Electronic Banking As An Aid To Commercial Bank Operations In Nigeria

Project and Seminar Topics with materials for Banking and Finance

Electronic Banking As An Aid To Commercial Bank Operations In Nigeria


This study examines critically Electronic Banking as an Aid to Commercial Bank Operations in Nigeria, using first bank as a case study. Electronic banking (e-banking) has brought about a revolution in the functioning of banks as it offers major opportunities to banks and their customers. This has made the transition to electronic banking a necessity for banks in order to be viable. Despite its benefits, developing countries still lag behind in the adoption of electronic banking. Due to emergence of global economy, e-business has increasingly become a necessary component of business strategy and a strong catalyst for economic development. E-banking has become popular because of its convenience and flexibility, and also transaction related benefits like speed, efficiency, accessibility, etc. The customers (respondents) perception is that e-banking provides convenience and flexible advantages. It also provides transaction related benefits like easy transfer, speedy transaction, less cost and time saving. The researcher used primary and secondary methods of data collection to gather the needed data. Through the cluster sampling technique, data was collected by means of questionnaires from 40 First Bank officers and the result shows that First Bank electronic banking guidelines are in line with the CBN electronic banking guideline. The bank has an effective electronic banking system which has improve its customer’s relationship and satisfaction. To this end, It is recommended that the bank information technology training programme should be encourage among the staff of First Bank, necessary legal codes banking should be established in order to enhanced growth of the industry.

Table of Content

Chapter One:


  • 1.1. Background of the Study
  • 1.2. Statement of the Problem
  • 1.3. Objectives of the Study
  • 1.4. Statement of 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

Chapter Two:

Literature Review

  • 2.1. Introduction
  • 2.2. The View on Electronic Banking
  • 2.3. Electronic Banking and the Common Banking Products
  • 2.3.1. Telephone and Pc Banking Products
  • 2.3.2. The Card System
  • 2.3.3. The Automated Teller Machine (Atm)
  • 2.4. The Entry of Nigerian Banks Electronic Banking
  • 2.5. The Emerging Issues in Electronic Banking
  • 2.5.1 Threats of Cyber Crimes on the Nigerian Banking Premises
  • 2.5.2. The Regulatory Challenges
  • 2.5.3. Electronic Banking Profitability and Efficiency
  • 2.5.4. Bank Customers Relationship
  • 2.5.5. Operations of Financial Institution

Chapter Three:

Research Methodology

  • 3.1. Introduction
  • 3.2. Population of Study
  • 3.3. Sampling Techniques
  • 3.4. Sample Size
  • 3.5. Sources of Data
  • 3.6. Method of Data Analysis
  • 3.6.1 Test of Hypothesis and Inference
  • 3.6.2. Decision Rule and Justification

Chapter Four:

Data Analysis and Discussion of Findings

  • 4.1. Introduction
  • 4.2. Presentation and Analysis of Data
  • 4.3. Discussion of Finding

Chapter Five:

Summary, Conclusion and Recommedations

  • 5.1. Summary of the Study
  • 5.2. Conclusion
  • 5.3. Recommendations
  • References- Bibliography
  • Appendix – Proposed Research Questionnaire

Chapter One

1.0 introduction

1.1 Background to the Study

Advances in information and communication technologies and the emergence of the internet have revolutionized business activities enabling new ways of conducting business referred to as electronic commerce. The Nigerian banking industry has witnessed a lot of changes since the mid 1980s and this is reflected in the increased volume and complexity of operations, increased innovations and varieties in product and services delivery. These developments have not only been technologically driven, but have influenced more technological advances. Information technology, which is the foundation of modern electronic banking, through desktop computers and terminals, provide tools for delivery of new products and innovations characterized by Automated Teller Machines (ATM) and Credit Cards. Information technology (IT), through electronic banking, is rapidly changing how banking is done all over the world. E-service is becoming more important, not only in the area of determination of success or failure of electronic commerce (Yang, 2001:164), but also in the provision of customers with superior experience with respect to the interactive flow of information. However, technology has had remarkable influence on the growth of service delivery options Bagozzi, M. (2002:27). According to (Dabhollear, 2000:19) in his view claimed that when the customer is in direct contact with the technology, there is a greater control such as with electronic banking. However, in the absence of direct contact such as with telephone banking, it is assumed that there is less perceived control by the customer during this transaction. He suggests that direct contact with such technology gives the customer a feeling of great control. He also goes on to say that electronic banking allows customers to perform task at time and places convenient for them. (Ovia, 1997, p.2) states that the new technology has created an unparallel wired economy, transferring money from point to point using bits and bytes through satellite transponders, fibre optic cables or regular telephone lines.

The installation of customer friendly technology, such as Automated Teller machines and internet banking service, as a means of delivering traditional banking service, has become common as a way of maintaining customer loyalty and increasing market shares. This technology is used by banks to meet the competitive challenges posed by online banks as well as a method of reducing the cost of producing services that were once delivered exclusively by bank personnel (Joseph, C. 2007:76). Millions of Naira is being spent on information technology by bank, making the use of electronic banking expensive, yet it is still suited in Nigeria where transport, telecommunication and energy is inefficient and ineffective, hampering the movement of goods and service. Imiefoh (2012:24) sees electronic banking as an umbrella term for the process by which a customer may perform banking transactions electronically without visiting a brick-and-mortar institution. That is, automated delivery of new and traditional banking products and services directly to customers through electronic, interactive communication channels. E banking generally implies a service that allows customers to use some form of computer to access account-specific information and possibly conduct transactions from a remote location like home or workplace, (Odulaja 2012:7).

The willingness of banks to take up efficiency seeking technology depends just as much on internal factors like cost of adoption and ownership of infrastructure like telecommunication. Tony, S. (2006:82) opined that service equality impact on customer satisfaction which in turn affects the financial performance of the banks. Thus, customer access electronic banking services using an intelligent electronic devices such as a personal computer (PC), personal digital assistant (PDA), automated teller machine (ATM), kiosk or touch tone telephone Auta (2010:17). Today, based on the considerable economic benefit of electronic banking system in terms of reduction of the cost and increase of banks profitability, increasing quality of services to the customers, removing the temporal and spatial limitations and development of bank activities and marketing, in most of the advance countries, there are many experienced banks that extended their operation by electronic methods by establishing independent banks, also they continued their current activities and new banks also present their services to the customers via electronic methods. Electronic banking is one of the great results of IT communication revolution in the economic field. Electronic banking made a revolution in the past commercial method and trend the focused mostly on speed and saving time (Gudarzi2008:140).

Before the emergence of modern banking system, banking operation was manually done which lead to slowdown in settlement of transactions. This manual system involves posting transaction from one lager to another which human handles. Figures or counting of money which should be done through computer or electronic machine were computed and counted manually which were not up to 100% accurate thereby resulting to human error. Most banks then use only one computer in carrying out transactions which ameliorate the sluggish nature of banking transaction. Electronic banking remains a strategic tool employed by banks to gain competitive edge both within and outside the boundaries of Nigeria. According to Kamokodi K. (2008:34), e-banking is important in six different areas:

  1. Augmenting profit pool.
  2. Enhancing operational efficiency.
  3. Customer management.
  4. Distribution and reach.
  5. Product innovation.
  6. Efficient payment and settlement.

The concept of e-banking differs amongst scholars. This is due to the fact that e-banking encompasses variety of services provided through electronic devices and over the internet. It is the most recent delivery channel of banking services which is used for both business-to-business and business-to-customer transactions. According to Burr O. (1996:90), electronic banking is the electronic connection between the bank and customer in order to prepare, manage and control financial transactions. E-banking also refers to the use of information and communication technology by banks to provide services and manage customer relationship more quickly and most satisfactorily (Charity-Commission, 2003). According to Salehi and Alipour (2010:145) who indicated that e-banking includes the systems that enable financial customers, individuals or businesses, to access accounts, transact business, or obtain information on financial products and services through a public or mobile phone. With e-banking, transaction costs would be low when compared to the cost of banking through conventional methods. The business environment is not only dynamic and discontinuous but also turbulent which has made the benchmark for services quality to rise. This has led to intense competition among banks to attract new customers and retain existing ones. Banks are increasing deploying IT as a means of generating insights into customer’s behavioral pattern and preferences in response to the demand for quick, efficient and reliable service. This is done through automated teller machine (ATM), card processing, bill presentment and payment, software development, call center operations and network management.

Today, we cannot think about the success of the banking industry without information and communication technology as it has enlarged the role of banking sector in the economy. Financial transaction and payment can be processed quickly and easily. Banks with the latest technology and techniques are more successful in the competitive financial market since they are able to generate more and more business resulting in the greater profitability. The Easiness of transacting economic substances as well as a safer and quicker access to funds, among other factors, has placed e-banking system on a more glorified pace than cash-based system, Obiano W. (2009:78).

1.2 The Statement of the Problem

The E-banking is a global phenomenon which no nation can opt away from. The use of technology forms the backbone for better results in banking. However, the problem of transparency of the system and poor dissemination of accurate financial information and protection of consumers remain an issue on point. Sharp practices are noticed by the customers many a time especially when financial information are electronically generated by the banking, where the accuracy and ability to verify same by the customers might be difficult. Since the inception of the use of electronic banking product in the late 1980s, banks have not made their presence felt much and this is arising as a result of problems associated with the use of electronic banking which includes:

1. Cost of Ownership and Adoption:

Cost of ownership or acquiring electronic banking by the banks tend to e very expensive, as it entails the acquisition of computers and telecommunication gadgets which are usually brought from overseas, making the bank spend more on the shipment and installation of these gadgets by the experts, as a result, most banks could not afford E-banking.

2. Poor Orientation:

The lack of knowledge about the use of the computer by employees can also be said, as most bank staffs are not computer literate which serves as a perquisite for e-banking operation.

3. Lack of Infrastructure:

The poor condition of power supply in the country as well as the unavailability of property installed telecommunication system are said to be great setbacks in the use of electronic banking.

1.3. Objectives of the Study

The main objective of this research work is to examine Electronic banking as an aid to commercial bank operations in Nigeria

Specifically the study objectives are;

  1. To evaluate the prospects of electronic Banking in first bank PLC
  2. To evaluate the impact of electronic Banking in first Bank PLC
  3. To examine whether electronic banking has improve the operation of the Bank.
  4. To examine the effect of electronic banking has it improve the operation of the bank.
  5. To examine whether the Bank electronic Banking guideline comply with the CBN electronic Banking guideline policy.

1.4. Research Questions

  1. What are the prospects of electronic Banking in first bank PLC?
  2. What is the impact of electronic Banking in first Bank PLC?
  3. Has electronic banking improved the operation of the Bank?
  4. What is the effect of electronic banking has it improve the operation of the bank?
  5. Does the Bank electronic Banking guideline comply with the CBN electronic Banking guideline policy?

1.5. Research Hypothesis

The following hypotheses are formulated in null form to guild the study.

  1. Hο: Electronic banking does have prospect in First Bank Plc
    Hµ: Electronic banking does not have prospect in First Bank Plc
  2. Ho: Electronic banking does impact in First Bank Plc
    Hµ: Electronic banking does not impact in First Bank Plc
  3. Ho: Adoption of Electronic banking does enhance the operation of first Bank Plc
    Hµ: Adoption of Electronic banking does not enhance the operation of first Bank Plc
  4. Ho: Electronic banking does improve Bank Customer relationship
    Hµ: Electronic banking does not improve Bank Customer relationship
  5. Ho: The Bank electronic banking guideline does comply with the CBN electronic banking guideline.
    Hµ: The Bank electronic banking guideline does not comply with the CBN electronic banking guideline.

1.6. Significance of the Study

In this research, the significance of this study is to bring together the various ways and facts as regards to subject matter, against this back drop, it is anticipated that the study will be of immensely help to banking industries and the customers to know the benefit of E-banking. Electronic banking in our economy today is a welcome development and also its impact in the society is over-whelming. It will motivate banks and other economy sectors to computerize their services. It will provide knowledge in the area of electronic banking that will advance the customers understanding. It can also serve many purposes in the following ways.

1. For Customers:

Increased convenience, reduction in risk of cash related crimes, access to credit and cheap access to banking service.

2. For Corporations:

Better access to capital due to shorter payment processing times, increased efficiency of payment process and accounting, reduced revenue leakage and efficiency in treasury management.

3. For Government:

Increased tax collection, increased economic growth.

4. For Banks:

Efficiency through electronic payment processing, reduced cost of operation and increased banking penetration.

The study will also be of great important to any student who will want to go for further research on this topic.

1.7. Scope of the Study

This research study is limited to first bank Plc, alone where the researcher wants to find out empirically electronic banking as an aid to commercial bank operations in Nigeria. In order to conduct an empirical investigation into the adoption of Electronic banking in Nigeria and will also examine the nature of electronic banking operations in first Bank Plc from 2007 to 2015.

1.8. Limitation of the Study

In view of the technicalities involved, it would be unrealistic to assume that all necessary facts have been gathered in the process of the study. Information gathered is limited to those accesses and made available by the respondents and also those gathered from end users. However, the impacts of this limitation will be reduced to the barest minimum.

1.9. Definition of Related Terms

Access Products

Products that allow consumers to access traditional payment instrument electronically, generally from remote locations.

ATM Card

UB Debit Card is a Chip device consisting of circuit element on single silicon chip. The Card a complex circuits that process microprocessors with a single chips that contain the complete arithmetic and logic unit of computers. It provided for First Bank customers to perform balance inquiry, mini statement and cash withdrawal as well as transfers through the use of Automated Teller Machines. This green card can also be used for Internet/Online and POS transactions.

Chip Card

Also known as an integrated circuit (IC) Card. A card containing one or more computers chips or integrated circuits for identification, data storage or special purpose processing used to validate personal identification numbers, authorize purchases, verify account balances and store personal records.

Electronic Data Interchange (EDI)

The transfer of information between organizations in machine readable form.

Electronic Money

Monetary value measured in currency units stored in electronic form on an electronic device in the consumer’s possession. This electronic value can be purchased and held on the device until reduced through purchase or transfer.

Electronic Recruitment

This is an online recruitment services to all kinds and categories of clients such as (Army, navy, police and the Paramilitary) through customizable web portals and the use of scratch cards/PINs for a Prospective applicants simply buy the scratch cards, visit portal and fill relevant information. Information collected about applicants could then be analyzed appropriately using ‘what if’ capabilities and filtered according to several criteria to be set by client. Short listed applicants could then be contacted automatically via email or SMS or both.

Electronic Web Collection

This enables the Bank partner with Universities and higher institutions of learning to handle Admission, Registration, Examination Managements and Fees Collection needs. Electronic Admission by Prospective Candidates, Electronic School Fees Payment, Automated Registration, Examination and Results Publication/Management

Internet Banking

This is a product that enables the Bank leverage on the Internet Banking System Module in-built on the new Banking Application (BANKS) implemented by the Bank to serve the Internet Banking needs of the Bank’s customers.

Mobile Banking

This is a product that offers Customers of a Bank to access services as you go. Customer can make their transactions anywhere such as account balance, transaction enquiries, stop checks, and other customer’s service instructions, Balance Inquiry, Account Verification, Bill Payment, Electronic fund transfer, Account Balances, updates and history, Customer service via mobile, Transfer between accounts etc.

Payment System

A financial system that establishes that means for transferring money between suppliers and of fund, usually by exchanging debits or Credits between financial institutions.

Point Of Sale (POS) Machine

A Point-of-Sale machine is the payment device that allows credit/debit cardholders make payments at sales/purchase outlets. It allowed customers to perform the following services Retail Payments, Cashless Payments, Cash Back Balance Inquiry, Airtime Vending, Loyalty Redemption, Printing mini statement etc.

Smart Card

A Card with a computer chip embedded, on which financial health, educational, and security information can be stored and processed.

Transaction Alert

Our customers carry out debit/credit transactions on their accounts and the need to keep track of these transactions prompted the creation of the alert system by the Bank to notify customers of those transactions. The alert system also serves as notification system to reach out to customers when necessary information need to be communicated.

Western Union Money Transfer (WUMT)

Western union Money transfer is a product that allowed people with relatives in Diaspora who may be remitting money home for family up-keep, Project financing, School fees etc. Nigerian Communities known for having their siblings gainfully employed in other parts of the world are idle markets for Western Union Money Transfer.

Chapter Five

Summary, Conclusions and Recommendations

5.1 Summary

The study was carried out in order to assess the Electronic banking as an aid to commercial bank operations in first Bank. The general introductory aspect shade more light on the essential of electronic banking. Many literature and academic publication from different authors in electronic banking, product emerging issues in electronic. In the cause of this research, the researcher was able to find out that origin of electronic banking system is a conventional banking system which started in Nigeria in 1952. Also the prospect of electronic banking was looked into critically. Electronic banking improved the operation of First Bank. This was achieved by adopting the CBN banking guidelines.

5.2 Conclusion

Based in the summary of the major findings the following conclusions are drawn:

  1. The adoption of electronic banking has enhanced First Bank efficiency by making it more productive and effective.
  2. Electronic Banking also has a strong impact on the overall banking performance by making workers performance more effective and efficiency.
  3. The adoption of electronic banking has enhanced the operation of the bank. This is achieved through bank charges cheque withdrawal slip and withdrawal charges.
  4. The electronic banking has improved the bank customer relationship by rendering effective services throughout the week. Customers can now have access to their account outside working hours to make withdrawal to attend to their needs.
  5. The electronic banking guideline introduced by CBN strongly helps in effective electronic banking system. Withdrawal can be made anywhere at any time and using any bank ATM machine, customer cannot withdrawal more than some certain amount to allowed other customers have access to cash and money, can be transfer from one place to another through electronic means.

In general conclusion the electronic banking has made banking transaction to be easier by bringing services closer to its customers.

5.3 Recommendations

In order to give the growing trends of Information and Communication Technology (ICT) which involves net banking and e-commerce in banks a vision in the right directions, the following strategies are recommended for further follow up:

  1. The banks must be focused in terms of their needs and using the right technology to achieve goals, rather, than acquiring technology of internet banking because other banks have it.
  2. Government participation in ensuring focused telecommunication industry must be visible to reduce or remove avoidable costs of implementing e-commerce and internet banking.
  3. Regulatory authorities like CBN (Central Bank of Nigeria) must stipulate standards for the banks to follow to avoid making Nigerian Banking Sector a dumping ground for the outdated technological infrastructures.
  4. Training and Manpower development is another major problem militating against the growth of e-commerce in the country. Government must make right IT policy by ensuring that Computer, Communication equipments and other IT infrastructures to a large extent are manufactures in the country so that our people can acquire first hand necessary skills. Government Policy that will guide against Money laundering, fraud and Security risks posed by net banking is inevitable.
  5. To counter the legal threat and security posed to net banking and e-commerce, the necessary legal codes backing the industry must be established; this will enhance the growth of the industry

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