Appraisal And Challenges Of Internet Banking System In Nigeria Banking Environment

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Appraisal And Challenges Of Internet Banking System In Nigeria Banking Environment


Abstract


The main objective of this study is focused on an appraisal and challenges of internet banking system in Nigeria banking environment using Access Bank PLC, Federal Capital Territory, Abuja as case study.. The study will further investigate whether challenges associated to internet banking discourages customers usage in Nigeria banking environment. This research is reported in five distinct yet interrelated chapters. In the chapter one we describes the study objectives clearly by stating the motive behind this study. Research hypotheses were developed for testing while the scope of this research was defined as well. The research adopted the survey descriptive design and with the aid of convenience sampling method, the researcher conveniently selected eighty (80) participant who are staff in Access Bank PLC, Federal Capital Territory, Abuja. Self- structure questionnaire was issued to the respondent of which seventy-seven (77)responses were retrieved and validated for the study. The study made use of of descriptive analysis and inferential statistics where data from field survey was analyzed using simple percentage, mean and standard deviation presented in frequencies and tables. Hypothesis test was conducted using Chi-Square Statistical Package for the Social Sciences (SPSS v.23).Findings of the study reveals that the benefit of internet banking includes; fast settlement of transactions, reduction in the rate of visits to banks, enhancement of Cashless Society, easier way of clearing imported goods and reduction of theft. Finding of the study further further establish that the challenges of internet banking system in Nigeria banking environment includes increasing the technical complexity ofbanks’ operation, transactions prone to error, security threat, regulatory challenges, fraud risk&money laundering associated with e-transaction. The study concludes that challenges associated to internet banking discourages customers usage in Nigeria banking environment. The study recommends therefore that Issuers of electronic transactions will need to take great care to ensure that the danger of counterfeiting is minimized and they must be very vigilant in monitoring their systems and operations so that fraud can be detected quickly when it occurs. They should constantly upgrade hardware and software whenever a new feature of enhancing security becomes available.


Table of Content


Chapter One:

Introduction

  • 1.1 Background of the Study
  • 1.2 Statement of the Problem
  • 1.3 Objective of the Study
  • 1.4 Research Questions
  • 1.5 Research Hypothesis
  • 1.6 Significance of the Study
  • 1.7 Scope of the Study
  • 1.8 Limitation of the Study
  • 1.9 Definition of Terms
  • 1.10 Organization of the Study

Chapter Two:

Review of Literature

  • 2.1 Conceptual Framework
  • 2.2 Theoretical Framework
  • 2.3 Empirical Review

Chapter Three:

Research Methodology

  • 3.1 Research Design
  • 3.2 Population of the Study
  • 3.3 Sample Size Determination
  • 3.4 Sample Size Selection Technique and Procedure
  • 3.5 Research Instrument and Administration
  • 3.6 Method of Data Collection
  • 3.7 Method of Data Analysis
  • 3.8 Validity of the Study
  • 3.9 Reliability of the Study
  • 3.10 Ethical Consideration

Chapter Four:

Data Presentation and Analysis

  • 4.1 Data Presentation
  • 4.2 Analysis of Data
  • 4.3 Answering Research Questions
  • 4.4 Test of Hypotheses

Chapter Five:

Summary, Conclusion and Recommendation

  • 5.1 Summary
  • 5.2 Conclusion
  • 5.3 Recommendation
  • REFERENCES
  • QUESTIONNAIRE

Chapter One


Introduction

1.1 Background of the Study

The application of information and communication technology concepts, techniques, policies and implementation strategies to banking services has become a subject of fundamental importance and concerns to all banks and indeed a prerequisite for local and global competitive banking. The advancement i-tech important role in improving service delivery standards in the banking industry. According to Olusegun, Ishola, & Hammed(2016), the increasingly competitive environment in the financial service market has resulted in pressure to develop and utilize alternative delivery channels. The most recently delivery channel introduced is online banking.

Conversely, online banking is otherwise refers to as electronic banking; and electronic banking, similarly is term as e-banking. According to Ovia (2018), the evolution of e-banking dates to 1986 when the banking sector in Nigeria was deregulated. The aftereffect of this deregulation brought extensive change through computerization and enhanced bank service provision. In an effort to encourage e-banking, the government of Nigeria promoted electronic banking with which the CBN released a guideline on august 2003, having recognized that electronic banking and installments service are still at the beginning times of improvement in Nigeria.Oleka opine electronic banking is the way a bank carry out business transaction using electronic devices such as computer system, global system for mobile communication (GSM telephones, Automated Teller Machine (ATM), internet facilities etc.

Online or electronic banking systems give everybody the opportunity for easy access to banking activities, thus promoting financial inclusion. These banking activities may include retrieving an account balance, electronic money transfers and retrieving an account history electronically. Dawson (2018) explicitly points out the merit of E-banking to encompass speed operation, better communication, timely management, improvement of product quality and gaining competitive advantage. According to Olusegun et’al (2016), the transformation from the traditional banking to Ebanking has been a ‘leap’ change, there is however a high level of job insecurity among employees in the modern-day banking industry. In other words, the modern-day banking services place more emphasis on technological innovations to improve service delivery and high level of customers’ satisfaction; and this however no doubt increases the level of employees’ job security by rendering some skills obsolete and demanding high level of skill in promoting e-banking occasioned by information technology evolution or development.

One of the major significance of e-banking products and services is improved efficiency and effectiveness of the operations so that transactions can be processed faster and most conveniently. Thus, it is expected to enhance customers’ services, effective distribution, improved operations, faster access to information and improved internal processes. This implies that customers’ benefit ranges from reduced frequency of going to the banking halls to handling of cash. However, despite this seemingly importance of e-banking, closer observation shows that there are still long queues seen in some banking halls even as customers still handle too much cash, problem of frequent network failure and inadequate awareness of available e-banking products and services, even as empirical evidence shows that level of understanding of a product and its commensurate benefits determines the reactions of customers to it and patronage (Balanchandler, 20117).


1.2 Statement of the Problem

In the bid to catch up with global developments and improve the quality of their service delivery, Nigerian banks have no doubt invested much on technology; and have widely adopted electronic and telecommunication networks for delivering a wide range of value added products and services. However, Agboola (2017)with the changes in business operations as a result of the internet era, there is a great concern about information security. The promise of e-banking is offset by the security challenges associated with the disintermediation of data access in Nigeria. Sometimes, the problem is even exacerbated by way of wrong debiting of account in the process of a bank customer attempting to assess his or her bank account balance. Even a lot of bank customers over the years have been defrauded because of the introduction of e-banking in the banking industry. Some members of the public have even consciously or unconsciously rescinded to the use of e- banking despite its attendant benefits. Many of the reasons are attributed to challenges of internet banking. According to Claessens, Dem, De Cock, Preneel, & Vandewalle, (2022) assert that the high prevalence of Internet fraud and lack of an adequate regulatory framework to protect the banks from the volatility of risks associated with Internet banking, especially at the levels of communication and transaction. Therefore, there is no contradicting the fact that the world today experiences problematic and unresolved e-banking services. Auta(2020) opined that this has seriously affected and is still affecting the process of e-banking worldwide, particularly in developing countries such as Nigeria; an indication that there are myriad of issues and challenges surrounding the application of e- banking. This has continued to elicit the reactions of many scholars with varying and often conflicting views on the fundamental issues at stake; how they can be resolved; and the importance of such resolution in the ever-changing banking system. Against these problem, the researcher delves into the study on appraisal and challenges of internet banking system in Nigeria banking environment.


1.3 Objective of the Study

The broad objective of this study is focused on an appraisal and challenges of internet banking system in Nigeria banking environment.

Other specific objectives includes:

  1. To examine the benefit of internet banking system in Nigeria.
  2. To establish whether there are challenges associated to internet banking system in Nigeria
  3. To determine the challenges of internet banking system in Nigeria
  4. To establish whether the challenges associated to internet banking discourages customers usage in Nigeria banking environment..

1.4 Research Questions

  1. What are the benefit of internet banking system in Nigeria?
  2. Are there challenges associated to internet banking system in Nigeria?
  3. What are the challenges of internet banking system in Nigeria?
  4. Does the challenges associated to internet banking discourages customers usage in Nigeria banking environment.?

1.5 Research Hypothesis

Ho: There are no challenges associated to internet banking system in Nigeria.

Hi: There are challenges associated to internet banking system in Nigeria.


1.6 Significance of the Study

The outcome of this study will be of immense benefit to: The management of Bank since it will help identify most of the challenges faced by the bank as well as the complaints tabled by the customers. Solutions will then be proffered on theses identified challenges. This will go a long way to help the bank achieve its stated objectives of ‘‘unequaled customer experience’’, and in the long run increase shareholder’s wealth. The study is beneficial to bank executives and indeed the policy makers of the bank and other financial institutions to be aware of electronic banking system as a product of electronic commerce with a view to making strategic decisions. This study will also be of benefits to the community and the society by creating awareness on the difference e-banking channels used by the banks and how they work. The Federal Government of Nigeria on the need to provide basic infrastructures that will help develop, increase the growth and use of e-banking in Nigeria.


1.7 Scope of the Study

The scope of this study is focused on an appraisal and challenges of internet banking system in Nigeria banking environment. The study will further investigate whether challenges associated to internet banking discourages customers usage in Nigeria banking environment. The study is however delimited to Access Bank, Federal Capital Territory, Abuja.


1.8 Limitations of the Study

Like in every human endeavour, the researchers encountered slight constraints while carrying out the study. The significant constraint was the scanty literature on the subject owing that internet banking system in Nigeria banking environment.discourse is vast thus the researcher incurred more financial expenses and much time was required in sourcing for the relevant materials, literature, or information and in the process of data collection, which is why the researcher resorted to a limited choice of sample size covering only customers bankers in Access Bank, Federal Capital Territory, Abuja..Thus findings of this study cannot be used for generalization for other states within Nigeria. Additionally, the researcher will simultaneously engage in this study with other academic work will impede maximum devotion to the research. Howbeit,despite the constraint encountered during the research, all factors were downplayed in other to give the best and make the research successful.


1.9 Definition of Terms

Electronic Banking

Electronic banking has been defined by Shahriari (2014) as the automated delivery of new and traditional banking products and services directly to customers through electronic and interactive communication channels.
Quality Service: This is a comparison of perceived expectations of a service with perceived performance.


1.10 Organization of the Study

This research work is organized in five chapters, for easy understanding, as follows.

  • Chapter one is concern with the introduction, which consist of the (overview, of the study), historical background, statement of problem, objectives of the study, research hypotheses, significance of the study, scope and limitation of the study, definition of terms and historical background of the study.
  • Chapter two highlights the theoretical framework on which the study is based, thus the review of related literature.
  • Chapter three deals on the research design and methodology adopted in the study.
  • Chapter four concentrate on the data collection and analysis and presentation of finding.
  • Chapter five gives summary, conclusion, and recommendations made of the study.

Chapter Five


Summary, Conclusion and Recommendation

5.1 Summary

The main objective of this study is focused on an appraisal and challenges of internet banking system in Nigeria banking environment using Access Bank PLC, Federal Capital Territory, Abuja as case study.. The study will further investigate whether challenges associated to internet banking discourages customers usage in Nigeria banking environment. This research is reported in five distinct yet interrelated chapters. In the chapter one we describes the study objectives clearly by stating the motive behind this study. Research hypotheses were developed for testing while the scope of this research was defined as well. The research adopted the survey descriptive design and with the aid of convenience sampling method, the researcher conveniently selected eighty (80) participant who are staff in Access Bank PLC, Federal Capital Territory, Abuja. Self- structure questionnaire was issued to the respondent of which seventy-seven (77)responses were retrieved and validated for the study. The study made use of of descriptive analysis and inferential statistics where data from field survey was analyzed using simple percentage, mean and standard deviation presented in frequencies and tables. Hypothesis test was conducted using Chi-Square Statistical Package for the Social Sciences (SPSS v.23).


5.2 Conclusion

Electronic banking (e-banking) system has become an important practice among commercial banks in Nigeria. The introduction of this banking system has improved banking efficiency in rendering services to customers and the public. However the gains of e-banking has been associated with some hinderances ranging from internet failure to arbitrary withdrawal of money by customers which negates the cashless policy being heralded by the Central Bank of Nigeria (CBN).

Findings of the study reveals that the benefit of internet banking includes; fast settlement of transactions, reduction in the rate of visits to banks, enhancement of Cashless Society, easier way of clearing imported goods and reduction of theft. Finding of the study further further establish that the challenges of internet banking system in Nigeria banking environment includes increasing the technical complexity of banks’ operation, transactions prone to error, security threat, regulatory challenges, fraud risk & money laundering associated with e-transaction. The study concludes that challenges associated to internet banking discourages customers usage in Nigeria banking environment.


5.3 Recommendation

Based on the responses obtained, the researcher proffers the following recommendations:

  1. The banks must perform more education and advertisement on electronic payments so that the Nigerian population will appreciate and use electronic products available. The use of cash comes with its own disadvantages and problems that electronic payment can eliminate. Cash and cheques must go through several processes which increases their risk of being lost or stolen. Such processes include transportation and counting. Most Nigerians are not aware of the benefits of e-payments are therefore slow to adopt it. The banks must also be educated to promote e-payments; training programme for senior management of the banks will assist in achieving this.
  2. The government of Nigeria should provide the much needed leadership and support for electronic payments.
  3. Applicable regulations including those for electronic approval processes, consumer protection and etransactions should be developed and standardized as needed.
  4. Government and private organizations should systematically expand the necessary infrastructure by promoting the development of necessary technologies, recruiting experts and expanding high speed information network as this will foster a strong foundation for e-payment.
  5. In order to be appreciative of the benefits emanating from the use of the new payment regime (EPS) there should be steady power supply in the country.
  6. Security to CDs/flash drive-measures should be taken to ensure that storage media be jealously guarded and delivered as intended.
  7. Issuers of electronic transactions will need to take great care to ensure that the danger of counterfeiting is minimized and they must be very vigilant in monitoring their systems and operations so that fraud can be detected quickly when it occurs. They should constantly upgrade hardware and software whenever a new feature of enhancing security becomes available. Besides, attending seminar/workshops/talk on the healthy usage of electronic transaction is very much encouraged, especially for those machine/computer illiterates. Customers must also be able to comply with the terms and conditions, keep track of the balance, especially after each transactions, protect identify/code number from public view, update personal information.
  8. Most electronic transaction cost only around one-third to one-half as much as a paper-based non cash payment and it is clearly understood that the cost of a transaction system could be considerably reduced if it is shifted to electronics. Therefore, financial institutions should provide transaction services according to their differential costs of services, so users may choose the instrument with the lowest net price/non price cost.

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