CHAPTER ONE

INTRODUCTION

1.1          BACKGROUND OF STUDY

Electronic banking (e-banking) is an umbrella term for the process by which a customer may perform banking transactions electronically.  E-banking can be defined also as the automated delivery of new and traditional banking products and services directly to customers through electronic and interactive communication channels.

E-banking refers to the effective deployment of IT by banks.  But hold on, the fact that a bank uses computers is not enough to qualify it as an E-Bank.  E-banking is about using the infrastructure of the digital age to create opportunities -both local and global.  E-banking enables the dramatic lowering of transaction costs, and the creation of new types of banking opportunities that address the barriers of time and distance.  Banking opportunities are local, global and immediate in E-banking.

It can also be defined as the automated delivery of new and traditional banking products and services directly to customers through electronic, interactive communication channels and other technology infrastructure.

E-banking includes the systems that enable financial institutions, customers, individuals or businesses, to access accounts, transact business or obtain information on financial products and services through a public or private networks, including the Internet.

The following terms all refer to one form or another of electronic banking: – PC Banking, Internet Banking, Online Banking, Home Banking, Remote Electronic Banking and Phone Banking.

PC Banking, Internet Banking and Online Banking are the most frequently used designations.  It should be noted, however, that the terms used to describe the various types of electronic banking are often used interchangeably.

The variety of electronic banking technologies available in the market place has greatly expanded in recent years for financial institutions.  Such technologies as Direct Deposit, Automated Teller Machines and Debit Cards can speed processing and reduce costs.  Other products and services for example, computer banking and stored-value payroll cards are viewed as ways to retain existing customers and attract unbanked and under banked consumer.

From the consumer’s perspective, choosing to use electronic banking (e-banking) technologies can mean easier and lower costs, bill paying, around the clock availability of financial services, and time savings in managing finances.  For some consumers, e-banking may not be a matter of choice, as more and more financial transactions are being conducted in an “electronic only” format.

Research suggests that consumer acceptance and use of e-banking technologies are related to the characteristics of both the individual consumer and the specific technology.  These characteristics include factors such as income and age, perceptions of specific technologies (such as perceived ease of use) and personal preferences.

In many ways also e-banking is not unlike traditional payment enquiry and information processing systems, differing only in that it utilizes a different delivery channel.  Any decision to adopt e-banking is normally influenced by a number of factors viz. the benefits to the customer, service enhancement and competitive costs, all these are issues which motivate banks to access their electronic commerce strategies.

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