Title Page                                                                                                                   i

Approval Page                                                                                                          ii

Acknowledgement                                                                                                   iii

Dedication                                                                                                                 iv

Abstract                                                                                                                     v

Table of Contents



1.1             Introduction                                                                                                  1

1.2             History of Internet                                                                                       3

1.3             Background of study

1.4             Statement of Problem

1.5             Purpose of study

1.6             Research Questions

1.7             Statement of Hypothesis

1.8             Scope of study

1.9             Significance of study

1.10         Definition of Terms




2.1             Literature Review

2.2             Brief History of the First Bank to practice

            Internet Banking in Nigeria

2.3             Banks currently operating Internet Banking

2.4             The Nature and System I. E. the Internet

2.5             Client side purchase

2.6             Server’s side (I.E. Banks)

2.7             Software Base security

2.8             Hardware integrated Security

2.9             User Level Security

2.10         Objective of Internet Banking

2.11         How to open an Account on the Internet

2.12         How cashier can fund their Accounts

2.13         How withdrawals can be made

2.14         Expected Bank’s Benefits

2.15         Benefits of Internet Banking to Users,

            Customers (Diagramatic Representations)

2.16         Benefit to Others

2.17         Challenges and Problems Associated with Internet Banking               

2.18         Prospects and Solution to Faced Problems

2.19         The Intranet




3.1             Research Methodology and Design

3.2             Research Design/Description

3.3             Data collection method

3.4             Development of research instrument

3.5             Processing of Data

3.6             Questionnaire Assumptions

3.7             Pre-Reliability Test

3.8             Validity Test



4.0             Data Analysis and Discussion

4.1       Distribution of Respondents

4.2       Analysis of Questionnaires

4.3       Discussions – The Responses

4.4       Testing of Hypothesis

4.5       Interpretation of Analysed Data




5.0             Summary of Results Conclusions, Limitations

            and Recommendations

5.1             Introduction

5.2             Discussions of Results

5.3             Conclusions

5.4             Limitations

5.5             Recommendations







In the past few years, Banking activities in Nigeria were increasingly dependent on the development of Information Technology (IT).  It is the exchange of information between parties.  The promise of IT especially the Internet is to turn the world into a global village.  This promise is gradually becoming a reality in the industrial and economically advanced parts of the world, people who are thousands of kilometers apart being able to engage in formal and informal relationships, which would have required them to engage in travels that may take a number of long hours.


In all societies, people need to interact with one another for the purpose of trading, employment, leisure and even for family related issues.  Such interaction will usually involve the movement of physical goods, services and  information but the percentage of information exchanged in these interactions is high.  It can be imagined the number of proposals and revisions that are exchanged between a supplier and a customer before a purchase order is issued.  These activities are just mere exchanges of information. After then the sales person will have to travel to prevent and discuss his proposals, the purpose of the travel is just to gain physical assess to his customers so that they can begin to exchange information.


Today’s Information Technology can enable people exchange information easily.  Information without physically traveling to deliver it, the most rational thing to do is the uses of technology, which can be through the Internet.  The primary elements of this technology are the telecommunications infrastructure and terminal equipment.  It is common knowledge that Nigerian banks have invested billions of Naira in IT.   The IT budget for the banking industry is by far larger than that of other industries in the country.


In service organizations such as banks, it is information that flows more than physical items.  Even in the most advanced societies today, money is carried more is information storage medium.  Such as cheques, credit cards and electronic means rather than in pure cash form.  Less cash is used within a society.  It is therefore more viable to conduct business and banking electronically.


By conducting business electronically or through the internet, especially banking, has its  challenges, the most common being the risk of fraud due to computer network, security that can be abused by fraudsters and hackers.  Conducting financial transactions through the Internet, means that a computer system for such transaction has to be on the Internet and as such subject to some of the risks of the Internet.  However, new technology such as encryption of financial transaction data maturing and hence the security of financial transaction on the Internet will continue to be more acceptable to bankers and customers.


Customer’s insatiable appetite for efficient services has compelled financial Institution to move fast to a more radical transformation of their business systems and models by embracing Internet banking.  The huge investment in IT is justifiable, as bank managers have become IT savvy.


Due to this fact, many banks in Nigeria have been busy creating interfaces and building portals and it has become more of a competition and egoism rather than offering customer’s value added service thus making transactions very easy for them.


A portal is an entry point to the World Wide Web (www) combining a mixture of content and services including search engines, directing users towards the information they desire and enabling them to analyse the information and ultimately to execute transactions.





The Internet has been called “the mother of all networks”.   It connects several million computers and reaches virtually every nation on earth.  It provides reference achieves, electronic mail, news, advice, opinions and gossips to all comers and most of the material is free.


The history of the Internet goes back to the late 1960s when the U.S. Department of Defence Advance Research Projects Agency (ARPA) funded an experimental Wide Area Network (WAN) connecting University Computer Science departments across the country.  ARPA net was the test-bed for most of today’s defence Network technologies.

Today’s Internet backbone consists of various federal, regional, educational, campus, foreign and commercial network service provisions, which are IP-based.  All of these systems, cooperate to form a seamless Network for collective users.



The world has become a virtual global village with the array of developments going in the information superhigh way, of course, Nigeria represents a part of this development.  Assisted by the deregulation measures introduced in the 1980s, there was an astronomical increase in the number of merchant and commercial banks.  By 1989, the number of banks had increased from 32 to 81 (47 commercial and 34 merchant) together with today, there are 82 approved commercial and merchant banking Institutions in Nigeria by the Central Bank of Nigeria (CBN) even after the distress syndrome that swept the industry in the mid 1990s leading to the collapse of many banks and finance houses.


The situation in Nigeria produced a some what interesting scenario.  The global phenomenon in the IT development was accentuated by keen competition at home in view of the unprecedented upsurge in the number of banks and bank branches.  There was need not only to innovate and become modern, there was a complete need to acquire a comprehensive edge to stay afloat in the market.  In the face of increased market pressure to innovate customers demand for more sophisticated products and increased convenience in service delivery; the adoption of Internet and electronic banking products therefore become and imperative.


Computerisation in Nigeria banking industry was first introduced in the 1970s by Societe Generale Bank (Nigeria) Limited, until the mid 1990s, few banks that were computerized adopted the Local Area Network  (LAN) within the bank branches.  The sophisticated ones among them implemented the WAN by linking branches within cities while one or two implemented intercity connectivity using leased lines.


Today, the scenario is different not only have banks adopted computerization from one level to another, it has affected all aspects of the banking business from the very simple and basic retail operations of deposit and each withdrawal, as well as the cheque processing, to the delivery of sophisticated products such as foreign exchange and Internet rate swaps which can be through the Internet.



In the world in general and Nigeria today, vocabulariers in business finance and economics are e-commerce, e-banking, globalisation and deregulation.  While some parts of the world have started talking about mobile banking, microwave banking, e-banking, etc.  Definitely, this is a new era of information dissemination and at the root of all these is computerization which is the bedrock of Internet.


Internet can be said to be a network of networks  that are interconnected physically, capable of communicating and sharing data with one another and also able to act as a single network, while banking is defined by Oxford Learners Dictionary as a process by which the business of a Bank is being conducted.


In a narrow sense, Internet Banking can be said to be the dissemination of banking information, products services, etc.  from bank to users via the Internet from any part of the globe at any time of the day.  In other words, Internet banking stems from IT and telecommunication systems.


These are the utilization of the combination of computer gadgets and communication equipment like telephone lease lines, radiophone, VSAT (Very Small Terminals),  etc. in facilitating communication of information rendition.  This implies the gathering, processing, dissemination and storing of information.  It is thus a process that can be of immense value to the bankers because a lot of relationships between bankers and their customers involve information exchange.

The exchange of information electrically using the Internet or its technology can take some of the following methods.

·                    Public e-mail;

·                    Corporate e-mail

·                    Electronic Data Internet (E.D.I.);

·                    Customized  message enables application,

·                    Public websites on Internet;

·                    Private websites; and

·                    Public and private collaboration systems.


From a business enterprise perspective, information exchange can be either intra enterprise or inter enterprise or a combination of both.  Customers can be reached today without the banks’ marketing staff having to commute to the office of the customers (telemarketing), customers can stay in their homes or offices and order for goods and services without having to visit the shop (on-line shopping and telemarketing) with the banks playing the role of facilitating the payment for transactions.  Orders by organization can be placed electronically (E.D.I.).  Customers can make request for transactions such as the issue of bank drafts electronically, then pass them along with e-mail attachments to those to process them (mail enabled applications) in the bank.


In achieving the above forms of exchange of information, the cost of using the Internet requires only a local telephone call to an Internet service provider.  However, some large banks may require leased telephone lines to connect to the Internet.


Internet banking is an aspect of e-commerce derived from the successes recorded in IT.  E-commerce is a process that deals with the utilization of Internets, Intranets, Extranets or communication supranet and e-mail to conduct business transactions.  But the scope of this research is only limited to the Internet.


From research conducted so far, it has been observed that Internet banking can engender the customer loyalty most organization dream of attaining it has shown that Internet banking built-up customer’s loyalty and improves relationships.  Much more than these, it saves customer’s money and speeds transaction process not to talk of cost reduction.


Internet banking also involves the speeding up process of payment mechanism.  However, it is not just the posting of transactions using the modern computer systems or simply doing away with manual recording of transactions and business ledgers, books and all sorts of registers including paper documentation.  It includes the totality of the deployment of the application of modern IT and communication systems to record transactions and deliver financial services to customers.  Internet banking is thus beyond on-line real time banking operation.  It encompasses a whole gamut of PC banking.  Electronics Funds Transfer (EFT), ATMs, etc.  In effect, it involves the mechanism of settling financial transactions and payment obligations other than by cash and cheque.


Interestingly, there is a constant and increasing demand on banks to offer advanced services.  At the inception of banking, a bank was no more than a deposit taker and later an intermediary between savers and investors of funds.  This seemingly single role have today been driven to high levels of sophistications and complexities.


This position is further accentuated by the fact that banks are service providers.  Today bank instruments have gone beyond the use of cash.  They have veered into Internet banking, Electronic Fund Transfer, on-line real-time banking, ATMs cards, etc.  This is so because the payment mechanism has had to respond to the opportunities offered by IT and globalisation.


Furthermore, the continuous improvement in IT has led to greater adaptability and swift responsiveness to customers demand for better services.  This accounts for the introduction of various forms of products and service that are near money.  (e.g. cheques, credit cards, etc.)


1.4             STATEMENT OF PROBLEM

With the advent of the Internet, radical changes are beginning to take place in Nigeria’s financial landscape.  In more developed and matured financial markets, the Internet banking excitement is growing rapidly and global acceptance has reinforced the speed of penetration.  On-line, real time banking systems have now become common place as customers are offered the flexibility  of operating an account in any branch irrespective of which branch of the bank the account is domiciled.  The online services, enables customers to transact a variety, of banking activities in any location of a particular bank.  These include inter alia deposit, withdrawals and draft issuance. 


Given the overwhelming benefits of on line real time services, banks in Nigeria have gradually embraced Internet banking as evidenced by the rate of which they launch their websites.


The problem of this study is that many banks make the mistake of believing that having a website and domain name equals full-fledged Internet banking or bank.   A website is a tool that enables a user to experience all the products that an individual or enterprise has to offer on the Internet e.g. pictures, videos, graphics, sound, etc.  It always starts with www which is World Wide Web.


A domain name is a way of identifying and locating computers connected to the Internet.  No two organization can have the same domain name e.g. Their website is www:/  At present, this bank is not Internet banking.


1.5             PURPOSE OF STUDY

Specifically, this study is designed to investigate or research on thy most banks in Nigeria are connected with how to position themselves effectively and maximize the wonders of Internet based opportunities in the not too distant future and the current stable (or stagnant) exchange and interest rates in the market, how to create awareness of their different products and services that can be rendered to customers at a reduced cost an on time.


1.6             RESEARCH QUESTIONS

For the purpose of this study some of the research question that will be relevant to this research topics are as follows:

·                    Does the amount spent by banks, on cost of installing, equipment help in quick transformation of data information justify on online project?

·                    Is the banking industry, doing enough to coordinate technology through Internet Banking in anticipation of future needs?

·                    With regard to cash movements, are there substitute products non bank financial Institutions like credit cards and electronic funds transfer; be preferred to Internet banking?

·                    The Federal Government, are they encouraging technological innovation in the banking sector?

·                    Banks practicing Internet banking should they be encouraged by the public in technological innovations?



Hypothesis is a declarative haunch that gives every event a fair and equal change of occurring.  For the purpose of this research, two types of hypothesis will be used.  These are, the alternative hypothesis and the null hypothesis.


A null hypothesis is one which does not provide a direction of difference and in this research H0 will denote it.


An alternative hypothesis is one which provides a direction of difference and in this research it will be denoted as HA.


This hypothesis will be comparing two variables, which are the independent variables and dependent variables.  The independent variables will be the customers who are interested in the products and services being rendered by banks practicing Internet Banking while the dependent variables will be the banks rendering these services, products and information to various customers through the Internet.


1.8             SCOPE OF STUDY

Before Nigerian banks can fully participate in the digital and Internet age, the epileptic telecommunications system, power shortage, risk of fraud due to computer network security, huge capital outlay to source the equipment and software, the literacy level, must be addressed.


This explains why there are only 200,000 Internet users in Nigeria (Chartered Institute of Bankers’ Library), This figure is in sympathy with Nigeria tele-density of 250 people to one telephone line.


The scope of study of this research, therefore, encompasses these problems and many other and possible solutions suggested.



Through Internet banking, customers from the residence would enjoy sitting in the comfort of their homes and their offices with a PC locked into their banks servers and then transact limited banking activities.  As for banking, the number of their customers would increase if they deliver products and services as promised.


These are clear indications that banks in Nigeria are extremely excited about Internet banking.  Undoubtedly, Nigeria Financial Institutions that are poised to be in the vanguard of narrowing the digital wonder have eventually embraced the type of e-banking, e-business and e-everything.



·                    Information technology: Technology, which enables the exchange of information.

·                    Portal: is an entry point to the World Wide Web (www) combining a mixture of contest and services including search engines, directing users  towards the information they desire and enabling them to analyse the information and ultimately to execute transactions.

·                    Information Rendition: Is the gathering, processing, dissemination and storing of information.

·                    Telemarketing: is a process whereby customers can be reached without the bank’s staff having to communicate to the office of the customer or seeing him personally.

·                    E-Commerce: This means on-line buying and selling of goods and services.  The sale and purchase of items including but not limited to flowers, books, magazines, newspapers, up to more sophisticated products and services such a buying and selling of shares of public quoted companies.

·                    Intranets: Are communication networks that use Internet technology to allow employees to access at random the full information and data resource available within the organization.

·                    On-line Real Time Banking:  Is a process that allows a customer to transact business in any branch of his bank irrespective of the branch their account is domiciled.

·                    Webfile: Is tool that enables a user to experience all the product that an individual or enterprise has to offer on the net.

·                    Domain Name: Is a way of identifying and locating computer connected to the Internet e.g. platinum

·                    Universal Banking:- This is a process that refers to all aspects of banking including the traditional and modern forms of banking.  The traditional form of banking involves manual counting of cash, posting to and from accounting ledgers, storing of information in files, etc.  While the modern mode of banking entails dissemination of information via computers, electronic funds transfer, all aspects of Internet, intranet and extranet banking, etc.









1)        JOHN, S. L. 1990         -        Certified Accountant Journal January, 1990.

2)        BANKING ACT. 1969         -


3)        CIBN LIBRARY          -        The Chartered Institute Bankers of Nigeria, (CIBN) January-June, 1998.

                                                            The Challenges of Information Technology.







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