E-Payment System – Its Impact On Electronic Fund Transfer And Cash Management In Commercial Banks

Project and Seminar Topics with material for Banking and Finance

E-Payment System – Its Impact On Electronic Fund Transfer And Cash Management In Commercial Banks


Abstract


In recent times several commercial products have been designed by commercial banks to improve the quality of services they are rendering to their customers, as well as to ensure quality cash management in banks. This research work has been divided into five chapters, chapter one introduces this work, demurring the risk and challenges, looked at the objective and significance as well as the statement of claims. Chapter two reviewed some precious works done in this area, ranging from the history of banking industry development in the commercial banks in Nigeria. Electronic payment banking and cash management. Chapter three examined the procedures and methods of data collection, such as the primary source that include books from the library and secondary source that include questionnaire and personal interview. Chapter four however analysis the data collected. Finally chapter five talks about the recommendation and summary of the work. Thus, commercial banks have been the life wire of any nation’s economy. Therefore, the researcher has recommended among other things that: All banks should be more effective in the administration of E-banking. The CBN should introduce measures and regulations that will guide the activities of commercial bank with respect to Electronic fund transfer (EFT).


Chapter One


1.0 Introduction

1.1 Background of the Study

It is generally, acknowledged that the availability of financial capital is a prerequisite for the rapid development and transformation of any nations economy. The provision and efficient management of this scare resources is best facilitated by the existence of an appropriate functioning institutions in the economy. With this at the back of our minds, it then follows that Banks have a vital when to play by making vast financial resources available for industrial growth and development.

Therefore, for banks to be effective and efficient in carrying its operations in the computer age, they have to embrace modern forms of banking, in other words, economic payment banking system.

The word “ Bank” is used in the sense of a commercial bank in this project work and it is also narrowed for money only. Oxford advanced learners dictionary, defines a bank as an organization that provides various financial service for example keeping or lending of money.

Economists have also defined a bank highlighting its various functions. According to Crowther (1981) the bankers business is to take debts of other people, to offer his own in exchange and thereby create money. A similar definitions have been given by keut (1989) who defined bank as an organization whose principal operations are concerned with the accumulation of the temporary with money to general public for the purpose of advancing to others for expenditure “sayers on the other hand, gives a more detailed definition of a bank thus ordinary banking business consists of changing cash for bank deposits and bank deposits for cash, transferring bank deposit for one person or corporation to another, giving bank deposit in exchange of bills of exchange government bonds, the secured or unsecured promises of businessmen to repay etc. thus, banks in essence is an institution which accepts deposits from the public and in turn advance loans by creating credits.

In recent times, several commercial produce have been designed by banks in the industry to improve the quality of services provided to their customers as well as to ensure quality cash management in these banks.

There have been several innovations from a paper transfer system to an electronic based in fund transfer system. There has been an introduction of sophisticated application of computer technology in cash management via the electronic fund transfer. These innovations aimed at modernizing banking, enables banks to transmit financial messages globally within seconds, while also receiving a spot confirmation, the banks are faced with the responsibility of properly and effectively managing their accounts receivables and accounts payable among other numerous tasks.

Cash management refers to the planning, organizing and controlling of corporate fund with the view to achieving organizational goals and objectives.

It involves the ability of a company or an individual to arrange holdings of cash balances in such a way that excess holdings and shortages of cash are minimized.

Cash management also entails controlling investment in fixed assets including interest income in any idle fund. These motives behind cash management has remained the reasons for innovations in Eletronic fund transfer (EFT)


1.2 Statement of the Problem

Nigeria commercial banks in recent years have designed series of products towards effective mobilization of fund needed for industrial growth and development of the country.

These funds need to be effectively managed to meet borrowers demand for short term loans and over drafts.

It must be noted that some exogenous and endogenous variables have posed great problems to the banks in their quest to effectively manage their cash via the electronic fund transfer (EFT) among the identified problems in this research work include:-

  1. Lack of proper transmission of information between bank and the resulting change in bank records.
  2. The range of banking services that are offered via the electronic/ internet are largely limited compared to the developed world.
  3. The reluctance to move away from traditional hard cash and general mistrust in our society
  4. Lack of proper knowledge of the guideline of e- payment by the regulating body.
  5. Lack of marketing drivers to enlighten the people above the advantage and convince
  6. There is high capital requirement on the project

1.3 Objectives of the Study

This project work on Electronic fund transfer and cash management is aimed at identifying and revealing the use fullness of electronic fund transfer and cash managements in banks.

  1. It will also highlight the benefits, risks and problems inherent in the use of EFT in cash management.
  2. This study will also x- ray the roles, functions and products/ services rendered by commercial banks to their esteemed customers.
  3. This study helps to know the level at which electronic fund transfer (EFT) has attained in cash management of commercial banks.

1.4 Research Questions

  1. How do banks access fund transfer?
  2. What are the effects or imports of electronic fund transfer?
  3. What kind of relationship exists between Electronic fund Transfer and cash management in Banks?
  4. How close Electronic fund transfers contribute of the overall cash management?
  5. To what extent has Electronic fund transfer services helped in reducing fraud in the banking industry?
  6. How do expenses as it relates I.T affect the profitability of banks?

1.5 Statement of Hypothesis

The following research hypotheses are formulated for the project:-

Hypothesis I
  • Ho: EFT has no effect on effective cash management in banks .
Hypothesis II
  • HO: The use of Electronic fund transfer is not an effective tool for cash managements is banks
Hypothesis III
  • Ho: Introduction of Electronic fund transfer system has not helped in reducing fraud in banks.
Hypothesis IV
  • HO: The use of electronic fund transfer has not bring about increase in profitability of banks.

1.6 Significance of the Study

The role of commercial banks in the economic development of a nation cannot be over- emphasized as they play a major role in the economic life of a country by providing individuals, corporate body and government with opportunities for saving and procuring funds needed to set, attain and accomplish their goals and objectives. Using the electronic fund transfer in managing cash in their till.

In view of the positions stated above, this study will be of great benefits to individuals wishing to do business with banks, bank customers, corporate bodies and the government the study is also expected to provide the banks with an assessment of the journey so far in the use of Electronic fund transfer (EFT) and cash management. It is equally hoped that this work will aid the management of banks in decision making as it affects Electronic based products and services.

To the students, this project will serve as a reference guide upon which further research can be based on.


1.7 Scope of the Study

Commercial banks were established in different times in Nigeria and in different part of the country principally to accept deposits and advance credit to customers (people) all these are aimed at enhancing and promoting economic development in the country.

This research work is conducted on selected branches of two commercial banks in Owerri, Imo State. First bank of Nigeria Plc and united Bank for Africa Plc (UBA).

An issue on transfer concerning Electronic fund transfer and cash management in particular and Electronic payment banking in general is the target.


1.8 Limitations of the Study

A research work of this nature, cannot be successfully carried out without encountering obvious constraints and difficulties which if not handled very well, can impair the quality and dept of the work.

Among these constraining factors is the branch banking system in Nigeria, whereby useful information can mainly be obtained from head officers of the banks.

Unfortunately most head offices are outside the state including first bank of Nigeria Plc and united bank for Africa Plc.

The bankers’ responsibility not to mention anything to an outsider concerning the customers’ accounts and other affairs reduced considerably the volume, scope and quality of this work.

Due to this fact, low level management staff found at extremely difficult to give information to the researcher even when such information ere readily available at their disposal.

There are also financial, time and human resources constraints due to the fact that the researcher had to finance this project on her own purse and the much needed travels movements to collect data were restricted due to high cost of transportation.

More so, the time frame was not in favour of the researcher as she had to share time between her normal class lectures and this research work.


1.9 Definition of Terms

Below are some of the definition of terms and concepts used in this project work.

Acceptance:

To receive your safe keeping, to signify intention to pay money, draft or bill at maturity

Account:

The recording in the ledger of the financial transaction that have taken place within a personal of time.

ATM:

Automatic teller machine,this is machine in which cash is dispensed

Banks:

An institution for safe keeping and lending of money.

Banker:

A person who performs brokerage services in his capacity as owner of a banking institution or as an executive employee of a bank

Branch Banking:

A system of banking in which a bank operates branches or offices outside the main or head office

Bank Customer:

A person who opens or operates an account with a bank

Cash:

This is currency and coins on hand, bank balances and negotiable money orders and cheques.

Cash Swap:

This is the movement of cash from one bank to another.
It could be inter bank borrowing

E- Banking:

Electronic Banking

E- Cash:

This is a payment mechanism designed for the internet. It is electronic money that can be passed along form one person to another like cash.

E- Check:

This electronic equivalent of a paper check

Electronic Banking:

A from of Banking in which funds are transferred through an exchange of Electronic signals between financial institutions, rather than an exchange of cash, checks or other negotiable instruments.

Electronic Bill Payment (E- Pay):

An alternative to paper checks for paying bills

Electronic Fund Transfer System:

A variety of systems and technologies for transferring funds (money) electronically rather than cheques

Electronic Fund Transfer (EFT):

A system that transfer funds through electronic messages interest of by traditional means such as cash or cheques.

Electronic Fund Transfer at the Point of Sale:

This is a payment system which enables cashless payment at sales points.


Chapter Five


5.0 Summary, Conclusion and Recommendation

5.1 Summary

This project work has x- rayed the role functions, products and services rendered by commercial banks to their esteemed customers.

The study sees commercial banks as life wires of any nation’s economy that provides individuals, cooperate bodies and government with the opportunities for savings and procumbent of funds needed to set, attain and accomplish their objectives using the electronic fund transfer in managing their cash till.

Again, due to cash and carry nature of Nigerian economy, good credit is only available from the banks and there is the tendency for companies to transfer their banking business to the bank that is willing to grant or offer then credit facilities without stringent terms and conditions.

Finally, this work has attempted to survey development in Electronic payment banking with particular reference as to know how it has enhanced cash management in banks, it has presented on overview of electronic fund transfer system and its related application as applied to cash management.


5.2 Conclusion

The expectations of the government and people of this great country in the banking sector are enormous. As we approach the 21st century, computer and telecommunications have become the most essential tools for efficient and cost effective operations of the world over their responsibility of ensuring successful computerized program for all staff.

Top management must therefore ensure that polices on information technology are approved and enforced.
This is to say that full commitment and support of top management are essential to encourage use of Electronic fund transfer (EFT) departments to work together in best interest of the bank.

The banking industry cannot reside in an island of incompetence, indeed their place is therefore in for technologically innovative banking.

It is a good thing banks now offer cash management services based on electronic fund transfer (EFT) systems, this level of awareness today is great and is hoped that they will increase the use of such services such increases will encourage banks to pool resources together and set up on inter money transfer on transaction involving different bank in different cities.

The central Bank of Nigeria (CBN) has however played an important role in the development of Electronic fund transfer (EFT) system because of its growing importance, this is evidenced today on the pronouncement and policies introduced recently by the CBN.

Electronic system of banking enables institution to develop business relations with a greater range of customers.

The time available for credit risk and other decision has been shortened by the efficiency of the bank electronic settlement system.


5.3 Recommendation

It is Obvious from the scope covered in this project work that there is vast improvement in cash management through electronic payment banking services provided by some banks in the country.

Considering the delay that arises from main and telegraphic transfer and cheques clearing system, then compare it with the instantaneous transfer of funds offered through Electronic fund transfer (EFT), the result shows that there has been a tremendous improvement but there is still room for further improvement.

A company collects its receivable from a customer, immediately the customers remits it to the bank respective of the part of the country the customer remits it from.

The transferring of fund to and from beneficiaries on the someday without attracting additional pay, is a welcome development on the part of today’s computerized banks via the electronic fund Transfer (EFT) services which is shongly recommended to be used to full advantage.

Again, there is the need for basic policies and laws to be enacted in other to help regulate the environment in which electronic fund transfer (EFT) operate in the course of this study, it was noted that not all banks have embraced Electronic payment banking even the banks that have embraced Electronic payment banking in view of the above the central bank of Nigeria (CBN) should mandate all the banks to improve in the Electronic payment system and this will enhance inter and intra transfer of funds.

Banks should improve on their public relations, this is intended to build good will and image within and outside the environment gain favour and also maintain a cordial relationship with customer and the general public at large.
This will enable the public appreciate the impact of Electronic fund Transfer (EFT) and as such embrace it.
Also, public confidence is the another and cornerstone on which banking is built, if it breaks down, the whole edifice of banking collapse.

The central Bank of Nigeria (CBN) should also introduce measures and regulation that will guide the activities of the commercial banks with respect to Electronic fund transfer (EFT).

This work could not have covered everything regard to this for instance while this work was nearing it’s completion saw another product through first inland bank (FIB) the product is named flash me cash. This is a package or production where by you will be using your GSM telephone to operate your account and your telephone number becomes your account number there is need for more research on this topic, so this project work will serve as a reference guide up on which further research can be based upon.


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