Electronic Banking as an Aid to Commercial Bank Operations in Nigeria (A Case Study of First Bank of Nigeria)

Electronic Banking as an Aid to Commercial Bank Operations in Nigeria (A Case Study of First Bank of Nigeria)

Chapter One

Objectives of the Study

The main objective of this research work is to examine Electronic banking as an aid to commercial bank operations in Nigeria

Specifically, the study objectives are;

1. To evaluate the prospects of electronic Banking in First Bank PLC
2. To evaluate the impact of electronic Banking in First Bank PLC
3. To examine whether electronic banking has improved the operation of the Bank.
4.  To examine the effect of electronic banking on improving the operation of the
5.  To examine the Bank electronic Banking guidelines to comply with the CBN electronic Banking guideline

CHAPTER TWO

LITERATURE REVIEW

INTRODUCTION

Electronic banking system is a conventional banking system which stated in Nigeria in 1952; (Benjamin 2001). Since then, the industry has witnessed a lot of regulatory and institutional advances. The industry was being controlled by at most five out the 89 banks in existence before the commencement of the merger and acquisition of banks in Nigeria economy. Multiple  branch  systems  is  also  one  of  the  notable  features  of Nigerian Banks, with a total of 89 banks accounting for about 3017 bank branches nationwide as at 2004. As well, the industry was faced with heavy challenges including the overbearing impact of fraud and corruption. Erosion in public confidence, a poor capital base, persistent cases of distress and failure poor asset quality and so on. Part of the moves to resolve these lingering problems include the banking reform initiated by the Central Bank of Nigeria in June 2004, which is largely targeted at reducing the number of banks in the economy and making the emerging banks much stronger and reliable. So far, the banking reform has been a success story with 25 mega banks emerging after the recapitalization exercise which ended on 31st December, 2005 in the bid to catch up with global development and improve the quality of their service delivery. Nigerian banks have no doubt invested much on technology; and have widely adopted electronic and telecommunication networks for delivering a wide range of value added products and services. They have in the last few years transformed from manual to automated systems. Unlike before when ledge-cards were used, today banking has been connected to information technology networks, thereby facilitating the practice of inter-banking and inter-branch banking transactions. Development domestically has the introduction of mobile telephone in 2001 and improved access to personal computers and internet service facilities have also added to the growth of electronic banking in the Nigeria banking sector. However, whereas local banks most commonly practice real time online internet banking, the integration of customers into the process is far from been realized. Many of the reasons are attributed to the high prevalence of internet fraud and lack of an adequate regulatory framework to protect the banks from the volatility of risks associated with internet banking, especially at the levels of communication and transaction. In the main, Nigeria is globally regarded as the headquarters of Advance Fee Fraud which is perpetrate mostly via the internet (Journal of international affairs vol. 51, 209-301.

  The View on Electronic Banking

The vast majority of the recent literature on electronic money and banking suffers from a narrow focus. It generally ignores electronic banking entirely and equates electronic money with the substitution of currency through electronic gadget such as smart cards and virtual currency.  For example, Freedman (2000) proposes that electronic banking and electronic money consist of three devices; access devices, stored value cards, and network money. Electronic banking is simply the use of new access devices and is therefore ignored. Electronic money then is the sum of stored value (smart) cards and network money (value stored on computer hard drives). What is most fascinating and revealing about this apparently popular view is that electronic banking and electronic money are no longer functions or processes, but devices.

Within this rather narrow scope for electronic banking and electronic money, there are nonetheless many research that address one or more of the challenges facing it. Santomero and Seater (1996), Prinz (1999), and Shy and Tarkka (2002), and many others present models that identify conditions under which alternative electronic payments substitute for currency. Most of these models indicate that there is at least the possibility for electronic substitutes for currency to emerge and flourish on a large scale, depending on the characteristic of the various technologies as well as the characteristics of the potential users.

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CHAPTER THREE

RESEARCH METHODOLOGY

Introduction

This chapter describes the techniques and procedures used by the researcher in conducting the study and accumulating the data for the study. It comprises of the description of the population of the study, sampling techniques, sample size, sources of data, method of data collection and method of data analysis and testing hypothesis.

 Population of Study

The population to be used in this study covers all the 40 credit officers of First Bank Plc.  The population selected was designed to obtain adequate and diverse views pertaining to the level and impact of electronic banking in First Bank.

CHAPTER FOUR

DATA ANALYSIS AND DISCUSSION OF FINDINGS

Introduction

A total of 40 questionnaires were distributed to the various credit officers of FIRST Bank Plc on Kaduna State. After the questionnaires were filled by the respondents and collect back, they were screened and sorted out by the researcher. The detail of the returned questionnaires shows that out of 40 sent out, 35 only were completed and returned, while 3 were not returned and 2 were rejected because they were not properly completed. Hence 87.5% of the respondents returned their questionnaires.

CHAPTER FIVE

SUMMARY, CONCLUSIONS AND RECOMMENDATIONS

Summary

The study was carried out in order to assess the Electronic banking as an aid to commercial bank operations in first Bank. The general introductory aspect shade more light on the essential of electronic banking. Many literature and academic publication from different authors in electronic banking, product emerging issues in electronic. In the cause of this research, the  researcher was  able  to  find  out  that  origin  of  electronic banking system is  a conventional banking system which started in Nigeria in 1952. Also the prospect of electronic banking was looked into critically. Electronic banking improved the operation of First Bank. This was achieved by adopting the CBN banking guidelines.

Conclusion

Based in the summary of the major findings the following conclusions are drawn:

1. The adoption  of  electronic  banking  has  enhanced  First  Bank  efficiency  by making it more productive and effective.
2. Electronic Banking also has a strong impact on the overall banking performance by making workers performance more effective and efficiency.
3. The adoption of electronic banking has enhanced the operation of the bank. This is achieved through bank charges cheque withdrawal slip and withdrawal charges.
4. The electronic banking has improved the bank customer relationship by rendering effective services throughout the week. Customers can now have access to their account outside working hours to make withdrawal to attend to their needs.
5.  The electronic banking guideline introduced by CBN strongly helps in effective electronic banking system. Withdrawal can be made anywhere at any time and using any bank ATM machine, customer cannot withdrawal more than some certain amount to allowed other customers have access to cash and money, can be transfer from one place to another through electronic means.

In general conclusion the electronic banking has made banking transaction to be easier by bringing services closer to its customers.

Recommendations

In order to give the growing trends of Information and Communication Technology (ICT) which involves net banking and e-commerce in banks a vision in the right directions, the following strategies are recommended for further follow up:

1. The banks  must  be  focused  in  terms  of  their  needs  and  using  the  right technology to achieve goals, rather, than acquiring technology of internet banking because other banks have it.
2. Government participation in ensuring focused telecommunication industry must be visible to reduce or remove avoidable costs of implementing e-commerce and internet banking.
3.  Regulatory authorities like  CBN  (Central  Bank  of  Nigeria)  must  stipulate standards for the banks to follow to avoid making Nigerian Banking Sector a dumping ground for the outdated technological infrastructures.
4. Training and Manpower development is another major problem militating against the growth of e-commerce in the country. Government must make right IT policy by ensuring that Computer, Communication equipments and other IT infrastructures to a large extent are manufactures in the country so that our people can acquire first hand necessary skills. Government Policy that will guide against Money laundering, fraud and Security risks posed by net banking is inevitable.
5. To counter the legal threat and security posed to net banking and e-commerce, the necessary legal codes backing the industry must be established; this will enhance the growth of the industry

References

• Amedu, U. M. (2005). Domestic electronic payment in Nigeria: The Challenges. Central Bank of Nigeria Bullion, vol. 29, No. 1, January/March.
• Bank  for  International Settlements (2001).  Committee on  Payment and  Settlement System Survey of  electronic money  developments prepared by  the  Committee on Payment and Settlement Systems of the Central Banks of the Group of Ten countries, November.
• Berentsen, A. (1998), Monetary Policy Implications of Digital Money, Kyklos, Vol. 51, pp. 89 117.
• Berry, M.J.A.; Linoff, G.S. (1999), Mastering Data Mining: The Art and Science of Customer Relationship Management. New York: John Wiley & Sons. pp.57-61
• Central Bank of Nigeria (2003), Guidelines on Electronic Banking in Nigeria. August. Central  Bank  of  Nigeria  (2003),  Report  of  the  Technical Committee on  Electronic Banking, February.
• Cohen, Benjamin J., (2001), Electronic Money: New Day or False Dawn? Review of International Political Economy, Vol. 8, pp. l97—225.
• Connel F. and Saleh M. N. (2004), Six Puzzles in Electronic Money and Banking IMF Working Paper, IMF Institute. Vol. 19. February.
• Davenport, T. H. (1993), Process Innovation: Reengineering Work through Information Technology. Boston: Harvard Business School Press. pp. 30 — 35

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