1.1 BACKGROUND OF THE STUDY
E-banking is defined as the provision of retail and small value banking services through electronic channels. Such products and services include deposit taking, lending, account management, the provision of financial advice, electronic bill payment, and the provision of other electronic payment products and services such as electronic money (Basel Committee on banking supervision, 2003). It covers both computer and telephone banking and 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 and Ovia, 2005). Electronic Banking (e-banking) is defined as ―the use of technology to communicate instructions and receive information from a financial institution where an account is held. This service includes the system that enables financial institution customers, individuals or businesses to access accounts, transact business, or obtain information on financial products and services through a public or private network‖ (Prakash & Malik, 2008; 84 in Sanni, 2009). However, electronic banking has experienced tremendous growth in many countries especially Africa and today it has transformed the traditional banking practice in Nigeria. Currently, electronic banking in Nigeria has changed the way services are delivered by the banking sector to customers. Electronic banking service, have lower operating costs, improve customer services‘ delivery, retain customer, reduce branch traffics, and downsize the number of branch staff (Parisa, 2006 in Sanni, 2009).
Banks are important in every country and have a significant effect in supporting economic development through efficient financial services. They provide a mechanical system to group saving and convert them into investment. For over a decade, banks have been affected by changes associated with globalization and financial liberalization. Reacting to these changes, banks expand the choice of services offered to the customers and increase their reliance on technology (Al-Smadi and Al-Wabel, 2011). Banks have been significantly affected by the evaluation of technology; competition between banks has forced them to find new market to expand, and the number of financial institutions that offer electronic banking products increased. Hence, banks have begun to offer electronic banking services to improve the effectiveness of distribution channels through reducing the transaction cost and increasing the speed of services. Recently, electronic banking has become the way for the development of banking system, and the role of electronic banking is increasing in many countries. It offers opportunities to create services processes that demand few internal resources, and therefore, lower cost. As well as it provides wider availability and possibility to reach more customers. From the customers’ point of view, electronic banking allows customers easier access to financial services and time saving in managing their finance (Almazari and Siam, 2008; Ayrga, 2011; Tan and Teo, 2000). Indeed, the emergence of electronic banking has prompted many banks to develop marketing and information technology strategies in order to stay competitive. Venkatesh, Morris, and Davis (2003) noted that the successful implementation of information systems is dependent on the extent to which such a system is used and eventually adapted by the potential users. Information system implementation is not likely to be considered successful if users are unmotivated to use that type of technology, and thus it will not bring full benefits to the organization. In order to motivate customers to use electronic banking, banks must make key improvements that address the customers’ concerns. Therefore, it is necessary to understand the key factors that influence the adoption of electronic banking among the banking customers.
Essentially, through the use of Information and Communication Technology (ICT) banks now employ different channels such as online banking, mobile banking and Automated Teller Machine ATM etcto deliver their services. Report on Electronic banking system in Nigeria reveals that e-payment machinery, especially the card technology, is presently enjoying the highest popularity in Nigerian banking market. According to INTER SWITCH statistics, Nigeria has over 30 million ATM card holders who conduct over 30 Billion worth of transactions on the machines every month. Nigeria’s banks operate over 9,000 ATM machines across the country’s 36 states and Federal Capital Territory. Therefore, this study focuses on the factor affecting the adoption E-Banking in Nigeria Banking Industry.