Introduction

In the past, you could take a linear approaches with a finish line:- identify the problem, assess the gaps and build solutions then hands shake all round. But today’s banking operations and payment system aims not only to improve performance but to also sustain that improvement. Most consumers would say “banking operation and payment system in Nigeria has gone digital”, that sounds like a change that is over and done with as if the industry crossed its finished line, yet the internal view is still striving to serve their clients better due to daily advancement in technology.

Similarly, in the past customer demand for banking services were merely base on the safety of their money and the interest they derive from such savings. But in the contemporary days, customer demand has migrated from just safety of money to how bank deliver its services, the reason being that in the present days customers requires efficient, fast and convenient services, thus the role of technology in transforming banking operation particularly in Nigeria dwell in, to foster this customer needs while maximizing return on investment using sophisticated information and communication technology.

The rapid changes in business operations in contemporary times in the form of technological improvement require banks in Nigeria to serve their customers electronically. Traditionally, banks have been in the forefront of harnessing technology to improve their products and services. The banking industry and its environment in the 21st century is highly complex and competitive and therefore the need for information and communication technology to take center stage in the operations of banks (Uchechukwu et al, 2019).

Technology is making tremendous role in transforming banking operation and payment system in Nigeria, one of the pivotal role of this transformation in terms of payment system is the shift from traditional banking to digital banking such as mobile banking, internet banking, Automated Teller Machine, Point of Sale (POS), etc. The combination of software and hardware components in banking operation and payment system in Nigeria have enabled banks do develop innovative solutions. For example, it has led to the development of online payment system, better risk management, security solutions, operational efficiency, and financial inclusion among others. This has shown pivotal role in banking sector to ease office work and deliver exceeding services to their customers.

The old method of manual banking has been replaced by the electronic method, where almost all the banking services are now available using electronic. The availability of online information provides bankers and customers with powerful devices for investigate /research, banks can provide information and services online (Rabiu et al 2019).

Banking practice for about three decades ago in Nigeria were so crude that customers could spend a whole day in banking hall just to make deposit or withdrawals, even sometimes had to return to the same bank the following day for same transaction because of the long queue. Banking operation as at that time were so designed in form of “arm-chair brick and mortal” approaches that these customers could not make transactions in another branch of same bank. Banking services during conventional banking era in Nigeria were very poor because they were manually carried out owning to lack of technology innovation (Okoye et al, 2019 in Ohiani, 2020).

When we talk about technology in banking operation and payment system particularly in Nigeria, we are referring to the crucial components that help banks to better communicate, comprehend, connect and provide to their customers.

Role of technology in transforming banking operation and payment system in Nigeria

1. Risk management

Technology has opened up new risk assessment methods in the banking operation. Some big players in the industry have developed a social credit scoring system using big data. It helps banks to access the risk involved before issuing out loans to their customers. For example, Ant Financial can be used for credit scoring system to issue loans even without collateral, unlike in the past decades, where risk assessment could take weeks or even more.

Burrows (2023), assert that Effective risk management is crucial for mitigating risks in the banking industry. By implementing a risk management framework, financial institutions can minimize losses, enhance efficiency, ensure compliance and foster confidence in the industry.

2. Security and privacy

Security and privacy plays vital role in transforming banking operation and payment in Nigeria context because as more people uses technology in the bank, the safety of their funds, personal data and transactions records become secured. Among those technologies are biometric data, tokenization Personal Identification Number (PIN) among others.

3. Financial inclusion

Technology has greater chance to promote financial inclusion by expanding access to banking services to local areas in Nigeria. For example, Mobile banking, digital wallets, Unstructured Supplementary Service Code (USSD), Point of Sales Terminals (POS) have made it easier for customers in local areas to conduct financial transactions and access other banking services.

Kaligis et al (2018), says that the introduction of financial inclusion to the villages will give broad impact to local and national economy, since it improve the economy and financial services in rapid pace.

4. Operational efficiency

The banking sector has massively increases its operational efficiency brought by digital transformation. Operational efficiency is one of the core roles that retain customer’s royalty which in turn has a significant effect on bank revenue generation and profit marginalization. Efficiency in banking operation and payment system quicken transactions, minimizes human errors in workplaces, allow banks to allocate resources in an effective way while investing in new technologies, improving customer services as well as meeting the security standard. Operational efficiency as one of the pivotal role in transforming banking operation and system in Nigerian context has a significant effect on customer satisfaction, employee satisfaction and indeed the overall revenue outcome.

According to Regnier (2023), an efficiently-run bank can process transaction quickly, reduce the likehood of errors, and offer customers a hassle-free experience, from simple account inquiries to complex financial transactions.

5. Artificial Intelligence

Artificial Intelligence is also playing significant role in the present banking operation and payment system. AI can typically analyze large amount of data quickly and accurately, helping banks to detect fraud, manage risk while improving customer services. For instance, chatbots powered by AI technology can provide customers with quick, effective and efficient response to their queries. It can also help banks to automate processes such as loan approvals time management for transactions among others.

The research conducted by Sutton (2023), say Chatbots, Virtual assistants, and Fraud detection Systems, which are all powered by AI have revolutionized risk management and customer services.

Conclusion

Technology has fundamentally transformed the banking sectors, reshaping how organizations operate in workplaces and interact with customers from risk management, security and privacy, financial inclusion, operational efficiency etc. Indeed banks can now testify that these roles are significant and stimulus both to the managements as well as customers because it has become the cornerstone of the present banking operation and payment system particularly in Nigeria. In conclusion, with the advent of technology, banks can now offer effective, fast and convenient services to their customer by using the software and hardware components available to reduce their operational cost while maximizing return on investment.

Reference

Burrows, L. (2023). The importance of Risk Management in Banking.

Kaligis, V.B., Tewal, B., Maramis, J.B. & Mangantar, M. (2018). Financial Inclusion Profile: determinant and Barriers. International Journal of Economics and Financial Issues, Volume 8 (5), 351-358. 2146-4138.

Ohiani, A.S. (2020). Technology innovation in the Nigerian banking system: prospects and challenges.

Okoye, L.U., Omankhanlen, A.E., Okoh, J.I., Ezeji, F.N. and Achugamonu, U.B. (2019), “Customer service delivery in the Nigerian banking sector through engineering and technology-based channels”, International Journal of Civil Engineering and Technology, Vol. 10 No. 1,pp. 2156-2169.

Rabiu, I. D., Ladan, S., Usman, H.A., & Garba, M. (2019). Impact of E-banking on the Operational Efficiency of Banks in Nigeria. International Journal of Academic Research in Business and Social Science, 9(2), 135-145.

Regnier, K. (2023). Operational Efficiency in Banking: 3 Fool Proof Strategies Every FI need to know.

Sutton, N. (2023). The role of technology in the finance industry.

Uchechukwu, N.M. & Stella, M. (2019). Impact of Electronic Banking on Customer Satisfactions. International Digital Organization for Scientific Research. Volume 4(1): 23-36, 2019. 2579-079.