Evaluating The Impact Of E-Banking On The Nigeria Banking Sector (A Case Study Of Zenith Bank Plc)

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Evaluating The Impact Of E-Banking On The Nigeria Banking Sector (A Case Study Of Zenith Bank Plc)


This research critically analyzed the effect of electronic banking on the Nigeria banking sector, using Zenith Bank Plc as a case study. The objective of the study is to justify the application of information technology in banking services delivery in terms of profitability to banks. This could be used as yardstick by banks that are yet to adopt information technology in the operations. The research design adopted for the study is survey research design. The main instrument used was questionnaires and statistical package for social science (SPSS). The questionnaire was used to analyze the date collected. The questionnaires was structured for easy administration, 64 copies of the questionnaires were distributed and administered. Chi-square method was used in testing the hypothesis. The finding shows that majority of the respondents strongly agreed that information communication technology has positive impact on banking operations. That is the impact of ICT has an impact on the efficiency effectiveness on the Nigeria banking system it was recommended that firms must introduce and adopt information and communication technology as a measure to increase it profit, market share and customers’ satisfaction.

Table of Content

Preliminary Page(s)

  • Title page
  • Certification
  • Dedication
  • Acknowledgement
  • Abstract
  • Table of Contents

Chapter One:


  • 1.0 Background to the Study
  • 1.1 Statement of the problem
  • 1.2 Objectives of the Study
  • 1.3 Significant of the study
  • 1.4 Research Questions
  • 1.5 Statement of hypotheses
  • 1.6 Scope of the study
  • 1.7 Limitation of the study
  • 1.8 Organization of the study
  • 1.9 Definition of terms

Chapter Two

Literature Review

  • 2.0 Introduction
  • 2.1 Problems and prospects of delivering the expectations on banking technology
  • 2.2 History/development of commercial banks in Nigeria
  • 2.3 Zenith bank plc: a typical Nigerian bank for banking
  • 2.4 The role of payment system in Nigeria
  • 2.5 General overview of payment system in Nigeria
  • 2.6 The principles for systemically important payment system
  • 2.7 Smart Cards In Nigeria
  • 2.8 Theoretical Framework on Electronic Banking
  • 2.9 Empirical studies on e- banking

Chapter Three

Research Methodology

  • 3.0 Introduction
  • 3.1 Research design
  • 3.2 Restatement of research hypotheses
  • 3.3 Population of the study
  • 3.4 Sampling Design
  • 3.5 Method of Data Analysis
  • 3.6 Administration of Data Collection Instrument
  • 3.7 Validity and Reliability of Research Instrument
  • 3.8 Method of Data Analysis
  • 3.9 Limitation of the Study

Chapter Four:

Data Analysis and Presentation of Findings

  • 4.1 Introduction
  • 4.2 Presentation and Analysis of the Data
  • 4.3 Testing of Hypotheses and Interpretation

Chapter Five:

Summary of Finding Conclusion and Recommendation

  • 5.0 Introduction
  • 5.1 Summary of Findings
  • 5.2 Conclusion
  • 5.3 Recommendations
  • 5.4 Suggestion for further reading
  • Bibliography
  • Questionnaires

Chapter One


1.0 Background to the Study

A bank is a financial institution where you can deposit your money. Banks provide a system for easily transferring of money from one person or business to another. Banks and the many services they offer saves an incredible amount of time and ensures that funds pass hand in a legal and structured manner.

Banking is a system of trading in money which involved safeguarding deposits banking and making funds available for borrowers. Banking developed in the middle ages in response to the growing needs for credit in commerce.

E-banking refers to the computerized, advance and technological approaches to banking service (Ogunfowora 2005).

The main purpose that banks have been serving since their inception is keeping our money safe for us. While keeping our money safe. They also let us earn a certain amount of interest on the money deposited with them. Traditional banks have been doing this and internet banks continues the same function. The only difference is the way the transactions are made.

Computerized advance and technology refer not only to ways of providing goods and services but also ways of fulfilling needs and deriving satisfaction. The technology of consumption has a profound impact on the structure of the economy, influencing the goods and services to be produced and rendered. Even the attitude and values of people are in sense, a part of technology since they affect the capabilities of a nation (Ogunfowora 2005).

In today’s world, computers play an incredibly large role in the way the world exists in general, and the majority of tasks could actually not be completed if not for the use of computers.

Although there are certainly some areas of jobs that cannot yet be completed solely by computers and which thus still require actual manpower, for the most part, computers have helped to make life significantly easier, productive and more convenient for us all.

Electronic banking have been around for quite a few years now, but has really only become prominent over the past year or so in particular. E-banking offers an array of different advantages to the user, including account balances and history including year – to-year information the ability to transfer money from one account to another to payees for bill payments, check history, records, and stop payments, check credit card balances and statements.

Complete online loan application, secure interactive messaging with staff, and much more (Adebisi 2003)

Electronic banking such as internet banking basically allows you to be able to do everything that you can in your regular banking institution, only with the benefit that you can do it all right from the convenience of your own home. Not only is this great because you can be comfortable and have peace of mind knowing that you can keep track yourself of all your banking issues, but as well it allow for more ease because you never have to worry about rushing out and making it to the bank (Onabanjo 2008).

Nigeria along with almost all other African countries and beyond is more often than not referred to as a “third world country” To an African who have lived in any of the advanced economic of Europe and America. The reason for the tag “Third world” is clear, the advanced economy are further referred to as cash-less societies because the closing of transaction in most cases does not involve the use of cash as means of payment but other forms of convenient payment instrument. This includes cheques, credit, debit cards and electronic transfer of funds.

Banks as a service industry find information technology most amendable to its operations. It has the strategic potential to change the overall structures of a banking organization or even the banking industry and commerce.

This suggest that the creation of an internet electronic payment system will provide opportunity for creation of completely new sets of global and national banking relationships. The internet offers the possibility of an “Open system” payment and settlement system which operates in parallel to the existing more traditional bank-based networks, and which is particularly suited to meet the currently unsatisfied requirements for processing low value payment systems electronically. However, the institutional framework to exploit there opportunities does not yet exist, regulatory policy issued will need to be addressed in order that full advantages can be taken of the new types of commerce, which could emerge.

Nigeria of today is still gambling with the problems associated with an ineffective payment system and serious efforts have not been made to solve the problem. The re-public of South Africa has through the South Africa (equivalent to the Nigeria Central Bank) established a national payment system committee, which in November 1995 publish the framework and strategy for the implementation of an effective payment system. The South Africa payment committee is almost like the Nigeria inter-bank settlement system (NIBSS), is how ever concerned with eth clearing of financial instrument.

Banking at the global level as well as in Nigeria has appreciated the immense benefits derivable form information technology (IT) and has warmly embrace it, hence, such facilities as electronic fund transfer (EFT) Automated Teller Machines (ATM), automated cheques clearing facilities, abound in the banking system.

In Nigeria of today cash has remain the chief means of payment for goods and services. This situation is not unknown to eth authorities as confirmed by Dr Paul A Ogwuma (OFR) government of the Central Bank of Nigeria (2000) saying that: “as a result of the declining confidence in the financial system, most Nigerians today prefer to settle their transaction in cash. This explains why between the end of 1986 and December 1994, total current in circulation and in particular currency outside the banking system had both increased substantially. Financial instruments cheques, drafts etc are used by a few who hold bank depots accounts.

Nigerian banks have no alternative but to embrace the new information, technology in order to achieve, efficiency and competitive advantage. It is encouraging that many banks have joined the global trend and are obviously reaping the immense benefit, few of them have hooked up to the information supper high way. The internet and the implication on their performance have been far-reaching. (Adebisi 2003).

1.1 Statement of the Problem

The primary purpose of the banking system is to create and manage financial resources and to meditate between surplus and deficit economy units. In the process of carrying out this fundamental role, the banking system provides secondary services, which includes mobilizing financial resources for investment purpose assisting in resources allocation, promoting the payment system a facilitating international trade. In the final analysis, the performance of the sector is measured not only by the number a variety of services that are provided but also more importantly by the speed efficiency and safety with which these services are provided.

With the problems and limitations associated with manual banking procedures as witnessed in most parastatals today, the problem associated with the existing application programs even much more in the presence of serious technological advances aimed at improving information system. This is activities aimed at shedding light upon the need for improvement in accounting activities and the means of achieving efficiency, effectiveness reliability and success promising future through computer intervention.

E-banking identifies a particular set of technological solution for the development and the distribution of financial services, which rely upon the open architecture of the internet. With the implementation of an internet banking system, the banks maintain a direct relationship with the end users via the web and are able to provide a personal characterization to the interface, by offering additional customized services.

As already observed, one way of enhancing these has witnessed phenomenal growth change especially since the mid 1980’s and these have manifested in the enormous volume and complexity of operation increased innovations and variety in product / service delivery, financial liberalization, growing competition, customer sophistication and business process re-engineering.

Online banking services has grown from simply allowing customers to check balances, to trading assets. Today banks like ING Direct are functioning entirely online. With no brick and motar building. With the costs saved by requiring fewer employees and the lack of facility expenses, these virtual banks can often offer higher interest rate than their traditional counterparts. E-banking gives you the power to control your finances completely, you are no longer tied down to managing your money during the hours the bank is open. If you want to transfer a balance after business hours, you can! if you have access to the internet and have a number of recurring monthly bills. Then you should use internet banking to make you life easier.

These developments have not only been driven by technology advances but have also in turn spawned technological development. It is therefore true to say that technology has been the hub of banking development since the last decade and will continue to be so into the 21st century.

Therefore, there are however problem that arise from the era of technological advances: which are

  1. The unequal rate of development between IT and the nation economy and this poses threat to IT development in banking industry.
  2. The problem associated with the deficiency of technological infrastructure which may be useful to facilitate it.
  3. The unskilled manpower problem, which further incapacitate the growth rate of IT development in the banking industry.
  4. The problem of the usage of internet which the banking industry may not have identified as a faster way of internationally interact.
  5. Nigeria banks has been slow adapter of information technology (IT). They are slow at moving from the conservative business practices to that oriented towards the emerging paradigm driven by now technology

1.2 Objectives of the Study

The main purpose of this study is to examine the impact of E-banking on the banking sector in Nigeria. Specifically, the study aims to:

  1. Examine the prospect of information technology in modern banking operations in Nigeria.
  2. Evaluate the impact of electronic banking on the operations of financial institution in the country.
  3. Examine the role of organizational structure in information processing
  4. Examine the effect of electronic – banking on bank – customer – relationship.
  5. Identify barriers to efficient technology system with a financial institution.
  6. Make suggestions on how to make information technology system more efficient in modern banking operations relying on the opinions of operators in the industry.

1.3 Significant of the Study

Technology has played a very important role in the modernization of banking sector especially in terms of the development of the product and payment systems. The increase volume, complexity competitiveness, customers sophistication and globalization of financial services required modern technology if the bank want to remain in the business.

The tidal wave of the internet with its rapidly expanding use as an information exchange tool by individual business around the globe, has as spurned the expansion of business across national frontier resulting in the globalization of trade. The global computers network is also binging to the fore, the famed information age.

The volume a speed of banking transactions have improved significantly because of the growth of internet connectivity indeed; internet has opened greater business, opportunities. In order to capture a segment of an increasingly sophisticated clientele, Nigeria banks in the last two years gave embraced contemporary electronic options whereby a customer needs not physically visit a bank before transaction would be affected.

The Nigeria banking industry is emerging from the work period of distress in nations financial systems to focus in capturing the niche staked in business.

Nigeria banks are making a transition from the conservative business practice towards the emerging paradigm driven by new technologies for increasing sophisticate customer demand and competitions.

1.4 Research Questions

This research work shall be guided by the following research questions:

  1. Dose E-Banking contributes to the efficient of banks and bank-customer relationship in Nigeria?
  2. To what extent would electronic banking improve the fortune and profitability of banks?
  3. How has E-Banking effect performance in the banking sector?
  4. How has E-banking improved financial aspect of the Nigeria citizen?

1.5 Statement Of Hypotheses

The null and alternative hypothesis to be tested are:

  1. Ho: The adoption of information technology does not improve bank efficiency a bank – customer relationship
    H1: The adoption of information technology improve bank efficiency a bank – customer relationship
  2. Ho: E-banking in banks has no impact on efficiency and effectiveness on the Nigeria banking sector.
    H1: E-banking in banks has an impact on efficiency and effectiveness on the Nigeria banking sector.

1.6 Scope of the Study

The study is limited to the examination of the aspect of introduction and adoption of electronic banking and an extension, and what form of card, is a major payments system in place of the cash-based settlement, system predominant in Nigeria.

Apart from cards, which are now cash, there are other form of contemporary payment instrument, they are classified into three broad categories. These are cash (note and coins) non-cash (paper-based instruments) such as cheques. electronic system such as Automated Teller Machines (ATM).

The study also examine the feasibility of using on-line banking and the use of cards for other objective other than settlement based on the concept of electronic funds transfer through such electronic system ATM etc.

The scope of the work will also extend to the basic infrastructural requirements and the gains to the society in general.

1.7 Limitations of the Study

The major limiting factor of this study is the texts and papers on banks, electronic and the Nigeria payment system unlike that of advanced economics. This may be attributed to the newness of the introduction of electronic banking in Nigeria.

There is also the death of secondary data and relevant information on the project topic. Banks which have introduced one form of on-line banking or electronic banking and non cash system like “western money transfer” “first cash” by first bank’ “money gram” by UBA “PAYCARD” by Diamond Bank” “Wema link by Wema Bank”, value card by platinum Habib Bank in Nigeria are resisting to discuss their product. This by understanding will enable them continue to maintain competitive advantage over and above their competitors most information available are only description and does not include statistics on sales.

Finance was another major handicap, it restricted the movement and sourcing of materials hence the scope of the study will be restricted to few banks and to Lagos and its environments.

1.8 Organization of the Study

The rest of this study shall be divided into four chapters: chapter two will deal with the literature review and the role of information technology in business operations.

Apart from the profile of Zenith Bank that would be examined in chapter three, the methodology analysis which includes the characteristics and basic elements of the research study shall also be presented. Data presentation, analysis and interpretation will be covered in chapter four while the concluding part of the research work will be chapter five where in a nutshell the summary, the conclusion and the recommendations would be discussed.

1.9 Definitions of Terms


Banks are institutions that create and manage the financial resources of individual companies and nations. A bank is measured but its profitability and efficiency of the services it provides in comparison, to its peers. That is other banks in the same league (commercial or merchant).

Banking Industry:

This refers to the financial institution in a particular environment in relations to banking sector. This is a description of banking environment in a comparison to the other sector. This can be measured by how well bank are doing. In terms of profitability and efficiency in relation to the other industry in the economy.

Current Man Power:

This term in this instance refers to the present work force in the bank, as at the time the IT infrastructure is being out in place that has knowledge of using information technology.


This is known as the “information super high way’ where everyone is connected to each other. The intent is a “high way” where we can go and ‘surf’ as long as we have the address of person(s) organization, institution we are looking for or a name surfing means that you go to these different web sites to get the required information.

IT development:

In terms It development is the rate at which information has been developed. Development would be in terms of the use of IT in the bank in comparison.

Technological Infrastructure:

Technological infrastructure describe the structure that is put in place to make IT a reality in the environment that is being required.

Automated Teller Machine (ATM):

Refers to a unmanned automated teller device located either in or off bank premises which are capable of dispensing cash and handling routine financial transaction.

Credit Card:

Is a plastic card for changing purchases to an individual of corporate account that at some later date use to extent credit outside the bank premises.

Smart Card:

Either credit cash or debit card with on board electronic intelligence of its own and program mable – store monetary value usable for payment of exchange which is held in electronic form rather than physical nature.

Electronic Purse:

Refers to a debit card with funds loaded on it for the holder/owner to spend as he wishes.


Are financial instruments issued by bank account holder authorizing a debt transaction on their account.


Central Bank of Nigeria, the apex financial institutions in the country

Off Line:

Refer to system that are linked either directly or through any form of communication, lines to a bank’s central computer system.

In Line:

Refers to systems that are linked in either way to a bank central computer system.

Master Cards:

Refers to a card at the point of sales and capable of recording information.

Value Cards:

A value card is a compact electronic circuit board with payment for goods and service could be effected.

Cash Holder:

Refers to the person or organization holding the debit and credit involving limited work but extensive use of computers.

Automated Clearing Housing: (ACH):

Facility that performs exchange and settlement functions for electronic payments that passed between financial institutions.

Transactions Log:

It is the record of all transaction completed by a merchant over a period of time normally one day.

Evaluating The Impact Of E-Banking On The Nigeria Banking Sector (A Case Study Of Zenith Bank Plc)

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Evaluating The Impact Of E-Banking On The Nigeria Banking Sector (A Case Study Of Zenith Bank Plc)


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Frequently Asked Questions

Is e-banking the future of banking in Nigeria?

As the wind of change started blowing most banks if not all adopted the use of electronic banking (e-banking) for transaction just like any other part of the world, in Nigeria today, e-banking is fast becoming the rule rather than exception. A number of good reasons are adduced for this dynamic change in banking systems.

Why do banks in Nigeria need to serve customers electronically?

The rapid changes in business operations in contemporary times in the form of technological improvement require banks in Nigeria to serve their customers electronically. Traditionally, banks have been in the forefront of harnessing technology to improve their products and services.

How has the introduction of electronic into the banking industry affected?

The introduction of electronic into the banking industry has affected service delivery in the service industry. Many banks are shifting gradually from the traditional way of banking and are gradually introducing electronic technologies into their service delivery.

What is e-banking?

Electronic banking: The definition of e-banking varies amongst researches partially because electronic banking refers to several types of services through which a bank’s customers can request information and carry out most retail banking services via computer, television or mobile phone (Lustsik, 2004). 

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