Banking on computers.

PINI JASON reports on the computerisation of Nigeria's banking industry - a development that has benefited both the customer and the banks considerably. Profits are up and fraud is down.

During the last 10 years, the advent of computers in Nigeria has sparked a revolution in the country's banking sector Alongside the oil industry, banks now belong to what the experts describe as 'pockets of sophistication' in Africa. As well as the obvious advantages that computers can offer to any business, such as greater efficiency and profitability, some Nigerian banks are using the new technology to help eliminate fraud.

Until the 1990s, Nigerian banks were thwarted by cumbersome and long-winded means of disseminating information and making calculations. Today, most of them, including First Bank, Union Bank, Diamond Bank, UBA and Guaranty Trust Bank, are either users of mainframes (huge computers able to store large amounts of information) or high speed PCs (personal computers) like the Pentium. Manual jobs have been superseded by computers and, aside from the fact that a reduction in manpower may not bode well for all employees, computers have enhanced the service to customers.

Statements are far more current and balances can be calculated up to the last minute and printed out instantly. Branch networking has made it possible for a customer to operate the same account from any branch. Customers can access their balance from their own office, without even going to the bank at all. Electronic banking, or the Smart-Card, is making it possible for customers to access millions of naira but avoid the risks of carrying too much cash about. The introduction of Automated Teller Machines (ATMs) is therefore significant, especially in a city like Lagos where crime is high.

Computers may not come cheap, especially imported ones, but profits are rising in most banks nonetheless. Most of the older banks have been investing heavily in new machines. In 1995, First Bank supplied ten of its branches with online facilities, while the operations of the remaining four Regional Operations Units, as well as some Head Office operations, were also computerised. First Bank shut down its mainframe last year and developed in-house packages for its Financial Control Department and International Banking Division.

Computerisation in the banking industry is still growing. "Computerisation is like knowledge itself," explains Mr Odafe of Diamond Bank, "you can never say you've reached the optimum. An organisation may not necessarily go for an over-kill. You have to declare a stand for what you really need." Indeed, chosing from the myriad of PCs and software now available can baffle even the most astute. Every six months, something new comes onto the market and it can seem like one long game of 'catch-up'.

In a place like Nigeria, however, computer experts are not worried about dumping or standardisation. "There is not much the Computer Vendors Association [COVAN] can do. Computers are not manufactured in Nigeria," said Mr Lucky Ajieh, Secretary of COVAN. Dumping, said Mr Etim James Amana, Chief Executive of Management Information Services (MIS), is relative and hard to define. "We can still consume what other nations have left behind," says Mr Amana. "That could be a start-up for some people." Indeed, the fast growth rate in technological developments means that second-hand machines, usually perfectly adequate for most buyers, are often sold cheaply.

When computers were initially introduced into Nigeria's banking industry, there were fears that fraud, through computer manipulation, would be rampant. That is no longer the case. "Security," declares Mr Amana, "is one of the most important operations in the banks". A system like the HP 9000, he added, is very secure: "If you combine that with the security a bank itself puts in place, it will be impossible for anybody to defraud the bank."

Each operation that a member of staff carries out on the computer is recorded. Staff need a password to get into the system and a Superior Officer has to provide that password. There is also a time stamp which records the time at which an operation is executed, who accessed it and which account was concerned. "In fact, computer should eliminate fraud completely," says Mr Amana confidently.

Although most Nigerian banks still use software that has been developed abroad, most systems have been adapted to suit the needs of the user. Some accounting and banking softwares have been developed locally but Mr Amana said they are not as good as those from abroad.

The Nigerian market has always been attractive to large computer companies like IBM and Hewlett Packard. Compared to South Africa, the amount of computers sold to Nigeria is relatively large. That the customs duty on computers was recently reduced to 5% has probably served to facilitate this pattern further.