Electronic Banking and the Implication on the Economic of Nigerian Banks
Chapter One
OBJECTIVES OF THE STUDY
This research work intends to assess the extent of electronic payment in banking activities as well as identify the various types of electronic banking.
The researcher will also evaluate the major problems associated with the development of electronic banking system in Nigeria as well as evaluate possible solutions to these problems.
The effect of electronic banking on profitability of banks will also be assessed. There are different types of electronic banking used in Nigeria banks; the researcher will like to evaluate the impact of these e-payment systems on banking industry and also assess the impact of electronic banking in Nigeria economy.
CHAPTER TWO
LITERATURE REVIEW
INTRODUCTION
Electronic banking have long been recognized to play an important role in economic development on the basis of their ability to create liquidity in the economy through financial intermediation between savers and borrowers. It also offers financial services and products that accelerate settlement of transactions and in the process reduce cash intensity in the financial system, encourage banking culture, and catalyses economic growth.
However, for the effective functioning of the financial system, the payment systems must be safe and efficient; otherwise they can be a channel for the transmission of disturbances from one part of the economy or financial system to others. This is why central bank have been active in promoting sound and efficient payments system and in seeking the means to reduce risks associated with the system.
Nigeria historically operated a cash-driven economy particularly in the consumer sector, however the system has witnessed improvements over the years, and particular in recent times has moved from its rudimentary level of the early years of banking business to the current state of sophistication comparable to other economies at the same level of development.
One important reason for financial liberalization and deregulation is the need to develop a good payment system which promotes an appropriate mechanism for efficiency in mobilizing and allocating financial resources in the economy. The payment system occupies an important place in the development of a country economy, infact the level of development of a countries payment system is a reflection of the state or condition of the countries economy.
Nigeria payment system is paper-based and this accounts for the high level of cash in the economy (cash outside bank), the concept “payment system” has different meanings among writers the definition range from a more simple to a more complex definition.
According to Report on the survey of developments in the e-payments and services products of banks and other financial institutions in Nigeria payment system is defined as a system which consists of net works which link members, the switches for routing message and rules and procedures for the use of its infrastructure.
According to Anyanwaokoro M. (1999), in theory and policy of money and banking, payment system is defined as a system where settlement of financial obligations are done by the use of credit cards or even pressing some bottoms that transfer the amount in their bank to the account of another person through the computer.
According to element of banking by Orjih, J. (1999), payment system is defined as a which consists of different methods of payments which are cheques, credit cards, Bankers drafts, standing order, documentary credits swift etc for the settlement of transactions.
2.2 ELECTRONIC BANKING
It is a fact that today a good number of banks cannot use their IT (information technology) infrastructure to adequately deal with their immediate information requirements. Do such banks qualify to be called e-banks?
E-banking is about using the infrastructure of the digital age to create opportunities both local and global. E-banking enables the dramatic covering of transaction cost and the creation of new types of banking opportunities that address the barriers of time and distance. Banking opportunities are local global and immediate in E-banking
The benefit of electronic banking comprises a broad range of functions which includes;
Electronic mail (email) improves communication between individuals, external parties and between banks. The availability of online information provides bankers and customers with a powerful vehicle for research, banks can provide information and services on line, which customer can pay for and receive. Banking processes are made more efficient and cost effective by integrating other aspects of banking operations such as treasure management and financial control.
If banking functions does not require physical interaction it may drive the benefits of electronic banking.
CHAPTER THREE
RESEARCH DESIGN AND METHODOLOGY
Design is the “specification of procedures for collecting and analyzing the data necessary to help solve the problem such that the difference between the cost of obtaining various levels of accuracy and the expected value of information associated with each level of accuracy is maximized”. It comprises a series of prior decisions and provides a master plan for executing a research project.
AREA OF STUDY
In this research work the Diamond bank of Nigeria Plc constituted the population studied however, it was not possible to study the bank entirely, the researcher adopted a survey technique and as such the branch in Enugu metropolis at Okpara Avenue (Enugu main branch) was selected for the study. A population of one hundred (100) was targeted and studied.
SAMPLE AND SAMPLING TECHNIQUES
A sample was determined to obtain a broad view on the economic implication of electronic banking from the bank under study based on this the population of one (hundred) was targeted.
Thus, from the target population the sample size was determined using the formulae below:
CHAPTER FOUR
DATA PRESENTATION, INTERPRETATION AND ANALYSIS
DATA PRESENTATION
The method of data analysis was based on the statistical table format using frequency distribution and consequently converted into percentages for easy analysis. Each tabular presentation represents the analysis of each question in the questionnaire which was subsequently described and with further discussion.
In all, eighty (80) questionnaires were administered of which seventy were returned the seventy questionnaires received formed the basis for our analysis and conclusion.
CHAPTER FIVE
SUMMARY, RECOMENDATION AND CONCLUSION
SUMMARY OF FINDING
The introduction of electronic banking in Nigeria has a strong influence on the development of the payment system in particular and the banking system in general. However, the introduction of the system, involves commitment of huge amount of financial resources on computer technology and telecommunication facilities, computer technology is a primary requirement for the proper functioning of the electronic monetary transfer system (EMTS)/electronic banking.
The use of computer in payment system would not reduce the importance of branch banking in Nigeria or reduce customer’s confidence on the banking industry, from responses obtained from staff of the bank studied; the introduction of electronic banking has rather increased customers loyalty to banks in general.
The major problems hindering the effective operation of electronic banking in Nigeria are infrastructural deficiencies such as erratic power supply, lack of government support and high charge on payment terminals (POS, ATMS) e.t.c. These problems are only peculiar to Nigeria as it is known that in developed countries issues like power failure or failure links are not in existence.
However, the introduction of electronic Banking System has also contributed significantly to bank income by way of fee or changes gotten from these services.
RECOMENDATION
Uninterrupted Power Supply
The government should endeavor to provide 24 hours uninterrupted power supply because without electricity these products cannot be boosted and effective, but in this country there is erratic power supply, therefore all banking industry should have a standby generator incase of power failure, in other to cover the deficiency of power failure.
Government Supports:
In smooth functioning of the payment system the government have the major role to play, in aspect of financing the payment system which require a lot of capital to maintain and also in the aspect of creating awareness the government should endeavor to inform the public about the benefits derived on the payment system.
Provision of skilled manpower and computer Wizard in operation of the payment system
Skilled manpower and computer wizard should be employed by every Bank, in other to stop, prevent fraudulent personal and hackers from manipulating the Banks data and stealing money from the Banks accounts.
Provision and maintenance of public network, system such as telephone (Nitel) the availability of these basic infrastructures is fundamental to the efficient functioning of the payments system.
Failure to maintain these infrastructures implies that the banks must be ready to provide their own communication networks and operate electronic generating sets to ensure reliable power supply.
Collaboration among banks: Electronic payment system as a result of its huge financial involvement requires that banks must jointly set and manage a network system such as ATMs v-cards etc. collaboration helps to spread and reduce the initial costs of setting up the electronic Banking system.
CONCLUSION
The Nigeria system is as old as the banking industry; this dynamism is manifested by the nature and quality of payment products paraded in the system. These products range from common paper money, cheque, cash to electronic payment Products such as Automated teller machine (ATM), SMARTCARD telephone Banking, internet Banking etc with the introduction of these electronic payments products, it is expected that the volume and cost of processing cheque will be drastically reduced or eliminated.
The C.B.N other financial authorities and banks have a role to play in enhancing the system through effective banking and momentary policies, efficiency and stability are also ensured and promoted. Furthermore, to sustain the electronic payment system, certain strategic measures must be taken to reduce negative effects of the problems identified as obstacles to the smooth functioning of the system.
BIBLIOGRAPHY
- Anyanwaokoro, M. (1999). Theory and Policy of Money and Banking, Enugu, Nigeria: Hossana Publications.
- Anyanwaokoro, M. (2001). Element, Practice and Processes of Banking Operations, Enugu, Nigeria: Hossana Publication.
- Anyanwaokoro, M. (2006). Nigeria Banking Laws and Regulations, Enugu, Nigeria: Hossana Publication.
- Clive, W. (2007). Academics Dictionary of Banking, New Delhi, India: Arrangement Academic New Delhi.
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- Onwurah, A. (1998). Introduction to Academics Research Methods, Enugu, Nigeria: Gostak Printing and Pub. Co. Ltd.
- Orjih, J. (1996). Element of Banking, Enugu, Nigeria: Rock Communication Publication.
- Orjih, J. (1999). Business Research Methodology, Enugu, Nigeria: Metteson Publishers.
