, medium term and the long term. It also examined the following; IT/IS
investment in the past three years, IS/IT Investment in recent times, outsourcing and
amount spent in training staff. Research has showed that there is a relationship between
investment in IT and business performance. (Brynjolfsson, Hitt and Yang, 2000;
Brynjolfsson and Hitt, 2001). Harris and Katz (1991) also found positive relationship
between IT expense and performance.
7.2.1 IS/IT Investment in the Past Three Years
The changing scene of information technology and information systems has made
businesses to invest more in IT/IS. The strategic staff respondents being at the top
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management were asked to indicate the level of information technology / information
system investment in the past three year. The analysis of their responses is presented in
Table 7.1.
Table 7.1: Responses of Levels of IS/IT Investment by banks in the Past Three
Years
No = 32 Bank A Bank B Bank C Bank D Bank E Bank F
Freq % Freq % Freq % Freq % Freq % Freq %
Low - - - - - - - - - - - -
Moderate - - - - 1 20 - - - - - -
High 6 100.0 6 100.0 4 80 5 100.0 5 100.0 5 100.0
Total 6 100.0 6 100.0 5 100.0 5 100.0 5 100.0 5 100.0
Source: Field data, 2013
The responses from the operational staff suggest that, there has been a high rate of
investment in the past three years. One (20.0%) of the respondents from Bank C also
indicated that there has been a moderate investment in terms of information technology
and information systems. The foreign banks have invested more in IS/IT than the local
banks. Bank C also recorded moderate IS investment even though some of the
respondent indicated that the IS investment is high.
Despite banks being major investors in IT, Beccalli (2007) found little relationship
between total IT investment and improved bank profitability or efficiency indicating the
existence of a profitability paradox. However, the impact of different types of IT
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investment (hardware, software and services) on banks’ performance is heterogeneous.
Investment in IT services from external providers (consulting services, implementation
services, training and education, support services) appears to have a positive influence
on accounting profits and profit efficiency. Harris and Katz (1991) indicate that firm
performance was linked to the level of information technology investment intensity.
7.2.2 IS/IT Investment in Recent Times
The use of information technology is an integral part of enterprise management and
operations. Spending or investments in information technology helps enterprises stay on
the cutting edge of the new tech to achieve better financial results. Investments in
information technology can also provide certain intangible benefits such as improved
customer care, increased time efficiency or better coordinated record keeping within an
organization (www.eHow.com). Banks also invest in technology based on their needs.
The strategic staff being the right respondents for this question were asked to indicate IS
investments in recent times. The responses of these staff are analyzed and presented in
Table 7.2.
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Table 7.2: Response on Information System Investments in Recent Times by Banks
No = 32 Bank A Bank B Bank C Bank D Bank E Bank F
Freq % Freq % Freq % Freq % Freq % Freq %
Banking
Software
6 100.0 5 83.3 3 60.0 - - - - - -
Network
Infrastructure
- - - - 1 20.0 5 100.0 3 60.0 3 85.7
Server
Computers
- - - - - - - - 1 20.0 1 5.7
Work Stations - - - - - - - - 1 20.0 1 8.6
IT
Outsourcing
- - 1 16.7 1 20.0 - - - - - -
Total 6 100.0 6 100.0 5 100.0 5 100.0 5 100.0 5 100.0
Source: Field data, 2013
All the foreign banks have invested in network infrastructure in recent times. Bank E
and Bank F in addition to the network infrastructure have invested in servers and work /
client stations. The local banks on the other hand have invested in improved banking
software. In addition, Bank B has also invested in IT outsourcing activities like ATM
services and general maintenance. Bank C has also in addition to the improved banking
software has invested in network infrastructure and IT outsourcing activities. The
researcher further asked the operational staff about future IS investments. The
respondents indicated that the bank has plans to improve upon the current information
system and therefore in the future Bank C and Bank D would invest in electronic
payment, electronic banking items and customer relationship systems to improve on the
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existing systems. Bank B and Bank E would also invest in support treasury dealing
system and anti-money laundry systems. Bank A and Bank F would invest in Flexcube
upgrade, IT security tools, and ATMs that take deposits in the near future.
Table 7.3: Responses on bank Performance by IT/IS Investment
N = 32 IT / IS Investments
TotalLow Moderate High
Bank
Performance
Moderate Count 2 0 6 8
Expected
Count
.5 2.5 5.0 8.0
High Count 0 10 14 24
Expected
Count
1.5 7.5 15.0 24.0
Total Count 2 10 20 32
Expected
Count
2.0 10.0 20.0 32.0
N = 32 Chi Square = 9.600 DF =2 p = 0.008 COR = 0.059
Source: Field data, 2013
To determine the relationship between bank performance and IT/IS investments, a cross
tabulation of the two variables was constructed. This was constructed from the responses
of the strategic staff. The statistics at the bottom of Table 7.3 indicate that, there exists a
relationship between the bank performance and IT/IS investment. As could be seen from
the correlation coefficient, this relationship is positive and weak. Thus, it means that
banks performance does not depend only on IT/IS investment.
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7.2.3 Modes of Training Staff
Quality human resource can affect performance positively. Job training and career
qualifications are important factors in getting a certain job or position. Training prepares
a person to be qualified for a job. Many people of different occupations continuously
train to maintain, update and upgrade their skills. To keep up with the fierce
competition, it is vital to train staff periodically. Slow business operations, inadequate
number of trained employees and dissatisfied customers can be the consequences of
outdated information management systems (www.eHow.com). Every staff that plays a
role in researching, selecting or implementing enterprise technology needs to have a firm
grasp on the basics of emerging technologies, as well as how they serve a larger business
purpose, to ensure that technology is being used to the company's best strategic
advantage. That is where staff training becomes important. IS strategic issues are more
synonymous with strategic staff. Thus, they were asked to indicate how bank staff are
trained. The respondents indicated that, Bank A uses the National Banking College to
train staff. Bank B gives in-house training to staff. Bank C has a Banking College that
trains staff. Bank D, Bank E, and Bank F (foreign banks) bring in experts to train the
staff and sometimes send the staff out for training. An interesting finding that emerged
from (Gupta and Collins, 1997) study is that, almost 82 percent of the banks surveyed
indicated that they had invested under $ 50,000 in employee training over the last five
years. In spite of the repeated pleas by professionals and experts in the field, banks, like
many other institutions, are reluctant to invest in training.
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7.3 Efficiency and Profitability
This covers the general questions about the bank. The answers to these questions were
used to ascertain the efficiency and profitability of the bank.
7.3.1 Bank Performance in the Past Three Years
Bank performance is a function of IT investment. The higher the organizations invest in
information technology, the higher the performance. In order to ascertain the levels of
performance (low, moderate and high) the strategic staff respondents were asked to
indicate the level of bank performance. Table 7.4 provides a summary of their responses.
Table 7.4: Responses on Bank Performance in the Past Three Years by Banks
No = 32 Bank A Bank B Bank C Bank D Bank E Bank F
Freq % Freq % Freq % Freq % Freq % Freq %
Low - - - - - - - - - - - -
Moderate - - - - 1 20.0 - - - - - -
High 6 100.0 6 100.0 4 80.0 5 100.0 5 100.0 5 100.0
Total 6 100.0 6 100.0 5 100.0 5 100.0 5 100.0 5 100.0
Source: Field data, 2013
From the above table, it could be inferred that most of the respondents indicated that the
banks have a high performance rate, whilst 1 (20.0%) of the respondents from Bank C
indicated the performance rate of the banks is moderate. The results of Hopkins and
Hopkins (1997) suggested that the intensity with which banks engage in the strategic
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planning process has a direct, positive effect on banks' financial performance, and
mediates the effects of managerial and organizational factors on the banks' performance.
All the foreign banks performed very well in the past three years. The local banks also
performed very well in the past three years as well. The IS/IT investment has a direct
relationship with the performance of the bank. From Table 7.1, all the foreign banks
have high investment in IS/IT and this reflected in their performance. In the same light,
all the local banks (Bank A and Bank B) that invested heavily in IS/IT also performed
very well. Bank C did not invest much in IS/IT and this affected the performance. The
most innovative users of information systems and technologies are often those
organizations that succeed in aligning corporate goals with technological investments
(Gupta and Collins, 1997). In other words, companies that ensure that investments in
technology are purposefully and meaningfully aligned with achieving the strategic,
tactical, and operational goals of the firm are likely to see a closer link between IS
investment and enhancements in organizational productivity.
7.3.2 Effect of IT/IS Investment on Bank Performance
Information technology investments have both positive and negative impacts on the
operations of banks in the financial industry. The positive impact indicated here refers to
reduction in operating expenses in market share, positive impact on profitability and
increases in labour productivity. Information technology investment however can also
have negative impact on banking operations. For this reason, the strategic staff
respondents were asked to ascertain the positive impact of IT investment in banks. The
researcher presents the responses of the strategic staff by banks in Table 7.5.
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Table 7.5: Responses on Effect of IT/IS Investment on Bank Performance
N = 32 Bank A Bank B Bank C Bank D Bank E Bank F
Freq % Freq % Freq % Freq % Freq % Freq %
Reduces operating
expenses
1 16.7 1 16.7 1 20.0 - - - -
Increase market
share of deposits
2 33.3 2 33.3 1 20.0 1 20.0 1 20.0 1 20.0
Increase profits 2 33.3 2 33.3 2 40.0 2 40.0 2 40.0 2 40.0
Positive impact on
Return on Asset
1 16.7 1 16.7 1 20.0 1 20.0 1 20.0 1 20.0
Increases labour
Productivity
- - - - - - 1 20.0 1 20.0 1 20.0
Total 6 100.0 6 100.0 5 100.0 5 100.0 5 100.0 5 100.0
Source: Field data, 2013
On the impact of IT investments on key variables, the above table indicates that all the
banks (both foreign and local) asserted that market share, profitability, and ROA
increases as IT investment are employed in the industry. This supports the school of
thought that banks that invest heavily in technology would have an increase in market
share of deposits and loans. In addition, the foreign banks indicated increased labour
productivity as one of the key variables on IT investment whilst the local banks also
indicated reduction in operating expenses. This expected impact of IT investment is a
sure motivator for the employment of the state of the art technology which banks are
heavily dependent on to survive in the face of keen competition.
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7.3.3 Problems Associated with IT/IS Investment
Technology is much effective and efficient to work with but they do come along with
their own problems. The constant changing technological environment alone is a
headache to most highly automated organizations for which the banks are not excluded.
Certainly, these are taken into consideration by these banks before any form of
investments. Scalability is one of the factors considered in cost cutting investment. To
find out the problems associated with the IT investments, the strategic staff respondents
were asked to indicate the problems associated with IT/IS investment. The researcher
presents the responses of the strategic staff in this analysis. From the responses, the
problems associated with the foreign banks are different from those of the local banks.
For the foreign banks, the problems associated with IS/IT investments are high
maintenance cost and energy crises. Whilst with the local banks, the problems are lack
of skilled personnel, the fact that some transactions cannot be done, customers cannot
use e-media, frequent breakdowns of channels and energy crises. Bank A indicated that
customers cannot use e-media and some transactions cannot be done as the main
problems associated with IS/IT investment. Bank B also identified customers’ inability
to use e-media and energy crises. Bank C stated lack of skilled personnel, customers
cannot use e-media, and frequent breakdowns of channels.
7.3.4 Return on Assets (ROA)
Return on assets is the ratio of annual net income to average total assets of a business
during a financial year. It measures efficiency of the business in using its assets to
generate net income. It is a profitability ratio. Return on assets indicates the number of
pesewas earned on each cedi of assets. Thus higher values of return on assets show that
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business is more profitable. Since the figures from the balance sheet could easily be
obtained at the strategic level to calculate the ROA for each bank, the strategic staff
respondents were asked to indicate the net income and assets of the bank for the period
2009 - 2011. The responses were used to calculate the ROA for each bank for the period
2009 -2011. Table 7.6 shows the ROA from 2009 – 2011.
Table 7.6: Return on Assets (ROA) by Banks
N = 6 2009 2010 2011 Mean Std. Dev.
Bank A 1.02 12.54 11.35 8.30 6.34
Bank B 10.72 2.03 4.52 5.76 4.48
Bank C 4.93 0.07 2.31 2.44 2.43
Bank D 0.46 3.29 3.75 2.50 1.78
Bank E 4.00 4.00 6.00 4.67 1.15
Bank F 0.78 3.64 4.86 3.09 2.09
Source: Field data, 2013
On average, Bank A has the highest average ROA for the period 2009 to 2011. The
values suggest good performance by the bank. The standard deviation (6.34) means that
the ROA values of 2009, 2010, and 2011 are scattered. The least of the average ROE
was recorded by Bank C and Bank D. Bank E had the smallest standard deviation (1.15)
which indicates that the ROA for the three years are close. All the foreign banks
exhibited increasing trends in the ROA. (See appendix K). The increasing trends in ROA
recorded by the foreign banks suggests a good IS strategy compared to the local banks.
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These results suggest that IT investments have a positive impact on operating profits.
Again this finding supports the observations of Kim and Davidson (2004).
7.3.5 Return on Equity (ROE)
Return on equity or return on capital is the ratio of net income of a business during a
year to its stockholders' equity during that year. It is a measure of profitability of
stockholders' investments. Return on equity is an important measure of the profitability
of a company. Again, since the figures from the balance sheet could easily be obtained at
the strategic level to calculate the ROE for each bank, the strategic staff respondents
were asked to indicate the net income and total equity of the bank for the period 2009 -
2011. The responses were used to calculate the ROE for each bank for the period 2009 -
2011. Table 7.7 shows the ROE from 2009 – 2011.
Table 7.7: Return on Equity (ROE) by Banks
N = 6 2009 2010 2011 Mean Std. Dev.
Bank A 9.87 149.95 164.40 108.07 85.35
Bank B 10.42 2.39 24.75 12.52 11.33
Bank C 39.69 8.38 22.07 23.38 15.70
Bank D 3.82 26.53 23.53 17.96 12.34
Bank E 36.00 37.00 39.00 37.33 1.53
Bank F 6.25 24.62 26.25 19.04 11.11
Source: Field data, 2013
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On average, Bank A had the higher ROE for the period 2009 to 2011. The values
suggest good performance by the bank. The standard deviation (85.35) means that the
ROE values of 2009, 2010, and 2011 are scattered. The least of the average ROE was
recorded by Bank D. Bank E had the smallest standard deviation (1.15) which indicates
that the ROE for the three years are close. Again all the foreign banks exhibited
increasing trends in the ROE. (See appendix K). Again, the increasing trends in ROE
recorded by the foreign banks suggest a good IS strategy compared to the local banks.
7.4 Hypothesis Testing
Hypothesis is a specific statement of prediction. It describes in concrete (rather than
theoretical) terms what the expectation will be in the study. A single study may have one
or many hypotheses. The chi-squared distribution is used in the common chi-squared
tests for goodness of fit of an observed distribution to a theoretical one, and the
independence of two criteria of classification of qualitative data. In this study, the
researcher employs the chi-square test to test the relationship between two variables. The
specific hypotheses are stated before conducting the test. The researcher identifies Ho
with the null hypothesis and Ha with the research hypothesis (alternative hypothesis).
The chi-square statistic was used to test the three hypotheses. The chi square statistic
was use to test the hypotheses because the researcher was testing for goodness of fit or
better still relationships.
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7.4.1 Hypothesis One
Ho: Information systems strategy does not have a positive relationship with bank
performance.
Ha: Information systems strategy has a positive relationship with bank performance.
Critical value
From the chi square distribution, a significance level of 0.05 with two degrees of
freedom gives a critical value of 5.99.
Decision rule
The researcher cannot accept Ho, if chi-square calculated is greater than 5.99 and
concludes that, Information systems strategy has a positive relationship with bank
performance else the researcher will fail to reject Ho and conclude that, information
systems strategy does not have a positive relationship with bank performance.
Table 7.8: Observed and Expected Values of IS Strategy by Bank Performance
N = 216 Bank Performance TotalLow Moderate High
Information
System Strategy
Yes Count 0 20 180 200
Expected
Count
5.6 18.5 175.9 200.0
No Count 6 0 10 16
Expected
Count
.4 1.5 14.1 16.0
Total Count 6 20 190 216
Expected
Count
6.0 20.0 190.0 216.0
No = 216 Chi Square = 77.874 DF = 2 p = 0.000 COR = 0.399
Source: Field data, 2013
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The chi-square calculated is equal to 77.874 and the critical value is equal to 5.99. Since
the chi-square calculated is greater than the critical value, thus, Ho cannot be accepted.
Therefore, information systems strategy has a positive relationship with bank
performance.
7.4.2 Hypothesis Two
Ho: Banks with higher level information systems investments do not have increasing
operating profits than banks with low level information systems investments.
Ha: Banks with higher level information systems investments have increasing operating
profits than banks with low level information systems investments.
Critical value
From the chi square distribution, a significance level of 0.05 with two degrees of
freedom gives a critical value of 5.99.
Decision rule
The researcher cannot accept Ho, if chi-square calculated is greater than 5.99 and
concludes that, banks with higher level information systems investments have increasing
operating profits than banks with low level information systems investments else the
researcher will fail to reject Ho and conclude that banks with higher level information
systems investments do not have increasing operating profits than banks with low level
information systems investments.
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Table 7.9: Observed and Expected Values of Profit Margins by IT/IS Investment
IT / IS Investments
TotalLow Moderate High
Profit Margins Moderate Count 2 0 6 8
Expected
Count
.5 2.5 5.0 8.0
High Count 0 10 14 24
Expected
Count
1.5 7.5 15.0 24.0
Total Count 2 10 20 32
Expected
Count
2.0 10.0 20.0 32.0
No = 32 Chi Square = 9.600 DF = 2 p = 0.000 COR = 0.590
Source: Field data, 2013
The chi-square calculated is equal to 9.6 and the critical value is equal to 5.99. Since the
chi-square calculated is greater than the critical value, thus, Ho cannot be accepted.
Therefore, banks with higher level information systems investments have increasing
operating profits than banks with low level information systems investments.
7.4.3 Hypothesis Three
Ho: Bank customers are not satisfied with the services of banks with modern technology
than banks without modern technology.
Ha: Bank customers are satisfied with the services of banks with modern technology
than banks without modern technology.
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Critical value
From the chi square distribution, a significance level of 0.05 with 1 degree of freedom
gives a critical value of 3.84.
Decision rule
The researcher cannot accept Ho, if chi-square calculated is greater than 3.84 and
concludes that, bank customers are satisfied with the services of banks with modern
technology than banks without modern technology else the researcher will fail to reject
the Ho and conclude that, bank customers are not satisfied with the services of banks
with modern technology than banks without modern technology.
Table 7.10: Observed and Expected Values for Modern Technology and
Customer Satisfaction
N = 720
Modern
Technology
TotalYes No
Customer
Satisfaction
Yes Count 480 12 492
Expected
Count
433.2 58.8 492.0
No Count 154 74 228
Expected
Count
200.8 27.2 228.0
Total Count 634 86 720
Expected
Count
634.0 86.0 720.0
No = 720 Chi Square = 133.470 DF = 1 p = 0.000 COR = 0.431
Source: Field data, 2013
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The chi-square calculated is equal to 133.47 and the critical value is equal to 3.84. Since
the chi-square calculated is greater than the critical value, Ho cannot be accepted, hence
the conclusion that bank customers are satisfied with the services of banks with modern
technology than banks without modern technology.
7.5 Conclusion
Information systems investment, bank performance, efficiency and Profitability were
covered under this chapter. These are forms of performance indicators. The findings
revealed that, the foreign banks have invested more in IS/IT than the local banks. Harris
and Katz (1991) indicate that firm performance was linked to the level of information
technology investment intensity. The findings also revealed that, most of the respondents
indicated that the banks have a high performance rate due to high investment in IS/IT.
The next chapter discusses the major finding from this study.
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investment intensity in the insurance industry. Organization Science, 2(3), 263-
296.
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Hopkins, W. E., & Hopkins, S. A. (1997). Strategic planning-financial performance
relationships in banks: A causal examination. Strategic Management Journal,
18(8), 635-652.
Retrieved from http://www.jstor.org/stable/3088180 [05/09/2012].
Kim, C., & Davidson, L. (2004). The effects of IT expenditures on banks Business
Performance: Using the Balanced Score Card approach. Managerial Finance, 30,
28-45.
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CHAPTER EIGHT
DISCUSSION OF MAJOR FINDINGS
8.1 Introduction
This chapter covers the discussion of major findings in relation to both the research
objectives and existing knowledge. The discussion segment provides the researcher the
opportunity to highlight the reflections, differences, similarities, and extends current
knowledge of the area in which the study has been carried out. It is also a chance to
demonstrate exactly what the researcher knows about the topic by interpreting the
findings and outlining what they mean. A discussion section of a research should
demonstrate the original thinking. The research must underpin what is already known
about the area. In addition, where something new has been discovered it is important to
outline what is new and compare it to what is already known. It is necessary to consider
how one’s results would extend the knowledge about the field. It is important that this
segment is comprehensive and well structured making clear links to the literature
review.
The purpose of this study was to determine the impact of information system strategy on
bank performance of six banks in the Greater Accra Region of Ghana. Information
system strategy is a plan that aims to (1) identify the required IS assets, structures,
monetary resources, and technologies and (2) allocate the existing Information System
assets in the most efficient way. There are two measures of performance that relate to
how efficient and profitable a business entity is and these are ROA and ROE. The study
adopted a cross-sectional survey design and was comfortably placed within a scientific
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epistemology of logical positivism because it allows IS researchers to answer research
questions about the interaction of humans and computers and it also lays emphasis on
quantitative data. The cases or study setting investigated were local banks and foreign
banks. This study has three categories of population. These are the Strategic level, the
Operational level and the bank customers from all the six banks all located at their Head
Offices in Greater Accra region. A proportionate sample size of 62, 348, and 1,352 were
used for the strategic staff, operational staff, and bank customers respectively. Simple
random sampling was used for the selection of the operation staff whilst purposive
sampling was used for the selection of the bank customers. The instrument used in this
study was the questionnaire. The Statistical Package for Social Sciences (SPSS) was
used for the analysis of the data. Simple frequencies, percentages, charts, cross
tabulations and Chi-Square test of independence to ascertain the significance of the
relationship between variables was used to present the results of the study. Logistic
regression was also used to predict the value of a dependent variable using more
independent variables.
A number of major findings have been made which will be discussed in this chapter.
The discussion was also arranged according to the order in which the research findings
were analyzed in the previous chapters (chapter five, six and seven) and also according
to the study objectives as follows:
1. IS Strategy and Bank Performance
2. Electronic products and Bank Performance
3. Bank Performance Indicators
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8.2 Major Findings on IS Strategy and Bank Performance
This section discusses the findings from the study on aspect of IS strategy. The
discussion of the results under this section has been categorized under the following
major sub headings:
a. Information Systems Strategy and Information Systems Assets
b. Staff Involvement and Success Predictors
c. Barriers to Strategy
8.2.1 Information Systems Strategy and Information Systems Assets
The business aligning techniques assume that IS will fulfill its most appropriate role if
the organization’s strategy is used as the basis for developing the IS strategy. One
technique that explicitly translates business strategies into IS terms is strategy set
transformation. Any business can be said to have a set of business strategies, whether
they are formally articulated or not. Henderson et al., (2012) work on critical sets, a
variant of CSF analysis intends to align IS to business demands. This particular
approach attempts to be both business aligning and business impacting in its effect, but it
is obviously going to be mainly about aligning. All aligning techniques work by
identifying business goals and plans, and deduce IS requirement via a formal method for
translating them.
Segars and Glover (1998) suggest that alignment produced by strategically positioned
IT/IS improves the stature of IT/IS within an organization. Henderson and Venkatraman
(1999) advocate the importance of strategically positioning of IT/IS within
organizations. They argued that successful applications of this model result in
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organizational capability to leverage IT/IS resources on a continuous basis to support
competitive advantage in the marketplace. They also indicate the need for a change in
IT/IS orientations from an exclusively internal focus to one that fits strategically with the
external IT/IS domain environment. The model also shows the connection may be
influenced by internal and external technological and socio-economic environments.
This means that the organization may be highly dynamic and alignment may need to be
continually re-examined, monitored and adjusted.
The findings from the research revealed that all the banks both local and foreign have
information systems strategy and that only three of the banks (Bank B, Bank E, and
Bank F) have all the components present in the IS strategy. This result supports Wilson
(1999) findings, where 75 percent of the respondents claimed to have an information
system strategy, suggesting that the idea of an information system strategy has been
widely adopted. He further stated that, in general, financial services companies are most
likely to have adopted information system strategies than other industrial firms. Most of
the information system strategy has a time span of five years, meaning that the IS
strategy is reviewed every five years. The information system strategy of all the banks is
aligned to the overall business strategy.
All the foreign banks and the local banks have IS strategy fully aligned to the business
strategy. From the outset, IT researchers advocated tight IT strategy linkages, asserting
that IT affects firm strategies that strategies have IT implications and that firms must
somehow integrate strategic thrusts with IT capabilities (Porter and Miller, 1985). In
sum, IT that is aligned with strategy, that provides sustainable competitive advantage,
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and / or that is required to avoid strategic disadvantage, enhances competitive position.
IT’s effects on organizational performance seem to range along a continuum from
strongly positive in cases of competitive advantage, to modestly positive or neutral in
cases of strategic necessity or non-strategic IT, to negative cases of strategic
misalignment (Floyd and Woolddridge, 1990). As the criticality of effectively linking
the strategic IS plan to the strategic business plan has increased the need to better
understand the nature of strategic planning in general and strategic IS planning in
particular, has also increased (Henderson et al., 2012). The relationship between the IS
strategy and the business strategy is very momentous for the success of the bank.
It also came to light that the prospector business strategy was widely used by banks as
well as the IS Innovator and IS conservative strategy Typology. All the banks do not use
the undefined IS strategy typology. This is because the banks deem it to be inconsistent
strategy. The foreign banks use IS Innovator strategy typology. For the local banks, only
two banks (Bank A and Bank B) use IS Innovator strategy typology. It is worth noting
that in addition to the IS Innovator strategy typology deployed by the local banks they
also use IS Conservative strategy typology. Bank C is the only bank that uses IS
Conservative strategy typology alone. Innovators may achieve advantage that continues
even after the technology is widely diffused. For example, Merrill Lynch’s early
introduction of Cash Management Accounts apparently achieved a level of market
visibility and an image unmatched by followers. The company continues to enjoy a
dominant market share (Clemons and Kimbrough, 1986).
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For the information systems assets, all the respondents from the foreign banks indicated
high human resource quality. Four respondents from each of Banks B and C indicated
that the bank has high human resource quality. The findings revealed that, all the foreign
banks have high financial positions whilst only two of the local banks (Bank A and Bank
B) recorded high financial performance. The foreign banks have a very high IT
infrastructure to implement the IS strategy whilst the local banks do not have that high
infrastructure for the IS strategy implementation
8.2.2 Staff Participation and SISP Success Predictors
There are many approaches to establishing IS strategy planning teams. Broadly, there
are three main approaches: the use of planning specialists, general IS staff or coalition
teams (Segars and Grover, 1998). Planning teams can be constructed primarily of
specialist planning staff. They then will probably hold responsibility for coordinating, if
not actually developing, many other planning effects. This dedicated planners’ approach
can offer many advantages, with perhaps the most significant being that there is a high
chance of the plan being completed (Segars and Grover, 1998). Additionally, since the
planners are involved in many other corporate and functional plans, there may be a
deeper understanding of business needs. Balancing the potential advantages, however, is
that their very specialism can lead to the most notable disadvantage and that is the
tendency of these teams to lack an appreciation of reality in issues. Some difficulties
associated with this ‘strategy by outsiders’ route can be addressed by careful attention to
the issues of ensuring ownership by those ultimately taking the IS resource decisions
(Segars and Grover, 1998).
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A second approach is to make the production of the IS strategy the responsibility of
general IS staff. Since teams of this type will tend, at least initially, to lack experience of
strategic planning and will also tend to suffer the ‘tyranny of the urgent’ in calls from
their everyday responsibility, this may reduce the chance of the plan being completed
(Segars and Grover, 1998). However, their significant MIS awareness may produce a
more implantation plan, if one is created at all. These teams are likely to be ad hoc in
nature or at least busy in other areas, and this may reduce the frequency and increase the
elapsed time needed for planning activities. The third route is to use a coalition team
drawn from a number of business functions, certainly including IS and perhaps including
some specialist planning staff. The breadth of experience should increase the
organizational realism within the IS strategy plan. This realism gives the organization
the best chance of an IS strategy that is aligned with business objectives. The only
potential drawback is that the diversity of interests may act destructively upon team
coordination, and that members may be ‘moved on’ at inappropriate, from a plan point
of view times (Segars and Grover, 1998).
The findings from the study brought out that, the major participants in the formulation of
IS strategy are management team, IT department and technology group. Ciborra and
Jelassi (1994) argue that strategy is formulated at the peak of the managerial pyramid.
This finding is also established in this study. The responsibility for strategy rests with
the chief executive officer: he or she formulates the strategy and then monitors its
application throughout the appropriate hierarchical control systems. The local banks
concentrate on management team and IT department for the formulation of IS strategy
whilst the foreign banks solely depend on Technology Group for the formulation of IS
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strategy. The Technology Group is a group with the foreign banks that formulate IS
strategy for the bank. It is also important to note that, outsourcing and all staff
involvement are not considered in the formulation process. Wilson (1999) also states
that, 6.4 percent of the respondents claim that ISS is a function of individual department,
which is at odds with the organization-wide focus. Since information systems can have a
significant strategic impact in the manner suggested by a growing number of authors
(Clemons and McFarlan, 1986), top management also needs to take responsibility for
fostering information systems with the potential to provide this impact.
Strategic art is the skillful balancing of ends (objectives), ways (courses of action), and
means (resources). Different banks perceived SISP success predictors differently. The
findings also revealed that, for the local banks, the most important SISP success factors
are staff training and staff involvement, resources, and IS alignment to the business
strategy. The foreign banks also indicated that, the most important SISP success factors
are top management involvement, resources, and organizational and technological
changes. It is worth noting that none of the banks considered control and evaluation as
an important factor but the banks affirmatively recognize the importance of resources to
the success of SISP. This findings support that of Segars and Grover (1998) who
researched into strategic information systems planning success and concluded that,
strategic information systems planning (SISP) requires significant outlays of
increasingly scarce human and financial resources. Yet, there exists very little
understanding of how the success of this planning activity is measured.
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8.2.3 Barriers and Strategy
Grant (2003) advocated that one of the earlier pieces of literature written by Boyd stated
that strategic planning has very little effect on the performance of an organization.
Nevertheless, the literature suggests strategic planning is vital to the success of an
organization. Organizations are often times evaluated on their performance. Executing
good performance can be a challenge when there are barriers present and an organization
lacks the knowledge of how to overcome them. Eadie (1983) suggests that the purpose
of strategic planning is to maintain a favorable balance between an organization and its
environment over the long run. Nevertheless, it does not matter how good an
organization‘s ideas are during the strategic planning process if it has major barriers that
cannot be overcome.
According to Webster Online Dictionary, a barrier is something immaterial that impedes
or separates. It is also described as an obstacle, something that impedes progress or
achievement (Meriam-Webster, 2011). There are numerous types of barriers that can
hinder the success of strategic planning. From authors such as Geersro and Ritter (2010),
Ardani et al., (2009), Ellis and Revitt (2010) and Berns et al., (2009) and in researching
a plethora of scholarly works, there have been some barriers discussed that seem to be a
little more noticeable than the others. In addition, four major barriers that commonly
impede the progress or achievement of successful strategic planning have been found:
uncertainty, lack of resources, lack of universal language/communication, and low
motivation or morale. Though these are not the only barriers, they are very prominent
barriers. These barriers can seriously obstruct the road to successful strategic planning.
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The findings revealed that, the major barriers to IS formulation to the foreign banks are
lack of staff involvement and uncertainties whilst with the local banks the barriers are
lack of policy, lack of resources, organizational culture, and uncertainties. The only
barrier that affects all the banks is the external factors (uncertainty). Mintzberg (1987)
suggests that strategy formation is a craft, rather than a science, and the process of
crafting a strategy will involve negotiating various barriers. The barriers suggested affect
any innovation, such as the hostile attitudes of management and the problems of
recruiting appropriate staff. Wilson (1999) on the other hand states that, the difficulties
in recruiting appropriate staff, the lack of resources to engage in user education, the
nature of the business, and the difficulties of measuring benefits, are key features of IT
strategies that are likely to cause problems for companies.
The findings further revealed that IT training, staff involvement and motivation, lack of
resources, internal factors (organizational culture) and external factors (Uncertainty) are
barriers to IS strategy implementation. The major barriers to IS implementation for the
foreign banks (Bank D, Bank E, and Bank F) are lack of communication and external
factors whilst with the local banks (Bank A, Bank B, and Bank C) the barriers are lack
of IT training, lack of resources, internal and external factors. The only barrier that
affects all the banks is the external factors. The lack of resources is the major barrier to
the implementation of IS strategy for the local banks. Most of the time it could be as a
result of lack of funds, lack of capable human force (humanware), or lack of appropriate
technology.
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8.3 Major Findings of Electronic Products and Bank Performance
This section discusses the findings from the study on aspect of electronic products and
bank performance. The discussion of the results under this section has been categorized
under the following major sub headings:
a. Electronic Banking
b. Technology and Customer Satisfaction
8.3.1 Electronic Banking
E-banking is a generic term for delivery of banking services and products through
electronic channels, such as the telephone, the internet, the cell phone, etc. The concept
and scope of e-banking is still evolving. It facilitates an effective payment and
accounting system thereby enhancing the speed of delivery of banking services
considerably. There are many electronic banking delivery channels to provide banking
services to customers. Among them are ATM, POS, Mobile banking and internet
banking which are widely used. Kumbhar (2011) expresses that today almost all banks
are adopting ICT as means to enhance service quality of banking services. It brings
convenience, customer centricity, enhance service quality and cost effectiveness in the
banking and increasing customer satisfaction in banking services.
The findings revealed that Automated Teller Machine (ATM) is the most patronized
electronic service by bank customers. This could be that, customers could visit the
ATMs at any time for funds. Automated Teller Machines (ATMs) are necessary to
survive in retail banking. Most banks have ATMs with the same basic services, and
these systems have significantly enhanced customer access to funds (Floyd and
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Wooldridge, 1990). Bank B has the minimum number of ATMs of thirty nine whilst
Bank F has the highest number of ATMs of one hundred and thirty. An empirical study
(Banker and Kauffman, 1988), however, concluded that ATM deployment among bank
branches had little or no effect on realizing greater deposit collection. Apparently,
ATMs are “strategic necessities” (Clemons and Kimbrough, 1986), but provide no real
competitive advantage to any particular bank.
The research findings have it that most of the foreign bank customers visit the web site
more than the customers of the local banks. Some of the customers visit Bank D, Bank
E, and Bank F websites once a week, twice a week and once a month. Most of the
customers of the local banks do not visit their websites. Even if they do, it is once in a
while. The low patronage of the website could be that the customers do not know how to
go by it and may also not have internet connectivity.
Internet Banking offers more convenience and flexibility to customers coupled with a
virtually absolute control over their banking. Service delivery is informational and
transactional. It was also revealed that the level of usage of Internet banking is very low.
For the local banks all the customers do not use the internet banking. The story is
different with the foreign banks, for these banks some of the customers use the internet
banking. Agwu (2012) revealed that most customers who have adopted internet banking
services believe that it has a lot of potentials in terms of its advantages, but most users
also believe that there are more problems attached to internet banking services than the
advantages as evidenced from the findings. This is mainly due to the security and
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privacy issues on one hand and dearth of telecommunication infrastructures, poor
education of the users and poverty (low income) issues on the other.
The findings also revealed that, for SMS banking, the percent of usage in the local banks
is less than that of the foreign banks. This means that, most of the customers use the
internet banking offered by Bank D, Bank E, and Bank F than that used by Bank A,
Bank B, and Bank C. The low patronage could be attributed to the fact that, the
customers may not be aware of such service or simply the customers are avoiding the
services charges.
8.3.2 Technology and Customer Satisfaction
Customer satisfaction is a subjective evaluation of a performance related to a standard
which when that standard is fulfilled, results in satisfaction, or in dissatisfaction when
the standard is not fulfilled (Oliver, 2010). The pleasurable level of under and over
fulfillment describes the situation where performance is a little less or a little above the
standard, but still results in satisfaction. Customer satisfaction is an important measure
of firm performance because of its positive influence on customer loyalty (Fornell,
2001). In a recent study of the relationship between customer satisfaction and
shareholder return, Anderson, Fornell and Mazvancheryl (2004) find a strong
relationship between customer satisfaction and Tobin’s Q (as a measure of shareholder
value) after controlling for fixed, random and unobservable factors. Fornell (2001)
shows that firms with higher customer satisfaction provide higher stock returns with less
risk. IT systems play an important role in enabling a firm’s customer management
capability. Nambisan (2002) presents a theoretical argument for the positive effect of an
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IT-enabled virtual customer environment on the effectiveness of new product
development. Karimi, Somers and Gupta (2001) report that firms with better IT planning
and integration are more effective at managing IT to improve customer service and thus
at managing customer relationships.
The findings revealed that customers are satisfied with the electronic products and
services provided by the banks. Most of the customers have been transacting business
with the respective banks for about six to ten years. On average bank customers spend
ten to twenty minutes on bank transactions in Bank A, Bank E, and Bank F. For Bank B,
Bank C, and Bank D, customers spend more than twenty minutes. The findings have it
that all the local banks consider customers suggestions in decision making whilst the
foreign banks do not consider customers suggestions in decision making. The local
banks also inform customers ahead of time before a new policy is introduced but the
foreign banks do not do that. From the global consumer banking survey in 2011, banks
should help customers to shape their own banking experiences by improving how they
provide information and advice, recruiting online affinity groups and by developing
flexible loyalty programs.
8.4 Major Findings on Indicators of Bank Performance
This section discusses the findings from the study on aspect of bank Performance.  The
discussion of the results under this section has been categorized under the following
major sub headings:
a. Information Systems Investment
b. Efficiency and Profitability
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8.4.1 Information Systems Investment
The Productivity Paradox phrase came into being when large investments in information
technology apparently failed to produce the much expected significant increases in
productivity in the 1980s and early 1990s and the early acclaimed positive effects on
two levels. The first is at the industry or economy wide level. This was summed up in
1987 by Nobel Prize winning economist Robert Solow, who wrote, “we see the
computer age everywhere except in the productivity statistics, as quoted in Brynjolfsson
and Hitt’s (1998) ‘beyond the Productivity Paradox’ (1998)”. The second productivity
paradox was observed at the company level, where “there was no correlation whatsoever
between expenditures for information technologies and any known measure of
profitability” (Strassmann, 1990). The equivocal results of IT investments, in many
cases are caused by the inconsistency in IT firm performance measurement issues
(Willcocks and Lester, 1999).
Many connoisseurs of early studies examined the correlation between IT spending ratios
and various performance measurements, such as profits or stock returns (Dos Santos et
al., 1993; Strassmann, 1997). Since the correlation was either zero or very low, some
concluded that computer investments has been unproductive. However, spending more
on computers should generate higher profitability or stock market returns (Lim et al,
2004). Zero correlation should be interpreted as indicating ‘normal’ ratios to investments
in IT (Brynjolfsson and Hitt, 1998).
The findings have it that the foreign banks have invested more in IS than the local banks.
All the foreign banks have invested in network infrastructure in recent times whilst the
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local banks have invested in improved banking software. There are different modes of
training within the banks. This is because some of the banks have their own banking
colleges whilst other banks have to train staff in house. Bank A uses the National
Banking College to train staff. Bank B gives in-house training to staff. Bank C has a
Banking College that trains staff. Bank D, Bank E, and Bank F (foreign banks) bring in
experts to train the staff and sometimes send the staff out for training. The findings
revealed that there is a linear relationship between IS investments and bank’s
performance. The more the information systems investments the higher the bank’s
performance. Several writers suggest that returns on IT investments depend on the
system’s strategic role (Porter and Millar, 1985; Strassman, 1997). Perhaps significant
performance effects should be expected only for IT investments that support strategy.
8.4.2 Efficiency and Profitability
Fisher and Kenny (2000) suggest that organizations infuse information systems into their
operations so as to enhance competitiveness and facilitate business growth and success.
On the other hand, Laudon and Laudon (2001) believe that information systems are
embedded in organizations and are the result of standard operating procedures, work
flows, politics, organizational culture and structure. Although organizations have
different information systems because they have varying information needs, they all
strive for competitive advantage through continuous improvement; re-evaluation of the
effectiveness and efficiency of their business information system (Chaffey and Wood
2005).
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All the foreign banks (Bank D, Bank E and Bank F) performed very well in the past
three years whilst with the local banks, only Bank A and Bank B performed very well in
the past three years. These finding supports the assertion that bank performance is linked
to the level of IS investment. Evidence is presented that indicates that firm performance
was linked to the level of information technology investment intensity (Harris and Katz,
1991). The findings also revealed that efficiency and profitability have increased as the
result of information system strategy. The results suggested that the intensity with which
banks engage in the strategic planning process has a direct, positive effect on banks'
financial performance, and mediates the effects of managerial and organizational factors
on banks' performance (Hopkins and Hopkins, 1997)
The effects of IT investment on increasing profitability (ROA) for banks are
significantly great. This suggests that IT investment plays a significant role in the
industry’s operating profit. These results support the fact that IT investments have a
positive impact on operating profits. Again this finding supports the observations of Kim
and Davidson (2004). Planning does not only improve IT effectives but IT may provide
the systems and information that can make planning more effective, creating a symbolic
IT-Planning relationship.
The findings revealed that, the increasing trends in ROA recorded by the foreign banks
suggests a good IS strategy compared to the local banks. Again, the increasing trends in
ROE recorded by the foreign banks suggests a good IS strategy compared to the local
banks. The zero-order correlation covers up the dynamics between the strategy, IT, and
ROA. Strategy appears to have direct effects on IT, and IT has direct effects on ROA.
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The analysis suggests that IT can play a meaningful role in the strategy – ROA
relationship. Despite these caveats, the strategic context makes a significant difference in
the correlations observed between IT adoption and ROA. Without strategy variable in
the model, the correlations would have been underestimated.
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Strassmann, P. A. (1990). The business value of computers: An executive guide, New
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CHAPTER NINE
SUMMARY, CONCLUSION AND RECOMMENDATIONS
9.1 Introduction
This chapter presents the summary of the findings based on the study objectives
indicated in Chapter One. The chapter also covers the conclusion drawn and
recommendations made to address the deficiencies identified in the formulation and
implementation of information system strategy, electronic products and services usage,
and bank performance.
9.2 Summary of Findings
This study determined the impact of information system strategy on bank performance.
The major findings of the study are as follow:
1. Findings on aspects of IS Strategy and Bank Performance
2. Findings on aspects of Electronic Products and Bank Performance
3. Findings on aspects of Bank Performance Indicators
9.2.1 Findings on IS Strategy and Bank Performance
This section highlights the findings from the study on aspect of strategy.  The findings
under this section have been categorized under the following major sub headings:
a. Information Systems Strategy and Information Systems Assets
b. Staff Involvement and Success Predictors
c. Barriers to Strategy
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9.2.1.1 Information Systems Strategy and Information Systems Assets
The first objective of the study was to determine the relationship between IS strategy
and business strategy and also find out the state of the required IS assets. The findings
from the research revealed that all the banks, both local and foreign, have information
systems strategy. The information system strategy has a time span of five years. All the
foreign banks and the local banks have information system strategy fully aligned to the
business strategy. The findings further revealed that all the foreign banks use IS
Innovator strategy typology whilst the local banks use both IS Innovator and IS
Conservative strategy typology. The findings further revealed that the foreign banks
(Bank D, Bank E, and Bank F) only use differentiation strategy whilst the local banks
(Bank A, Bank B, and Bank C) use a combination of cost leadership and differentiation
strategy.
For the information systems assets, all the respondents from the foreign banks indicated
high human resource quality. Four respondents from each of Banks B and C indicated
that the bank has high human resource quality. The findings revealed that, all the foreign
banks have high financial positions whilst only two of the local banks (Bank A and Bank
B) recorded high financial performance. The foreign banks have a very high IT
infrastructure to implement the IS strategy whilst the local banks do not have that high
infrastructure for the IS strategy implementation.
9.2.1.2 Staff Participation and SISP Success Predictors
One of the objectives of the study was to explore the success predictors of strategic
information system planning and the staff participation in IS strategy formulation. The
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findings showed that the local banks (Bank A, Bank B, and Bank C) concentrate on
management team and IT department for the formulation of IS strategy whilst the
foreign banks (Bank D, Bank E, and Bank F) solely depend on Technology Group for
the formulation of IS strategy. The findings further revealed that for the local banks
(Bank A, Bank B, and Bank C), the most important SISP success factors are staff
training and staff involvement, resources, and IS alignment to the business strategy. For
the foreign banks (Bank D, Bank E, and Bank F), the most important SISP success
factors are top management involvement, resources, and organizational and
technological changes.
9.2.1.3 Barriers to Strategy
The study also attempted to determine the barriers to the formulation and
implementation of information System Strategy. The research findings indicated that the
major barriers to IS formulation to the foreign banks (Bank D, Bank E, and Bank F) are
lack of staff involvement and uncertainties whilst with the local banks (Bank A, Bank B,
and Bank C) the barriers are lack of policy, lack of resources, organizational culture, and
uncertainties. The only barrier that affects all the banks is the external factors
(uncertainty). The findings further revealed that the major barriers to IS implementation
for the foreign banks (Bank D, Bank E, and Bank F) are lack of communication and
external factors whilst with the local banks (Bank A, Bank B, and Bank C) the barriers
are lack of IT training, lack of resources, internal and external factors.
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9.2.2 Findings on Electronic Products and Bank Performance
This section highlights the findings from the study on aspect of electronic products and
bank performance. The findings under this section have been categorized under the
following major sub headings:
a. Electronic Banking
b. Technology and Customer Satisfaction
9.2.2.1 Electronic Banking
The forth objective of the study was to determine the level of usage and satisfaction of
electronic banking products among bank customers. The research findings have it that
most of the foreign bank customers visit the web site more than the customers of the
local banks. Some of the customers visit Bank D, Bank E, and Bank F websites once a
week, twice a week and once a month. Most of the customers of the local banks do not
visit their websites. Even if they do, it is once in a while. The findings also revealed that,
for SMS banking, the percent of usage in the local banks is less than that of the foreign
banks. This means that, most of the customers use the internet banking offered by Bank
D, Bank E, and Bank F than that used by Bank A, Bank B, and Bank C.
9.2.2.2 Technology and Customer Satisfaction
The findings also revealed that the bank customers are satisfied with the electronic
products and services provided by the banks. Most of the customers have been
transacting business with the respective banks for about six to ten years. On average
bank customers spend ten to twenty minutes on bank transactions in Bank A, Bank E,
and Bank F. The findings have it that all the local banks consider customers suggestions
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in decision making whilst the foreign banks do not consider customers suggestions in
decision making. The local banks also inform customers ahead of time before a new
policy is introduced but the foreign banks do not do that.
9.2.3 Findings on Bank Performance
This section highlights the findings from the study on aspect of bank performance.  The
findings under this section have been categorized under the following major sub
headings:
a. Information Systems Investment
b. Efficiency and Profitability
9.2.3.1 Information Systems Investments
The study also sought to determine the relationship between IS investment and bank’s
performance. The research findings showed that there exists is a linear relationship
between IS investments and bank’s performance. The higher the information systems
investments the higher the bank’s performance. The findings brought to the fore that
there has been a very high rate of investment in the past three years in the banks and the
investment has affected the operations of the bank positively. The findings have it that
the foreign banks have invested more in IS than the local banks. All the foreign banks
have invested in network infrastructure in recent times whilst the local banks have
invested in improved banking software. Bank A uses the National Banking College to
train staff. Bank B gives in-house training to staff. Bank C has a banking college that
trains staff. Bank D, Bank E, and Bank F (foreign banks) bring in experts to train the
staff and sometimes send the staff out for training.
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9.2.3.2 Efficiency and Profitability
The study determined the effectiveness of strategies in terms of efficiency and
profitability. The findings have it bare that, the banks increased their turnover because of
the information systems investment. All the foreign banks performed very well in the
past three years whilst with the local banks, only Bank A and Bank B performed very
well in the past three years. On the impact of IT investments on key variables, all the
banks (both foreign and local) asserted that market share, profitability, and ROA
increases as IT investment are employed in the industry. From the findings, to the
foreign banks, the problems associated with IS/IT investments are high maintenance cost
and energy crises. Whilst with the local banks, the problems are lack of skilled
personnel, some transactions cannot be done, customers can’t use e-media, frequent
breakdowns of channels, and energy crises.
All the foreign banks exhibited increasing trends in the ROA but this trend did not occur
in the local banks. The effects of IT investment on increasing profitability (ROA and
ROE) for banks are significantly great. The findings also have it that, the strategy of the
foreign banks seems better than that of the local banks. The increasing trends in ROA
recorded by the foreign banks suggest a good IS strategy compared to the local banks.
Again, the increasing trends in ROE recorded by the foreign banks also suggest a good
IS strategy compared to the local banks.
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9.3 Conclusion
As the field of strategy management has expanded, strategy researchers and practitioners
have shown increasing interest in the role of information technology in strategy
formulation and implementation, and in its impacts on financial performance.
Technology has brought about a complete paradigm shift in the functioning of banks and
delivery of banking services. Gone are the days when every banking transaction required
a visit to the bank branch. Today, most of the transactions can be done from the comfort
of one’s home and customers need not visit the bank branch for anything. Technology is
no longer an enabler, but a business driver. The growth of the internet, mobiles and
communication technology has added a different dimension to banking. The information
technology (IT) available today is being leveraged in customer acquisitions, driving
automation and process efficiency, delivering ease and efficiency to customers.
Contemporary technology in banking comes in the form of computer based application
and information technology. From the banking customer’s perspective, two of the
practical purposes of banking are convenience and accessibility to both funds and
account information.
The business operations in the banking and financial sector have been increasingly
dependent on the computerized information systems over the years. It has now become
impossible to separate information technology (IT) from the business of the banks and
the financial institutions. There is a need for focused attention on the issues of the
corporate governance of the information systems in computerized environment and the
security controls to safeguard information and information systems. The application of
information technology has brought about significant changes in the way the institutions
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in the banking and financial sector process and store data and this sector is now poised
to countenance various developments such as internet banking, e-money, e-cheque, e-
commerce etc., as the most modern methods of delivery of services to the customers.
The telecommunication networks have played a catalytic role in the expansion and
integration of the information systems (IS), within and between the institutions,
facilitating data accessibility to different users. Today’s business environment is very
dynamic and undergoes rapid changes as a result of technological innovation, increased
awareness and demands from customers. The term strategic information system (SIS)
has for many become synonymous with “the strategic use of information technology”.
But unlike the short cycles of summer files or the similarly brief lives of buzzwords
buried soon after birth, the SIS concept now enters its second decade firmly entrenched
world-wide. Yet the meaning and reference of this idea remains a bit elusive.
Banks have a growing understanding of the power of technology and have begun
leveraging advances in technology to improve operations and enhance customer service.
However, technology is always changing and improving, and banks typically and
desperately adapt in order to keep their customer base. When there is a change in the
solution within a bank policy, it affects the interaction of other solutions being used
within the same bank. Therefore, to take full advantage of these ever changing solutions,
the bank must act to make sure it has full access to information between each solution.
While ever-changing technology can pose difficulties, it is still an essential tool to
ensure an institution’s standing in the highly competitive financial services market. The
changes brought about by IT include new products, more sophisticated customers,
changing cost structures, and enhanced competitive pressures. These have all combined
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to transform the structure of the banking industry. And with further development of new
technology, the industry will likely continue to evolve.
Advances in IT have surely changed the optimal size of a bank. Some technologically
intensive products, such as processing payments, are more efficiently produced on a
large scale; and the banking industry’s recent wave of mergers and acquisitions suggests
that bankers, at least, believe the “efficient” size of a bank has increased. Information
technology has also resulted in new database technology and data-mining techniques
that may expand the range of services that banks offer their customers. This technology
allows firms to use customer information gathered in one part of their company, say
banking, to increase sales in the others, say insurance or brokerage services, and is one
of the factors driving recent industry consolidation. Advances in IT have opened up
market niches for competitors from unexpected places. Many firms, not just banks, can
now use statistical models to evaluate risk efficiently, originate loans, transform them
into marketable securities, and sell them to obtain funding to make more loans.
Information technology will likely continue to transform some banks into new types of
financial institutions whose business bears little resemblance to that of a traditional
bank.
There is a growing debate in the business community about the importance of measuring
the return on investments in IS. This is a difficult and challenging task, given that many
of the benefits derived from IS are both intangible and long term. In spite of the
limitations of existing productivity measures, it is important to monitor and assess the
contribution of IS investments to organizational productivity and efficiency. Banks that
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do not make investments that take advantage of new technology may find that they are
losing customers to the better-quality or lower-cost products of firms that do. But using
IT as a strategic weapon can be quite tricky, entailing high costs and an uncertain payoff
(Brynjolfsson and Hitt, 2001). The study adopted a cross-sectional survey design and
was comfortably placed within a scientific epistemology of logical positivism. The cases
or study settings investigated were local banks and foreign banks.
The findings revealed that for the local banks, the most important SISP success factors
are staff training and staff involvement, resources, and IS alignment to the business
strategy. For the foreign banks, the most important SISP success factors are top
management involvement, resources, and organizational and technological changes. The
major barriers to IS formulation to the foreign banks are lack of staff involvement and
uncertainties whilst with the local banks the barriers are lack of policy, lack of resources,
organizational culture, and uncertainties. The major barriers to IS implementation for the
foreign banks are lack of communication and external factors whilst with the local banks
the barriers are lack of IT training, lack of resources, internal and external factors. The
research findings suggest that the foreign bank customers visit the web site more than
the customers of the local banks. It was also revealed that the level of usage of SMS and
internet banking are very low.
On the impact of IT investments on key variables, all the banks (both foreign and local)
asserted that market share, profitability, and ROA increases as IT investment are
employed in the industry. The zero-order correlation covers up the dynamics between
the strategy, IT, and ROA. Strategy appears to have direct effects on IT, and IT has
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direct effects on ROA. The analysis suggests that IT can play a meaningful role in the
strategy – ROA relationship. Despite these caveats, the strategic context makes a
significant difference in the correlations observed between IT adoption and ROA.
Without strategy variable in the model, the correlations would have been
underestimated. Three hypotheses were statistically tested. The first hypothesis was
concluded that information systems strategy has a positive relationship with bank
performance even though the relationship is not strong. The second hypothesis was
concluded that banks with higher levels of information systems investments have
increasing operating profits than banks with low levels of information systems
investments. And finally, the third hypothesis was concluded that bank customers are
satisfied with the services of banks with modern technology than banks without modern
technology.
The study is significant in terms of its contribution to understanding the significance of
information technology investments in the Ghanaian banking industry. As an academic
work, this study acts as a source of future reference, and it also adds to existing
knowledge in this area since “the meaning and reference of this idea remains a bit
elusive”. Scholars interested in development and implementation of ISS would also
benefit from this research work. In some circumstances, applying IT to a value chain
activity is essential, even where it provides no lasting competitive advantage. The
technology becomes a strategic necessity “because failing to attend to it results in
strategic disadvantage” (Clemons and Kimbrough, 1986). In this sense, IT becomes
more threat than opportunity. The costs of adoption may yield little or no return, but the
costs of not adopting are sufficiently high to justify the investment.
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9.4 Recommendations
The findings of this study informed the following recommendations for improving and
sustaining the IS strategy, information systems and bank performance.
Aligning information systems to the organizational strategy goals has appeared to be a
concern for managers over the last decade. One of the most extensively used models of
alignment is the strategic alignment model proposed by Henderson and Venkatraman.
This multidimensional model identifies the internal and external dimensions and how
these can be integrated functionally with the organizational strategy. Basically, the
majority of alignment models are based on the organizational structure and their
objectives. The strategic alignment model places alignment at the heart of the
organization’s needs. Many of these models also reveal the influence of the
organization’s objectives on the alignment as this type of model focuses on the
connection between strategy and technology. To develop an attainable level of
alignment within an organization, the IT/IS purpose has to be located within the
organizational structure.
Banks must consider the ‘mechanistic’ perspective on strategy formulation from the
business strategy literature into current SIS frameworks. According to such a
perspective, management should in a first phase engage in a purely cognitive
formulation process: through the appraisal of the environment, its threats and
opportunities, and the strengths and weaknesses of the organization, key success factors
and distinctive competencies are identified and translated into a range of competitive
strategy alternatives. Once the optimal strategy has been selected, agreed upon and laid
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out in sufficient detail, the next phase of implementation follows. The perspective is
based on a set of premises or assumptions, to be found in most SIS models, such as the
Critical Success Factors, the value chain, the strategic thrusts, and the sustainability
analysis. Specifically, the approach can be characterized as being conscious and
analytic, top-down and control-oriented, simple and structured, and separating action
and structure.
There is the need to develop all the resources (human, physical, financial, technological
capabilities for the enhancement of organizational flexibility and performance. The role
of intangible (reputation, skills, technical know-how, etc.) and organizational learning
are relevant to the capabilities concept and hence to the implementation of strategic
management. It is essential for banks to manage both intangible and tangible resources
and capabilities (organizational routines) in order to achieve strategic performance. The
key to achieving strategic capability is for the banks to coordinate all resources and also
to develop organizational learning. Bank C must take steps to increase the financial base
and both Bank B and Bank C must increase the quality of their human resources base in
order to stay competitive and much the following banks. This could be done through
intensive training.
The vision and mission of the bank must be communicated to all staff so as to make staff
members fully aware since the vision and mission must be shared. If not, this may
impede the productivity of the staff members. The concept of information technology
has become global and rules the world. For this reason, all staff members must be aware
of the information system strategy irrespective of the department and work experience.
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Both foreign and local banks must involve some of the operational staff in the IS
formulation process.
IT researchers, consultants, and executives have universally asserted that firms should
integrate IT with overall strategic planning efforts. Banks should continuously align
their IS strategy with their overall business strategy: one should complement the other.
The two strategies must not be in conflict but rather in harmony. As the result of the
alignment, banks can increase market shares, profitability, and efficiency. The
information system strategy of Bank A, Bank B, and Bank C must also be reviewed
every three years since technology is always changing. For the foreign banks, top
management must be committed and involved in the formulation of IS strategy for the
smooth implementation of the IS strategy. For any bank to remain competitive there is
the need to combine certain competitive strategies. Foreign banks must combine both
cost leadership and differentiation strategies in order to remain competitive. It has been
proven that, banks that use both competitive strategies have competitive edge over the
other banks in the same industry.
In an effort to reduce or mitigate barriers of uncertainty when involved in strategic
planning, Fitzsimmons (2006) remarked a natural compromise is to build strategies that
are robust across multiple alternative future events, but are still tailored to meet the
challenges of the most likely future events. That is to say, flexibility in the plan is
essential; the plans should be flexible enough to adapt to any necessary changes that
may occur within the organization. Fitzsimmons (2006) expressed that a better way to
account for uncertainty in strategic planning would be to address several factors that
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could be considered as potential threats and/or security challenges. The approach would
also need to include transparent, probabilistic, and explicit reasoning in the planning
process to ensure a) a better understanding, and b) disciplined judgments. Schwartz
(1991) maintains that strategist should not create future scenarios with the intention of
seeing the future. Instead, scenarios should be used to make leaders aware of alternative
strategies and necessary decisions to be made. The key to dealing with lack of resource
barrier is first to identify the cause or causes of the limited resources. By identifying
where the limitation originated, one will be better equipped to create an effective
strategy for developing superior resources. Instead of seeking greener fields, managers
would usually do better by investing in building resources in present fields or a segment
of present fields. In other words, to gain the most from strategic planning, the key is to
concentrate on small sections at a time while building resources.
The banks must invest in servers with higher capacities and speed. Especially, Bank C
and Bank D. More microcomputers must also be considered for client/work stations by
all banks, both foreign and local. The local banks are encouraged to move from old
version of operating system and use Vista, Windows 7 and Windows 8. Microsoft Office
2010 must also be encouraged since it makes life and work easier. For the Network
Operating System (NOS), the banks must invest in the latest versions of Linux, UNIX,
and Windows Server 2012. All the banks both foreign and local must also consider
improved banking software built on oracle or MYSQL.
IT researchers consistently advocate IT training as an indispensable complement to
hardware and software investments (Benjamin and Levinson, 1993). On the other hand,
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IT training often has a commodity like character, and generic IT training services are
broadly available at a market price. As such, the only sustainable value to IT training
appears to lie in merging firm specific information technology with firm specific
training to produce idiosyncratic, causally ambiguous organizational capabilities. This
may be possible through a combination of formal and on-the-job training methods, such
as job rotation, cross training, and mentoring, which emphasize firm specific IT
applications, and may in the long run produce embedded IT skills. The provision of
training in IT will have to be made for all staff. ‘New blood’ may have to be introduced
to strengthen the technical expertise in the bank. Short as well as long-term formal and
refresher training programmes in modern technology usage would have to be pursued.
The importance of the IT-business unit partnership cannot be overemphasized.
The people and processes are just as critical to success as hardware and software.
Undoubtedly, banks have made great technological advances in storing information.
However, the full power to use that information to be more productive and make better
decisions still goes unrealized. The effectiveness of the infrastructure is measured in the
value it brings to the customer. That value is diminished by business units and
individuals that are not networked. Therefore, banks must provide access and training, to
each member of the bank who directly or indirectly serves customers. To make this
possible, clear standards and expectations must be published, so the information
technology organization can bring individuals on-line in a consistent manner.
Banks have understood that educating the customer makes good business sense. There
are two levels of education; products and practices. Product education is targeted toward
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increasing usage and the practices education is targeted at gaining customer confidence
around systems and processes employed at banks. Both the foreign banks and the local
banks must encourage the banks customers to use the SMS banking, internet banking,
and visit the banks’ website. Increased adoption of e-payments and mobile banking are
clearly the emerging areas which are bound to strengthen in the near future. In addition
the focus is shifting towards systems and processes needed in the maturity phase of the
technology needs curve. Banks are and will need to increasingly focusing on cost and
profitability management, business intelligence, dashboards / executive information
reports, data warehousing and analytics. Improving internal effectiveness and efficiency
with integrated data warehouse and real-time access to all customer information will
help the banks’ decision making and ability to deliver appropriate products and services
to the customers. The foreign banks are encouraged to consider suggestions and
complaints from bank customers and must endeavour to inform bank customers prior to
the introduction of a new policy.
Banks must see beyond applications that provide solutions to today’s problems. They
need to develop a vision of comprehensive infrastructure comprising internal and
external networks instantaneously moving information from data stores to users and
back again. Banks must be encouraged to employ more technologies to automate their
service delivery. The use of ATMs and electronic based bank services would reduce the
number of branches that would be required. Moreover, these technologies would enable
banks to explore new markets without maintaining a physical presence. It would reduce
the number of staff costs, occupancy cost, paper cost and queuing times in the banking
halls. The foreign banks must take collaborative and radical steps in building capacity of
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IT employees to reduce over reliance on Technology Group. The foreign banks must
also intensify communication within the bank since this would help in the dissemination
of information.
The advancement of technology is a necessity of the current era. Businesses need to
adopt and embrace new technologies to provide excellent business operation and
services to their customers. The banking industry is not an exception with regards to this
adaptation. So it is worth suggesting that the banking industry needs to spend more on
IT and better apply IT to improve its operations, customer services and products. Banks
should devote more resources to the development of secure IT systems, services and
products. The local banks must invest more in IS/IT especially, in IT security and IT
infrastructure to achieve better results. Bank C must also conduct a systems audit to
know the true picture of the system.
9.5 Areas of Future Research
This study investigated six banks out of twenty seven banks in Ghana. More banks could
also be investigated. Further research into the analysis of the individual IS strategy of the
banks to determine whether it conforms to IS standards would be a vital venture. This
study adopted a survey approach. It would be very interesting to subject this study to a
case study approach to compare the findings. As a task for the future research agenda, it
could be interesting to elaborate an empirical strategy aimed at identifying the different
channels through which ICT may affect decentralization. Moreover, it could also be of
interest to attempt to analyse the heterogeneity of the strategies followed by the banks in
the adoption of competitive strategies and how these reflect on performance.
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Schwartz, P. (1991). The art of the long view. New York: Doubleday/Currency.
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APPENDICES
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APPENDIX A
GLOSSARY
Automated Teller Machine (ATM) is a computerized telecommunications device that
provides the customers of a financial institution with access to financial transaction in a
public space without the need for a human clerk or bank teller.
Banks are financial institutions that offer the widest range of financial services,
especially credit, savings and payment services and perform the widest range of
financial functions of any business economy.
Coding is process by which responses are classified into meaningful categories.
Competitive Advantage: A company is said to have a competitive advantage over its
rivals when its profitability is greater than the average profitability of all other
companies competing for the same set of customers. There are three basic types of
competitive strategies a firm can possess: low cost, differentiation, and generic.
Computer is a general purpose device that can be programmed to carry out a finite set
of arithmetic or logical operations.
Computerized System is a computer system with a purpose referring to a function
(process or operation) integrated with a computer system and performed by trained
people.
Customer Satisfaction is the company's ability to fulfill the business, emotional, and
psychological needs of its customers.
Information Technology (IT): Information Technology consists of all the hardware
and software that a firm needs to use in order to achieve its business objectives.
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Information Technology Infrastructure consists of the shared technology resources
that provide the platform for the firm’s specific information system applications.
Information Technology Security is the process of implementing measures and
systems designed to securely protect and safeguard information.
Information System (IS) is any combination of information technology and people's
activities that support operations, management and decision making. Information
Systems (IS) is also a set of interrelated components that collect (or retrieve), process,
store, and distribute information to support decision making and control in an
organization.
Information Systems Strategy brings together the business aims of the company, an
understanding of the information needed to support those aims, and the implementation
of computer systems to provide that information. It is a plan for the development of
systems towards some future vision of the role of information systems in the
organization.
Mobile Banking is the provision of banking and financial services with the help of
mobile telecommunication devices.
Mission statement is a brief description of a company's fundamental purpose. It answers
the question, "Why do we exist?" The mission statement articulates the company's
purpose both for those in the organization and for the public.
Network Operating System (NOS) is the software that runs on a server and enables the
server to manage data, users, groups, security, applications, and other networking
functions. It also includes special functions for connecting computers and devices into a
Local Area Network (LAN).
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Online Banking refers to the automated delivery of banking products and services
directly to customers through electronic communication channels, most notably the
Internet.
Operating System (OS) is a set of programmes through which the computer manages
its own resources. Every computer has an operating system hidden from the user. The
operating system is often referred to as the software environment or platform.
Policy is a statement of intent, and is implemented as a procedure or protocol.
Return on Assets is the ratio of annual net income to average total assets of a business
during a financial year.
Return on Equity or return on capital is the ratio of net income of a business during a
year to its stockholders' equity during that year.
Service Quality is seen as the extent to which a service meets customer’s needs and
expectations.  Thus, it is the difference between customer expectations of service and
perceived service.
Severs are computers with higher capacity and speed that can be linked to other client
stations.
SMS Banking provides instant notification about transactions as and when it happens. It
helps to keep a watch on account with a round the clock service.
Software is a set of instructions that direct the hardware to perform specified actions.
Strategy is the pattern or plan that integrates an organization’s major goals, policies and
action sequences into a cohesive whole.
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Strategic Art is the skillful balancing of ends (objectives), ways (courses of action), and
means (resources).
Strategic Information Systems (SIS) is a system that helps companies change or
otherwise alter their business strategy and/or structure. It is typically utilized to
streamline and quicken the reaction time to environmental changes and aid it in
achieving a competitive advantage.
Systems are defined as integrated set of components or entities that interact to achieve a
particular function or goal.
Technology is the making, modification, usage, and knowledge of tools, machines,
techniques, crafts, systems, methods of organization, in order to solve a problem,
improve a preexisting solution to a problem, achieve a goal or perform a specific
function.
Turnover of a bank is the profit after tax in any financial year.
Vision statement is a picture of a company in the future. It is an inspiration and
framework for all strategic planning.
Website is a collection of web pages having images, videos and other digital assets that
is hosted on one or several web servers usually accessible via Internet, cell phone or a
LAN
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APPENDIX B
UNIVERSITY OF GHANA, LEGON
DEPARTMENT OF INFORMATION STUDIES
Dear Sir / Madam,
THE IMPACT OF INFORMATION SYSTEM STRATEGY ON BANK
PERFORMANCE
I am conducting a research into the above topic as part of a PhD program in the
Department of Information studies, University of Ghana, Legon. In this direction, it is
necessary for me to collect information / data from your bank.
I would be pleased if you would allow me to use your bank as my case study. All
information collected would be considered confidential and will be used strictly for
academic purposes.
Thank you for co-operation.
Yours sincerely,
Ebenezer Ankrah
ebankrah@yahoo.com
0244657044
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APPENDIX C
UNIVERSITY OF GHANA
DEPARTMENT OF INFORMATION STUDIES
P. O.  BOX 60, LEGON, GHANA.
Our Ref.: Telephone: 0302 513486
Ext.  3098
Your Ref.: Email: dislegon@ug.edu.gh
14th December 2011
The Head,
Human Resource
...........................................
...........................................
...........................................
Dear Sir,
LETTER OF INTRODUCTION
EBENEZER ANKRAH (TEL: 0244657044, E-mail: ebankrah@yahoo.com)
This is to introduce to you Ebenezer Ankrah, a PhD student of the Department of
Information Studies.  Ebenezer is expected to submit a thesis work as part of the
requirement for his PhD programme.  He is researching on the topic: “The Impact of
Information Systems Strategy on Bank Performance”.
We would appreciate any support you can give him.
Yours faithfully,
Dr. Musah Adams
(Head of Department)
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APPENDIX D
UNIVERSITY OF GHANA, LEGON
DEPARTMENT OF INFORMATION STUDIES
QUESTIONNAIRE FOR DATA COLLECTION
STRATEGIC STAFF
Dear Sir / Madam,
THE IMPACT OF INFORMATION SYSTEMS STRATEGY ON BANK
PERFORMANCE
I am conducting a research into the above topic as part of a PhD program in the
Department of Information studies, University of Ghana, Legon.
In this direction, it is necessary for me to collect information / data from your bank.
I would be pleased if you would spare a few minutes of your busy schedule to complete
the following questionnaire.
All information provided would be considered confidential and will be used strictly for
academic purposes.
Thank you for co-operation.
Yours sincerely,
Ebenezer Ankrah
ebankrah@yahoo.com
0244657044
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INSTRUCTIONS: Please, tick the appropriate answer for the close ended questions
and answer the open ended questions to the best of your knowledge.
SECTION 1: BANK PROFILE
This will find out general questions about the bank. The answers for these questions will
be used to find out the bank size and business growth.
1.1 Gender                    Male [  ]                        Female [  ]
1.2 Educational background
Second degree [  ]
First degree [  ]
‘A’ levels [  ]
‘O’ Levels [  ]
SHS [  ]
Others……………………………………………………………………
1.3 What is the name of your bank?
………………………………………………………………………………
1.4       What is your current rank in the bank?
……………………………………………………………………………………
1.5     How long have you been working with by the bank?
[  ]     Less than 1 Year [  ]     11 – 15 Years
[  ]     1 – 5 Years [  ]     16 – 20 Years
[  ]     6 – 10 Years [  ]     More than 20 Years
1.6 What is the total number of employees in your bank (head office)?
[  ]1 - 50 [  ]51 – 100   [  ]101 - 150  [  ]151 - 200 [  ]More than 200
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1.7     Which department do you belong to?
……………………………………………………………………………………
1.8 How many staff are currently working in your department?
[  ]1- 10 [  ]11 – 20     [  ] 21 – 30   [  ]31 – 40  [  ]41 – 50  [  ]More than 50
SECTION 2: BUSSINESS STRATEGY AND IS STRATEGY
This section will explore the relationship between the IS strategy and the overall
business strategy of the bank. It will also try to establish the importance of the IS
strategy to the Vision and Mission of the bank.
2.1 Do you have information system strategy? Yes [  ] No [  ]
2.2      Identify the important components in the IS strategy in your bank?
[  ] IS Manual
[  ] IS Training
[  ] IS Formulation
[  ] IS Implementation
[  ] IS Monitoring
[  ] IS Control
2.3 What time frame does your strategic plan covers?
[  ] One yr [  ] Three yrs [  ] Five yrs [  ] Ten yrs [  ] Others …………
2.4 How would you describe your business strategy?
[  ] Prosper [  ] Analyzer [  ] Defender [  ] Reactor
2.5 How is your IS strategy aligned to your business strategy?
[  ] Well Aligned [  ] Semi Aligned [  ] No Alignment
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2.6 What is the concept of your IS strategy typology?
[  ] Innovator [  ] Conservative [  ] Undefined
2.7 How do you see this bank in the next five (5) years (vision of the bank)?
……………………………………………………………………………………
……………………………………………………………………………………
2.8 How can this vision be achieved?
……………………………………………………………………………………
……………………………………………………………………………………
2.9 Does the bank have the human resources to achieve its goals in the next five (5)
years? Yes [  ] No [  ]
2.10 What type of technology does the bank need in order to achieve its goals in the
next five (5) years?
……………………………………………………………………………………
……………………………………………………………………………………
2.11 Indicate the current financial resources level of the bank
[  ] Low [  ] Moderate [  ] High
2.12 What does your bank exist for (mission of the bank)?
……………………………………………………………………………………
……………………………………………………………………………………
2.13 Is the political situation in the country favorable for your bank’s IS strategy?
Yes [  ] No [  ]
2.14 Can the economic factors in the country affect the bank’s IS strategy?
Yes [  ] No [  ]
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2.15 Can the social factors in the country affect the bank’s IS strategy?
Yes [  ] No [  ]
2.16 Can technological factors affect the bank’s IS strategy?
Yes [  ] No [  ]
SECTION 3: STAFF INVOLVEMENT AND SUCCESS PREDICTORS
To every strategy there are key features and this section seeks to find out the key
features of the IS strategy of the bank. This section will also find out among others
whether the entire staff are involved in the formulation and the implementation of the IS
strategy.
3.1 Who are the people involved in your IS strategy formulation?
[  ]     Board Members
[  ]     Management Team
[  ]     Information Technology Department
[  ]     Out Sourcing
[  ] Technology Group
[  ]     Others ………………………………………………………………
3.2 Identify the important Strategic Information Systems Planning (SISP) success
predictors.
……………………………………………………………………………………
……………………………………………………………………………………
3.3 How would you rate your willingness to use a new technology for your
operations in the bank?
[  ] Not Willing [  ] Somehow Willing [  ] Most Willing
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3.4 Does the bank have the resources to support the formulation and implementation
of the IS strategy?
Yes [  ] No [  ]
SECTION 4: COMPETITIVE ADVANTAGE AND IS STRATEGY
This section seeks to determine the various competitive strategies of the banks and how
the banks are benefiting from the competitive strategies.
4.1 Has your profit margins and market share increased since the implementation of
the IS strategy? Yes [  ] No [  ]
4.2 What type of competitive strategy does your bank use?
[  ]     Cost leadership [  ]     Differentiation [  ]     Generic
4.3 Who are your competitors?
……………………………………………………………………………………
……………………………………………………………………………………
4.4 Is the competition affecting the banks profits?
Yes [  ] No [  ]
4.5 Apart from competitive advantage, what are the benefits accruing to your bank
from using information system?
……………………………………………………………………………………
……………………………………………………………………………………
SECTION 5: BARRIERS AND STRATEGY
These questions will find out the challenges that are associated with the formulation and
implementation of an IS strategy and the way forward.
5.1 What is the level of the IS infrastructure to implement your strategy?
[  ] Low [  ] Moderate [  ] High
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5.2 What was the outcome of your bank’s IS strategy implementation?
[  ]   Successful [  ]   Somehow Successful [  ]    Not Successful
5.3 What are the barriers in formulating IS strategy?
……………………………………………………………………………………
……………………………………………………………………………………
5.4 How could the barriers in formulating your IS strategy be overcome?
……………………………………………………………………………………
……………………………………………………………………………………
5.5 What are the barriers in implementing your IS strategy?
……………………………………………………………………………………
……………………………………………………………………………………
5.6 How could the barriers in implementing your IS strategy be overcome?
……………………………………………………………………………………
……………………………………………………………………………………
5.7 How are your customers benefiting as a result of the implementation of an IS
strategy?
……………………………………………………………………………………
……………………………………………………………………………………
SECTION 6: INFORMATION TECHNOLOGY ISSUES
Basic information technology issues will be determined in this section. The emphasis
will be on how information technology is used to carry out certain banking operations
and also the benefits derived from using information technology.
6.1 How many microcomputers (PCs) does your department have?
[  ]1 – 20 PCs [  ]21 – 50 PCs [  ] 51 – 70 PCs
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[  ] 71 – 100 PCs [  ] 101 – 150 PCs [  ] More than 150 PCs
6.2 How many server computers does your bank have?
[  ] One [  ] Three [  ] Five    [  ] Ten [  ] Others ………
6.3 What type of operating system does your bank use on the client stations?
[  ] Windows XP [  ] Windows 7 [  ] Vista [  ] Others…
6.4 What type of network operating system does your bank use?
[  ] Windows Server 2000 [  ] Windows Server 2008   [  ]Windows Server XP
[  ] Windows Server NT [  ] UNIX [  ]     Linux
6.5 Please, what is the name of the database management system that your bank is
using?
……………………………………………………………………………………
……………………………………………………………………………………
6.6 What is the level of IS security in your bank?
[  ]     Low [  ]     Moderate [  ]     High
6.7 How would you describe the current information system in the bank?
[  ] Not Effective [  ] Somehow Effective [  ] Very Effective
6.8 Influence of ICT on time saving
[ ] Very     High [  ] High   [  ] Moderate    [  ] Low      [  ] Very Low
6.9 Influence of ICT devices on error rate reduction
[  ] Very     High [  ] High   [  ] Moderate    [  ] Low      [  ] Very Low
6.10 Influence of ICT on Management decisions
[  ] Very     High [  ] High   [  ] Moderate    [  ] Low      [  ] Very Low
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6.11 Influence of ICT on speed of transaction
[  ] Very     High [  ] High   [  ] Moderate    [  ] Low      [  ] Very Low High
SECTION 7: PRODUCTS AND SERVICES
These questions will find out the various products and services available at the banks
and how they are linked to information technology.
7.1 Which of the following products and services are available to your customers?
[  ] Accounts [  ] Online Banking
[  ] Money transfer [  ] SMS Banking
[  ] Loans [  ] E-Zwitch
[  ] Bank Assurance [  ] T-Bills
[  ] ATM [  ] Bills Payment
[  ]
Others……………………………………………………………….
7.2 Does your bank use IT to design products and services?
Yes [  ] No [  ]
7.3 How do you perceive the services quality of your bank?
[  ]      Low [  ]     Moderate [  ]     High
7.4 How can information System be used to reduce cost in banking operations?
……………………………………………………………………………………
……………………………………………………………………………………
7.5 What are the banking operations that are supported by information systems?
……………………………………………………………………………………
……………………………………………………………………………………
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7.6 What are the problems associated with the banking operations that are handled
manually?
……………………………………………………………………………………
……………………………………………………………………………………
7.7       How can information systems be used to improve upon banking operations?
……………………………………………………………………………………
……………………………………………………………………………………
SECTION 8:  BANK PERFORMANCE
This section explores the level of IT investment of the bank in the short term, medium
term and the long term.
8.1 How much have you invested in your IT systems in terms of hardware and
software in the past three (3) years and what has been the effect on the bank’s
operations?
YEAR SOFTWARE AND
HARDWARE COST
IMPACT ON OPERATIONS
2009
2010
2011
8.2 How would you rate your bank IT/IS investments in the past three years?
[  ]     Low [  ]     Moderate [  ]     High
8.3 Please, how often do you update your IT systems?
[  ]     Once a year [  ]     Twice in a year [  ]     Once in two years
[  ]     Once in five years [  ]     Others ……………
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8.4 Please, what has been your IS/IT investment in recent times?
……………………………………………………………………………………
……………………………………………………………………………………
8.5 How much do you spend in training your staff each year?
[  ] Less than GH¢ 1,000 [  ] GH¢ 1,000 – 1,900
[  ] GH¢ 2,000 – 2,900 [  ] GH¢ 3,000 – 3,900
[  ] GH¢ 4,000 – 4,900 [  ] Greater than GH¢ 5,000
8.6 Are there any plans to bring improvement or change in the current information
systems?
Yes [  ] No [  ]
8.7 What are some of the IT related items that in the future you will investment in?
……………………………………………………………………………………
……………………………………………………………………………………..
.
8.8 List the IT services that your bank outsources.
……………………………………………………………………………………
……………………………………………………………………………………
8.9 How would you rate your bank performance in the past three years?
[  ]     Low [  ]     Moderate [  ]     High
8.10 What was the total turnover of your bank in the last three year?
YEAR 2009 2010 2011
TURNOVER(GH¢)
8.11 In your view, what constitute bank performance?
[  ]     Profitability [  ]     Sales Growth [  ]     IT Infrastructure
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8.12 Do you think IT investments have the following effects on your bank?
Reduces operating expenses [  ]     Yes [  ]     No
Increases market share of deposits [  ]     Yes [  ]     No
Increases profits [  ]     Yes [  ]     No
Positive impact on Return on Asset [ ]     Yes [  ]     No
Increases labour productivity [  ]     Yes [  ]     No
8.13 Which problem(s) is / are associated with the investments in IT in your bank?
[  ]     High cost maintenance
[  ]     Frequent breakdowns of channels
[  ]     Energy crisis
[  ]     Lack of skilled personnel in this field
[  ]     Some transactions can’t be done through e-medium
[  ]     Some customers don’t know how to use them
[  ]     Others
8.14 Indicate the Net Income, Total Asset, and Total Equity for the following years.
2009 2010 2011
Net Income
Total Asset
Total Equity
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APPENDIX E
UNIVERSITY OF GHANA, LEGON
DEPARTMENT OF INFORMATION STUDIES
QUESTIONNAIRE FOR DATA COLLECTION
OPERATIONAL STAFF
Dear Sir / Madam,
THE IMPACT OF INFORMATION SYSTEMS STRATEGY ON BANK
PERFORMANCE
I am conducting a research into the above topic as part of a PhD program in the
Department of Information studies, University of Ghana, Legon.
In this direction, it is necessary for me to collect information / data from your bank.
I would be pleased if you would spare a few minutes of your busy schedule to complete
the following questionnaire.
All information provided would be considered confidential and will be used strictly for
academic purposes.
Thank you for co-operation.
Yours sincerely,
Ebenezer Ankrah
ebankrah@yahoo.com
0244657044
University of Ghana          http://ugspace.ug.edu.gh
330
INSTRUCTIONS: Please, tick the appropriate answer for the close ended questions
and answer the open ended questions to the best of your knowledge.
SECTION 1: BANK SIZE AND BUSINESS GROWTH
This will find out general questions about the bank. The answers for these questions will
be used to find out the bank size and business growth.
1.1 Gender                    Male [  ]                                           Female [  ]
1.3 Educational background
[  ] Second degree [  ] First degree [  ]‘A’ levels
[  ]‘O’ Levels [  ] SHS [  ] Others………
1.3 What is the name of your bank?
[  ] GCB     [  ] SCB [  ] NIB     [  ] BBG     [  ] ADB [  ] STANBIC
1.4       What is your current rank in the bank?
……………………………………………………………………………………
……………………………………………………………………………………
1.5      How long have you been hired by the bank?
[  ]     Less than 1 Year [  ]     11 – 15 Years
[  ]     1 – 5 Years [  ]     16 – 20 Years
[  ]     6 – 10 Years [  ]     More than 20 Years
1.6 How many staff are currently working in your department?
[  ]     1- 10 [  ]     31 – 40
[  ]     11 – 20 [  ]     41 – 50
[  ]     21 – 30 [  ]     More than 50
1.7 Which department to you belongs to?
[  ] Information Technology [  ] Credit Management Administration
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[  ] Human Resource [  ] Special Assets Management
[  ] Retail Banking [  ] Legal Department
[  ] Corporate Banking [  ] Operations Department
[  ] Project and Multilateral [  ] Financial Control Department
[  ] Service Excellence [  ] Treasury Department
SECTION 2: BUSSINESS STRATEGY AND IS STRATEGY
This section will explore the relationship between the IS strategy and the overall
business strategy of the bank. It will also try to establish the importance of the IS
strategy to the Vision and Mission of the bank.
2.1 Do you have information system strategy? Yes [  ] No [  ]
2.2      Identify the important components in the IS strategy in your bank?
[  ] IS Manual [  ] IS Training [  ]IS Formulation
[  ] IS Implementation [  ] IS Monitoring [  ]IS Control
2.3    How would you describe your business strategy?
[  ] Prospector [  ] Analyzer [  ] Defender [  ] Reactor
2.4 How is your IS strategy aligned to your business strategy?
[  ] Well aligned [  ] Semi aligned [  ] No alignment
2.5 What is the concept of your IS strategy typology?
[ ] Innovator [  ] Conservative [  ] Undefined
2.6 How do you see this bank in the next five (5) years (vision of the bank)?
[  ]     Best bank and Market leader
[  ]     Among the top five banks
[  ]     Best customer friendly bank
[  ]     Multinational bank
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[  ]     Others …………………………………………
2.7 Indicate the current human resources level (quality) of the bank
[  ] Low [  ] Moderate [  ] High
2.8 What type of technology does the bank need in order to achieve its goals in the
next five (5) years?
[  ]     Banking software [  ]     Work stations
[  ]     Network Infrastructure [  ]     IT Outsourcing
[  ]     Server computers [  ]     Others ……………………
2.9 Indicate the current financial resources level of the bank
[  ] Low [ ] Moderate [  ] High
2.10 What does your bank exist for (mission of the bank)?
[  ] Customer Service   [  ] Loans   [  ] Expansion    [  ] CSR    [  ] Others ………
2.11 Is the political situation in the country favorable for your bank’s IS strategy?
Yes [  ] No [  ]
2.12 Can the economic factors in the country affect the bank’s IS strategy?
Yes [  ] No [  ]
2.13 Can the social factors in the country affect the bank’s IS strategy?
Yes [  ] No [  ]
2.14 Can technological factors affect the bank’s IS strategy?
Yes [  ] No [  ]
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SECTION 3: STAFF INVOLVEMENT AND SUCCESS PREDICTORS
To every strategy there are key features and this section seeks to find out the key
features of the IS strategy of the bank. This section will also find out among others
whether the entire staff are involved in the formulation and the implementation of the IS
strategy.
3.1 Who are the staff involved in your IS strategy formulation?
[  ] Board Members [  ] Management Team [  ] IT Department
[  ] Out Sourcing [  ] All Staff [  ] Technology Group
3.2 Identify the important Strategic Information Systems Planning (SISP) success
predictors.
[  ]     Top management Involvement
[  ]     Staff Training and Staff Involvement
[  ]     Resources
[  ]     IS strategy alignment with business strategy
[  ]     Organizational and Technology Changes
[  ]     Control and Evaluation
[  ]     Others ……………………………………………….
3.3 How would you rate your willingness to use a new technology for your
operations in the bank?
[  ] Not willing [  ] Somehow willing [  ] Most willing
3.4 What is the bank level of resources to support the formulation and
implementation of the IS strategy?
[  ] Low [  ] Moderate [  ] High
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SECTION 4: COMPETITIVE ADVANTAGE AND IS STRATEGY
This section seeks to determine the various competitive strategies of the banks and how
the banks are benefiting from the competitive strategies.
4.1 Has your profit margins and market share increased since the implementation of
the IS strategy? Yes [  ] No [  ]
4.2 What type of competitive strategy does your bank use?
[  ]     Cost leadership [  ]     Differentiation [  ]     Generic
4.3 Who are your competitors?
[  ] All banks [  ] Selected banks [  ] Insurance companies
[  ] Savings and loans [  ] Credit Unions [  ] Others ………………
4.4 Is the competition affecting the banks profits?
Yes [  ] No [  ]
SECTION 5: BARRIERS TO STRATEGY
These questions will find out the challenges that are associated with the formulation and
implementation of an IS strategy and the way forward.
5.1 What is the level of the IS infrastructure to implement your strategy?
[  ] Low [  ] Moderate [  ] High
5.2 What was the outcome of your bank’s IS strategy implementation?
[  ]   Successful [  ]   Somehow Successful [  ]    Not Successful
5.3 What are the barriers in formulating IS strategy?
[  ] Strategy [  ] Staff Involvement [  ] Resources
[  ] Organizational Culture      [  ] External Factors [  ] Others …………
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5.4 What are the barriers in implementing your IS strategy?
[  ] Strategy [  ] Staff [  ] Resources
[  ] Organizational Culture      [  ] External Factors [ ] Others ……………
5.5 How are your customers benefiting as a result of the implementation of an IS
strategy?
……………………………………………………………………………………
……………………………………………………………………………………
SECTION 6: INFORMATION TECHNOLOGY ISSUES
Basic information technology issues will be determined in this section. The emphasis
will be on how information technology is used to carry out certain banking operations
and also the benefits derived from using information technology.
6.1 How many microcomputers (PCs) does your department have?
[  ] 1 – 20 PCs [  ] 71 – 100 PCs
[  ] 21 – 50 PCs [  ] 101 – 150 PCs
[  ] 51 – 70 PCs [  ] More than 150 PCs
6.2 How many servers does your bank have?
[  ] One [  ] Three [  ] Five [  ] Ten [  ] Others ………
6.3 What type of operating system does your bank use on the client stations?
[  ] Windows XP [  ] Windows 7 [  ] Vista [  ] Others …………
6.4 What type of network operating system does your bank use?
[  ] Windows Server 2000   [  ] Windows Server 2008   [  ] Windows Server XP
[  ] Windows Server NT      [  ] UNIX [  ] Linux
6.5 What is the level of IS security in your bank?
[  ]     Low [  ]     Moderate [  ]     High
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6.6 How would you describe the current information system in the bank?
[  ] Not effective [  ] Somehow Effective [  ] Very effective
6.7 Influence of ICT on time saving
[  ] Very High    [  ] High      [  ] Moderate [  ] Low     [  ] Very Low
6.8 Influence of ICT devices on error rate reduction
[  ] Very High    [  ] High      [  ] Moderate [  ] Low [  ] Very Low
6.9 Influence of ICT on Management decisions
[  ] Very High    [  ] High      [  ] Moderate [  ] Low     [  ] Very Low
6.10 Influence of ICT on speed of transaction
[  ] Very High    [  ] High      [  ] Moderate [  ] Low     [  ] Very Low
SECTION 7: PRODUCTS AND SERVICES
These questions will find out the various products and services available at the banks
and how they are linked to information technology.
7.1 Which of the following products and services are available to your customers?
[  ] Accounts [  ] Online Banking
[  ] Money transfer [  ] SMS Banking
[  ] Loans [  ] E-Zwitch
[  ] Bank Assurance [  ] T-Bills
[  ] ATM [  ] Bills Payment
7.2 Does your bank use IT to design products and services?
Yes [  ] No [  ]
7.3 How do you perceive the services quality of your bank?
[  ]      Low [  ]     Moderate [  ]     High
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7.4 Can Information Systems be used to reduce cost in banking operations?
Yes [  ] No [  ]
7.5 How can information System be used to reduce cost in banking operations?
[  ]     Automation [  ]     Accurate interest calculations
[  ]     Data integrity [  ]     Banking software
[  ]     Trained staff [  ]     Others …………………
7.6 What are the problems associated with the banking operations that are handled
manually?
[  ]     Errors [  ]     Slow access [  ]     Cost
[  ]     Lack of backup [  ]     Delay transactions [  ]     Others ………………
7.7 Can Information Systems be used to improve upon banking operations?
Yes [  ] No [  ]
SECTION 8:  BANK PERFORMANCE
This section explores the level of IT investment of the bank in the short term, medium
term and the long term.
8.1 How would you rate your bank IT/IS investments in the past three years?
[  ]     Low [  ]     Moderate [  ]     High
8.2 Please, how often do you update your IT systems?
[  ]     Once a year [  ]     Twice in a year
[  ]     Once in two years [  ]     Once in five years [  ]     Others ………
8.3 Please, what has been your IS/IT investment in recent times?
[  ]     Banking software [  ]     Network Infrastructure
[  ]     Server computers [  ]     Work stations
[  ]     IT Outsourcing [  ]     Others ………………………
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8.4 How much is spent in training staff each year?
[ ] Less than GH¢ 1,000 [  ] GH¢ 1,000 – 1,900
[  ] GH¢ 2,000 – 2,900 [  ] GH¢ 3,000 – 3,900
[  ] GH¢ 4,000 – 4,900 [  ] Greater than GH¢ 5,000
[  ] Others ………………………………………………………
8.5 Are there any plans to bring improvement or change in the current information
systems?
Yes [  ] No [  ]
8.6 How would you rate your bank performance in the past three years?
[  ]     Low [  ]     Moderate [  ]     High
8.7 In your view, what constitute bank performance?
[  ]     Profitability [  ]     Sales Growth [  ]     IT Infrastructure
8.8 Do you think IT investments have the following effects on your bank?
Reduces operating expenses [  ]     Yes [  ]     No
Increases market share of deposits [  ]     Yes [  ]     No
Increases profits [  ] Yes [  ]     No
Positive impact on Return on Asset [  ]     Yes [  ]     No
Increases labour productivity [  ]     Yes [  ]     No
8.9 Which problem(s) is / are associated with the investments in IT in your bank?
[  ]     High cost maintenance
[ ]     Frequent breakdowns of channels
[  ]     Energy crisis
[  ]     Lack of skilled personnel in this field
[  ]     Some transactions can’t be done through e-medium
[  ]     Some customers don’t know how to use them
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APPENDIX F
UNIVERSITY OF GHANA, LEGON
DEPARTMENT OF INFORMATION STUDIES
QUESTIONNAIRE FOR DATA COLLECTION
BANK CUSTOMERS
Dear Sir / Madam,
THE IMPACT OF INFORMATION SYSTEMS STRATEGY ON BANK
PERFORMANCE
I am conducting a research into the above topic as part of a PhD program in the
Department of Information studies, University of Ghana, Legon.
In this direction, it is necessary for me to collect information / data from your bank.
I would be pleased if you would spare a few minutes of your busy schedule to complete
the following questionnaire.
All information provided would be considered confidential and will be used strictly for
academic purposes.
Thank you for co-operation.
Yours sincerely,
Ebenezer Ankrah
ebankrah@yahoo.com
0244657044
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SECTION 1: DEMOGRAPHIC
1.1 Gender                    Male [  ]               Female [  ]
1.4 Who are your bankers?
[  ] GCB [  ] SCB [  ] NIB
[  ] BBG [  ] ADB [  ] STANBIC
1.5 How long have you been banking with your bankers?
1– 2 yrs [  ] 11 – 15 yrs [  ]
3– 5 yrs [  ] 16 – 20 yrs [  ]
6– 10 yrs [  ] >21 yrs [  ]
SECTION 2: ICT PRODUCTS AND SERVICES
2.1       Which of the following products and services are available to you?
[  ] Accounts [  ] Online Banking
[  ] Money transfer [ ] SMS Banking
[  ] Loans [  ] E-Zwitch
[  ] Bank Assurance [  ] T-Bills
[  ] ATM [  ] Bills Payment
[  ] Others……………………………………………………………….
2.2 Why do you transact business with this bank?
……………………………………………………………………………………
……………………………………………………………………………………
2.3 How long do you spend in your bank transactions?
[  ] Less than 10 minutes [  ] 10 – 20 minutes
[  ] 21 – 30 minutes [  ] 31 – 60 minutes
[  ] Others…………………………………………………………..
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2.4       Does your bank have modern technology for its operations?
Yes [  ] No [  ]
2.5 Are you satisfied with the services of the bank?
Yes [  ] No [  ]
2.6 Does your bank have a website? Yes   [  ] No   [  ]
2.7 If yes, how often do you visit the bank’s website?
[  ]     Once in a week [  ]     Twice in a week
[  ]     Once in a month [  ]     Others…………………
2.8 Do you use SMS banking from your bankers? Yes   [  ] No   [  ]
2.9 Do you use the internet banking? Yes   [  ] No   [  ]
2.10 If yes, how often do you use the internet banking?
[  ]     Once in a week [  ]     Twice in a week
[  ]     Once in a month [  ]     Others………………
2.11 How often do you use the ATMs?
[  ]     Never [  ]     Not Often [  ]     Most Often
[  ]     Frequently [  ]     Others………………………
SECTION 3: POLICY FORMULATION
3.1 Are you informed ahead of time before a new policy is introduced?
Yes [  ] No [  ]
3.2 Are your suggestions considered in decision making?
Yes [  ] No [  ]
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SECTION 4: ICT AND CUSTOMER SERVICE
4.1 Adoption of ICT products facilities Accurate Record
[  ]     Strongly Agree [  ]     Agree [  ]     Hardly Agree
[  ]     Disagree [  ]     Strongly Disagree
4.2 Adoption of ICT enhances faster Services
[  ]     Strongly Agree [  ]     Agree [  ]     Hardly Agree
[  ]     Disagree [  ]     Strongly Disagree
4.3 Ability to access Accounts at any Location
[  ]     Strongly Agree [  ]     Agree [  ]     Hardly Agree
[  ]     Disagree [  ]     Strongly Disagree
4.4 Adoption of ICT makes enquiries on Accounts faster
[  ]     Strongly Agree [  ]     Agree [  ]     Hardly Agree
[  ]     Disagree [  ]     Strongly Disagree
4.5 Adoption of ICT reduces interpersonal relationships
[  ]     Strongly Agree [  ] Agree [  ]     Hardly Agree
[  ]     Disagree [  ]     Strongly Disagree
SECTION 5: OTHER ISSUES
5.1 What are some of the products and services that you expect from your bank?
……………………………………………………………………………………..
……………………………………………………………………………………..
5.2 How can the services of your bank be improved?
……………………………………………………………………………………
……………………………………………………………………………………
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APPENDIX G
THE CODING SCHEME FOR THE STRATEGIC STAFF
QUES.
NO.
LABEL CODE WID
TH
Q1.1 Gender Male                = 1
Female = 2
Non-Response = 99
Q1.2 Educational Background Second degree  = 1
First degree      = 2
‘A’ levels         = 3
‘O’ Levels        = 4
SHS                  = 5
Non-Response  = 99
Q1.5 Work Experience Less than 1 Year         = 1
1 – 5 Years                  = 2
6 – 10 Years                = 3
11 – 15 Years              = 4
16 – 20 Years              = 5
More than 20 Years    = 6
Non-Response            = 99
Q1.7 Department Information Technology  =
1
Human Resource =
2
Retail Banking                 =
3
Corporate Banking           =
4
Project and Multilateral   =
5
Service Excellence          =
6
Credit Mgt Admin           =
7
Special Assets Mgt          =
8
Legal Department            =
9
Operations Department
=10
Financial Control Depart
=11
Treasury Department
=12
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Non-Response
=99
Q2.1 Information System Strategy Yes                   = 1
No                    = 2
Non-Response = 99
Q2.2 Components of IS strategy IS Manual = 1
IS Training             = 2
IS Formulation       = 3
IS Implementation = 4
IS Monitoring        = 5
IS Control              = 6
Non-Response       = 99
Q2.3 Time Frame of Strategy One Year               = 1
Three Years           = 2
Five Years = 3
Ten Years              = 4
Others                    = 5
Non-Responses     = 99
Q2.4 Business Strategy Prospector          = 1
Analyzer            = 2
Defender            = 3
Reactor              =  4
Non-Response   = 99
Q2.5 IS Strategy Aligned to Business Strategy Well aligned    = 1
Semi aligned    = 2
No alignment   = 3
Non-Response = 99
Q2.6 IS Strategy Typology Innovator          = 1
Conservative    = 2
Undefined        = 3
Non-Response = 99
Q2.9 Human Resources Quality Low = 1
Moderate            = 2
High                   = 3
Non-Response   = 99
Q2.11 Financial Resources Level Low                     = 1
Moderate             = 2
High                    = 3
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Non-Response    = 99
Q2.13 Political Situation Yes                   = 1
No                    = 2
Non-Response = 99
Q2.14 Economic Factors Yes                   = 1
No                    = 2
Non-Response = 99
Q2.15 Social Factors Yes                   = 1
No = 2
Non-Response = 99
Q2.16 Technological Factors Yes                   = 1
No                    = 2
Non-Response = 99
Q3.1 Staff Involvement Board Members      = 1
Management Team = 2
IT Department        = 3
Out Sourcing          = 4
All Staff                  = 5
Technology Group  = 6
Non-Response        = 99
Q3.3 Willingness to Use New Technology Not willing            = 1
Somehow willing  = 2
Most willing
= 3
Non-Response = 99
Q3.4 Level of Resources Low                        = 1
Moderate                = 2
High                       = 3
Non-Response       = 99
Q4.1 Increased Profit Margins and Market Share Yes                   = 1
No                    = 2
Non-Response = 99
Q4.2 Types of Competitive Strategies Cost leadership = 1
Differentiation  = 2
Generic             = 3
Non-Response  = 99
Q4.3 Competition Affecting the Banks Profits Yes                  = 1
No                   = 2
Non-Response = 99
Q5.1 Level of IS Infrastructure Low                   = 1
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Moderate           = 2
High                  = 3
Non-Response  = 99
Q5.2 Outcome of IS strategy Successful                    = 1
Somehow Successful   = 2
Not Successful             = 3
Non-Response              =
99
Q6.1 Number of Microcomputers (PCs) 1 – 20 PCs                 = 1
21 – 50 PCs               = 2
51 – 70 PCs               = 3
71 – 100 PCs             = 4
101 – 150 PCs           = 5
More than 150 PCs   = 6
Non-Response          = 99
Q6.2 Number of Servers One                     = 1
Three                  = 2
Five                    = 3
Ten                     = 4
Others                = 5
Non-Response   = 99
Q6.3 Types of Operating Systems Windows XP      = 1
Windows 7         = 2
Vista                   = 3
Other                  = 4
Non-Response   = 99
Q6.4 Type of Network Operating Systems Windows Server 2000  = 1
Windows Server 2008  = 2
Windows Server XP    = 3
Windows Server NT    = 4
UNIX = 5
Linux                          = 6
Non-Response             = 99
Q6.6 Levels of IS Security Low                     = 1
Moderate             = 2
High                    = 3
Non-Response    = 99
Q6.7 Current Information System Not effective                = 1
Somehow Effective     = 2
Very effective              = 3
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Non-Response             = 99
Q6.8 Influence of ICT on Time saving Very High           = 1
High                    = 2
Moderate             = 3
Low = 4
Very Low            = 5
Non-Response    = 99
Q6.9 Influence of ICT devices on Error Rate
Reduction
Very High           = 1
High                    = 2
Moderate             = 3
Low                     = 4
Very Low            = 5
Non-Response     = 99
Q6.10 Influence of ICT on Management Decisions Very High           = 1
High                    = 2
Moderate             = 3
Low                     = 4
Very Low            = 5
Non-Response     = 99
Q6.11 Influence of ICT on Speed of Transaction Very High           = 1
High                    = 2
Moderate             = 3
Low                     = 4
Very Low            = 5
Non-Response    = 99
Q7.2 IT and Design of Products and Services Yes = 1
No                    = 2
Non-Response = 99
Q7.3 Services Quality Low                     = 1
Moderate          = 2
High                 = 3
Non-Response  = 99
Q8.2 IT/IS Investments Rating Low                  = 1
Moderate          = 2
High                 = 3
Non-Response  = 99
Q8.3 Update of IT systems Once a year           = 1
Twice in a year     = 2
Once in two years = 3
Once in five years = 4
Others                    = 5
Non-Response       = 99
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Q8.5 Amount spent in Training Staff Less than GH¢ 1,000        =
1
GH¢ 1,000 – 1,900
= 2
GH¢ 2,000 – 2,900
= 3
GH¢ 3,000 – 3,900
= 4
GH¢ 4,000 – 4,900
= 5
Greater than GH¢ 5,000
= 6
Non-Response
= 99
Q8.6 Plans for Improvement of IS Yes                   = 1
No                    = 2
Non-Response = 99
Q8.9 Bank Performance Rating Low                  = 1
Moderate          = 2
High                 = 3
Non-Response = 99
Q8.11 Bank Performance Measures Profitability          = 1
Sales Growth       = 2
IT Infrastructure  = 3
Non-Response     = 99
Q8.12A IT Investments - Reduces Operating Expenses Yes                  = 1
No                   = 2
Non-Response = 99
Q8.12B IT Investments - Increases Market Share Yes                  = 1
No                   = 2
Non-Response = 99
Q8.12C IT Investments - Increases Profits Yes                   = 1
No                    = 2
Non-Response = 99
Q8.12D IT Investments - Positive impact on Return on
Asset
Yes                  = 1
No                   = 2
Non-Response = 99
Q8.12E IT Investments - Increases labour productivity Yes                   = 1
No                    = 2
Non-Response = 99
Q8.13A IT Investments  Problem- High cost Yes                  = 1
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maintenance No                   = 2
Non-Response = 99
Q8.13B IT Investments  Problem- Frequent
breakdowns
Yes                  = 1
No                   = 2
Non-Response = 99
Q8.13C IT Investments  Problem- Energy crisis Yes                  = 1
No                   = 2
Non-Response = 99
Q8.13D IT Investments  Problem- Lack of skilled
personnel
Yes                  = 1
No                   = 2
Non-Response = 99
Q8.13E IT Investments  Problem- Some transactions
can’t be done through e-medium
Yes                   = 1
No                    = 2
Non-Response = 99
Q8.13F IT Investments  Problem- Some customers
don’t know how to use them
Yes                  = 1
No = 2
Non-Response = 99
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APPENDIX H
THE CODING SCHEME FOR THE OPERATIONAL STAFF
QUES.
NO.
LABEL CODE WID
TH
Q1.1 Gender Male                = 1
Female             = 2
Non-Response = 99
Q1.2 Educational Background Second degree  = 1
First degree      = 2
‘A’ levels         = 3
‘O’ Levels        = 4
SHS                  = 5
Non-Response  = 99
Q1.5 Work Experience Less than 1 Year         = 1
1 – 5 Years                  = 2
6 – 10 Years                = 3
11 – 15 Years              = 4
16 – 20 Years              = 5
More than 20 Years    = 6
Non-Response            = 99
Q1.7 Department Information Technology  = 1
Human Resource             = 2
Retail Banking                 = 3
Corporate Banking           = 4
Project and Multilateral   = 5
Service Excellence          = 6
Credit Mgt Admin           = 7
Special Assets Mgt          = 8
Legal Department            = 9
Operations Department   =10
Financial Control Depart =11
Treasury Department       =12
Non-Response                 =99
Q2.1 Information System Strategy Yes                   = 1
No                    = 2
Non-Response = 99
Q2.2 Components of IS strategy IS Manual               = 1
IS Training             = 2
IS Formulation       = 3
IS Implementation = 4
IS Monitoring        = 5
IS Control              = 6
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Non-Response       = 99
Q2.3 Business Strategy Prospector          = 1
Analyzer            = 2
Defender            = 3
Reactor              =  4
Non-Response   = 99
Q2.4 IS Strategy Aligned to Business Strategy Well aligned    = 1
Semi aligned    = 2
No alignment   = 3
Non-Response = 99
Q2.5 IS Strategy Typology Innovator          = 1
Conservative    = 2
Undefined        = 3
Non-Response  = 99
Q2.6 Vision Best bank and Market leader
= 1
Among the top five banks
= 2
Among the top ten banks
= 3
Best customer friendly bank
= 4
Non-Response                        =
99
Q2.7 Human Resources Quality Low = 1
Moderate          = 2
High                 = 3
Non-Response  = 99
Q2.8 Technology Needed Banking software              = 1
Network Infrastructure     = 2
Server computers              = 3
Work stations                    = 4
IT Outsourcing = 5
Non-Response = 99
Q2.9 Financial Resources Level Low                     = 1
Moderate             = 2
High                    = 3
Non-Response  = 99
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Q2.10 Mission Customer Service  = 1
Loans                     = 2
Expansion              = 3
CSR                        = 4
Non-Response        = 99
Q2.11 Political Situation Yes                   = 1
No                    = 2
Non-Response = 99
Q2.12 Economic Factors Yes                   = 1
No                    = 2
Non-Response = 99
Q2.13 Social Factors Yes                  = 1
No                   = 2
Non-Response = 99
Q2.14 Technological Factors Yes                  = 1
No                   = 2
Non-Response = 99
Q3.1 Staff Involvement Board Members      = 1
Management Team = 2
IT Department        = 3
Out Sourcing          = 4
All Staff                  = 5
Technology Group  = 6
Non-Response        = 99
Q3.2A SISP -Top Management Involvement Yes                  = 1
No = 2
Non-Response = 99
Q3.2B SISP - Staff Training and Staff Involvement Yes                  = 1
No                   = 2
Non-Response = 99
Q3.2C SISP - Resources Yes                  = 1
No                   = 2
Non-Response = 99
Q3.2D SISP - IS strategy alignment with Business
Strategy
Yes                  = 1
No                   = 2
Non-Response = 99
Q3.2E SISP - Organizational and Technology
Changes
Yes                   = 1
No                    = 2
Non-Response = 99
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Q3.2F SISP - Control and Evaluation Yes                  = 1
No                   = 2
Non-Response = 99
Q3.3 Willingness to Use New Technology Not willing            = 1
Somehow willing  = 2
Most willing          =
3
Non-Response       = 99
Q3.4 Level of Resources Low                        = 1
Moderate                = 2
High                       = 3
Non-Response       = 99
Q4.1 Increased Profit Margins and Market Share Yes                  = 1
No                   = 2
Non-Response = 99
Q4.2 Types of Competitive Strategies Cost leadership  = 1
Differentiation   = 2
Generic              = 3
Non-Response   = 99
Q4.3 Bank Competitors All banks                       = 1
Selected banks              = 2
Insurance companies    = 3
Savings and loans         = 4
Credit Unions               = 5
Others                           = 6
Non-Response              = 99
Q4.3 Competition Affecting the Banks Profits Yes                   = 1
No                    = 2
Non-Response = 99
Q5.1 Level of IS Infrastructure Low                  = 1
Moderate          = 2
High                 = 3
Non-Response = 99
Q5.2 Outcome of IS strategy Successful                     = 1
Somehow Successful    = 2
Not Successful              = 3
Non-Response = 99
Q5.3A Barriers to Formulation - Strategy Yes                   = 1
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No                    = 2
Non-Response = 99
Q5.3B Barriers to Formulation – Staff Involvement Yes                   = 1
No                    = 2
Non-Response = 99
Q5.3C Barriers to Formulation - Resources Yes                   = 1
No                    = 2
Non-Response = 99
Q5.3D Barriers to Formulation - Organizational
Culture
Yes                  = 1
No                   = 2
Non-Response = 99
Q5.3E Barriers to Formulation – External Factors Yes                   = 1
No                    = 2
Non-Response = 99
Q5.4A Barriers in implementation - Strategy Yes                   = 1
No                    = 2
Non-Response = 99
Q5.4B Barriers in implementation– Staff
Involvement
Yes                 = 1
No                  = 2
Non-Response = 99
Q5.4C Barriers in implementation - Resources Yes                  = 1
No                   = 2
Non-Response = 99
Q5.4D Barriers in implementation –
Organizational Culture
Yes                  = 1
No                   = 2
Non-Response = 99
Q5.4E Barriers in implementation – External
Factors
Yes                   = 1
No                    = 2
Non-Response = 99
Q6.1 Number of Microcomputers (PCs) 1 – 20 PCs                 = 1
21 – 50 PCs               = 2
51 – 70 PCs               = 3
71 – 100 PCs             = 4
101 – 150 PCs           = 5
More than 150 PCs   = 6
Non-Response          = 99
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Q6.2 Number of Servers One                     = 1
Three                   = 2
Five                     = 3
Ten                      = 4
Others                 = 5
Non-Response    = 99
Q6.3 Types of Operating Systems Windows XP      = 1
Windows 7         = 2
Vista = 3
Other                  = 4
Non-Response   = 99
Q6.4 Type of Network Operating Systems Windows Server 2000 = 1
Windows Server 2008 = 2
Windows Server XP    = 3
Windows Server NT    = 4
UNIX                           = 5
Linux                          = 6
Non-Response             = 99
Q6.5 Levels of IS Security Low                  = 1
Moderate          = 2
High                 = 3
Non-Response = 99
Q6.6 Current Information System Not effective              = 1
Somehow Effective   = 2
Very effective            = 3
Non-Response           = 99
Q6.7 Influence of ICT on Time saving Very High           = 1
High                    = 2
Moderate             = 3
Low                     = 4
Very Low            = 5
Non-Response    = 99
Q6.8 Influence of ICT devices on Error Rate
Reduction
Very High           = 1
High                    = 2
Moderate             = 3
Low                     = 4
Very Low            = 5
Non-Response     = 99
Q6.9 Influence of ICT on Management Decisions Very High           = 1
High                    = 2
Moderate             = 3
Low                     = 4
Very Low            = 5
Non-Response     = 99
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Q6.10 Influence of ICT on Speed of Transaction Very High = 1
High                    = 2
Moderate             = 3
Low                     = 4
Very Low            = 5
Non-Response     = 99
Q7.2 IT and Design of Products and Services Yes                   = 1
No                    = 2
Non-Response = 99
Q7.3 Services Quality Low                     = 1
Moderate             = 2
High                    = 3
Non-Response    = 99
Q7.4 Information Systems and Cost Reduction Yes                   = 1
No                    = 2
Non-Response = 99
Q7.5 Methods of Cost Reduction Automation                   = 1
Accurate interest cal     = 2
Data integrity                = 3
Banking software          = 4
Trained staff                  = 5
Others                            = 6
Non-Response               = 99
Q7.6 Problems Associated with Manual System Errors                       = 1
Slow access              = 2
Cost                          = 3
Lack of backup        = 4
Delay transactions   = 5
Others                      = 6
Non-Response         = 99
Q7.7 Improving Banking operations With IS Yes                   = 1
No                    = 2
Non-Response = 99
Q8.1 IT/IS Investments Rating Low                     = 1
Moderate             = 2
High                    = 3
Non-Response    = 99
Q8.2 Update of IT systems Once a year             = 1
Twice in a year       = 2
Once in two years   = 3
Once in five years   = 4
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Others                      = 5
Non-Response         = 99
Q8.3 IS/IT investment - Banking software Banking software = 1
Network Infrastructure = 2
Server                            = 3
Work stations                = 4
IT Outsourcing              = 5
Non-Response               = 99
Q8.4 Amount spent in Training Staff Less than GH¢ 1,000         = 1
GH¢ 1,000 – 1,900            = 2
GH¢ 2,000 – 2,900            = 3
GH¢ 3,000 – 3,900            = 4
GH¢ 4,000 – 4,900            = 5
Greater than GH¢ 5,000    = 6
Non-Response                   = 99
Q8.5 Plans for  Improvement of IS Yes                   = 1
No = 2
Non-Response = 99
Q8.6 Bank Performance Rating Low                     = 1
Moderate             = 2
High                    = 3
Non-Response     = 99
Q8.7 Bank Performance Measures Profitability         = 1
Sales Growth       = 2
IT Infrastructure  = 3
Non-Response     = 99
Q8.8A IT Investments - Reduces Operating
Expenses
Yes                   = 1
No                    = 2
Non-Response = 99
Q8.8B IT Investments - Increases Market Share Yes                  = 1
No = 2
Non-Response = 99
Q8.8C IT Investments - Increases Profits Yes                   = 1
No                    = 2
Non-Response = 99
Q8.8D IT Investments - Positive impact on Return
on Asset
Yes                  = 1
No                   = 2
Non-Response = 99
Q8.8E IT Investments - Increases labour
productivity
Yes                  = 1
No                   = 2
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Non-Response = 99
Q8.9A IT Investments  Problem- High cost
maintenance
Yes                  = 1
No                   = 2
Non-Response = 99
Q8.9B IT Investments  Problem- Frequent
breakdowns
Yes                  = 1
No                   = 2
Non-Response = 99
Q8.9C IT Investments  Problem- Energy crisis Yes                  = 1
No                   = 2
Non-Response = 99
Q8.9D IT Investments  Problem- Lack of skilled
personnel
Yes                  = 1
No                   = 2
Non-Response = 99
Q8.9E IT Investments  Problem- Some
transactions can’t be done through e-
medium
Yes                  = 1
No = 2
Non-Response = 99
Q8.9F IT Investments  Problem- Some customers
don’t know how to use them
Yes                  = 1
No                   = 2
Non-Response = 99
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APPENDIX I
THE CODING SCHEME FOR THE BANK CUSTOMERS
QUES.
NO.
LABEL CODE WID
TH
Q1.1 Gender Male                = 1
Female             = 2
Non-Response = 99
Q1.2 Bankers GCB = 1
SCB                 = 2
NIB                  = 3
BBG                 = 4
ADB                 = 5
STANBIC        = 6
Non-Response = 99
Q1.3 Number of years of Banking 1– 2 yrs           = 1
11 – 15 yrs      = 2
3– 5 yrs           = 3
16 – 20 yrs      = 4
6– 10 yrs         = 5
>21 yrs            = 6
Non-Response = 99
Q2.3 Transactions Time Less than 10 minutes = 1
10 – 20 minutes = 2
21 – 30 minutes         = 3
31 – 60 minutes         = 4`
Others                        = 5
Non-Response           = 99
Q2.4 Modern Technology Yes                    = 1
No                     = 2
Non-Response   = 99
Q2.5 Service Satisfaction Yes                    = 1
No                     = 2
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Non-Response   = 99
Q2.6 Bank Website Yes                    = 1
No                     = 2
Non-Response   = 99
Q2.7 Website Visitation Once in a week    = 1
Twice in a week   = 2
Once in a month = 3
Others                  = 4
Non-Response     = 99
Q2.8 SMS Banking Yes                    = 1
No                     = 2
Non-Response   = 99
Q2.9 Internet Banking Yes                    = 1
No                     = 2
Non-Response   = 99
Q2.10 Internet Banking Usage Once in a week  = 1
Twice in a week = 2
Once in a month = 3
Others                 = 4
Non-Response    = 99
Q2.11 ATM Usage Never              = 1
Not Often       = 2
Most Often     = 3
Frequently       = 4
Others              = 5
Non-Response
Q3.1 New Policy Yes                    = 1
No                     = 2
Non-Response   = 99
Q3.2 Suggestion Consideration Yes                    = 1
No                     = 2
Non-Response   = 99
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Q4.1 ICT Products Facilities Accurate Record Strongly Agree = 1
Agree                    = 2
Hardly Agree        = 3
Disagree                = 4
Strongly Disagree = 5
Non-Response      = 99
Q4.2 ICT Enhances Faster Services Strongly Agree = 1
Agree                    = 2
Hardly Agree        = 3
Disagree                = 4
Strongly Disagree = 5
Non-Response      = 99
Q4.3 Ability to Access Accounts at any Location Strongly Agree = 1
Agree                    = 2
Hardly Agree        = 3
Disagree                = 4
Strongly Disagree = 5
Non-Response      = 99
Q4.4 ICT makes Enquiries on Accounts Faster Strongly Agree = 1
Agree                    = 2
Hardly Agree        = 3
Disagree                = 4
Strongly Disagree = 5
Non-Response      = 99
Q4.5 ICT Reduces Interpersonal Relationships Strongly Agree = 1
Agree                    = 2
Hardly Agree        = 3
Disagree                = 4
Strongly Disagree = 5
Non-Response      = 99
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APPENDIX J
RANDOM NUMBER TABLE
13962 70992 65172 28053 02190 83634 66012 70305 66761 88344
43905 46941 72300 11641 43548 30455 07686 31840 03261 89139
00504 48658 38051 59408 16508 82979 92002 63606 41078 86326
61274 57238 47267 35303 29066 02140 60867 39847 50968 96719
43753 21159 16239 50595 62509 61207 86816 29902 23395 72640
83503 51662 21636 68192 84294 38754 84755 34053 94582 29215
36807 71420 35804 44862 23577 79551 42003 58684 09271 68396
19110 55680 18792 41487 16614 83053 00812 16749 45347 88199
82615 86984 93290 87971 60022 35415 20852 02909 99476 45568
05621 26584 36493 63013 68181 57702 49510 75304 38724 15712
06936 37293 55875 71213 83025 46063 74665 12178 10741 58362
84981 60458 16194 92403 80951 80068 47076 23310 74899 87929
66354 88441 96191 04794 14714 64749 43097 83976 83281 72038
49602 94109 36460 62353 00721 66980 82554 90270 12312 56299
78430 72391 96973 70437 97803 78683 04670 70667 58912 21883
33331 51803 15934 75807 46561 80188 78984 29317 27971 16440
62843 84445 56652 91797 45284 25842 96246 73504 21631 81223
19528 15445 77764 33446 41204 70067 33354 70680 66664 75486
16737 01887 50934 43306 75190 86997 56561 79018 34273 25196
99389 06685 45945 62000 76228 60645 87750 46329 46544 95665
36160 38196 77705 28891 12106 56281 86222 66116 39626 06080
05505 45420 44016 79662 92069 27628 50002 32540 19848 27319
85962 19758 92795 00458 71289 05884 37963 23322 73243 98185
28763 04900 54460 22083 89279 43492 00066 40857 86568 49336
42222 40446 82240 79159 44168 38213 46839 26598 29983 67645
43626 40039 51492 36488 70280 24218 14596 04744 89336 35630
97761 43444 95895 24102 07006 71923 04800 32062 41425 66862
49275 44270 52512 03951 21651 53867 73531 70073 45542 22831
15797 75134 39856 73527 78417 36208 59510 76913 22499 68467
04497 24853 43879 07613 26400 17180 18880 66083 02196 10638
95468 87411 30647 88711 01765 57688 60665 57636 36070 37285
01420 74218 71047 14401 74537 14820 45248 78007 65911 38583
74633 40171 97092 79137 30698 97915 36305 42613 87251 75608
46662 99688 59576 04887 02310 35508 69481 30300 94047 57096
10853 10393 03013 90372 89639 65800 88532 71789 59964 50681
68583 01032 67938 29733 71176 35699 10551 15091 52947 20134
75818 78982 24258 93051 02081 83890 66944 99856 87950 13952
16395 16837 00538 57133 89398 78205 72122 99655 25294 20941
53892 15105 40963 69267 85534 00533 27130 90420 72584 84576
66009 26869 91829 65078 89616 49016 14200 97469 88307 92282
45292 93427 92326 70206 15847 14302 60043 30530 57149 08642
34033 45008 41621 79437 98745 84455 66769 94729 17975 50963
13364 09937 00535 88122 47278 90758 23542 35273 67912 97670
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03343 62593 93332 09921 25306 57483 98115 33460 55304 43572
46145 24476 62507 19530 41257 97919 02290 40357 38408 50031
37703 51658 17420 30593 39637 64220 45486 03698 80220 12139
12622 98083 17689 59677 56603 93316 79858 52548 67367 72416
56043 00251 70085 28067 78135 53000 18138 40564 77086 49557
43401 35924 28308 55140 07515 53854 23023 70268 80435 24269
18053 53460 32125 81357 26935 67234 78460 47833 20496 35645
From the Rand Corporation, A Million Random Digits with 100,000 Normal Deviates
(New York: The Free Press, 1955)
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APPENDIX K
ROA AND ROE RATIOS
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