Project Materials

AN APPRAISAL OF THE IMPLICATION OF ELECTRONIC BANKING NIGERIA BANKS (A CASE STUDY OF DIAMOND BANK).

Chapter one

INTRODUCTION

Background of the study

Before the introduction of modern banking system, banking operation was manually done which contributed to a delay down in settlement of transactions. This manual approach requires posting transactions from one ledger to another, which are handled by humans.

Figures or money counting that should have been done by computers or electronic machines were computed and counted manually, which was not completely correct, resulting in human errors.

Most banks now employ only one computer to carry out transactions, which reduces the sluggishness of banking activities.

In comparison to developed countries, Nigeria has been slower to adopt electronic banking. Nigeria implemented an electronic banking system in the early 2000s.

During the implementation of an electronic banking system, several politicians claimed that the usage of raw cash encouraged corruption through the “cash and carry syndrome,” which is typically associated with the rapid movement of Ghana-must-go bags.

According to some analysts, such bags are a big source of corruption since doubtful people try to pay their way out of being examined in critical locations or places in a corrupt culture.

Since electronic banking began in all Nigerian banks, it has been a source of frustration for civil servants; checks show that some employees in establishments such as the national boundary commission, for example, have yet to receive their salaries for the previous months because efforts to electronically transfer salaries into their accounts have failed, according to Ibrahim (2015).

“One bank will tell you it has transferred your salaries but the supposed recipient bank will tell you it has not received anything leaving you even more confused” , remarks John, I. (2015).

Olekah (2015) acknowledges the system’s initial glitches, but cautions stakeholders not to be discouraged because such “teething problems” are normal.

James (2015), a banker, stated in the Vanguard annual report that “we should not destroy electronic banking by focussing on the negative aspects; rather, we must strive to perfect it.” According to James, A. (2015), the volume of data generated by government ministry agencies makes it difficult for banks to cope.

Mathew S. (2015), a worker, says in his report to the Vanguard annual report on banks and cards that the government should have done its homework “very well” before introducing the system

“they plugged us into a system they were not prepared for and the result is untold hardship visited on innocent people”. At this point, it is useful to understand what e-banking is all about.

According to Anyawaokoro M. (2015). Electronic banking is described as the use of computer technology in banking, particularly the payment (deposit transfer) parts of banking.

He also characterised electronic banking as a financial system with an electronic communication network that allows for the online processing of same-day credit and debit transfers of funds between clearing system member institutions.

According to Clive, W. (2017) in his Academic Dictionary of Banking, electronic banking is a type of banking in which funds are moved between financial institutions using electronic signals rather than cash, checks, or other negotiable objects.

According to Omotayo, G. (2015), electronic banking is a system in which funds are transferred between separate accounts utilising computerised on-line/real-time systems instead of paper cheques.

According to Edit, O. (2014) in the International Journal of Investment and Finance, electronic banking is a system in which transactions are settled electronically using electronic gadgets such as ATMs, POS terminals, GSM phones, and V-cards, among others, and are handled by e-holders, bank customers, and stakeholders.