APPRAISAL OF THE ECONOMIC IMPLICATION OF ELECTRONIC
BANKING IN NIGERIA BANKS
(A CASE STUDY OF DIAMOND BANK)
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.
Nigeria do not 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, I. (2009). Olekah, J. (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 Nigeria 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 Nigeria
banks; 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
Nigeria
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 Nigeria
banks 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 Nigeria but to
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.