THE ROLE OF ELECTRONIC BANKING (E_BANKING) IN THE DEVELOPMENT OF FINANCIAL INSTITUTIONS IN NIGERIA
ABSTRACT
The primary goal of this project is to highlight the role of electronic banking in the development of Nigeria’s banking industries, which is being taken seriously because it presents a mechanism for extending banking services to a wider segment of the population at a lower cost.
More importantly, it promotes innovation and competition by making various types of sophisticated products and equipment available that are geared toward providing maximum satisfaction for the bank that cannot keep up with the innovation environment will lose their customers to more innovative and customer-oriented banks.
Furthermore, E-banking articulated transactions by allowing customers to execute financial transactions on the bank’s website via “transaction website,” and it also enabled organizations to reach consumers outside of their immediate area at a low cost into foreign markets.
CHAPITRE ONE
INTRODUCTION
1.1 THE STUDY’S BACKGROUND
The introduction of financial innovations such as smart cards, credit cards, electronic transfers in the payment system, and, most recently, internet banking has transformed the world into a global village linked by electronic impulses. The concept of electronic money was introduced in Nigeria in 1990, when the Central Bank of Nigeria (CBN) approved it.
Smart cards are a financial product offered by All State Trust Bank Limited. Diamond Bank then issued a play card. However, the smart card scheme received a boost in February 1998 when a consortium of licensed banks formed a smart card company in
Nigeria known as Smart card Nigeria plc with the mandate to produce and manage cards issued by the consortium’s member banks. In the year 2000, another consortium of more than 20 banks under the patronage of Gen card went live.
These innovations, which are still in their early stages of development, have the potential to challenge cash’s dominant role in making small value payments and make retail transactions easier and cheaper for account holders and consumers.
However, they also raised a number of policy concerns, such as the potential implications for Central Bank monetary policy, the consumer system, and so on.
In response to implications in domestic financial sector technology development, the Central Bank of Nigeria commissioned an information technology strategy study in 1991 with the goal of promoting efficient performance of its statutory duties. The product is being phased in, and both licensed banks and the regulatory authority in this area have demonstrated their appreciation for the benefits derived from the application and use of information technology.
Given the foregoing, the Central Bank Governors of the Group of Ten (G-10) countries have commissioned a series of studies on specific issues concerning electronic banking in Nigeria. As a result, the research objectives are to determine the role of electronic banking in Nigeria by using Guaranty Trust Bank (GTB) Plc, Ogui Road, Enugu as a case study.
1.2 PROBLEM STATEMENT
Lack of adequate information and communication technological awareness campaign about electronic banking is one of the problems confronting electronic banking in Nigeria. In Nigeria, internet communication is insecure and frequently congested;
the financial institution would also have to deal with other internet challenges such as security, quality of service, and some abbreviations in electronic fiancé (Guardian newspaper 2001). Aside from the existing business environment,
some operational challenges to the smooth operation of electronic banking in Nigeria include epileptic power supply, the dominance of cash transactions in the economy, a low level of awareness among Nigerians, and so on (Agbada, 2008).
The focus of this research will be on the trend of electronic banking in Nigeria, as well as a critical examination of the challenge.
Finally, in my opinion, the following are the issues that electronic banking in Nigeria is facing.
a. There was insufficient public education in Nigeria on how to use E-banking products before banks began to roll them out.
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b. Inadequate service from the providers.
c. Many people are averse to using E- products; they prefer cash transactions, which is understandable given No. 2 above. If your money runs out on the ATM, you’re on your own.
d. Many banks are unable to provide what they claim to provide in terms of E- banking.
1.3 THE STUDY’S OBJECTIVE
The primary goal of this research is to evaluate the role of electronic banking (E-banking) in Nigeria, as well as the development of the banking industry in Nigeria. The study’s specific objectives are as follows.
1. To ascertain how a lack of information and communication technology (ICT) awareness impedes the development of electronic banking in Nigeria.
2. To assess how inactive regulatory bodies obstruct the development of critical logistics technical support.
3. Determine the extent to which a lack of skilled labor distorts the development of electronic banking in Nigeria.
4. To determine how inadequate government and agency funding affects the development of electronic banking in Nigeria.
1.4 QUESTIONS FOR RESEARCH
During the course of this study, the following research questions were developed.
1. To what extent does a lack of knowledge about information and communication technology distort the development of electronic banking in Nigeria?
2. How do inactive regulatory bodies prevent needed logistics and technical support from being provided?
3. To what extent does a lack of skilled labor impede the development of electronic banking in Nigeria?
4. How does insufficient government and agency funding affect the development of electronic banking in Nigeria?
HYPOTHESIS 1.5
The following hypothesis would be empirically tested in order to carry out this study properly and successfully:
Ho: Inadequate information and communication technology stymies the growth of electronic banking in Nigeria.
Hi: Inadequate information and communication technology is not impeding the growth of electronic banking in Nigeria.
Ho: Inactive regulatory bodies prevent necessary logistics from being provided.
Hi: Inactive regulatory bodies do not prevent necessary logistics from being provided.
Ho: In Nigeria, electronic banking development is hampered by a lack of skilled labor.
Hi: The lack of skilled labor does not impede the development of electronic banking in Nigeria.
1.7 THE STUDY’S SIGNIFICANCE
This study is significant because it will help to educate banking operators as well as other concerned individuals and organizations about the benefits of electronic banking. The research will primarily identify the challenges that electronic banking faces in the Nigerian business environment and suggest solutions.
1.8 TERM DEFINITION
1. Teller: This is a small but important sheet of paper used in a banking environment to pay money and, in the case of a bank, to withdraw money.
2. Loan: A loan is a type of money borrowed from a bank to help an organization or firm’s capital and cash level. They can be long-term or short-term to help with capital expenditures.
3. Guarantors: This is a person who stands in for another when opening an account and opting for loads, among other services provided by banks. Guarantor typically bears the risk of repaying defaultment in the event of a default.
4. Online banking:
This is the main focus of the project. Banking services are becoming more interesting, and electronic banking is a step toward providing services to customers more quickly.
5. Automated Teller Machines (ATM): This is a physical asset used by banks that is built and erected concretely to give out cash, aid recharges (Phones), aid transfers, and so on, and it is the most recent trend in the banking industry.
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THE ROLE OF ELECTRONIC BANKING (E_BANKING) IN THE DEVELOPMENT OF FINANCIAL INSTITUTIONS IN NIGERIA
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