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. Banking transaction 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) 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 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 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 power 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’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.
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 and also assess.
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 it 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.
In the course of carrying out the
study, some challenges were encountered by the researcher that stood as
limitation to the study and they include:
Financial Factor : Inadequate funds affected
researcher had to travel long distances for the distribution of the research
questionnaire forms.
Time Factor : This affected the reduction in the
size of the sample used for the study because the researcher had only less than
two months to complete the study.
Material Factor: Shortage of relevant material for
literature review posed.
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, aim and objectives 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
research methodology used in these research work.
Chapter four presents the data
analysis, presentation, and interpretation.
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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