Problems and Prospect of Electronic Banking in Nigeria
Chapter One
THE OBJECTIVE OF THE STUDY
The main focus of this project will be on the problems and challenges, that the introduction of an electronic money scheme throws up, adequate attention will also be devoted to prospects or control mechanisms that have been put in place to ensure effective management of electronic products vis-à-vis likely impact on the economy as a whole. Some of the sub objectives which this research work aims to achieve are as follows:-
- To investigate the impact of Electronic banking on the efficiency and reliability of banks services.
- To examine the impact of electronic banking on the operations of financial institutions with specific reference to the organization understudy.
- To examine the relationship between Electronic banking and bank-customer relationship.
- To test the efficacy of Electronic banking in enhancing the fortune of the banks.
- To proffer solution/recommendations where necessary.
CHAPTER TWO
REVIEW OF RELATED LITERATURE
Introduction
Electronic banking otherwise known as E-banking evolved from developed nations with enormous benefits such as online banking and elongated banking hours to customers. These benefits make available comfort, convenience and ease of use for bank transactions. Before the advent of electronic banking, customers could only make transactions from a bank’s brick and mortar branch offices. E-banking has facilitated the integration of the functions of some large banks that have several branches around the country on a centralized network so that transactions can be carried out at any branch on the network without the customer being physically present in the branch. Nevertheless, e-banking like any other human activities is fraught with different challenges as well as prospects.
Business organization especially the banking industry of the 21st century operates in a complex and competitive environment characterized by changing factors and highly unpredictable climate, thus, information and communication technology is at the centre of this global curve as an absorber and to provide a cooling effect. Also, Laudon D. and Laudon J. (1991) contend that banks cannot ignore information system because it plays a critical role in their competitive edge both locally and globally, they point out that most fortune banks’ cash flow is linked to their adoption of information system. The adoption of Information and Communication Technology in banking sector is generally referred to as electronic banking (E-banking) and application of its concepts, techniques, policies, and implementation strategies to banking services has become a subject of fundamental importance and concerns to all banks and indeed a pre-requisite for local and global competitiveness because, it directly affects the management decisions, plan and products and services to be offered by banks. It has continued to change the way banks and the corporate relationships are organized worldwide and the variety of innovation of service delivery.
E-business has been continuously growing as a new industry during the last decade (Van Hoeck, 2001). The banking industry has been leading this trend in recent years, and now all banking transactions completing through internet applications is sometimes called e-banking (Boss et al., 2000; Smith, 2006; Hwang et al., 2007; Shin, 2008). E-banking has revolutionized the way business is transacted by globalizing the business enterprise. E-banking technologies have proliferated in recent years, and the availability of a wide range of products has led to increasing adoption among consumers. These technologies include direct deposit, computer banking, stored value cards, and debit cards (Servon and Kaestner, 2008). Consumers are attracted to these technologies because of convenience, increasing ease of use, and in some instances cost savings (Anguelov et al., 2004). E-banking has been viewed as an upgrading from previous electronic delivery systems to open new business opportunities for the banking industry (Ebling, 2001). www.wikipedia.com defines cellular phone as: The Cellular telephone (commonly “mobile phone” or “cell phone” or “hand phone”) is a long-range, portable electronic device used for mobile communication. For the past two decades, the banking sector has chosen a new service channel based on the progress of information technology – internet to respond to the changes in customer preferences and needs, increasing competition from non-banks, changes in demographic and social trends, and government deregulations of the financial service sector (Byers and Lederer, 2001). In the search for sustainable competitive advantages in the technological financial service industry, banks have acknowledged the value to differentiate themselves from other financial institutions through new service distribution channels (Daniel, 1999). In addition, customer’s transaction and communication abilities have been improved by the developments of information technology. Information technology enabled electronic channels to perform many banking functions that would traditionally be carried out over the counter (Giannakoudi, 1999). The rise of electronic payments media such as debit and credit cards has caused the value of paid in the USA to fall to – from about $49 billion in 1995 to about $42 billion in 2002 (Gerdes and Walton, 2002).
CHAPTER THREE
RESEARCH METHODOLOGY
Introduction
This chapter deals with the method used in collecting data required in carrying out this research work it explains the procedures that were followed and the instrument used in collecting data.
Sources of data collection
Data were collected from two main sources namely:
- Primary source and
- Secondary source
Primary source:
These are materials of statistical investigation which were collected by the research for a particular purpose. They can be obtained through a survey, observation questionnaire or as experiment, the researcher has adopted the questionnaire method for this study.
Secondary source:
These are data from textbook Journal handset etc. they arise as byproducts of the same other purposes. Example administration, various other unpublished works and write ups were also used.
Population of the study
Population of a study is a group of persons or aggregate items, things the researcher is interested in getting information for the study internal control and financial management of universities in Nigeria. The researchers randomly select 200 staffs of four banks which include First Bank of Nigeria Plc, Zenith Bank Plc, United Bank for Africa Plc, Diamond Bank Plc, all in Nigeria as the population of the study.
CHAPTER FOUR
PRESENTATION ANALYSIS INTERPRETATION OF DATA
Introduction
Efforts will be made at this stage to present, analyze and interpret the data collected during the field survey. This presentation will be based on the responses from the completed questionnaires. The result of this exercise will be summarized in tabular forms for easy references and analysis. It will also show answers to questions relating to the research questions for this research study. The researcher employed simple percentage in the analysis.
DATA ANALYSIS
The data collected from the respondents were analyzed in tabular form with simple percentage for easy understanding.
A total of 133 (one hundred and thirty three) questionnaires were distributed and 133 questionnaires were returned.
CHAPTER FIVE
SUMMARY CONCLUSION AND RECOMMENDATION
Introduction
It is important to ascertain that the objective of this study was to evaluate the problems and prospects of electronic banking in Nigeria.
In the preceding chapter, the relevant data collected for this study were presented, critically analyzed and appropriate interpretation given. In this chapter, certain recommendations made which in the opinion of the researcher will be of benefits in addressing the challenges and problems of electronic banking in Nigeria.
Summary
It is crystal clear that the adoption electronic banking has influenced the content and quality of banking operations in Nigeria. The study investigates the problems and challenges of electronic banking on customers’ satisfaction. It also review extant literatures that have expounded the existing factors that affects electronic banking system in Nigeria, how they have been managed, and its relative effect on profitability and performance of banks in Nigeria. The study’s research design was the survey design and the population used was the entire staffs of First Bank of Nigeria Plc, Zenith Bank Plc, United Bank for Africa Plc, Diamond Bank Plc all in Nigeria. A simple random sampling technique was employed to get 200 respondents. Simple percentage was used to analyze the data, while chi-square was used to test the hypothesis.
Conclusion
Electronic banking is a welcomed development in Nigerian banking system. Although electronic banking reduces bank robbery activities, and safeguards customers. It also eliminates reconciliation challenges that comes with manual transaction processing and promotes operational efficiency. There are some challenges which pose threat to electronic banking. However, a lot of prospects have been recorded in Nigeria banking system through electronic banking which should be encouraged. Observation on this study shows that Electronic Banking when properly adopted will contribute substantially to the increase of accessibility and profitability of bank customer. It was revealed from the findings that high literacy level negatively impact on the electronic banking in Nigeria electronic fraud and infrastructural deficiency are a major constraint to internet banking in Nigeria. The study further revealed that power cuts during transaction send wrong signals about electronic banking and poor regulation of the e-banking structures is a limitation of banking in Nigeria. A significant portion of the population are of the opinion that electronic banking has increased banking cost and charges and that customers have been compelled against their wish to use ATM in a bid to imbibe e-banking culture. Furthermore, some banks have lost customers due to poor implementation of electronic banking. The study also shows that nevertheless electronic banking has helped to increase customer’s satisfaction especially the corporate ones. There is a significant improvement in general banking services as a result of the introduction of electronic banking, while the level of profit made by banks can be attributed partly to the introduction of electronic banking. Electronic banking has help to increase banks market share.
Recommendations
Having identified how crucial electronic banking is to an organization and its effectiveness, organizations are therefore encouraged to utilize electronic banking to the fullest advantage in order to enhance their effectiveness. With regards to the above findings, the following recommendations were made:
- The migration of our normal banking system to electronic banking system would require some reform and a lot of effort and sensitization especially for low income customers, who are currently deeply rooted in using cash and see it as a convenient and easy way of receiving and making payments any point in time.
- Critical infrastructure like power; security and telecommunication should be strengthened to ensure the application of electronic banking in Nigeria and optimum satisfaction on the part of customers.
- The organization should always train and retrain their staff to ensure that they keep up with the dynamism of information technology.
- Banks should always ensure that ICT serves core-banking activities not core banking fitting into IT legacy. This can be achieved by outsourcing ICT to a third party, however, this as to be pursued within caution.
- Every Banks need to design proper customer identification and screening techniques, develop audit trails, and conduct periodic compliance reviews, frame policies and procedures to spot and report suspicious activities in electronic internet transactions to NDLEA and CBN.
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