research critically analyzed the effect of electronic banking on the Nigeria
banking sector, using Zenith Bank Plc as a case study. The objective of the
study is to justify the application of information technology in banking
services delivery in terms of profitability to banks. This could be used as
yardstick by banks that are yet to adopt information technology in the
operations. The research design adopted for the study is survey research
design. The main instrument used was questionnaires and statistical package for
social science (SPSS). The questionnaire was used to analyze the date
collected. The questionnaires was
structured for easy administration, 64 copies of the questionnaires were
distributed and administered. Chi-square method was used in testing the
hypothesis. The finding shows that majority of the respondents strongly agreed
that information communication technology has positive impact on banking
operations. That is the impact of ICT has an impact on the efficiency
effectiveness on the Nigeria banking system it was recommended that firms must
introduce and adopt information and communication technology as a measure to increase it profit, market share
and customers’ satisfaction.
TABLE OF CONTENT
Title page i
Table of Contents vi
to the Study 1
of the problem 5
of the Study 9
of the study 9
of hypotheses 11
the study 12
of the study 13
of the study 14
of terms 14 - 17
Problems and prospects of delivering the
banking technology 25 – 30
History/development of commercial
in Nigeria 30
Zenith bank plc: a typical Nigerian bank for banking 31 -33
The role of payment system in Nigeria 33 – 34
General overview of payment system in
Nigeria 34 – 35
The principles for systemically
payment system 36
Smart Cards In Nigeria 30-40
Theoretical Framework On Electronic
Banking 40 – 45
Empirical studies on e- banking 45 – 39
of research hypotheses 51
of the study 52
Design 52 – 53
Data Analysis 53
Of Data Collection Instrument 54
And Reliability Of Research Instrument 54
Data Analysis 55
Of The Study 55
DATA ANALYSIS AND PRESENTATION OF FINDINGS
And Analysis Of The Data 56 – 68
Testing Of Hypotheses And
Interpretation 68 – 71
SUMMARY OF FINDING CONCLUSION AND RECOMMENDATION
Summary of Findings 72 – 74
for further reading 76
TO THE STUDY
bank is a financial institution where you can deposit your money. Banks provide
a system for easily transferring of money from one person or business to
another. Banks and the many services they offer saves an incredible amount of
time and ensures that funds pass hand in
a legal and structured manner.
Banking is a system of trading in money which
involved safeguarding deposits banking and making funds available for
borrowers. Banking developed in the middle ages in response to the growing
needs for credit in commerce.
refers to the computerized, advance and technological approaches to banking
service (Ogunfowora 2005).
main purpose that banks have been serving since their inception is keeping our
money safe for us. While keeping our money safe. They also let us earn a
certain amount of interest on the money deposited with them. Traditional banks
have been doing this and internet banks continues the same function. The only
difference is the way the transactions are made.
advance and technology refer not only to ways of providing goods and services
but also ways of fulfilling needs and deriving satisfaction. The technology of
consumption has a profound impact on the structure of the economy, influencing
the goods and services to be produced and rendered. Even the attitude and
values of people are in sense, a part of technology since they affect the
capabilities of a nation (Ogunfowora 2005).
today’s world, computers play an incredibly large role in the way the world
exists in general, and the majority of tasks could actually not be completed if
not for the use of computers.
there are certainly some areas of jobs that cannot yet be completed solely by
computers and which thus still require actual manpower, for the most part,
computers have helped to make life
significantly easier, productive and more
convenient for us all.
banking have been around for quite
a few years now, but has really only
become prominent over the past year or so in particular. E-banking offers an
array of different advantages to the user, including account balances and
history including year – to-year information the ability to transfer money from
one account to another to payees for bill payments, check history, records, and
stop payments, check credit card balances and statements.
online loan application, secure interactive messaging with staff, and much more
banking such as internet banking basically allows you to be able to do
everything that you can in your regular banking institution, only with the
benefit that you can do it all right from the convenience of your own home. Not
only is this great because you can be comfortable and have peace of mind
knowing that you can keep track yourself of all your banking issues, but as
well it allow for more ease because you never have to worry about rushing out
and making it to the bank (Onabanjo 2008).
along with almost all other African countries and beyond is more often than not
referred to as a “third world country” To an African who have lived in any of
the advanced economic of Europe and America. The reason for the tag “Third world” is clear, the advanced economy are
further referred to as cash-less societies because the closing of
transaction in most cases does not
involve the use of cash as means of payment but other forms of convenient payment instrument. This includes
cheques, credit, debit cards and electronic transfer of funds.
as a service industry find information technology most amendable to its
operations. It has the strategic potential to change the overall structures of
a banking organization or even the banking industry and commerce.
suggest that the creation of an internet electronic payment system will provide
opportunity for creation of completely new sets of global and national banking
relationships. The internet offers the possibility of an “Open system” payment
and settlement system which operates in parallel to the existing more traditional bank-based
networks, and which is particularly suited to meet the currently unsatisfied
requirements for processing low value payment systems electronically. However,
the institutional framework to exploit there opportunities does not yet exist,
regulatory policy issued will need to be addressed in order that full advantages can be taken of the new types of
commerce, which could emerge.
of today is still gambling with the problems
associated with an ineffective payment system and serious efforts have
not been made to solve the problem. The re-public of South Africa has through
the South Africa (equivalent to the Nigeria Central Bank) established a
national payment system committee, which in November 1995 publish the framework
and strategy for the implementation of an effective payment system. The South
Africa payment committee is almost like the Nigeria inter-bank settlement
system (NIBSS), is how ever concerned with eth clearing of financial
at the global level as well as in Nigeria has appreciated the immense benefits derivable form information
technology (IT) and has warmly embrace it, hence, such facilities as electronic
fund transfer (EFT) Automated Teller Machines (ATM), automated cheques clearing
facilities, abound in the banking system.
Nigeria of today cash has remain the chief means of payment for goods and
services. This situation is not unknown to eth authorities as confirmed by Dr
Paul A Ogwuma (OFR) government of the Central Bank of Nigeria (2000) saying
that: “as a result of the declining confidence in the financial system, most Nigerians today
prefer to settle their transaction in
cash. This explains why between the end of 1986 and December 1994, total
current in circulation and in particular currency outside the banking system
had both increased substantially. Financial instruments cheques, drafts etc are
used by a few who hold bank depots accounts.
banks have no alternative but to embrace the new information, technology in
order to achieve, efficiency and competitive advantage. It is encouraging that
many banks have joined the global trend and are obviously reaping the immense
benefit, few of them have hooked up to the information supper high way. The
internet and the implication on their performance have been far-reaching. (Adebisi 2003).
1.1 STATEMENT OF THE PROBLEM
primary purpose of the banking system is to create and manage financial
resources and to meditate between surplus and deficit economy units. In the
process of carrying out this fundamental role, the banking system provides
secondary services, which includes mobilizing financial resources for
investment purpose assisting in resources allocation, promoting the payment
system a facilitating international
trade. In the final analysis, the performance of the sector is measured not only
by the number a variety of services that are provided but also more importantly by the
speed efficiency and safety with which these services are provided.
the problems and limitations associated with manual banking procedures as
witnessed in most parastatals today, the problem associated with the existing
application programs even much more in the presence of serious technological
advances aimed at improving information system. This is activities aimed at
shedding light upon the need for improvement in accounting activities and the
means of achieving efficiency, effectiveness reliability and success promising
future through computer intervention.
identifies a particular set of technological solution for the development and
the distribution of financial services, which rely upon the open architecture
of the internet. With the implementation of an internet banking system, the
banks maintain a direct relationship with the end users via the web and are
able to provide a personal characterization to the interface, by offering
additional customized services.
already observed, one way of enhancing
these has witnessed phenomenal growth change especially since the mid
1980’s and these have manifested in the enormous volume and complexity of
operation increased innovations and variety
in product / service delivery,
financial liberalization, growing
competition, customer sophistication and business process
banking services has grown from simply allowing customers to check balances, to
trading assets. Today banks like ING Direct are functioning entirely online. With no brick and motar
building. With the costs saved by requiring fewer employees and the lack of
facility expenses, these virtual banks can often offer higher interest rate
than their traditional counterparts. E-banking gives you the power to control
your finances completely, you are no longer tied down to managing your money
during the hours the bank is open. If you want to transfer a balance after
business hours, you can! if you have access to the internet and have a number
of recurring monthly bills. Then you should use internet banking to make you
developments have not only been driven by technology advances but have also in
turn spawned technological development. It is therefore true to say that
technology has been the hub of banking development since the last decade and
will continue to be so into the 21st century.
there are however problem that arise from the era of technological advances:
The unequal rate of development
between IT and the nation economy and this poses threat to IT development in
The problem associated with the deficiency
of technological infrastructure which may be useful to facilitate it.
The unskilled manpower problem,
which further incapacitate the growth
rate of IT development in the banking industry.
The problem of the usage of internet
which the banking industry may not have identified as a faster way of
banks has been slow adapter of information technology (IT). They are slow at
moving from the conservative business practices to that oriented towards the
emerging paradigm driven by now technology
OF THE STUDY
main purpose of this study is to examine the impact of E-banking on the banking sector in Nigeria.
Specifically, the study aims to:
Examine the prospect of information
technology in modern banking operations in Nigeria.
Evaluate the impact of electronic
banking on the operations of financial
institution in the country.
Examine the role of organizational
structure in information processing
Examine the effect of electronic –
banking on bank – customer – relationship.
Identify barriers to efficient
technology system with a financial institution.
Make suggestions on how to make
information technology system more efficient in modern banking operations
relying on the opinions of operators in the industry.
OF THE STUDY
has played a very important role in the
modernization of banking sector
especially in terms of the development of the product and payment systems. The increase volume,
complexity competitiveness, customers sophistication and globalization of
financial services required modern technology if the bank want to remain in the
tidal wave of the internet with its rapidly expanding use as an information
exchange tool by individual business around the globe, has as spurned the expansion of business across national
frontier resulting in the globalization
of trade. The global computers network is also binging to the fore, the famed
volume a speed of banking transactions have improved significantly because of the growth of
internet connectivity indeed; internet has opened greater business, opportunities. In order to capture
a segment of an increasingly sophisticated clientele, Nigeria banks in the last
two years gave embraced contemporary
electronic options whereby a customer needs not physically visit a bank before transaction would be affected.
Nigeria banking industry is emerging
from the work period of distress in nations financial systems to focus in
capturing the niche staked in business.
banks are making a transition from the conservative business practice towards
the emerging paradigm driven by new technologies for increasing sophisticate
customer demand and competitions.
1.4 RESEARCH QUESTIONS
research work shall be guided by the following research questions:
E-Banking contributes to the efficient of banks and bank-customer relationship
(b)To what extent would
electronic banking improve the fortune and profitability of banks?
has E-Banking effect performance in the banking sector?
(d)How has E-banking improved
financial aspect of the Nigeria citizen?
1.5 STATEMENT OF HYPOTHESES
null and alternative hypothesis to be tested are:
Ho: The adoption of
information technology does not improve bank efficiency a bank – customer
H1: The adoption of information technology improve bank efficiency
a bank – customer relationship
Ho: E-banking in banks
has no impact on efficiency and effectiveness on the Nigeria banking sector.
H1: E-banking in banks
has an impact on efficiency and effectiveness on the Nigeria banking sector.
1.6 SCOPE OF THE
study is limited to the examination of the aspect of introduction and adoption
of electronic banking and an extension, and
what form of card, is a major payments system in place of the cash-based settlement,
system predominant in Nigeria.
from cards, which are now cash, there are
other form of contemporary payment
instrument, they are classified into three broad categories.
These are cash (note and coins) non-cash (paper-based instruments) such as
cheques. electronic system such as
Automated Teller Machines (ATM).
study also examine the feasibility of using on-line banking and the use of
cards for other objective other than settlement based on the concept of
electronic funds transfer through such electronic system ATM etc.
scope of the work will also extend to the basic infrastructural requirements
and the gains to the society in general.
1.7 LIMITATIONS OF THE STUDY
major limiting factor of this study is the texts and papers on banks,
electronic and the Nigeria payment system unlike that of advanced economics.
This may be attributed to the newness of the introduction of electronic banking in Nigeria.
is also the death of secondary data and relevant information on the project topic.
Banks which have introduced one form of on-line banking or electronic banking and non cash system like “western
money transfer” “first cash” by first bank’ “money gram” by UBA “PAYCARD” by
Diamond Bank” “Wema link by Wema Bank”, value card by platinum Habib Bank in
Nigeria are resisting to discuss their product. This by understanding will
enable them continue to maintain competitive advantage over and above their
competitors most information available
are only description and does not include
statistics on sales.
was another major handicap, it restricted the movement and sourcing of
materials hence the scope of the study will be restricted to few banks and to
Lagos and its environments.
1.8 ORGANIZATION OF THE STUDY
rest of this study shall be divided into four chapters: chapter two will deal
with the literature review and the role of information technology in business
from the profile of Zenith Bank that would be examined in chapter three, the
methodology analysis which includes the characteristics and basic elements of the research study shall also be
presented. Data presentation, analysis and interpretation will be covered in
chapter four while the concluding part of the research work will be chapter five
where in a nutshell the summary, the conclusion and the recommendations would
1.9 DEFINITIONS OF TERMS
Banks are institutions that create and manage the financial resources of
individual companies and nations. A bank is measured but its profitability and
efficiency of the services it provides
in comparison, to its peers. That is other banks in the same league
(commercial or merchant).
This refers to the financial institution in a particular environment in
relations to banking sector. This is a description of banking environment in a
comparison to the other sector. This can be measured by how well bank are
doing. In terms of profitability and efficiency in relation to the other
industry in the economy.
Current man power:
This term in this instance refers to the present work force in the bank, as at
the time the IT infrastructure is being out in place that has knowledge of
using information technology.
This is known as the “information super high way’ where everyone is connected
to each other. The intent is a “high way” where we can go and ‘surf’ as long as we have the address of person(s)
organization, institution we are looking
for or a name surfing means that you go to these different web sites to
get the required information.
In terms It development is the rate at
which information has been developed. Development would be in terms of the use
of IT in the bank in comparison.
infrastructure: Technological infrastructure describe
the structure that is put in place to make IT a reality in the environment that is being required.
Machine (ATM): refers to a unmanned automated teller
device located either in or off bank premises which are capable of dispensing
cash and handling routine financial
Credit card: Is
a plastic card for changing purchases to an individual of corporate account
that at some later date use to extent credit outside the bank premises.
Smart card: either
credit cash or debit card with on board electronic intelligence of its own and program mable – store monetary value usable for payment
of exchange which is held in electronic form rather than physical nature.
Electronic purse: Refers
to a debit card with funds loaded on it for the holder/owner to spend as he
Are financial instruments issued by bank account holder authorizing a debt
transaction on their account.
Bank of Nigeria, the apex financial institutions in the country
Refer to system that are linked either directly or through any form of
communication, lines to a bank’s central computer system.
In line: Refers
to systems that are linked in either way to a bank central computer system.
Refers to a card at the point of sales and capable of recording
A value card is a compact electronic circuit board with payment for goods and
service could be effected.
Refers to the person or organization
holding the debit and credit involving limited work but extensive use of
housing: (ACH): facility that performs exchange and
settlement functions for electronic payments that passed between financial
It is the record of all transaction completed by a merchant over a period of
time normally one day.