An appraisal of forex trading system enhancements on operational costs in banking: a case study of Accord Microfinance Bank
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Background of the Study
Forex trading is a significant revenue generator for banks, but it is also subject to high operational costs. Accord Microfinance Bank has recently enhanced its forex trading system by integrating advanced analytics, algorithmic trading, and real-time monitoring technologies (Okechukwu, 2023). These system enhancements are designed to optimize trading processes, reduce manual intervention, and improve accuracy in foreign exchange transactions. By automating key aspects of forex trading, the bank aims to minimize errors, reduce transaction costs, and increase overall efficiency. The improvements have also led to better risk management practices, ensuring that trading strategies are more responsive to market fluctuations (Adeniyi, 2024). Enhanced system capabilities allow the bank to process a higher volume of trades with lower overhead, thereby reducing the per-transaction cost and increasing profit margins.
Academic research has demonstrated that technology-driven improvements in forex trading systems can result in significant operational cost savings and enhanced profitability (Chinwe, 2023). However, integrating new technologies with legacy systems remains a challenge, and the high initial investment may offset short-term gains. This study aims to appraise the impact of forex trading system enhancements on operational costs at Accord Microfinance Bank by analyzing cost metrics, trade execution data, and feedback from trading desk personnel.
Statement of the Problem
Although Accord Microfinance Bank has invested in upgrading its forex trading systems, the expected reductions in operational costs have not been fully realized. A primary problem is the difficulty in integrating new system components with existing legacy infrastructure, which can lead to data inconsistencies and delays in trade execution (Emeka, 2023). These integration challenges may cause operational inefficiencies that negate the cost-saving benefits of advanced technologies. Furthermore, the high costs associated with system upgrades and ongoing maintenance may be burdensome, particularly if the improvements do not translate into proportional gains in efficiency. The study seeks to determine the extent to which the forex trading system enhancements have reduced operational costs and to identify the obstacles that hinder the realization of full cost savings.
Objectives of the Study
• To evaluate the impact of forex trading system enhancements on reducing operational costs at Accord Microfinance Bank.
• To identify integration and operational challenges affecting cost efficiency.
• To recommend strategies for optimizing system performance to maximize cost savings.
Research Questions
• How do forex trading system enhancements impact operational costs at Accord Microfinance Bank?
• What integration challenges hinder cost efficiency?
• How can operational processes be optimized to enhance cost savings?
Research Hypotheses
• H1: Enhancements in the forex trading system significantly reduce operational costs.
• H2: Integration challenges negatively affect the cost-saving potential of new technologies.
• H3: Optimized system maintenance improves overall operational efficiency.
Scope and Limitations of the Study
This study examines system enhancements at Accord Microfinance Bank over the past three years using cost reports, trade data, and interviews with forex traders. Limitations include external market volatility and integration complexities with legacy systems.
Definitions of Terms
• Forex Trading System Enhancements: Upgrades and technological improvements in the foreign exchange trading process.
• Operational Costs: Expenses associated with running the forex trading operations.
• Algorithmic Trading: Automated trade execution using pre-programmed algorithms.
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