ROLES OF E-BANKING TO NIGERIAN ECONOMY

CHAPTER ONE

1.0 INTRODUCTION

1.1 BACKGROUND OF THE STUDY

Before the emergence of modern banking system, banking operation was manually done which lead to a slowdown 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.

According to Clive, W. (2007, p.5) 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, p.3) defines electronic banking as a system in which funds are moved between different accounts using computerized online/real time systems without the use of written cheques. According to Edet, O. (2008, p.1) 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.

In the Nigerian monetary system, the Central Bank of Nigeria (CBN) is pursuing the cashless banking system that would see the co-existence of cash and electronic money and the policy document on cashless economy detailed out the following implications:

Reduction in cash transactions to both the banks and their customers: it does not allow going about with cash but improve online transaction.

Expansion in vault cash:

Expansion in the credit creation process: it make credit easy and available through online access and it does not involve to much cash in hand but bank transfer.

Expansion in the involvement of the informal sector in the banking process. CBN (2011)

These implications follow directly from the surface of the policy but there is the need for a deeper and economic analysis of the introduction of the cashless banking or cashless economic paradigm and its attendant implications as far as the attainment of advanced economic objectives are concerned.

1.2     STATEMENT OF PROBLEMS

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 network failure in banks resulting to slow down in operation.

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, coupled 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 cards. Usage was however low due to lack of interconnectivity i.e. switching platform to interconnect the ATM for card holders.

1.3     AIMS AND 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.

1.     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.

2.     The effect of electronic banking on profitability of banks will also be assessed.

3.     The researcher will like to evaluate the impact of these e-payment systems on banking industry

4.     The impact of electronic banking in Nigeria economy.

1.4     RESEARCH QUESTION

In order to get information from respondents the following questions were formulated:

1. What is the role of e-banking on the growth of Nigerian economy?

2. What are the various types of electronic payment and the extent of electronic payment in banking activities?

3. To what extent can e-banking improve or enhance banking services?

4. What are the major problems associated with the development of electronic banking system in Nigerian?

5. What are the solutions to the problems associated with the development of e-banking?

6. To what extent has e-payment affected banking activities?

7. What are the benefits of Bank Verification Number (BVN)?

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.

1.5. RESEARCH HYPOTHESES

H01: There is no significant effectof e-banking on the economy of Nigeria.

H02: There is no significant relationship between e-banking and economic development in Nigeria

1.6     SCOPE AND LIMITATIONS OF THE STUDY

This research is on the role of electronic banking on the growth of Nigerian Economy using UBA saki as a case study and also it covers the various forms of payment and electronic systems used by banks.

Limitation of the studies include:

Financial Factor : There is not enough money to carry out the research properly as analysed, getting data from different source is difficult and downloading some articles and journals is restricted because of low subscription due to financial problem.

Time Factor: There is limited time to carry out this research work, some area are not analysed and some aspect are not touched due to low time or inadequate time to carry out the research work.

1.7     ORGANIZATION OF THE STUDY

This research work is organized into five chapters. Chapter one is concerned with the introduction of the research study and it presents the preliminaries, theoretical background, statement of the problem, aims and objective of the study, significance of the study, scope of the study, organization of the research and definition of terms.

Chapter two focuses on the literature review, the contributions of other scholars on the subject matter is discussed.

Chapter three is concerned with the system analysis and design. It presents the research methodology used in the development of the system;

Chapter four presents the system implementation and documentation, and the data analysis.

Chapter five focuses on the summary, constraints of the study, conclusion and recommendations are provided in this chapter based on the study carried out.

1.8 DEFINITION OF TERMS

Bank: Business that keeps money for individual people or companies, exchanges currencies, makes loans, and offers other financial services

Cashless: Using an electronic means of exchanging money instead of dealing in cash

Cashless Society: Society that does not use cash: A theoretical society in which consumers purchase all goods and services by credit card or electronic funds transfer, without the use of cash.

Electronic Banking: The use of computers and related networks/devices to carry out transfers of money and other banking transactions.

Government: A group of people who have the power to make and enforce laws for a country or area.

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