ASSESSMENT OF THE IMPLICATION OF ELECTRONIC BANKING IN NIGERIA BANKS.
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ASSESSMENT OF THE IMPLICATION OF ELECTRONIC BANKING IN NIGERIA BANKS.
Chapter one
1.1 Background of the Study
Prior to the development of the modern financial system, banking operations were performed manually, which resulted in a lengthy 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 was introduced in all Nigerian banks, it has been a source of concern for civil servants; checks show that some employees at 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, D. (2009).
“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” , John, (2009). Olekah, J. (2009) acknowledges the system’s initial difficulties but cautions stakeholders not to be discouraged because such “teething problems” are common.
James, A. (2009), a banker, stated in the Vanguard annual report that “we should not destroy electronic banking by focusing on the negative aspects; rather, we must strive to perfect it.”
According to James, A. (2009), the volume of data generated by government ministry agencies makes it difficult for banks to cope. Mathew S. (2009), 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. (1999). 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. (2007) 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. (2007), electronic banking is a method in which funds are transferred between multiple accounts utilising computerised on-line/real-time systems instead of printed checks.
According to Edit, O. (2008) 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.
1.2 Statement of Problems
As previously stated, there is a delay in cheque payments, which has led to the development of an electronic banking system. The use of electronic banking, which was supposed to make financial transactions easier, actually caused problems for customers.
Most individuals complain about wasting time in banks. This occurs when electricity fails in banks, causing operations to slow down.
Another issue that arose was that banks lack information backup in the event of a computer failure.
Investing in electronic banking will require a significant amount of financial resources in computer technology, which are clearly in short supply in Nigeria due to the country’s high degree of poverty.
For an electronic payment system to function properly, infrastructural facilities such as energy and telecommunications networks must be available; however, power supply fluctuates, and network linkages break on a regular basis.
Since the early 2000s, banks have developed and launched payment cards for their consumers, as well as ATM cards. However, usage was low due to a lack of interconnectivity, which is a switching platform that connects ATMs for cardholders.
1.3 GOALS OF THE STUDY
This study aims to determine the prevalence of electronic payment in banking activities as well as the various types of electronic banking.
The researcher will also assess the primary issues involved with the creation of an electronic banking system in Nigeria, as well as potential solutions to these issues.
The impact of electronic banking on bank profitability will also be studied. There are various types of electronic banking utilised in Nigerian banks; the researcher intends to examine the influence of these e-payment systems on the banking industry as well as the impact of electronic banking on the Nigerian economy.
1.4 RESEARCH QUESTION.
To collect information from respondents, the following questions were formulated:
What are the different sorts of electronic payments, and how prevalent are they in banking?
To what extent does e-banking improve or enhance banking services?
What are the biggest challenges in developing Nigeria’s electronic banking system?
What are the solutions to the issues surrounding the development of e-banking?
To what extent has e-payment influenced banking activities?
The research will seek to find answers to these questions in the following chapter.
1.5 Significance of the Study
Electronic banking in our economy today is a wonderful development, and its effects on society are far-reaching, thus this research is important in many ways.
It will highlight the strengths and weaknesses of electronic banking.
It will encourage banks and other economic agents to computerise their operations.
Knowledge of electronic banking will be advanced.
Apart from adding to our understanding of electronic banking, it serves as a reference for future research in this field.
1.6 SCOPE OF THE STUDY
This study focuses on the economic implications of electronic banking in Nigerian banks, as well as the numerous payment methods and electronic systems that banks utilise. The researcher will base this work on all deposit money institutions in Nigeria, but Diamond Bank in particular.
1.7 Limitations of Study
Time is an important consideration for the researcher because this type of research requires a significant amount of time to collect data, but it was not provided to carry out the research, distribution, collecting, and analysis of questionnaires.
Furthermore, the school administration has made it impossible for students to seek information by refusing to let them leave. Some banks retain information from students who request it in order to maintain the bank’s secrecy, making it difficult for students to acquire material for their research.
Finally, finance was the most constrained issue; yet, the researcher had to travel to the sampling organisation to interview some of the managers and supervisors.
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