TABLE OF CONTENTSCHAPTER I.......................................................................................................................3

INTRODUCTION.........................................................................................................3

1.0 INTRODUCTION........................................................................................3

1.1 BACKGROUND TO THE STUDY............................................................4

1.2 STATEMENT OF PROBLEM...................................................................5

1.3 RESEARCH QUESTIONS.........................................................................6

1.4 RESEARCH OBJECTIVES.......................................................................7

1.5 JUSTIFICATION OF STUDY....................................................................7

1.6 METHODOLOGY.......................................................................................8

1.7 SCOPE OF STUDY.....................................................................................9

1.8 LIMITATION OF STUDY.........................................................................9

1.9 ORGANIZATION OF STUDY...................................................................9

CHAPTER II...................................................................................................................11

LITERATURE REVIEW............................................................................................11

2.0 INTRODUCTION......................................................................................11

2.1 History of ICTs adoption in banking in Ghana.......................................11

2.2 Benefits of ICTs adoption to business.......................................................12

2.3 Challenges of ICTs adoption in business..................................................15

2.4 Some working Definitions of Key Terms..................................................16

CHAPTER III..................................................................................................................24

METHODOLOGY......................................................................................................24

3.0 INTRODUCTION......................................................................................24

3.1 POPULATION...........................................................................................24

3.2 SAMPLING................................................................................................24

3.2.1. Sampling Method...................................................................................24

3.3 TYPES OF DATA......................................................................................25

3.4 DATA ANALYSIS AND TECHNIQUES................................................25

3.5 PRODUCTS OF THE RURAL BANK.....................................................26

3.5.1. Current Accounts....................................................................................26

1

3.5.2. Savings Accounts....................................................................................26

3.5.3. Fixed Deposit Accounts...........................................................................27

3.5.4. Salaried Workers’ Loan..........................................................................27

3.5.5. Farmers’ Loans.......................................................................................27

3.5.6. Commercial Loans..................................................................................27

CHAPTER IV..................................................................................................................29

DATA PRESENTATION ANALYSIS AND DISCUSSION......................................29

4.0 INTRODUCTION......................................................................................29

4.1 Adoption of ICT in Nwabiagya Rural Bank............................................29

4.2 ICTs adopted in Nwabiagya Rural Bank.................................................30

4.3 The Importance of ICTs in the bank........................................................30

4.4 Assessment of ICTs usage and support in the Nwabiagya Rural Bank. 31

4.5 Benefits of ICT in Nwabiagya Rural Bank...............................................37

4.6 Challenges to ICT adoption in Nwabiagya Rural Bank..........................40

CHAPTER V...................................................................................................................45

SUMMARY OF FINDINGS, RECOMMENDATIONS AND CONCLUSION..........45

5.1 SUMMARY OF FINDINGS........................................................................45

5.1.1. Benefits derived when ICT is integrated into the operations of the rural bank 45

5.1.2. The extent to which the rural bank is reaping the benefits of ICTs.......45

5.1.3. The challenges encountered when integrating ICTs into the rural bank46

5.2 RECOMMENDATIONS...........................................................................46

REFERENCES................................................................................................................48

APPENDICES.................................................................................................................51

APPENDIX 1: QUESTIONNAIRE.........................................................................51

APPENDIX 2: RURAL BANKING IN GHANA....................................................52

2

CHAPTER I

INTRODUCTION

1.0 INTRODUCTION

This paper sets forth the benefits of successful adoption of Information and

Communication Technologies (ICTs) into rural banking and explores the

challenges posed in the quest to fully adopt ICTs into the banking operations. The

paper considers a case study of one bank as a means of understanding the real

issues on ground as regarding ICT adoption in rural banks.

Information technology (IT), as defined by the Information Technology

Association of America (ITAA), is "the study, design, development,

implementation, support or management of computer-based information systems,

particularly software applications and computer hardware". IT deals with the use

of electronic computers and computer software to convert, store, protect, process,

transmit, and securely retrieve information. 'Information Technology is a general

term that describes the technology that helps to produce, manipulate, store,

communicate, and/or disseminate information.

Nwabiagya Rural Bank Ltd. was founded in 1984 at Barekese where it has its

headquarters. It was then incorporated and issued a certificate to operate the

business of banking on June 4, 1987 but started operation on August 4, 1987

under the chair of Professor Kwame Arhin. Through well-focused direction and

planning, coupled with the well-motivated staff and enviable customers the bank

can now boast of five additional outlets located at Sagoe Lane-Adum, Offinso,

3

Magazine, Bohyen and Abuakwa. Nwabiagya Rural Bank was rated the second in

the ranks of rural banks in Ghana after Atwima Kwanwoma Rural Bank in the

2009 ranking.

Yamajala Krishna Murty (Vice-President and Centre Head for Virtusa, India),

avers that over the last decade or so, IT has been central to the way organization

runs, and the current economic recession has reinforced IT to be the key business

enabler in an interview. (www.virtusa.com).

1.1 BACKGROUND TO THE STUDY

The introduction of ICT has had a dramatic effect on the banking industry and

employment patterns within it. ICT as a business enabler is slowly but surely

filtering its way into the corporate psyche. The fact that IT can transform

businesses in radically different and more effective ways is undisputed.

Rural Banks (RBs) in Ghana are unit banks owned by members of the rural

community through the purchase of shares and are licensed to provide financial

intermediation in rural areas of Ghana (Addeah, 1989). The RBs were set up

because of the failure of the traditional banks to provide banking services to the

rural community. In other words, financial support in the rural areas has largely

been problematic, despite the contribution made by rural sector to the socio-

economic development of the country. Over the years, the few commercial banks

that originally had branches in the rural areas have closed these branches due to

low profitability and the perceived risk of rural financing (Adom Adu-Amoah et

al, 2008). Thus according to Adu-Amoah et al (2008) RBs have served as the gap

4

fillers in the area of banking as most of these rural banks are rather seeking higher

and a more profitable prospect.

It is therefore the need of this research to face out these problems facing rural

banks in Ghana via the adoption of ICTs into the operations of the banks.

1.2 STATEMENT OF PROBLEM

With the inception of technology in businesses since the past two decades, the

benefits of technology in businesses cannot be over-emphasised. The inception of

technology has remarkably changed the way businesses are conducted and

transacted all over the globe. Technology alone had not achieved much until its

integration with information and communication. This integration has highly been

accentuated by the knowledge-based environment the world has evolved into.

The promise of ICTs in the banking sector has been seen in terms of its 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). A major facet when ICTs is

mentioned, is electronic business (e-business) which according to Basu and

Muyelle (2007) could reap two major benefits for organizations which are: value

creation and enhancement; and Cost minimization.

Nwabiagya Rural Bank, a leading ranking member in the grades of rural banks

has seen some of the benefits of ICTs adoption in rural banking since the

introduction of ICTs in May 2000 in their operations. It has yet higher prospects

5

of fully computerised systems with extranets to other branches and vital external

alliances. The bank has not fully automated its systems as customers are not fully

incorporated in their ICTs strategy. Customers would rather have to visit the

branch where they hold their account before any transaction can be executed on

their account. Thus in spite of their place as the second in the current ranking of

rural banks in Ghana, it is faced with some challenges in their pursuit of a total

adoption of ICTs in all its processes.

The above benefits stated appertaining ICTs and e-business to business

enhancement, especially to the banking sector of other economies, could be a

reality in the rural banking sector of the Ghanaian industry if duly exploited in the

total or partial absence of the challenges faced. For ICTs to be full-fledged in the

Ghanaian economy, ICTs should be given the requisite attention. Harold et al

(1995) contend that it has become axiomatic that to remain viable in the 1990s

and the decades that follow, financial service providers must modify their

traditional operating practices.

It is, therefore, the objective of this paper to explore the challenges in adopting the

various ICTs in the rural banking sector of the banking industry as a means of

developing countermeasures to ameliorate or evade the challenges as much as

possible. This will then enhance the operations of rural banking.

1.3 RESEARCH QUESTIONS

What are the benefits that the rural bank derives when ICT is integrated

into their operations?

6

What is the extent to which the rural bank is reaping the benefits of ICTs

adoption?

What are the challenges that the rural bank face when integrating ICTs

into their operations?

1.4 RESEARCH OBJECTIVES

The main objective of the research is to assess the extent of Information

Communication Technologies’ (ICTs) adoption into the operations of Nwabiagya

Rural Bank in Ghana. Below are the specific objectives:

To investigate the benefits derived when ICT is integrated into the

operations of the rural bank.

To assess the extent to which the rural bank is reaping the benefits

of ICTs.

To explore the challenges encountered when integrating ICTs into

the rural bank.

1.5 JUSTIFICATION OF STUDY

In this dynamic world of business where constant change can never be eluded,

businesses for that matter banks cannot, than to succumb to the mould of change.

The change has become very certain and more sporadic than we could have

estimated some years back especially with the inception of Information and

Communication Technologies (ICTs). Ghana, a developing country in the sub-

region of West-Africa, has recently been quickened to this breeze of change that

7

blows all over the world. Banking, a fast-growing venture in a very high income

generating sector of the Ghanaian economy needs to be well abreast with and

squarely integrated into ICTs.

The paper also carefully selects a rural bank as a case study since it stands as a

promising sector of the banking industry in a time when Ghana seeks to

ameliorate if not eradicate poverty. These banks are important in the socio-

economic development of Ghana, as over 60% of the population live in rural

areas. The majority of these people are engaged in agricultural activities, which

contribute over 40% of the country's GDP and over 60% of employment

(Ameyaw, 2001). With 60% of the money supply outside the commercial banking

system, the rural banks, savings and loans companies, and the semi-formal and

informal financial systems play a particularly important role in Ghana’s private

sector development and poverty reduction strategies (Steel and Andah, 2004).

In a time when Ghana is much concerned about poverty alleviation and

enhancement of the per capita income of the general income levels, there is

therefore a need to channelize the ICTs resources into rural banking.

1.6 METHODOLOGY

The fundamental sources of data will be primary and secondary. The primary data

will be wholly captured from Nwabiagya Rural Bank through the administration

of questionnaires and semi-structured interviews with some key personnel of the

organisation. The secondary data will be collected from books, journals, internet

8

and other research works on the subjects of ICTs adoption, rural banking and

business enabler.

1.7 SCOPE OF STUDY

The research topic supposes several ideas among which are – a proof of whether

or not ICT is a business enabler in the banking sector; the benefits of ICTs to the

banking industry; and the conditions that allow ICT to be a business enabler to the

banking industry. This research, however, rather seeks to assess the benefits and

the challenges posed in adopting Information and Communications Technologies

(ICTs) in the banking industry and propose realistic and workable solution to the

challenges set forth.

1.8 LIMITATION OF STUDY

This research confines itself to a case study of a rural bank in Ghana due to the

challenges posed in accessing relevant data for the research and financial

constraints. The bank for study is Nwabiagya Rural Bank due to their place in the

rungs of rural banks in Ghana. And also this bank has proven to be ICT minded as

it seeks to fully computerise its systems.

1.9 ORGANIZATION OF STUDY

The research will be organized into five main sections. These are the introduction,

literature review, methodology, the data analysis and the conclusions and

recommendations. The introduction captures the background of the study, the

research objectives and the scope of study. The literature review is a review of the

9

current literature that bothers on the objectives of the research. The methodology

spells out how our data collected and from where it was collected. The data

presentation analysis and discussion is the analysis of the data collected in the

chapter three and finally, the chapter five gives the summary of findings,

recommendations and conclusion of the research based on the data analysis in

chapter four.

10

CHAPTER II

LITERATURE REVIEW

2.0 INTRODUCTION

The previous chapter delineated the background, objective and scope of this study

among several other essential point of the research. This chapter sets forth the

various literatures on the objectives of this study as a means of shaping the study

to know where in the research on the subject this study can appropriately seek to

address. This chapter also reviews the literatures on some basic terminologies of

the research in order to afford a holistic understanding of the how the research

should be carried out.

2.1 History of ICTs adoption in banking in Ghana

In Ghana, the earliest forms of electronic and communications technologies used

were mainly office automation devices. Telephones, telex and facsimile were

employed to speed up and make more efficient, the process of servicing clients.

For decades, they remained the main information and communication

technologies used for transacting bank business.

Later in the 1980s, as competition intensified and the personal computer (PC) got

proletarian, Ghanaian banks begun to use them in back-office operations and later

tellers used them to service clients. Advancements in computer technology saw

the banks networking their branches and operations, thereby making the one-

11

branch philosophy a reality. Barclays Bank (Gh.) and Standard Chartered Bank

(Gh.) pioneered this very important electronic novelty, which changed the

banking landscape in the country (Joshua Abhor).

2.2 Benefits of ICTs adoption to business

There is a dearth of literature that directly focus on the benefits of Information

and Communication Technologies (ICTs) to rural banking, however, there is quite

a chunk of information on the benefits of ICTs in itself and on businesses.

Agboola (2001) studied the impact of computer automation on the banking

services in Ghana and discovered that Electronic Banking has tremendously

improved the services of some banks to their customers. IT is becoming the

backbone of banks’ services regeneration in Ghana. Several authors have

conducted investigations on the impact of ICT on the banking sector of the Ghana

economy. Agboola et al (2002) discussed the dimensions in which automation in

the banking industry manifest in Ghana. They include:

(i) Bankers Automated Clearing Services: This involves the use of Magnetic Ink

Character Reader (MICR) for cheque processing. It is capable of encoding,

reading and sorting cheques.

(ii) Automated Payment Systems: Devices used here include Automatic Teller

Machine (ATM), Plastic Cards and Electronic Funds Transfer.

(iii) Automated Delivery Channels: These include interactive television and the

Internet.

12

Banks now offer customers the flexibility of operating an account in any branch

irrespective of which branch the account is domiciled. The first variable refers to

how banks have made new products and services available to customers. These

services include computerized credit ratings, programs that determine when

cheques should be made available to customers and daily calculation of

accounting balances. It also involves how various types of information technology

devices are made available.

Irechukwu (2000) lists some banking services that have been revolutionized

through the use of ICT as including account opening, customer account mandate,

and transaction processing and recording. Information and Communication

Technology has provided self-service facilities (automated customer service

machines) from where prospective customers can complete their account opening

documents direct online. It assists customers to validate their account numbers

and receive instruction on when and how to receive their chequebooks, credit and

debit cards.

According to Dr.Satchidananda Sogala (2004), financial institutions operating in

rural areas have an urgent need to deliver citizen services to the rural folks in a

cost effective way with assured quality. This involves mainly the following:

• Enabling the ready access at the place of the villagers

• Reducing transaction cost to make the services affordable

• Reduction in delays

13

• Improving the quality of services available

With all these expectations, in view the adoption of ICTs will enable the smooth

and lucrative operations of rural banking. According to Alu (2002), IT affects

financial institutions by easing enquiry, saving time, and improving service

delivery. In recent decades, investment in IT by rural banks has served to

streamline operations, improve competitiveness, and increase the variety and

quality of services provided.

ICTs can also act as an enabler for growth, development and competitiveness in

developing countries as suggested by speakers at an interactive debate among

government, private sector representatives and civil society on the role of ICTs as

an enabler for growth and competitiveness (www.unctadxi.org 10 July 2004

19:24). Several benefits have been noted from the literature and among them are

these:

i. Competitiveness,

ii. Cost minimization;

iii. Increased efficiency;

iv. Improved customer satisfaction;

v. Value enhancement;

vi. Improved quality in service delivery;

vii. Saves time in service delivery;

viii. Employee efficiency.

14

2.3 Challenges of ICTs adoption in business

Notwithstanding the enormous benefit that is derived from the adoption of ICTs,

some major challenges have inhibited businesses and especially rural banks from

fully exploiting these benefits. The insufficiency of credible information on these

challenges has greatly handicapped the research from extracting enough

challenges from the reviewed literature. The most common ICT application used

by firms is automation of communications and none had conducted B2B or B2C

e-commerce. Some SMEs in transport services also consider that the Internet does

not suit their industry. A firm with 90 employees and an emphasis on personal

contact with clients decided not to adopt the Internet after a three-month trial of a

Web site (Mehrtens et al., 2001). Thus, a major challenge that has militated

against ICTs adoption is the nature of the operations of businesses and the

unsuitability of ICTs to the operations of businesses.

The primary objectives of RBs are to mobilize all available savings within the

catchment area, extend credit to rural areas and act as catalysts for rural

development by identifying and promoting rural development projects (Gallardo,

2002; Asiedu-Mante, 2001). The rural banks due to their operations require a high

degree of personal touch with the customers and that a great challenge is posed to

them in their quest to enhance adopt ICT that might sequestrate them from their

customers.

15

Most of the literature has reflected on the challenges posed to SMEs in their

adoption of ICTs but the challenges posed to rural banks have received little

attention in the research works.

SMEs generally lack the human technological resources needed for ICT and e-

commerce, because they focus on day-to-day operations and lack the time to

understand the benefits of new technologies. Even when they are aware of the

potential benefits of adopting e-commerce, they require expertise or qualified

personnel. The firms that adopt Internet and e-commerce are likely to have within

the firm someone who has a reasonable amount of knowledge of the specific

technology and/or technology in general. A study of small ICT companies with 3-

80 employees suggests that the Internet was adopted by firms with personnel who

understand the technology (Mehrtens et al., 2001).

2.4 Some working Definitions of Key Terms

Some key terms in the research has been reviewed to afford a succinct

understanding of the research objectives. These terms are: Information and

Communication Technologies, Rural Banking and Business Enabler.

Information and Communication Technologies (ICTs)

Information and communication technology (ICT) is the catchall phrase used to

describe a range of technologies for gathering, storing, retrieving, processing,

analyzing and transmitting information. Advances in ICT have progressively

reduced the costs of managing information, enabling individuals and

16

organizations to undertake information-related tasks much more efficiently, and to

introduce innovations in products, processes and organizational structures. ICT is

a generic name for all the technologies involved in communicating with

computers.

ICTs have been identified by many international development institutions as a

crucial element in developing the worlds' poorest countries, by integrating them

into the global economy and by making global markets more accessible. The

World Bank has collaborated with the International Finance Corporation to

promote access to ICTs, an initiative which it describes as one of its most

successful. In 2006 the United Nations launched an initiative called the Global

Alliance for Information and Communication Technologies and Development.

According to Yasuharu (2003), implementation of information technology and

communication networking has brought revolution in the functioning of the banks

and the financial institutions.

Many banks are making what seem like huge investments in technology to

maintain and upgrade their infrastructure, in order not only to provide new

electronic information-based services, but also to manage their risk positions and

pricing. At the same time, new off-the-shelf electronic services such as online

retail banking are making it possible for very small institutions to take advantage

of new technologies at quite reasonable costs. These developments may

ultimately change the competitive landscape in the financial services.

17

Bankers now see a kind of evolution in their business, partly, because the world

has taken a quantum leap in the use of technologies in the last several years. The

various electronic delivery channels used by banks are discussed below:

Automated Teller Machine (ATM)

Rose (1999), describes 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”.

Once access is gained, it offers several retail banking services to customers. They

are mostly located outside of banks, and are also found at airports, malls, and

places far away from the home bank of customers. They were introduced first to

function as cash dispensing machines. However, due to advancements in

technology, ATMs are able to provide a wide range of services, such as making

deposits, funds transfer between two or accounts and bill payments. Banks tend to

utilize this electronic banking device, as all others for competitive advantage. The

combined services of both the Automated and human tellers imply more

productivity for the bank during banking hours. Also, as it saves customers time

in service delivery as alternative to queuing in bank halls, customers can invest

such time saved into other productive activities. ATMs are a cost-efficient way of

yielding higher productivity as they achieve higher productivity per period than

human tellers (an average of about 6,400 transactions per month for ATMs

compared to 4,300 for human tellers (Rose, 1999). Furthermore, as the ATMs

18

continue when human tellers stop, there is continual productivity for the banks

even after banking hours.

Telephone Banking

“Tele-banking (telephone banking) can be considered as a form of remote or

virtual banking. It 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,

which is connected to an automated system of the bank by utilizing Automated

Voice Response (AVR) technology” (Balachandher et al, 2001).

According to Leow (1999), telephone banking 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. It has almost all the

impact on productivity of ATMs, except that it lacks the productivity generated

from cash dispensing by the ATMs. For, as a delivery conduit that provides retail

banking services even after banking hours (24 hours a day) it accrues continual

productivity for the bank. It offers retail banking services to customers at their

offices/homes as an alternative to going to the bank branch/ATM. This saves

customers time, and gives more convenience for higher productivity.

19

Internet Banking

The idea of Internet banking according to Essinger (1999) is: “to give customers

access to their bank accounts via a web site and to enable them to enact certain

transactions on their account, given compliance with stringent security checks”.

To the Federal Reserve Board of Chicago’s Office of the Controller of the

Currency (OCC) Internet Banking Handbook (2001), Internet Banking is

described as “the provision of traditional (banking) services over the internet”.

Internet banking by its nature offers more convenience and flexibility to

customers coupled with a virtually absolute control over their banking. Service

delivery is informational (informing customers on bank’s products, etc) and

transactional (conducting retail banking services).

As an alternative delivery conduit for retail banking, it has all the impact on

productivity imputed to telephone banking and PC-Banking. Aside that it is the

most cost-efficient technological means of yielding higher productivity.

Furthermore, it eliminates the barriers of distance / time and provides continual

productivity for the bank to unimaginable distant customers.

Business Enabler

Business enabler has not been a subject that has attracted the attention of most

researchers. However, some writers and researchers who have commented on this

subject almost agree that a suitable business enabler should enhance the

competitive edge of organizations in the industry within which they operate.

Among other advantages these researchers also concur that a business enabler

20

should be one that enhances the collaborative efforts of all factions of the

organization into one common goal or purpose. Pastemack and Viscio attest that a

business enabler has four main functions and they are:

a. Enabling the firm to become more distributed yet act as one;

b. Putting the capabilities in place for the right action to occur;

c. Enabling decisions that are in the interest of the corporation as a

whole;

d. Ensuring the right resources and skills exist for the company to

compete and grow.

Prakash Daya, an IT expert and head of LG Electronics Ltd. in India argues that

in today’s increasingly global competitive business environment, it is not enough

for the organizations to know where they want their business to go, but at any

given point they must know where they are. Organizations must plan faster and do

more with potentially less budget and resources. At the same time, they must be

incredibly efficient and more precise with every decision. Another specialist,

Yamajala Krishna Murty (Vice-President and Centre Head for Virtusa, India),

avers that over the last decade or so, IT has been central to the way organization

runs, and the current economic recession has reinforced IT to be the key business

enabler in an interview. (www.virtusa.com). He adds that technology

advancement has led to work mobility. In some industries, employees can now

work from home or any other with the availability of laptops, mobile phones and

internet connectivity. The coming of the Internet and the ongoing technology

21

advancements has seen a significant jump in productivity and efficiency in the

way an organization conducts its business.

The strategic use of IT systems helps an organization review and align

performance of various business functions with the organization’s strategy by

tracking and analyzing key performance index (statistics and goals) via end-to-

end integrated systems such as ERP, CRM, SCM, management dashboards and

early warning/alert systems. Thus by implementing above stated tools and

technologies, it provides organizations a platform for Enterprise Performance

Management (EPM) (Daya Prakash, IT head LG Electronics India Ltd, 2004).

Having EPM alone is not sufficient in today’s competitive world. The leading

organizations have put an effective Balanced Scorecard system in place. Typically

organizations would have a high level Balanced Scorecard Metrics which is

governed by the Corporate Planning function/department, in coordination with the

senior management. This would reflect Key Performance Indexes at an

organization level. These Key Performance Indexes are directly aligned to the

mission and vision of the organization. They are used by each functional

department to map with their respective departmental goals. Once these Key

Performance Indexes have been defined by each of the functional departments,

they are executed by means of coming up with clear strategies to attain identified

business goals. IT plays the role of a backbone for majority of performance

parameters implementation/execution (Daya Prakash, IT head LG Electronics

India Ltd, 2004).

22

The organization’s mission and vision are often converted into corporate goals

which are achieved through adoption of effective IT strategies. This clearly shows

how important IT is for the organization, both from IT as a core business as well

as business enabler/driver’s perspective (Daya Prakash, IT head LG Electronics

India Ltd, 2004).

23

CHAPTER III

METHODOLOGY

3.0 INTRODUCTION

The research seeks to explore the benefits that ICTs adoption hold in the

enhancement of business in the rural banking sector of the Ghanaian industry and

the challenges that are encountered in the adoption of the various forms of ICTs in

rural banking operation of Ghana. The paper also attempts to resolve the

challenges in order for rural banks in Ghana to fully exploit these benefits.

3.1 POPULATION

The population of the research is Nwabiagya Rural Bank and the bank has 5

branches in Kumasi with headquarters at Barekese. The workforce of the bank is (

twenty-eight (28).

3.2 SAMPLING

The sample size selected was one branch out of the five branches in Kumasi due

to the constraints of the research. This sample was the headquarters of the bank at

Barekese. Out of the population of 28 employees, 20 of them were sampled for

the questionnaires. 100% of this population responded to the questionnaires.

3.2.1. Sampling Method

The sampling method for this study was a non-probabilistic kind. The sampling

technique was therefore based on the convenience sampling. Further under this

technique the judgment sampling was most preferred. The upshot of the research

24

must therefore be reckoned with little caution as the external validity might have

been compromised due to the convenience sampling method rather than a study of

the entire population.

3.3 TYPES OF DATA

The data required for this research was primary and secondary data. The primary

data were gathered through the administration of questionnaires to key members

in the organization of study and semi-structured interviews conducted exclusively

with other experienced and well-resourced personnel in the field of ICTs. The

secondary data were collected through the reviewing of some journal articles,

books and largely from other research works of others.

3.4 DATA ANALYSIS AND TECHNIQUES

With the data we seek to analyze, it is primarily a qualitative data and thus

requires a qualitative analysis. According to Yin (1994), the ultimate goal of

analyzing data is to treat the evidence fairly, to produce compelling analytical

conclusions and to rule out alternative interpretations. Miles and Huberman

(1994) attest that data analysis is seen to consist of three concurrent flows of

activities that are data reduction, data display and conclusion drawing and

verification. Data reduction deals with the filtering of all data to focus on the

necessary data in order to make a conclusion. In this sense, data reduction refers

to the process of selecting, focusing, simplifying, abstracting and transforming the

raw data (Miles and Huberman, 1994). The display also ensures that the required

information filtered from the large pool of data is well organized in order to allow

25

for a reasonable conclusion. The results of this study are presented later in the

subsequent chapter.

3.5 PRODUCTS OF THE RURAL BANK

The rural bank like other rural banks serves their customers with several products

and among these are current accounts, savings accounts, fixed deposit accounts,

salaried workers’ loans among others. Below are descriptions of these accounts.

3.5.1. Current Accounts

A minimum of GHC 5 is accepted in opening a current account. A Customer will

have to provide one (1) passport size picture for processing the account. A Pay-In-

Book and a MICR cheque is then issued to the customer. No commission is

charged on the turnover of the account. Overdrafts and other loan facilities may

be granted to customers depending on upon operations and legibility.

3.5.2. Savings Accounts

The same minimum of GHC 5 is accepted for opening a savings current Account.

Customers provide one (1) passport size picture. A Savings Passbook is then

issued to the customer. Interest is a paid quarterly on the minimum balance

maintained within the period. Micro-enterprises loans and farmers’ loan may be

granted to customers depending upon operations.

26

3.5.3. Fixed Deposit Accounts

This is a fixed period of savings ranging from 3 months, 6 months and 12 months.

There shall be withdrawal until the end of the expiry period. A minimum of GHC

50 is accepted and in multiples of GHC 10. A certificate is issued to the customer

to specify the expiry period. Attractive interests are given on fixed deposits.

3.5.4. Salaried Workers’ Loan

Loans to salaried workers shall be granted where the employee collects his/her

salary through the bank. Employee is to operate with the bank for at least one (1)

month to qualify for salaried workers’ loans. Employers will have to undertake to

pay employee’s salary direct to the pay while he/she remains in employment. At

least one (1) salaried worker who collects his/her salary through the bank shall

guarantee the loan. Loans are to be repaid on monthly installment basis.

3.5.5. Farmers’ Loans

Loans to farmers are granted where farmers form groups and associations. At

least one (1) salary worker who collects his her/her salary through the bank is to

guarantee the loan. Loan is to be repaid in not more than 12 months.

3.5.6. Commercial Loans

These are overdraft and loan facilities granted to individuals, corporate groups,

enterprises and others in active business. Applicant has to be a loyal customer and

should operate a current account for not less than 6 months. Duration for

27

repayment of the loan shall not be more than 18 months. A customer is to provide

at least (1) salaried worker who collects his/her salary through the bank as a

guarantor. Customers are to provide at least 20% of amount required as security.

Repayment has to be on monthly installment basis or regular cash lodgments.

28

CHAPTER IV

DATA PRESENTATION ANALYSIS AND DISCUSSION

4.0 INTRODUCTION

This chapter consists of the analysis of the data collected for discussion and

presentation. It aims at primarily answering the research questions set out in the

chapter one. It also describes responses provided by Nwabiagya Rural Bank

Limited with the aim of finding out how I.C.T has been integrated into their

operations. Closed and open interviews and questionnaire were used. Charts were

employed to illustrate certain points where necessary. In all a population of 20

respondents were used.

4.1 Adoption of ICT in Nwabiagya Rural Bank

Table 4.1

Is your department computerized?Response Frequency Percentage

YES 17 85%NO 3 15%

TOTAL 20 100%Source: Field Work, May 2010

85% of the respondents answered yes to the above question while 3 respondents

representing 15% of the population answered negatively. It was realized that the

15% of the respondents were not using any ICTs in their operations. Their work

was to aid clients who could not read nor write in filling their forms. A greater

percentage had their department computerized and use one form of ICT in their

operations.

29

4.2 ICTs adopted in Nwabiagya Rural Bank

Table 4.2

What are some of the ICTs used in your operations?Response Frequency PercentageTelephone 18 90%Computers 19 95%Intranet 14 70%Internet 13 65%

Source: Field Work, May 2010

This table indicates that 90% of the respondents use telephones in their

operations. 19 respondents, indicating 95% used computers while 14 people,

representing 70% and 13 people representing 65% used intranet and internet

respectively in their operations. The researchers discovered that some of the

respondents used more than one ICT in their operations. Some used one, two and

three while others used all of the ICTs in performing their everyday operations.

4.3 The Importance of ICTs in the bank

Table 4.3

Why do you use ICT in your operations?Response Frequency PercentageSaves time 12 60%Company's Policy 5 25%Makes work easier 16 80%Because it is available 5 25%

Source: Field Work, May 2010

The study shows that more than half of the respondents (i.e. 12 respondents)

representing 60% indicates that they use ICTs in their operations because it saves

30

time, 25% use ICTs in their operations because it is a company’s policy. A greater

number of the respondents (i.e. 16) representing 80% stated that they used ICTs in

their operations because it made their work easier, 5 respondents indicating 25%

used ICT in their operations because it is available.

4.4 Assessment of ICTs usage and support in the Nwabiagya Rural Bank

Table 4.4

Has your work been made easier because of ICT?Response Frequency PercentageYES 18 90%NO 2 10%TOTAL 20 100%

Source: Field Work, May 2010

In response to the question above as displayed in the table above, 18 respondents

representing 90% agree that their work has been made easier because of ICT

whiles a very few (i.e. 10%) decline that their work has not been made easier by

ICTs.

Table 4.5

Every process in the bank should be computerizedPerception Frequency PercentageStrongly Agree 7 35%Agree 8 40%Undecided 3 15%Disagree 2 10%Strongly Disagree 0 0%TOTAL 20 100%Source: Field Work, May 2010

Figure 1

31

Source: Field work, May 2010

From the table 4.5 above, out of 20 respondents, 7 representing 35% strongly

agreed that every process in the bank should be computerized, 40% agreed to it,

15% were undecided as to whether to computerize all the bank’s operations or

not. 10% disagreed to the banks processes being computerized while no

respondent strongly disagreed to the statement. It can be further deduced that

majority of the respondents (i.e. 75%) would accept to all the banking processes

being computerized while a small percentage of 15 will object to the idea.

32

SUPPORT FOR TOTAL COMPUTERIZATION

Strongly Agree

Agree

Undecided

Disagree

Strongly Disagree

Table 4.6

What percentage of your colleagues do you think will support ICT?

Percentage Support Frequency Percentage

100% to 70% 17 85%

69% to 60% 1 5%

59% to 50% 1 5%

49% to 40% 1 5%

Below 40% 0 0%

TOTAL 20 100%

Source: Field Work, May 2010

Figure 2

Source: Field work, May 2010

33

INDIVIDUAL ICT SUPPORT

100% to 70%69% to 60%59% to 50%49% to 40%Below 40%

The table 4.6 represents the percentages of the colleagues that will support I.C.T

in the organisation. This has been categorized into 100% to 70%, 69% to 60%,

59% to 50%, 49% to 40% and below 40%.

In respect to what percentage, the respondents think would support I.C.T., 15%

would support I.C.T. between the percentages of 69% to 40%. 17 respondents

indicating 85% of the said colleagues would support I.C.T. between100% to 70%.

This confirmed that a majority number of the colleagues had the desire and

passion in supporting I.C.Ts in the organisation.

34

Table 4.7How would you rank support of ICTs in your organization?

Group Support Very High

% High % Moderate % Low % Very Low

% TOTAL % TOTAL

Management Support

11 55% 9 45% - - - - - - 20 100%

Staff Support 10 50% 7 35% 3 15% - - - 20 100%Client Support 5 25% 3 15% 2 10% 10 50% - - 20 100%

Source: Field Work, May 2010

Figure 3

Source: Field work, May 2010

35

Very High High Moderate Low Very Low-10%

0%

10%

20%

30%

40%

50%

60%

ORGANISATIONAL SUPPORT OF ICT

Management SupportStaff SupportClient Support

Ranking

Per

cent

age

Fre

quen

cy

From the above table, the answers to the question indicate that 11 out of 20

respondents (i.e. 55%) are of the view that management support of ICT in the

bank is very high and 9 representing 45% of the population are of the view that

management support of ICT was high.

With the staff support, half of the respondents (i.e. 50%) said that staff support

was very high, 35% said that staff support was high while 3 respondents

representing 15% of the population were of the view that staff support of ICTs

was moderate.

5 of the respondents (i.e. 25%) said that client support to ICT in the organization

is very high, 15% of the population said it is high, 10% , however, said its

moderate while a greater number of the respondents (50% of the population) said

client support of ICT in the organization is low. The reasons being that majority

of the clients were illiterates who had little or no knowledge in ICT; thus found it

difficult in using ICTs in their operations.

36

4.5 Benefits of ICT in Nwabiagya Rural Bank

Table 4.8

Response to benefits of ICTQuestion Strongly

Agree% Agree % Undecided % Disagree % Strongly

Disagree% TOTAL %

TOTALICT has improved effectiveness and efficiency

7 35% 12 60% - - 1 5% - - 20 100%

ICT has improved quality of work

12 60% 7 35% 1 5% - - - - 20 100%

ICT can potentially reduce cost of operations

9 45% 8 40% 3 15%

- - - - 20 100%

ICT has increased customer satisfaction

9 45% 10 50% 1 5% - - - - 20 100%

Source: Field Work, May 2010

37

Figure 4

Source: Field work, May 2010

38

Strongly Agree Agree

UndecidedDisagree

Strongly Disagree

0

2

4

6

8

10

12

14

ASSESSMENT OF THE BENEFITS OF ICT

Increase in customer satisfactionIncrease in quality of workReduction in cost of operationsIncrease in efficiency and effec-tiveness

Perception

Res

pons

e

From the above data, 35% of the respondents strongly agree that ICT has

increased efficiency and effectiveness in the organization, 65% agree and none of

the respondents said ICT does not increase effectiveness and efficiency. From the

above response it is blatant that the ICT increases efficiency and effectiveness.

60% of the respondents strongly agree that ICT adoption can increase the quality

of work, 35%, however, agree that ICT adoption can indeed increase the quality

of work leaving an undecided 5% on this benefit of ICT. With no respondent

disagreeing on this benefit of ICT adoption, it can be well accepted that ICT can

help increase the quality of work greatly.

The potential of ICT to reduce the cost of operations was strongly agreed to by

45% of the respondents, 40% of the respondents agree and an undecided 15%

were recorded. This indicates that the majority of the respondents affirm that ICT

has the potential of reducing cost in the organization.

With an undecided 5%, 50% agreeing and 45% strongly agreeing to the ability of

ICT to increase customer satisfaction, the respondents acquiesce to a large degree

that ICT can increase customer satisfaction. This indicates that in spite of the

undecided few, the majority of the respondents support this benefit of ICT.

39

4.6 Challenges to ICT adoption in Nwabiagya Rural Bank

Table 4.9

What percentage of your colleagues do you think will object to all processes being computerized?

Percentage Support Frequency Percentage100% to 70% 1 5%69% to 60% 2 10%59% to 50% 0 0%49% to 40% 2 10%Below 40% 15 75%

TOTAL 20 100%Source: Field Work, May 2010

Figure 5

Source: Field work, May 2010

40

INDIVIDUAL RESISTANCE TO ICT

100% to 70%69% to 60%59% to 50%49% to 40%Below 40%

In answering what percentage of the colleagues, they thought would object to all

process being computerized, 5% said between 100% - 70%, 2 respondents each

said between 60% - 69% and 40% - 49% respectively. 15 respondents indicating

75% said below 40% of colleagues would object to all process being

computerized. This signified that majority of the respondents indicated that they

would like all the process in the bank to be computerized s that their works would

be made easier and save precious time of clients and that of workers thereby

increasing productivity of the organisation.

Table 4.10

ICT is worth its high cost of installationPerception Frequency PercentageStrongly Agree 4 20%Agree 15 75%Undecided 0 0%Disagree 1 5%Strongly Disagree 0 0%TOTAL 20 100%

Source: Field Work, May 2010

From the analysis, 20% strongly agreed that I.C.T. is worth its high cost of

installation. Fifteen (15) respondents representing 75% agreed to this statement.

Only 5% of the respondents disagreed that I.C.T was worth its high cost of

installation. This confirms the organization reaps enough benefits proportional or

even more than the cost involved in the installation.

41

Table 4.11

In your opinion which of the reasons below indicate why the bank is not maximizing on ICT?

Challenges Frequency PercentageLack of Training 12 60%Lack of Infrastructure 3 15%Fear of Change 4 20%Lack of Support 1 5%Others 1 5%

Source: Field Work, May 2010

Figure 6

Source: Field Work, May 2010

In response to why the bank was not maximizing on ICT, 60% of the respondents

related this problem to lack o training. 15% of the population said lack of

infrastructure was the problem, 20% and 5% said fear of change and lack of

support respectively was the problem. One (1) respondent, however, said other

and gave a reason that the organization had training programmes for some of the

workers but stated this was inadequate.

42

Lack o

f Trai

ning

Lack o

f Inf

rastru

cture

Fear o

f Cha

nge

Lack o

f Sup

port

Others

02468

101214

ASSESSMENT OF ICT CHALLENGES

Response

Table 4.12

The major problems in the adoption of ICT are:

Response Frequency Percentage

High cost of installation 13 65%

Low computer literacy of clients 14 70%

Uncontrolled change in technology 7 35%

Source: Field Work, May 2010

Figure 7

High co

st of

insta

llatio

n

Low co

mputer

liter

acy o

f clie

nts

Uncontro

lled ch

ange

in te

chnolo

gy0%

20%

40%

60%

80%

MAJOR PROBLEMS IN ICT ADOPTION

Fre

quen

cy o

f P

erce

ntag

e

Source: Field Work, May 2010

Among the major problems or challenges identified in this study that adoption of

ICT were high cost of the installation, low computer literacy of clients,

uncontrolled change in technology.

43

An item was found out that 65% indicated high cost of installation that the

amount of money needed in computerizing the organisation. 70% indicated low

computer literacy of clients. This indicated a greater percentage because most of

the clients were illiterates, who found it difficult in adopting I.C.T fully.

4.7 Comments and Recommendations of Respondents

ATMs should be introduced as one of the bank’s ICTs to aid clients access

their accounts even after normal banking hours.

ICT education to the clients should be made more easier and

understandable in the banking industry.

More ICTs should be made available.

ICT has come to stay but not to replace human capital entirely.

All banking processes should be automated.

ICT has provided efficient and effective work but extranets has to be

introduced in order to be able to link up with other branches to access and

exchange information while at the work place without moving about.

ICT has come to save the lengthy time spent during manual work.

4.8 CHAPTER SUMMARY

From this chapter we presented the analysis of the data collected through

administration of questionnaires at Nwabiagya Rural Bank. The analysis was

presented in figures and tables where necessary in order to give a vivid picture of

ICTs adoption in the rural bank.

44

CHAPTER V

SUMMARY OF FINDINGS, RECOMMENDATIONS AND CONCLUSION

5.0 INTRODUCTIONThis chapter sets out to round off the study with a summary work done and

recommendations as well as conclusion. The main objective of this research was

to assess the adoption of ICTs into the operations of Nwabiagya Rural Bank in

Ghana. The recommendations are drawn out of this study for further research into

the area of ICTs adoption into rural banking especially in Ghana.

5.1 SUMMARY OF FINDINGS

5.1.1. Benefits derived when ICT is integrated into the operations of the rural

bank

The data analysis indicates that there are benefits in the adoption of ICT into the

operation of Nwabiagya Rural Bank. These known benefits are increased quality

of work, increased customer satisfaction, reduced cost of operations and improved

effectiveness and efficiency.

5.1.2. The extent to which the rural bank is reaping the benefits of ICTs

The study indicates that 60% of the respondents agree or strongly agree to that

ICT increases efficiency and effectiveness and improved quality of work

respectively. To this extent Nwabiagya Rural Bank enjoys the benefits of ICT.

However, factors as lack of training inhibits a fuller reaping of the benefits of ICT

as indicated by the 60% of respondents in the analysis.

45

5.1.3. The challenges encountered when integrating ICTs into the rural bank

Factors such as high cost of installation, low computer literacy of clients and

uncontrolled change in technology are the major challenges in the adoption of

ICTs in Nwabiagya Rural Bank as indicated by the study. However, fear of

change was recorded from the response of 20% of the population as an inhibiting

factor to the adoption of ICT.

5.2 RECOMMENDATIONS

From the research, it has been well noted that the rural banks are not able to fully

enjoy the benefits of ICTs but the reaping of the benefits will leapfrog these

businesses into a higher pedestal of operational excellence and quality customer

service.

For the rural banks to enjoy fully the benefits in spite of the challenges, it is

suggested that the bank of Ghana and the central bank of rural banks in Ghana

(ARB Apex Bank) would step in to finance a private exchange network for the

rural banks for a fee. This will ensure a smooth running of operations of rural

banks especially in the area of customer service and thus will ensure a centralized

information system for the rural banks.

The rural banks would be better off in assisting their customers with automated

teller machines (ATM) linked up to the centralized information system if their

customers are provided with workshops to educate them on how to operate these

systems by themselves. This will ease the banking premise of the queues formed

and congestion especially during paydays for the farmers and other civil workers.

46

With these measures in place rural banks, a hub of rural development will achieve

fully its purpose of existence.

The area of rural banking however, touched has not been exploited fully but it is

yet an area that requires much attention especially in an era that Ghana seeks for

poverty alleviation and enhancement of the standard of living. The rural folks

who form a major section of the country’s population and an engine of growth

due to the farming activities should be given the requisite attention especially in

line with rural banking. It is therefore, recommended that a study be set up to

study:

The role of rural banking and ICTs adoption in national development in Ghana;

The exclusive benefits of ICTs adoption in rural banking in Ghana;

Assessment of the various ICTs in rural banking in Ghana.

`

47

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50

APPENDICES

APPENDIX 1: QUESTIONNAIRE

Below is a sample of the questionnaires administered at the Nwabiagya Rural

Bank.

SCHOOL OF BUSINESS

DEPARTMENT OF INFORMATION AND DECISION SCIENCES

QUESTIONNAIRE ON THE TOPIC: ICT AS A BUSINESS ENABLER IN THE BANKING INDUSTRY

1. Is your department computerized? YES ( ) NO ( )2. What are some of the ICTs used in your operations?

Telephone ( ) Automatic Teller Machines ( )Computers ( ) Internet ( )Intranet ( ) Others ( ) Specify ………………

3. Why do you use ICTs in your operations?Saves time ( ) Makes work easier ( ) Because it is available ()Company Policy ( ) Others ( ) Specify ………………………………………………………….

4. Would you like every process in the bank to be computerized?Strongly agree () Agree () Undecided () Disagree() Strongly disagree ( )

5. Has ICT enhanced your way of work? YES ( ) NO ( )6. How would you rank support of ICT in your organization?

Very high High Moderate Low Very Low

a. Management Support ( ) ( ) ( ) ( ) ( )b. Staff Support ( ) ( ) ( ) ( ) ( )c. Client Support ( ) ( ) ( ) ( ) ( )

7. What percentage of your colleagues do you think will support ICT?100% to 70% ( ) 69% to 60% ( ) 59% to 50% ( ) 49% to 40% () Below 40% ( )

8. What percentage of your colleagues do you think will object to all processes being computerized?100% to 70% ( ) 69% to 60% ( ) 59% to 50% ( ) 49% to 40% () Below 40% ( )

9. Because they …

51

Lack training ( ) Lack of infrastructure ( ) Fear change ()Others Specify……………………………..…

10. ICT is worth its high cost of installation.Strongly agree () Agree () Undecided () Disagree() Strongly disagree ( )

11. The major problem in the adoption of ICTs is:High Cost of installation ( )Low computer Literacy of clients ( )Uncontrolled change in technology ( )

12. ICT has increased customer satisfaction.Strongly agree () Agree () Undecided () Disagree() Strongly disagree ( )

13. ICT has improved quality of work.Strongly agree () Agree () Undecided () Disagree() Strongly disagree ( )

14. ICT has reduced cost of operations.Strongly agree () Agree () Undecided () Disagree() Strongly disagree ( )

15. ICT has improved effectiveness and efficiency.Strongly agree () Agree () Undecided () Disagree() Strongly disagree ( )

16. Any comments you would like to provide.…………………………………………………………………………………………………………………………..………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

APPENDIX 2: RURAL BANKING IN GHANA

Rural Banks (RBs) in Ghana are unit banks owned by members of the rural

community through the purchase of shares and are licensed to provide financial

intermediation in rural areas of Ghana (Addeah, 1989). Thus, according to

Addeah rural banks as per its occurrence in Ghana belongs to the rural folks of the

community within which the rural bank (RB) is found and that its core operations

– financial intermediation – is channelized to rural areas.

52

Ghana has a population of about 18 million, which has been growing at about 3%

per year. Recent statistics (1999-2000) indicate that 63% of the population lives in

rural areas and 37% in urban areas. Gross domestic product (GDP) for 2001 at

current prices stands at US$5.36 billion, with an annual growth rate of 4.2%; per

capita GNP of US$390 remains lower than the average per capita income level of

US$520 for Sub-Saharan Africa (Gallardo, 2002).

These banks are important in the socio-economic development of Ghana, as over

60% of the population live in rural areas. The majority of these people are

engaged in agricultural activities, which contribute over 40% of the country's

GDP and over 60% of employment (Ameyaw, 2001). With 60% of the money

supply outside the commercial banking system, the rural banks, savings and loans

companies, and the semi-formal and informal financial systems play a particularly

important role in Ghana’s private sector development and poverty reduction

strategies (Steel and Andah, 2004). Thus, by a careful attention to this sector of

the economy, the poverty reduction strategy of Ghana will be attained and thereby

ensuring a middle-income status in no time.

They support development projects and provide employment opportunities in

rural areas (Adom Adu-Amoah et al, 2008). Due to all the predefined purpose of

RBs in the socio-economic development of Ghana especially the rural

communities there should be a commensurate attention to this sector of the

economy in order to ensure the realization of these anticipated benefits. The RBs

have contributed to improvements in banking culture, access to financial services

53

and household consumption patterns in rural Ghana (Gallardo, 2002; Asiedu-

Mante, 2001).

The idea of rural banking was conceived some 32 years ago by the Bank of Ghana

when it opened a dialogue with the Ministry of Finance about what was called

junior league of banking institutions to serve the special needs of the rural

population in Ghana (www. arbapexbank.com, 8/1/2010, 11:23 am).

The number expanded rapidly in the early 1980s in response to the demand for

rural banking services created by the government’s introduction of special checks

instead of cash payment to cocoa farmers. The small number of rural outlets of

commercial banks was woefully inadequate to meet the demand to cash these

checks, let alone provide other banking services, creating undue hardships on

farmers who often had to travel long distances or spend days at the banks to cash

their checks. More RBs and agencies were, therefore, hurriedly opened to help

service areas without banking facilities (Steel and Andah, 2004).

According to the ARB Apex Bank Ltd website the ARB Apex Bank Ltd is a mini

Central Bank in Ghana for the Rural/ Community Banks (RCBs) financed mainly

through the Rural Financial Services Project (RFSP), which is a Government of

Ghana project to holistically address the operational bottlenecks of the rural

financial sector with the aim of broadening and deepening financial

intermediation in the rural areas (www. arbapexbank.com, 8/1/2010, 11:23 am).

Thus the ARB Apex Bank Ltd stands as the main governing body of the rural

banks of Ghana.

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At the time, the traditional licensed banking institutions were all structured,

equipped and managed as city-centered institutions with their clients mostly in the

export/import business and in the mining sector. It was, therefore, necessary to

bring the rural population into the banking system under rules designed to suit

their socio-economic circumstances and the peculiarities of their occupation in

farming and craft-making (www. arbapexbank.com, 8/1/2010, 11:23 am).

With over one hundred and twenty-five rural banks in the 10 regions of Ghana

since these 32 years according to the ARB Apex Bank Ltd website it could well

be concluded that rural banks operations have come to stay and should be given

the due cognizance in order to sustain its progress on the Ghanaian soil. Thus if

the due attention is given it would enhance the standard of living of especially the

rural folk since it will provide jobs for these communities. The Association of

Rural Banks (ARB) was founded in 1981 as an NGO with voluntary membership,

starting with 29 members and reaching 115 at end of 2001. The association was

formed out of the need “to promote and strengthen the rural banking concept”

(Steel and Andah, 2004). This is carried out through advocacy and training. Under

the Rural Finance Project, financed with a World Bank/IDA credit in 1991, and

with DANIDA assistance, ARB trained 2341 directors and 2559 staff members of

the RCBs (Osei-Bonsu, 1998). ARB has no statutory authority and influences its

members through persuasion and training seminars. The association initiated the

proposal for the ARB Apex Bank, licensed in 2001 to perform apex financial

services for RCBs and, eventually, to take over some supervisory and training

functions (Steel and Andah, 2004).

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As the literature was reviewed on this key term, it came to bare that most authors

used rural banks (RBs) and rural community banks (RCBs). Thus all two terms

referring to unit banks owned by members of the rural community through the

purchase of shares and are licensed to provide financial intermediation in rural

areas. With the generic acceptance of the rural banking concept in Ghana coupled

with the need of the banks to diversify into other specialized areas than what it

had been known for initially especially in the field of Agriculture, hence the need

for a business enabler as Information and Communication Technologies (ICTs)

to enhance the operations of rural banks in Ghana.

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No table of figures entries found.

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