DESIGN AND IMPLMENETATION OF A COMPUTERIZED

BANKING SYSTEM

BY

AMAEFULE CHIMUANYA ESTHER

ND/EP/CST/2010/207

DEPARTMENT OF COMPUTER SCIENCE TECHNOLOGY,

IN PARTIAL FULFILLMENT OF THE REQUIREMENT FOR THE

AWARD OF NATIONAL DIPLOMA (ND) IN COMPUTER SCIENCE

TECHNOLOGY.

IMO STATE POLYTECHNIC UMUAGWO-OHAJI

AUGUST, 2010
 DEDICATION

This project is dedicated to Almighty God for giving me the grace to

carryout my project research successfully, to my beloved parents Lt. Cdr &
Dr. (Mrs.) Ralph Onyiaorah who made it possible for me to be in a higher
institution and helped in making it a reality. Also my beloved siblings
Chioma and Zimuzo who all contributed financially and morally towards
making this a success.
 ACKNOWLEDGEMENT

My sincere thanks goes to God Almighty for granting me the wisdom

and understanding in order to make a huge success out of this work.

I remain eternally grateful to my supervisor Mr. Lawrence Ikpeama

who had to sit me down thoroughly so as to make sure that the work is
befitting and benefiting in a manner one wont question.

My appreciation also goes to my H.O.D (Mr. Ejike Ugwu) for

instilling in us the manner and method of handling our academic duties.
Also all my departmental lecturers who taught me during the course of my
study in school, am eternally grateful.

Finally, my thanks go to my friends and classmates Emmanuel, Kachi,

Blaise, Richard, Benjamin, CY, Chisom, Adaobi, Amaka, and Ugochukwu
Nnamani for being a true friend indeed. Am blessed to have you guys in my
life.

ABSTRACT
In this world of competitive resource application and technological

development, the banks have been totally computerized. This project work

Design and Implementation of computerized banking system is concerned

with the analysis and design of a computerized system aimed at supporting

the whole banking operation provides an interface which enables the user or

the customer to lodge in money into his or her account and make

withdrawals as the need arises. It will also provide the basis for the

implementation of computerized banking transactions. A development which

made most banks and other financial institutions more responsive to changes

and imperative to adopt the latest art of technology is for the purpose of

maintaining operational efficiency as a means of warding off competitive

threat, and also to improve on the security measures, checkmate fraud and

error, to increase the speed of transaction and improvement of customers

convenience by reducing barriers to entry into payment systems. At the end

of all, the system proposed is better, calculates faster and is reliable. This

enhances operations and level of commitment to customers.

CHAPTER ONE
 1.0 INTRODUCTION

1.1 THE OVERVIEW OF THE STUDY

Banking has come a long way from the time of ledger cards and other

manual filing systems. Most banks today are computerized to handle their

daily voluminous tasks of information retrieval, storage, and processing.

Irrespective of whether they are automated or not, banks by their natures are

involved in all forms of Information Technology and Management on

continuous basis (Molina, 1997).

Banks play their significant role in any economic system. They are financial

intermediaries involve in transfers of funds within and outside the country.

Banking sector is getting competitive every day. Quantity, speed, efficiency

and innovations are the main points on which quality programs are designed.

All banks are engaged in same basic banking activities but it is the way of

delivery of services that distinguishes one bank form the other. All banks

worldwide are considering quality in the strategic management. Taking a

proactive stance against privacy invasion could help stave off government

intervention in passing legislation to create tighter controls over what can be

done with an individuals personal data. The development of computerized

banking system, however, involves a substantial amount of work, which

ranges from collecting sufficiently large number of data items.

Computerized banking system uses computer technology to relieve the

consumer of the paper based and time consuming work. Computerized banks

have started utilizing powerful computer networks resources for automating

large numbers of daily transactions, which minimizes the time consuming

manual paper work and giving access too many different banking services to

its clients instantly, on demand, at home or at work. With the help of

computerized banking, one can have access to money and banking functions

anytime and anywhere, even where there is internet access (Renom, 1997).

This technology has seen a tremendous increment in the usage, as more and

more big national banks and various other banks in smaller regions, have

started some form of computerized banking to provide conveniences to their

customers and to themselves. According to (Wainer, 2000), the

computerized banking mechanism is fast and secure compared to the

traditional banking operations because of automation of the manual aspects

of banking practice, which is time consuming.

United bank for Africa was incorporated on February 23, 1961 and was the

first of the International Banks operating in Nigeria at that time to be

registered under Nigeria Law. However, the Bank has its antecedents in the

British French bank which itself metamorphosed from Banque National

Pour Le Commerce ET L Industries, BNCI, and Paris, established in 1932.

UBA has 258 branches and cash offices and agencies in Nigerias major

commercial center, state capital and the federal territory, including two

offshore branches in New York and grand Cayman Island. UBA retains the

unique status of being the only Nigerian Bank with a presence in the United

States of America. The New York branch acts as one of UBAs overseas

correspondent banks. Others major correspondent banks are Bankers Trust

(USA) and Banque Nationale de Paris (UK and France). A tradition of trail-

brazing. In 1963, UBA became the first bank to introduce Mobile Banking

services in Nigeria. In 1986, UBA became the first to introduce a Cheque

Guarantee Scheme known as UBACARD, a forerunner of Easy Card which

has recently replaced the electronic payment card, UBA Val Card. Today the

bank remains in the forefront in the application of technological innovations

in banking. It is one of the largest agents of monogram International for

award international money transfers. UBA Connect TM provides a window

for online global banking. In 1998 UBA became the first Nigerian Bank to

have its shares placed abroad through a global depositary Receipt (GDR)

program. UBA thus has a more international and diversified shareholder

base than any other Nigerian bank.

UBA Capital and Trust, one of UBAs subsidiaries, handles specialized

services including Asset Management , retirement and Pension,

Executorships of wills, trust ship services etc. Nominee, custodial and share

registration services are provided by UBA Securities services. An aggressive

business promotion strategy has earned the bank an enviable position in the

banking industry. Due to the competition in the banking sector, banks are

mapping up the best strategy to meeting up the global challenges. UBA is

one of the new generation banks in Nigeria that has one or two branches in

each States of the Federation of which Enugu Branch is my case Study.

From the studies carried out, their initial means of transactions was manual,

to automated system then to computerized system which lacked some

feature such as account to account transfer of different customers, instant

messaging. This study focuses on total elimination of the manual means of

transactions through the addition of more features in computerized system of

banking. Effective adoption of computerized banking system, error rate,

paper work, inefficiency, inconsistency which has been the features of

manual means of transaction will drastically reduced or totally eliminated.

1.2 STATEMENT OF THE PROBLEM

In banking industries today, queuing has become the order of the day,

customers line up for hours waiting to withdraw or deposit money. This

creates a lot of problem to both customers as they waste their useful time in

the baking hall. The management also wastes their time as they run around

to find solution to their problems. Also it is observed that customers cannot

withdraw money any time they want as banks has their working hours. This

is a big problem as needs can arise at any time and human beings will

always like to have those needs solved. Also money deposited into accounts

at times takes some hours to reflect in the persons account balance hence

making banking operations slow and unhealthy for business growth.

1.3 OBJECTIVES OF THE STUDY

The project has been planned to have the form of distributed architecture,

with centralized storage database to improve on the speed and effectiveness,

efficiency and conveniences in business transaction. The standards of

security and data protective mechanism have been given a big choice for

paper usage. The application takes care of different modules and their

associated reports. The only online transactions the customer can do are

cheque book requisition and fund transfer among his personal accounts.

Provide administration to control and monitor various transactions. The

study and subsequent design and implementation of this program will be of

immense use to the organization, the administration and the customers in

realizing the speed, efficiency, effectiveness and convenience. The program

takes care of those factors that militate against the smooth running of the

organization using the computerized system services. Better still scholars

who intend to carry out subsequent research could have this as base from

where improvement could be made.

In a nut shell therefore, the following are the major objective of this work:

- To provide fast services, this reduces the queue in the banking hall.
- To provide an easy to operate system for the bank staff.
- To build a one time entry for customer details in the system.
- It requires minimum staff for easy operation.
- It reduces room for errors which might be caused by staff.
- To provide a minimum saving tie for customer and also staff.
- The system provides automatic calculation for accurate results.
- The system reduces the time normally spent trying to save data.
- A calculation like interest or rate is very fast and accurate under this

system.

1.4 LIMITATION OF THE STUDY

The development of this work was not an easy task, the areas of sourcing for

information and data collection was a challenging one. The materials apart

from the one sourced from the internet were not easy as most information
were journals that requires subscriptions in order to have access to it. Also

gaining access and interviewing of various heads of their staff was not an

easy one, most time I went, they are busy attending to customers. Again lack

of sufficient funds to conduct an extensive study was another handicap.

More so I found at that banks go through a lot in order to get a system which

not only should be secure but also offers many order services as to the

satisfaction of the customer. The financial implication as this project is

concerned gulped money.

1.5 THE SCOPE OF THE STUDY

The application of this software is not only limited to banks alone but can be

used equally by government establishment, cooperate organization and

individuals to efficiently pilot the affairs and its management.

1.6 SIGNIFICANCE OF THE STUDY

The purpose of this project is to magnificently improve on the manual means

of transaction in the banks which has lead to low output, customers

dissatisfaction, inefficiency, inconsistency, error and poor storage data and

information to computerized means of transaction system.

1.8 DEFINITION OF BASIC CONCEPTS RELEVANT TO THIS

STUDY Analysis: Breaking a problem into successively manageable parts

for individual study.

Attribute: A data item that characterize an object

Data flow: Movement of data in a system from a point of origin to specific

destination indicated by a line and arrow

Data Security: Protection of data from loss, disclosure, modification or

destruction.

Design: Process of developing the technical and operational specification of

a candidate system for implements.

File: Collection of related records organized for a particular purpose also

called dataset.

Flow Chart: A graphical picture of the logical steps and sequence involved

in a procedure or a program.

Form: A physical carrier of data of information

Gantt chart: A statistics system model used for scheduling portrays output

performance against time.

Implementation: In system development-phase that focuses on user

training, site preparation and file conversion for installing a candidate

system.

Maintenance: Restoring to its original condition

Normalization: A process of replacing a given file with its logical

equivalent the object is to derive simple files with no redundant elements.

Operation System: In database machine based software that facilitates the

availability of information or reports through the DBMS.

Password: Identity authenticators a key that allow access to a program

system a procedure.

Record: A collection of aggregates or related items of a data treated as a

unit.

Source Code: A procedure or format that allow enhancements on a software

package.
System: A regular or orderly arrangements of components or parts in a

connected and interrelated series or whole a group of components necessary

to some operation.

System Design: Detailed concentration on the technical and other

specification that will make the new system operational.

SDLC (System Development Life Cycle): A structural sequence of phases

for implementing information system

System Testing: Testing the whole system by the user after major programs

and subsystem has been tested.

Unit testing: Testing changes made in an existing or new programs.

Validation: Checking the quality of software in both simulated and live

environments.
 CHAPTER TWO

REVIEW OF THE RELATED LITERTURE

2.1 THE EVOLUTION OF THE COMPUTERISED BANKING

SYSTEM

During the 1990s researchers at the Stanford Institute invented ERMA

according to Molina (1990) the Electronic Recording Method of Accounting

is a computer processing system. ERMA began as a project for the bank of

America in an effort to computerize the banking industry. ERMA

computerized the manual processing of checks and account management and

automatically updated and posted checking accounts. Because of the

historical evolution and peculiarities, engendered taking into account the

model of the European structure of a banking system, a banking system n

two levels has been created; the National Bank of Romania, as the Central

Bank, and the Commercial Banks(Vossen,1991). Considering the role and

importance held by the banks as regards the good operation of the economic

agents and the requirements of all the categories of economic agents in the

market economy, as well as of the physical persons beneficiaries of

credits, depositors etc.. The computers security system should be sound

enough to maintain privacy of personal information. But still, we can that

computerized banking is really a boom to the customers in accessing and

managing their account effectively, anytime and almost anywhere. (Lewis,

2001). Recent media attention to information privacy issues has shown that

citizens are increasingly concerned about information privacy and their right

to it. Governmental and other organizations have been collecting data about

individuals t an increasing and to many, alarming rate. The ability to gather

so much information on individuals is largely because of advances in

information technology (Renon, 1997).

It is important for managers and professionals to understand the issues

surrounding personal information privacy in order to protect the rights of

those from and about whom they collect data. The speed employed by the

computerized banking for executing and confirming the transactions is faster

than the traditional speed of the ATM processing. (Bergstrom, 1994).

2.2 REGISTRATION AND SECURITY

Before user can actually use a secure computerized banking system, a

registration procedure is performed. During this registration procedure, the

security of the system is bootstrapped. The user has to obtain an initial

means for entity authentication with which a first secure session can be
established with the bank, thereafter, the regular security authenticators are

enabled. It is clear that something goes wrong during this stage, the security

of the rest of the computerized system is undermined (Renom, 1997).

In some situations, the ability of delegation within an electronic banking

system is desired e.g. the manager of a department would like to be able to

delegate right to one or more employees who needs to have access to the

companys banking transactions, or that parents would possibly delegate

certain rights to their children. The use of ID and password. These and other

security measures must be installed. Security in computerized banking is

typically provided through effective prevention not only a breach of privacy,

but other security concerns like the alteration of data, IT fraud, etc. But it is

in ensuring system availability that banks still have a lot of work to do

(Renom, 1997).

2.3 DATABASE MANAGEMENT SYSTEMS

Computers permit the collection and aggregation of statistical information

which would be very time consuming, if not impossible to assemble from

manual systems. Data are raw facts that constitute building blocks of

information. Database is a collection of information and a means to

manipulate data in a useful way, which must provide proper storage for large
amount of data, easy and fast access and facilitates the processing of data.

Database management system is a set of software that is used to define,

store, manipulate and control the data in the database. A database provides

integrated and structured collection of stored operational data which can be

used or shared by application systems. The advanced database technology

along with internet has proved faster communication and worldwide

connectivity (Willits, 1992).

Customer Clerk
2.3.1 Cash Deposit Diagram 1.1

Fillup

Own Proces Customer

s

Pass Book Form Details

Own

Customer Details Details

1 1.2
Accou Check
nt and
Clerk verify
Proces
s By
officer
 Fig 2.1: Cash Deposit Diagram

2.3.2 Deposit by Cheque

Customer
Cheque amount 1.4 check
Balance the cheque
no and acc
Balance report Verify receipt no and
signature

Balance report

Officer Customer
Fig 2.2 Deposit by Cheque
 CHAPTER THREE

DATA MANAGEMENT

It is important in developing and maintaining executive information (EISS).

An EIS can fail due to lack of an adequate data infrastructure for this data

intensive.

2.4.1 Data Integrity

Is crucial to the success of an EIS because even a minor incidence of failure

to provide accurate information can lead to a fatal loss of executive trust in

the system. Some EIS managers believe that executives tend to be less

forgiving within accurate data displayed on screens that those provided on

paper reports. A survey conducted by the International Data Corporation

found 65% of the respondents choose data integrity as one of the critical

success factors of an EIS.

2.4.2 Cash/Cheque Payment

With the invention b of computerized banking, customers cannot only in

through physical cash to their accounts, but can equally pay in through

cheque and get automatic update of their accounts. (Kingsbury, 2000). This
projects enables, clerk, view, the edit, auto update, and closing of account

should the customer apply. According to (Glass, 2000) the advent of

computerized banking has over taken the virtually in all areas of banking

system. According to Customer Services manager Chika Okparaugo (1998)

the speed, accuracy, efficiency, efficiency of computerized banking has

gone a long way to reduce crowd in the banking hall.

2.5 TRADTIONAL BANKING VS ONLINE BANKING

There is a lot of difference in traditional banking and online banking. Online

banking is time saving, fast and efficient than the traditional banking. In

these busy days, people are finding it difficult to spend time on personal

banking. Internet banking is a boon for all such customers. Internet banks

pay higher yields, require low balances to avoid fees, charges less for

bounced checks, follow friendlier ATM policies and offer higher percentages

of accounts that cost nothing at all. The hurdle that banks must overcome is

primarily psychological fear of insecurity.

To encourage more people to use the services, banks are offering incentives

such as cash bonus for online payments. Large banks like Citigroup Well

Fargo and Bank of America, are making good progress with their online

services. Its more cost effective for small banks to start online banking than
large banks, because of small investment required establishing the

infrastructure (Renom, 1997).

2.6 TYPES OF SERVICES

Every bank has different types of accounts designed to suit the needs of their

customers. Checking and savings are the widely used accounts in most of

the banks. Customer can check information of his checking account, saving

account, Mortgage loan, Home Equity loans or credit line using online

banking.

Most important service that any bank would assure its customer is access of

account information in a most secured way. However, there is still some

perceived insecurity from hackers and cyber criminals. There are various

services that a bank offers its customers and they enable the customer to the

following:

Check multiple account information and account balances

Balance a checkbook
Direct deposit of the paycheck
Transfer money between accounts
Track recent account activity
Authorize electronic bill payments request copies of past

statements and processed checks

Order travelers, cashiers and regular checks
Issue stop payment request
 Apply for loans (auto, student, home equity, mortgage or personal)
Apply for credit card and view that account information
Receive investment product and service information
2.7 THE ROLE OF INFORMATION TECHGNOLOGY IN THE

BANKING SYSTEM

Information technology has been an integral part of banking system since

almost four decades. Since the arrival of internet technology, banking system

has taken a new shape and style with a blend of convenience and

satisfaction. Banking from a customers bedroom, office or anywhere in the

world has made its way into banking system with the advent of internet

technology. Information technology has always helped the banking industry

to serve its customers in a better way. To explain few examples, direct

deposit is a method where the employers bank communicates directly with

the employees bank. This is only possible with the help of information

technology. This direct deposit feature saves an employee time to cash his

paycheck every fortnight or every month (Olea et al, 1999).

This feature is safe, fast and has no hazels. One more service that an online

bank could provide its customer in online loan application. Filling out the

documents and comparing options and waiting for approval is a time

consuming process. Through the internet, this process is made much easier

and some times the approval is made within minutes. This explains an
efficient way of banking and saves time and money to a customer (Olea et

al, 1999).
 CHAPTER FOUR

2.8 SECURITY FEATURES IN ONLINE BANKING SYSTEM

Security breaches in web-based banking are increasing in spite of having

efficient technology. All the banks, which offer online banking system, take

a special care and interest in building and developing their internet banking

system. It s very important to give a special importance to features like

security, Privacy, confidentiality and Authenticity (Fluaghter, 1990).

For security and privacy issues, there are protocols like Secure Socket Layer

(SSL), Secure Electronic Transaction (SET), e-Cash, Smart Card, Digital

Signature, and Digital Certificate. SSL is a protocol, which is embedded in

the browsers, encrypts sensitive information like CC Numbers, passwords,

SSN, etc, which cannot be interpreted by any unauthorized interceptors

(Fluaghter, 1990).

Banks use these secure protocols and servers to host their web-sits, between

the customer and the bank or vendors. This encryption process encrypts the

data in to some symbols, which can only be understood by the machine and

not humans. SET is similar to SSL, except that the retailer cans never see the

CC Number of a consumer. These features prevent any unauthorized or

illegal tapping of data over the internet (Fluaghter, 1990).

2.9 ADVANTAGES OF ONLINE BANKING

Clear advantages of internet checking accounts over those of traditional

brick-and-mortar banks are higher yields, a higher proportion of free

accounts and much lower balance requirements. Online banking allows the

users to check their account information, statements and pay the bills

instantly. Customer has to login into his account using the username and

password, check the statement and fill the amount and authorize the payment

and it will be posted instantly or in a couple of days. Options are provided to

authorize payments on regular intervals to the same vendor or different

vendors. There are many other advantages of online banking system and

some of them are listed below:

It saves a lot of time

It is very convenient to use it right from the bedroom, office or

anywhere in the world.

Transactions are very fast and postal delays can be avoided.
It is inexpensive to customer
Bills can be paid in a very convenient fashion round the clock
It allows making transaction on weekends
Transaction are secured
Help the bank in reducing the costs such as labor, inventory and

stationary.
 2.10 DISADVANTAGES OF ONLINE BANKING

Online banking has few disadvantages such as:

A customer should be a computer literate to manage an online

account
Internet account with an ISP s required
Some customers are scared of the insecurity involved in the online

transactions, though the bank implements the most secure ways of

processing transactions. Switching between banks online is more

tedious than doing it physically.

Its difficult for a bank to promote its brand when compared to

brick-and-mortar banks

2.11 ONLINE BANKING SYSTEM SECURITY

In internet banking as with traditional banking methods, security is a

primary concern. We have taken every precaution necessary to be sure your

information is transmitted safely and securely. The latest methods in internet

banking system security are used to increase and monitor the integrity and

security of the system

The security of the internet banking application is addressed at three levels.

The first concern is the security of customer information as it is sent from

the customers PC to the Web server. The second area concerns the security
of the environment in which the internet banking server and customer

information database reside. Finally, security measures are in place to

prevent unauthorized users from attempting to log into the online banking

section of the web site (Charp, 1994).

Data security between the customer browser and our web server is handled

through a security protocol called Secure Sockets Layer (SSL). SSL

provides data encryption, server authentication, and message integrity fro an

internet connection. In addition, SSL provides a security handshake that is

used to initiate the connection. This handshake results in the client and

server agreeing on the level of security they will use and fulfils any

authentication requirements for the connection. Currently online banking

application supports data encryption at the highest level (128 bit). In order to

get this level of encryption, you will need a browser that supports it. Both

version 3 and 4 of the most popular browser support 40-bit encryption as a

default, and have complete versions as well as patches that will support the

stronger 128-bit encryption. Check with your browser manufacturers

website for more information (Charp, 1994).

Requests for online banking information are passed on from the Web server

to the internet banking server. The internet banking application is designed

using a three-tiered architecture. The three-tiered architecture provides a

double firewall, completely isolating the web server from the customer

information SQL database.

The World Wide Web interface receives SSL input and sends requests

through a firewall over a dedicated private network to the internet banking

server. The World Wide Web interface is the only process capable of

communicating through the firewall to the internet banking server.

Therefore, only authenticated requests communicate with the internet

banking server.

The customer information database is housed on a Microsoft SQL server,

which implements Microsoft NT security in addition to the firewall
technology. The customer database is stored on a RAID-5 drive array, which
provides uninterruptible data access, even in the even of a hard drive failure.
Just as the World Wide Web interface is the only process capable of
communicating with the internet banking server, the internet banking server
is the only process able to send requests to the SQL (Wise, et al, 2000).

CHAPTER FIVE

SUMMARY, CONCLUSION AND RECOMMENDATIONS

5.1 SUMMARY
The primary purpose of this project is to replace the existing manual

processing with error free, high speed and low cost and should improve the

system capability. Working on the project was good experience. I understand

the importance of planning and designing as a part of software development.

5.2 CONCLUSION

The aim of this project is to provide a computerized banking system to be

used in the bank to improve efficiency. Though in the long run, more

features could still be added which will entail expanding the program to be

more complex than this.

5.3 RECOMMENDATIONS

Proposed system improves the systems performance because the current

system is based on manual processing while the proposed system is based on

computer processing. The project can be further enhanced to provide

different types of account facilities with providing different of interest on

each type of accounts available in system. Also can be enhanced to provide

different types of loans to each customer.

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