CHAPTER ONE
1.1 BACKGROUND OF THE STUDY
Before the emergence of
modern banking system, banking operation was manually done which lead to a slow
down in settlement of transactions. This manual system involves posting
transactions from one ledger to another which human handles. Figures or
counting of money which should be done through computers or electronic machine
were computed and counted manually which were not 100% accurate thereby
resulting to human errors. Most bank then use only one computer in carrying out
transactions which ameliorate the sluggish nature of banking transaction.
embrace electronic banking early compared to developed countries. Nigeria
adopted electronic banking system in the early 2000s. During the introduction of electronic banking
system, the use of raw cash was said to have bred corruption through the “cash
and carry syndrome” usually linked with the swift movement of Ghana-must go”
bags by some politicians. Such bags as some analyst say, are a major source of
corrupt practices as dubious persons seeks to bribe their way to avoid been
checked in some sensitive areas or places in a corrupt society.
Since
electronic banking started in all Nigeria banks, it has been a woe for civil
servants; checks show that some staff in establishments such as the national
boundary commission for instance, are yet to receive their salaries for the
previous months as efforts to electrically transfer salaries into their account
have failed according to Ibrahim, D. (2009).
“One
bank will tell you it has transferred your salaries but the supposed recipient
bank will tell you it has not received anything leaving you even more
confused”, says John,
(2009) while acknowledging the initial hiccups that dogged the system, advises
stakeholders against being discouraged as such “teething problems” are normal.
James,
A. (2009) a banker reported to vanguard annual report that “we should not
destroy electronic-banking by looking at the negative aspects, we must strive
towards perfecting it”. James, A. (2009) also says that the volume of data
generated by the Government ministry Agencies is much making it a bit difficult
for banks to cope, Mathew S. (2009) a worker says in his report to vanguard
annual report on banks and cards that government should have done its home work
“very well” before introducing the system, “they plugged us into a system they
were not prepared for and the result is untold hardship visited on innocent people”.
At this juncture, is good to know what e-banking is all
about.
According
to Anyawaokoro, M. (1999). Electronic banking is defined as the application of
computer technology to banking especially the payment (deposit transfer)
aspects of banking. He also defined electronic banking as a system of banking
with an electronic communication network which permits on-line processing of
the same day credit and debit transfers of funds between member institutions of
a clearing system.
According
to Clive, W. (2007) in his Academic dictionary of banking, electronic banking
is defined as a form of banking in which funds are transferred through an
exchange of electronic signals between financial institutions, rather than an
exchange of cash, cheques or other negotiable instruments.
According
to Omotayo, G. (2007) defines electronic banking as a system in which funds are
moved between different accounts using computerized on line/real time systems
without the use of written cheques.
According
to Edit, O. (2008) in international Journal of investment and finance,
electronic banking is defined as a system by which transactions are settled
electronically with the use of electronic gadgets such as ATMs, POS terminals,
GSM phones, and V-cards e.t.c. handled by e-holders, bank customers, and stake
holders.
1.2 STATEMENT OF PROBLEMS
As earlier pointed out,
there is delay in payment of cheques which lead to the adoption of electronic
banking system. Adoption of electronic banking which suppose to ease banking transactions
rather resulted to woes to customer. Most people complain of time wasted in
banks. This occurs when there is power failure in banks resulting to slow down
in operation.
Another
problem that emerged was that banks do not have information backup to fall back
on should there be any computer break down.
In
investing in electronic banking, the country will need a large amount of
financial resources in computer technology, obviously, the resource is in short
supply in Nigeria, couple with high level of poverty. For an efficient
functioning of electronic payment system, there must be availability of
infrastructural facilities such as electricity and telecommunication network, however,
power supply fluctuates and there is still constant failure links in networks.
Since
early 2000s banks have been developing and introducing payment cards for their
customers as well as deploy ATM’s cards. Usage was however low due to lack of
interconnectivity i.e. switching platform to interconnect the ATM’s for card holders.
1.3 OBJECTIVES OF THE
STUDY
This
research work intends to assess the extent of electronic payment in banking
activities as well as identify the various types of electronic banking.
The researcher will also evaluate
the major problems associated with the development of electronic banking system
in
as well as evaluate possible solutions to these problems.
The
effect of electronic banking on profitability of banks will also be assessed.
There are different types of electronic banking used in
the researcher will like to evaluate the impact of these e-payment systems on banking
industry and also assess the impact of electronic banking in
economy.
1.4 RESEARCH QUESTION
In
order to get information from respondents the following questions where
formulated:
What
are the various types of electronic payment and the extent of electronic
payment in banking activities?
In
what extent can e-banking improve or enhance banking services?
What
are the major problems associated with the development of electronic banking
system in Nigerian?
What
are the solutions to the problems associated with the development of e-banking?
What extent has e-payment affected banking activities?
The research shall attempt to find answers to these
questions in the next chapter.
1.5 SIGNIFICANCE OF THE
STUDY
Electronic
banking in our economy today is a welcome development and also its impacts in
the society are over-whelming, so this research is significant in so many ways.
It will expose the strength and weakness of
electronic banking.
It will motivate banks and
other economic agents to computerize their services.
Knowledge
in the area of electronic banking will be advanced.
Apart from contributing to
the knowledge of electronic banking, it forms a reference for future research
in this area.
1.6 SCOPE OF STUDY
This
research is on economic implication of electronic banking in
and also the various forms of payment and electronic systems used by banks. The
researcher will base this work on the entire deposit money banks in
Diamond Bank in particular.
1.7 LIMITATION OF STUDY
Time
is a major factor to the researcher as research of this kind requires enough
time in gathering of data, but it was not given to carryout the research,
distribution, collection and analysis of questionnaire.
Also
the school system has made it difficult for student to go out in search for
information by not granting exeat for student. Some banks hud information from
students who desires such information in other to maintain the banks secrecy
thereby making it difficult for students to gather information for their
research.
Finally,
finance was infact the most limited factor, in spite of this the researcher
have to travel out to the sampled organization to interview some of the
managers and supervisors.
CHAPTER TWO
LITERATURE REVIEW
2.1 INTRODUCTION
Electronic
banking have long been recognized to play an important role in economic
development on the basis of their ability to create liquidity in the economy
through financial intermediation between savers and borrowers. It also offers
financial services and products that accelerate settlement of transactions and
in the process reduce cash intensity in the financial system, encourage banking
culture, and catalyses economic growth.
However,
for the effective functioning of the financial system, the payment systems must
be safe and efficient; otherwise they can be a channel for the transmission of
disturbances from one part of the economy or financial system to others. This
is why central bank have been active in promoting sound and efficient payments
system and in seeking the means to reduce risks associated with the system.
cash-driven economy particularly in the consumer sector, however the system has
witnessed improvements over the years, and particular in recent times has moved
from its rudimentary level of the early years of banking business to the
current state of sophistication comparable to other economies at the same level
of development.
One important reason for financial
liberalization and deregulation is the need to develop a good payment system
which promotes an appropriate mechanism for efficiency in mobilizing and
allocating financial resources in the economy. The payment system occupies an
important place in the development of a country economy, infact the level of
development of a countries payment system is a reflection of the state or
condition of the countries economy.
system is paper-based and this accounts for the high level of cash in the
economy (cash outside bank), the concept “payment system” has different
meanings among writers the definition range from a more simple to a more
complex definition.
According to Report on the survey of
developments in the e-payments and services products of banks and other
financial institutions in
payment system is defined as a system which consists of net works which link
members, the switches for routing message and rules and procedures for the use
of its infrastructure.
According to Anyanwaokoro M. (1999), in
theory and policy of money and banking, payment system is defined as a system
where settlement of financial obligations are done by the use of credit cards
or even pressing some bottoms that transfer the amount in their bank to the
account of another person through the computer.
According
to element of banking by Orjih, J. (1999), payment system is defined as a which
consists of different methods of payments which are cheques, credit cards,
Bankers drafts, standing order, documentary credits swift etc for the
settlement of transactions.
2.2 ELECTRONIC BANKING
It
is a fact that today a good number of banks cannot use their IT (information technology)
infrastructure to adequately deal with their immediate information
requirements. Do such banks qualify to be called e-banks?
E-banking
is about using the infrastructure of the digital age to create opportunities
both local and global. E-banking enables the dramatic covering of transaction
cost 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
The
benefit of electronic banking comprises a broad range of functions which
includes;
Electronic
mail (email) improves communication between individuals, external parties and between banks. The availability of
online information provides bankers and customers with a powerful vehicle for
research, banks can provide information and services on line, which customer can pay for and receive. Banking
processes are made more efficient and cost effective by integrating other
aspects of banking operations such as treasure management and financial control.
If banking functions does
not require physical interaction it may drive the benefits of electronic
banking.
WHERE SHOULD THE REAL E-BANKING BE?
First
of all the bank must fully understand and appreciate the fact that the banking
industry now exist, in a global
village. It must therefore strive to provide local and global banking services
using the infrastructure of the global village. Most current E-banking
applications use the internet, the advantages of on line banking are in
providing convenience and flexibility for customers, lets take a look at some.
Online
banking allows customers to get current account balances at any time. Customers
do not need to wonder whether a check of has cleared or a deposite has been
posted at the click of a button, customers can easily check the status of their
current savings and money-market accounts through online banking. Banks can
provider immediate account enquires or statements online for customers.
Online
banking gives the ability to pay bills electronically, customers can also
download account transactions on line, it should be easy to import the
transactions directly into typical PC programs at home or office, the transfer
of money between accounts is another powerful application of online banking,
online banking provides flexibility by allowing the customer to assess his
finances from any part of the globe.
THE INTERNET
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