ABSTRACT
The primary aim of this project tilted role of electronic banking in the development of banking industries in Nigeria which is being taking with all seriousness as it presents a mechanism of extending banking services of wilder segment of the people at a lower cost. More importantly, it encourages innovations and competition by making available different types of sophisticated products and equipment that are geared towards providing maximum satisfaction for the bank that cannot meet up with the innovation environment will leave their customer to more innovation and customer oriented banks. Furthermore, E-banking articulated transaction by allowing customers to execute financial transaction on the bank website by using “transaction website” and it also enable organization to reach consumer outside their immediate area at minimum pretreated into foreign market.
CHAPTER ONE
1.1 BACKGROUND OF STUDY
In Nigeria, the banking industry witnessed lots of challenges due to increase in the awareness and utilization of banking services. The demand for bank services equally increased the staff strength and branches of most Nigerian banks. In spite of this these adjustments the banks cannot satisfy the demands of some of their transactions were based on manual and physical present of their customers.
The advent of financial innovation such as smart card, credit card, electronic transfers in the payment system and recently the lunching of internet banking have transformed the world into a global village linked with electronic impulses. The concept of electronic money in Nigeria was introduced in 1990 when the Central Bank of Nigeria (CBN) gave approval to them. All state Trust Bank limited to offer a financial product known as smart card. Subsequently, Diamond Bank play card. However, the smart card scheme received uplift in February, 1998 when a consortium of a licensed bank surfaces a smart card company in Nigeria which is known as Smart card Nigeria plc with a mandate to producers and manages cards issued by the member bank of the consortium. Another consortium of more than 20 banks under the patronage of Gen card became operational in year 2000. These innovations, which are still at a relatively early state of development have postnatal to challenge the predominate role of cash for making small value payments and make retail transactions easier and cheaper for consumers and merchants who are account holders. However, they also raised a number of policy issues because of the possible implication for Central Bank monetary policy consumer system etc. In responses to implication technology development in the domestic financial sector, the Central Bank of Nigeria commissioned and information technology strategy study in 1991 with the objective of promoting efficient performance of its statutory duties. The product is being implemented in phase and both the licensed banks and the regulatory authority here demonstrated their appreciation of benefit derivable form the application and use of the information technology. In view of foregoing, the Central Bank Governors of the group of ten (G-10) country commission a series of studies on specific issues related to electronic banking in Nigeria. Modern Internet banking brought to relief to the increased volume and complexity of banking operations and services delivery. Experimentation with
Internet banking and electronic fund transfer gradually become part of daily transaction as arrangement were made with banks using microcomputer to pay some bill owed big department stores and companies, by this practices the internet becomes a service delivery mechanism of their customer has equally embraced it
Meanwhile information technology through Internet banking is radically changing how banking is done all over the world and Nigeria is not an exception. The volume and speed of banking transactions has improved tremendously as a result of the growth of internet banking which has created a lot of changes and business opportunities for banks operate bodies and industries. In fact Nigeria is believed to be the largest Internet user in the West African with about 100,000 Internet users as at year 2000. It was estimated to have risen to 350,000 in 2001 and projected to hit has a million by the end of 2002. However, the population size of Nigeria calls for accelerated sensitization on the need to embrace information technology as the provision of an enabling environment for its operation. Internet is inevitable for the success of any modern banking institution since it is a competitive tool as it creates room for customized services and reduces the cost of operation, promotes profitability growth and efficient portfolio management. The emergence of a crop of new generation banks coupled with computerization of the Nigerian financial sector motivated the introduction of high technology in the Nigerian banking system. Remarkably, information technology is dynamic continuously coming up in new challenges for human capital development virtually every Nigerian banks claims to be having internet banking and on-line union bank of Nigeria plc harbors large amount of information on-line and of course lowers the marketing distribution costs. Indeed internet banking has brought a greater advantages for one bank over another depending on its application, operation and service delivery.
1.2 STATEMENT OF PROBLEMS
Banks since the inception of the use of Internet banking products in the late 1980's have not made their presence felt much. These are as a result of problems associated with the use of Internet banking includes the following:
1. Nigerian's poor Infrastructures:
The first major challenge for the future of Internet banking is Nigerian’s poor infrastructure. Word Bank data indicates that in Nigeria there are only 6 computers and 4 mainline telephone lines per thousand people. Electricity supply is sporadic and inefficient. Most importantly, Nigeria has very low Internet penetration, with less than one Internet services provided per thousand people and only an estimated 30,000 Internet users out of over 100 million. In addition, Internet bandwidth is negligible when compared with more developed nation as they has been insufficient deregulation of the telecommunications sector to allow for investor to provide bandwidth and sell commercially. Finally, many of the area crucial to the financial sector such as the cleaning and trade processes are not automated which will limit the efficiency of internet banking in this country.
2. Lack of security:
The second challenge for the future of Internet banking in Nigeria is the issue of security. Resent research carried out in Africa shows that companies consider the biggest obstacle to being used the Internet for financial transaction to the lack security. Many companies are concerned about the integrity of financial information that travels over the internet and would rather accept the inefficiencies and incontinences of a manual system that subject themselves to the uncertainty of the internet, in addition Nigeria is a cash economy and the issue of trust in such that even cheques are not generally accepted as payment for goods and services rendered. Recently, the Nigerian market has witnessed the development of electronic purse products such as value card and the smart pay card, designed to move the economy although it is hoped that they will eventually help lessen the importance of cash in our society. It is therefore clear that in such an environment, most consumers will be skeptical that a click on a computer screen will result in a completed financial transaction.
3. Cost of ownership and Adoption:
Internet banking’ very expensive because it entails the acquisition of computers, telecommunication gadgets. Banks spend a lot on these products because of the exchange rate between the Naira and the dollar.
4. Poor orientation (illiteracy):
So many people are still ignorant of the services and benefits available to them through the use of Internet banking product. The benefits include that it is fast, safe and reliable.
1.3 OBJECTIVES OF RESEARCH
The purpose of this research is to identify the effects of INTERNET BANKING has exerted on the banking industry since its inception. It would also identify the various uses and also new technologies brought into banks in the late twentieth century. The study would pay special attention to Union Bank, Sterling bank and Diamond Bank Plc of Nigeria plc in trying to state these new technologies.
The local area network and wide area network (LAN and WAN) in particular are critical to the effective operations of computer system. This helps banks to make global connections with their branches access customer’s accounts and also pay in or with draw funds any branch nations wide. This study would bring into accounts and a general study or the application of Internet banking products rendered by banks and how its application has affected output and efficiency. The major objective of study is to appraise the role of electronic banking (E-banking) in Nigeria, the development of banking industries in Nigeria. The following are the specific objectives of the study.
1. To determine how inadequate information and communication technology (ICT) awareness distorts the development of electronic banking in Nigeria.
2. To appraise how inactive regulatory bodies prevent the development of needed logistics technical supports.
3. To ascertain the extent to which lack of sufficient skilled manpower distorts the development of electronic banking in Nigeria.
4. To find out how inadequate funding by government and its agencies affects the development of electronic banking in Nigeria.
1.4 SCOPE OF THE STUDY
The scope of this research work will be limited to the Nigerian commercial banks, using Union Bank Plc, Sterling Bank Plc and Diamond Bank Plc all in Uyo Akwa Ibom State as a case study.
1.5 Research Questions
This study will try to answer the following research questions drawn from the study the research questions are as follows:
1. To what extent does inadequate information and communication technology awareness distort the development of electronic banking in Nigeria?
2. How do inactive regulatory bodies prevent the provision of needed logistics and technical support?
3. To what extent does lack of sufficient skilled manpower distorts the development of electronic banking in Nigeria?
4. How does inadequate funding by government and agencies affect the development of electronic banking in Nigeria?
1.6 Significance of Study
It is helped that the findings are recommendations of the study will include:
1.7 DEFINITION OF TERMS:
1. INTERNET BANKING: A quick and easy way to access your account through the Internet.
2. I.T: The study and the use of electronic processes and equipment to store information of all kinds, including words, numbers, pictures and abbreviation for information technology
3. WAN: Wide areas network a system in which computers in different places are connected, usually over a large area.
4. LAN: Local area network for communication by computer within a large building
5. ON-LINE: Controlled by or connected to a computer or to the Internet.
6. HYPER LINK: A place in electronic documents on a computer that link to another electronic document.
7. GLOBALIZATION: Is a world trade.
8 WEBSITE: Where accompany has information about itself on the web.
9. ACCESS: To open a computer file in order to get or add information.
10. SEARCH ENGINE: An act of looking for information in a computer database or network.
11. NETWORK: Computing a number of computers and other devices that are connected together so hat equipment and information can be shared, the office network allows users to
12. Teller: This is sheet but an important sheet of paper being used in banking environment to paying money and withdraws in case of a bank that uses it for withdrawals too.
13. Loan: Loan is a form of money borrowed from the banks to aid capital and cash level in an organization or firm. They can be long term or short term to aid capital expenditures respect.
14. Guarantors: This is a person that stands in for one in case of opening an accounts opting for loads and many other services rendered by banks. Guarantor tends to carry the risk of paying back defaultment incase of any default.
15. Electronic banking: This is the main study of the project, Banking services tends to be getting more interesting and electronic Banking is a step taking to render services electronically to aid faster services to customers.
16. Automated Teller Machines (ATM): This is a physical assets being used by banks, built and erected concretely to give out cash, aid recharges (Phones), aid transfers, etc. and it is utmost trend in the banking industry.