AN INVESTIGATION OF ELECTRONIC BANKING AND ITS IMPLICATIONS IN NIGERIA BANKS

AN INVESTIGATION OF ELECTRONIC BANKING AND ITS IMPLICATIONS IN NIGERIA BANKS

Background to the study

Electronic banking in Nigeria has been considered by many, particularly economists, as having significant ramifications for the Nigerian economy, particularly the banking industry, over time. Nigeria's economy has benefited greatly from electronic banking (Nnamdi, 2009). This study will examine the implications of electronic banking in Nigerian banks, since it is viewed as a key participant in the economy.

It is true that a large proportion of banks today are unable to meet their urgent information needs using their IT (information technology) infrastructure. Do such institutions qualify as e-banks?

E-banking is about leveraging the digital age's infrastructure to provide both local and global opportunities. E-banking allows for a significant reduction in transaction costs as well as the emergence of new sorts of banking possibilities that overcome time and geographical restrictions. E-banking offers local, worldwide, and immediate banking alternatives (Ahmed, 2010).

Electronic banking provides a wide range of benefits, including: electronic mail (email), which enhances communication between people, external parties, and banks. The availability of Internet information offers bankers and consumers with a strong vehicle for study. Banks may supply information and services that clients can pay for and get over the internet. Integrating other parts of banking operations, such as treasure management and financial control, improves the efficiency and cost effectiveness of banking activities (Nnamdi, 2009).

If banking operations do not necessitate physical interaction, electronic banking may be advantageous.

Because of their potential to produce liquidity in the economy through financial intermediation between savers and borrowers, electronic banking has long been regarded as playing a significant role in economic development. It also provides financial services and solutions that expedite transaction settlement and, as a result, reduce cash intensity in the financial system, promote banking culture, and accelerate economic growth (Bush, 2010).

Payment systems, on the other hand, must be safe and efficient in order for the financial system to function properly; otherwise, they can serve as a conduit for the transmission of disruptions from one part of the economy or financial system to another. This is why central banks have been active in supporting a sound and efficient payments system as well as finding ways to mitigate the system's dangers (CBN, 2011).

Nigeria has traditionally operated a cash-based economy, particularly in the consumer sector; however, the system has improved over time, and in recent years has advanced from its rudimentary beginnings in banking to a level of sophistication comparable to other economies at the same stage of development (Ahmed, 2010).

The necessity to build a good payment system that supports an adequate method for efficiently mobilizing and distributing financial resources in the economy is one significant rationale for financial liberalization and deregulation (Nkem, 2009). The payment system plays a significant role in a country's economic growth; in fact, the degree of development of a country's payment system reflects the status or condition of the country's economy (Ahmed, 2010).

1.2 Statement Of Problems

As previously stated, there is a delay in cheque payment, which has led to the development of an electronic banking system. The use of electronic banking, which was supposed to make financial transactions easier, instead caused client problems. The majority of individuals grumble about how much time they waste in banks. This happens when there is a power outage at a bank, causing the operation to slow down (Bra, 2009).

Another issue that has surfaced is that banks do not have data backups to fall back on in the event of a computer failure. Investing in electronic banking will need a significant amount of financial resources in computer technology, which are clearly in short supply in Nigeria due to the country's high poverty rate. The availability of infrastructure facilities such as energy and communications networks is required for the proper operation of an electronic payment system; nevertheless, power supply varies and there are still continual failure links in networks (Stra, 2011). Banks have been designing and introducing payment cards for their clients, as well as ATM cards, since the early 2000s. However, due to a lack of inter-connectivity (i.e. a switching platform to connect the ATMs for card holders), usage was minimal.

1.3 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. Specifically, it aim to examine:

1. The extent of automation in the payment system
2. The major problem associated with the development of electronic momentary transfer system (electronic banking) in the Nigeria economy.
3. The effect of electronic banking system on bank’s profitability
4. The impact of various electronic payment systems on banking industry

 5.  The impact of electronic payment system on economic activities in Nigeria

1.4 Research Questions 

In order to get information from respondents the following questions where formulated:

1. What are the various types of electronic payment and the extent of electronic payment in banking activities?
2. In what extent can e-banking improve or enhance banking services?
3. What are the major problems associated with the development of electronic banking system in Nigerian?
4. What are the solutions to the problems associated with the development of e-banking?
5. What extent has e-payment affected banking activities?

1.5 Significance Of The Study

Electronic banking in our economy today is a welcome development and also its impacts in the society are over-whelming, so this research is significant in so many ways.

It will expose the strength and weakness of electronic banking.

It will motivate banks and other economic agents to computerize their services. Knowledge in the area of electronic banking will be advanced. Apart from contributing to the knowledge of electronic banking, it forms a reference for future research in this area.

1.6 SCOPE OF STUDY

This research is on economic implication of electronic banking in Nigeria banks and also the various forms of payment and electronic systems used by banks. The researcher will base this work on the entire deposit money banks in Nigeria but to Access Bank in particular.

1.7 LIMITATION OF STUDY

Time is a major factor to the researcher as research of this kind requires enough time in gathering of data, but it was not given to carryout the research, distribution, collection and analysis of questionnaire.

Also the school system has made it difficult for student to go out in search for information by not granting exeat for student. Some banks hud information from students who desires such information in other to maintain the banks secrecy thereby making it difficult for students to gather information for their research.

Finally, finance was in fact the most limited factor, in spite of this the researcher have to travel out to the sampled organization to interview some of the managers and supervisors.

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