CHAPTER ONE
1.1 INTRODUCTION
The business environment is always changing and therefore requires a dynamic strategized adaptation to these changes by businesses that wish to survive. These changes could be social, economic, legal, technological, etc (Acha, 2006: 109; Akpan, 2005: 23). In recent time, quantum improvements and innovations have been recorded in information and communications technology which has had tremendous impact on the way businesses are conducted. information and communication technology has, among other things, changed the nature of businesses, reshaped their competitive environment, reframed market structures, enlarged the size of markets and opened new vistas of risks hitherto unknown to these businesses.
As usual, the banking system has been in the forefront in adopting and incorporating these advances in information and communication technology into its operations. This could be attributed to some perceived advantages which information and communication technology offers users such as increased transaction efficiency, convenience and cost reduction (Ayandele and Adeoye, 2006: 2). Banks in Nigeria had recognised the potentials of information and communication technology since early 1980s when some of them began adopting electronic banking. Since these early days, electronic banking products have, though slowly but steadily, been on the increase in the system. Banks in Nigeria now offer automated teller machine (ATM) services, internet banking services, telephone banking services, on-line banking services, intranet banking services, credit card services, etc.
The obvious tendency of the Nigerian banking is to become more and more electronically driven, making the understanding of this concept and its practice imperative. In the light of the above, the objective of this study is to, among other things, examine the concept of electronic banking with a view to helping both professionals and non-professionals understand them. This project will also discover the challenges of electronic banking in Nigeria in order to help practitioners and regulators navigate our banks away from them. Finally, this study assesses the future problems and prospects of electronic banking in Nigeria.
To do this, the project is divided into five sections starting with this introductory note. The second section addresses the concept of electronic banking and reviews global experience in its practice. In the third section, the hiccups in the use of electronic devices in financial transactions are examined. This examination will consider the implications of electronic banking for the banks and the regulatory/supervisory authorities. The fourth section problems and prospects into the future to discover the way forward for electronic banking in Nigeria. Finally, recommendations are made and conclusion drawn in the fifth section.
1.2. STATEMENT OF THE PROBLEM
In Nigeria, customers of banks today are no longer enjoying safety of their funds and increase returns on their investments. Customers demand efficient, fast and convenient services. Customers want a Bank that will offer them services that will meet their particular needs (personalized Banking) and support their Business goals for instance; businessmen want to travel without carrying cash for security reasons. They want to be able to check their balance online, find out if a cheque is cleared, transfer funds among accounts and even want to download transaction records into their own computer at work or home. Customers want a preferential treatment and full attention by their choice Bank. All these are only achievable through electronic Banking. In line with rendering qualities and acceptable services that most Banks in Nigeria are gearing toward and investing large sum of money in information and communication Technology, expectedly such Banks services have been improved. United Bank for Africa (First bank of Nigeria Plc), Zenith Bank, GT Bank (to mention few) are in the forefront in the use of IT in rendering services to their Customers (The Guardian Newspaper April 18, 2008p 21). It also seeks the challenges involved in Electronic Banking and Best industrial practice and the approach of implementing them in Nigeria Banking system.
1.3 STATE OF THE PROBLEM
The problem that leads to the study of this research work arises from issues relating to the effective use of internet among Nigerian Banks with specific focus on First Bank of Nigeria Plc.
Despite the rapid adoption of the use of internet by many business organization and government parastatals, the banking sector still need a critical examination of how the use of internet and information technology can by employed to boost their operations.
This study will look into the operation of Nigeria Banks in this era of internet technology, it will determine problems encountered and suggest possible solutions.
1.4 SIGNIFICANCE OF THE STUDY
There are many people that will benefit from research work. Both the investor and the stakeholders, However, the level of education will not only improve the use of internet among Nigerian Banks but also suggest solutions to the problem encountered by the banks in the computer age.
This research work will be of advantage to anybody that which to know more about the problems encountered by banks in the use of Internet technologies.
1.5 OBJECTIVES OF THE STUDY
The main objective of this research work is to examine the impact of electronic Banking in Nigeria banking system. Specifically the study objectives are;
1.6 STATEMENT OF RESEARCH QUESTIONS
This project aims to provide answers to the following research questions;
1.7 RESEARCH HYPOTHESIS
The following hypotheses are formulated in null form to guild the study.
Hμ: Adoption of Electronic banking enhances the fortune of First bank of Nigeria Plc
1.8 SIGNIFICANCE OF THE STUDY
The study would enable the banks executives and indeed the policy makers of the banks and financial institutions to be aware of electronic banking as a product of electronic commerce with a view to making strategic decisions. The research is equally significant because it would provide answers to factors militating against the implementation of electronic banking in First bank of Nigeria Plc; prove the success and growth associated with implementation of electronic banking highlight the areas of banking operations that can be enhanced via electronic banking and also be an invaluable tool for Staff, Academician, institutions, Corporate managers and individuals that want to know more about electronic banking trends especially in Nigeria.
1.9 SCOPE OF THE STUDY
In pursuance of the objective of the study; attention shall be focused on electronic banking among other electronic commerce implementation. In order to conduct an empirical investigation into the adoption of Electronic banking in Nigeria and will also examine the nature of electronic banking operations in First bank of Nigeria Plc from 2007 to 2009.
1.10 LIMITATION OF THE STUDY
In view of the technicalities involved, it would be unrealistic to assume that all necessary facts have been gathered in the process of the study. Information gathered is limited to those accesses and made available by the respondents and also those gathered from end users. However, the impacts of this limitation will be reduced to the barest minimum.
1.11 DEFINITION OF RELATED TERMS
Access Products – Products that allow consumers to access traditional payment instrument electronically, generally from remote locations.
ATM Card - UB Debit Card is a Chip device consisting of circuit element on single silicon chip. The Card a complex circuits that process microprocessors with a single chips that contain the complete arithmetic and logic unit of computers. It provided for Unity Bank customers to perform balance inquiry, mini statement and cash withdrawal as well as transfers through the use of Automated Teller Machines. This green card can also be used for Internet/Online and POS transactions.
Chip Card – Also known as an integrated circuit (IC) Card. A card containing one or more computers chips or integrated circuits for identification, data storage or special purpose processing used to validate personal identification numbers, authorize purchases, verify account balances and store personal records.
Electronic Data Interchange (EDI) – The transfer of information between organizations in machine readable form.
Electronic Money – Monetary value measured in currency units stored in electronic form on an electronic device in the consumer’s possession. This electronic value can be purchased and held on the device until reduced through purchase or transfer.
Electronic Recruitment –This is an online recruitment services to all kinds and categories of clients such as (Army, navy, police and the Paramilitary) through customizable web portals and the use of scratch cards/PINs for a Prospective applicants simply buy the scratch cards, visit portal and fill relevant information. Information collected about applicants could then be analyzed appropriately using ‘what if’ capabilities and filtered according to several criteria to be set by client. Short listed applicants could then be contacted automatically via email or SMS or both.
Electronic Web Collection - This enables the Bank partner with Universities and higher institutions of learning to handle Admission, Registration, Examination Managements and Fees Collection needs. Electronic Admission by Prospective Candidates, Electronic School Fees Payment, Automated Registration, Examination and Results Publication/Management
Internet Banking- This is a product that enables the Bank leverage on the Internet Banking System Module in-built on the new Banking Application (BANKS) implemented by the Bank to serve the Internet Banking needs of the Bank’s customers.
Mobile Banking - This is a product that offers Customers of a Bank to access services as you go. Customer can make their transactions anywhere such as account balance, transaction enquiries, stop checks, and other customer’s service instructions, Balance Inquiry, Account Verification, Bill Payment, Electronic fund transfer, Account Balances, updates and history, Customer service via mobile, Transfer between accounts etc.
Payment System – A financial system that establishes that means for transferring money between suppliers and of fund, usually by exchanging debits or Credits between financial institutions.
Point Of Sale (POS) Machine - A Point-of-Sale machine is the payment device that allows credit/debit cardholders make payments at sales/purchase outlets. It allowed customers to perform the following services Retail Payments, Cashless Payments, Cash Back Balance Inquiry, Airtime Vending, Loyalty Redemption, Printing mini statement etc.
Smart Card – A Card with a computer chip embedded, on which financial health, educational, and security information can be stored and processed.
Transaction Alert - Our customers carry out debit/credit transactions on their accounts and the need to keep track of these transactions prompted the creation of the alert system by the Bank to notify customers of those transactions. The alert system also serves as notification system to reach out to customers when necessary information need to be communicated.
Western Union Money Transfer (WUMT) - Western union Money transfer is a product that allowed people with relatives in Diaspora who may be remitting money home for family up-keep, Project financing, School fees etc. Nigerian Communities known for having their siblings gainfully employed in other parts of the world are idle markets for Western Union Money Transfer.
1.10. Brief Profile of First bank of Nigeria Plc
First bank of Nigeria Plc is one of the leading retail banks in Nigeria which emerged from the largest merger and consolidation in Nigeria's banking industry. Following the merger and consolidation of Nine Banks Intercity Bank, First Interstate, Tropical Commercial, Pacific, Centre Point, NNB, Bank of the North and New Africa Bank limited and spearheaded by the Central Bank of Nigeria, (CBN). The financial institutions with competences in investment banking, corporate and retail banking came together in January 2006 to form First bank of Nigeria Plc. It has 248 business offices spread across the country and working to increase this number in the nearest future. Unity Bank is the sixth largest bank in Nigeria today by business locations. The Head Office is located at Plot 785, Herbert Macaulay Way, Central Business District, Abuja, while the Head Office Annex is at No. 290A, Akin Olugbade Street, Victoria Island, Lagos.
The Mission of the Bank is to create superior wealth for our stakeholders and The Vision is to be one of the top five financial services institutions in Nigeria by 2012.
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