Impact of Electronic Banking

October 1, 2017 | Author: Abdulraheem Olalekan | Category: Banks, Automated Teller Machine, Automation, Financial Transaction, Online Banking
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CERTIFICATION The research project submitted by ADAM TEMITOPE AMINAT has been carefully supervised, read, approved and accepted by the Department of Accountancy. As having satisfied one of the necessary requirement for the Award of National Diploma (ND) in the school of management science. The Polytechnic, Ile-Ife, Osun State, Nigeria.

----------------------------MR. ALONGE Project Supervisor


-----------------------------MR JUNAID ADEWALE


----------------------------------ADAM TEMITOPE AMINAT The Researcher


DEDICATION The project is especially dedicated to Almighty Allah who sustained me through my course of study. Also, I dedicated this project to my mummy Mrs. Fatimah Adam for her care both financially, morally and even through out my academic session, May Almighty Allah be with you (Amen). And also dedicated to my Grand parent and my brother Adam Ibrahim. May you all rest in perfect peace (Amen). ACKNOWLEDGEMENT Except God build the house, the builder & building in vain. From the bottom of my heart I give glory, Honor and Adoration unto Almighty God, who has been my fountain of wisdom and knowledge from the beginning till end of my time of course of study. My special thanks go to my jewel, the dearest mummy to my heart, whom through God with her immeasurable effort this dream has been made a reality, my dearest mother, Mrs. Fatimah Adam. I want to say I love you mummy and I will forever love you, I pray that you shall live long to eat the fruit of your labor in abundance (Amen). Mummy you are one in a billion, I can’t stop saying (I LOVE YOU MUMMY) I shall not but appreciate you too DADDY Mr. ADAM IBRAHIM. I also want to thank my wonderful brother and sisters especially my aunty Mrs. AMINAT YUSUF (Amuda) for her caring since. I will ever remain grateful to you Aunty, Also to Mrs. Hawau…... Mr. BANNA IBRAHIM, IBRAHIM YAYA, ADAM ABUBAKHARI, ADAM ABDURAMAN and to my angel Miss MARRIAM ABDULLAHI, MR. MUDASHIRU OYEWALE, BARRISTER PEJU MADUGU. I will be an ingrate if I refuse to thank MUMMY & DADDY for your encouragement & your financial supports ALHAJI G.O. OYEWALE and ALHAJA S.M. OYEWALE you are a wonderful parent. I will forever remain grateful.

Not only will I thank but also give a big kudos to my project supervisor in person of MR ALONGE…… who created time out of his busy schedule to correct and recommend different solution to this project work. May almighty God bless you and your family sir (Amen). Also to my special lecturer like: my HOD MR JUNAID ADEWALE, MR G.O. LAWAL, MR R.O. OKOBE, MR. T.O. SIYANBOLA, MR S.K. FASHOLA For their intellectual and academic support. They say a friend in need is a friend in indeed, that is why this page is incomplete should I fail to express my sincere gratitude to friends like MISS HALIMA OYENIKE OYEWALE, MISS AYISAT OYEWALE, MISS HALIMA ABDUSALAM (Afin) and other friend like TEWOGBADE BUKOLA, OYINLOYE MUHAMMED SAEED, NWOKO CHEELOZIE JOEL (Dozie) MISS ADEKEMI R. AMUO, MISS OMOBOLALE………, VICTOR AND HIS BROTHERS and others who are too numerous to mention. I confidently say you are all wonderful and your love will ever linger in my memory. My appreciation also goes to MR. BAMIDELE OYEKANMI; I affectionately say I love you and that I cherish the fact that I love you so much for your maximum finance support. Also to MR. EBENIZER AYEOKERE (Temi) for your encouragement and support you will forever remain in my heart, I love you. And conclusively to all who have in one way or the other to contributed to transforming this wish into an “accomplishment”, I sincerely say I love you all once again E SE PUPO ABSTRACT My interest of choosing this topic Electronic Banking and it impact to Nigeria Banking sector and the general public is not for the simple reason that banking and the public are a sensitive sector of the economy and this has taking a new dimension. It is know fact that the industry constitutes the string that builds every sector of the economy. The recorded rate in the industry has been put behind us with the emergence of sophistication. The successful execution of the pilot test of Electronic Bank such as smart card, Internet ATM etc, is a step they will help redirect people’s interest into the industry. What we are witnessing is a serious revolution calculated toward remodifying the once-upon a time arm char banking. The project has package that run to five chapters. The first chapter contains introduction to the research’s topic. Being a new phenomena’s in this part of the world, core was taken as illuminate comprehensively on what Electronic Banking is all about. The objective and scope of the project were critically analyze in such a way that a first time will understand. Chapter Two deal with literature review that is the meaning of Electronic Banking as well as product of the scheme is also discuss in detail the advantage and disadvantage i.e. delimitation and limitation.

Chapter Three deals with research methodology and my chapter four deals with analysis of data and Interpretation. Then a look was taken on the research design, the primary and secondary sources of data determination of population reliability and validity. Acceptability of the scheme was also given due attention. Finally chapter Five deals with summary, conclusion and recommendation of the project. CHAPTER ONE INTRODUCTION Today Electronic Banking System allows the customer to transact business from the comfort of his office home or wherever he may be even whilst during traffic .He can access his bank account to make enquiries or to initiate a transaction. He can link up to a store or shop to order for goods ranging from a pizza to an Aircraft, Customer monitor and control his spending as much as he does card bearing system which now exist to facilitate commercial transaction. It has eliminated long queen of customer before he could get service in the Banking hall or counter. This Electronic Banking is a kind of Banking that involves Electronic form of money transaction. Banking services are fully automated such that transactions are automated in a simplified way. It also involves the use of computer networking in dispensing cash and transfer of fund. This innovation in the Banking industry came into existence in 1986 during Babangida regime was introduced. When the structural Adjustment Program (SAP) this has tremendously affected the Banking industry more than any other sector of the economy. It has not only changed the structure but also the content of banking business just as the number of Bank grew tremendously from the year 1925 to 1991. This increase has equally brought a change in banking delivery the cheque and image of product in the market. These changes have been described as revolutions while other as another Banking been comparable to what was witnessed in the fifties. True enough the volume of profit increased substantially at the early years of SAP but this did not append by chance. This is because in the last decade, the old bank have been challenged by the ingenuity of the smaller ones e.g. strictly operational bank which was the first Bank to adopt Electronic Banking in 1990 and other whose daily research and introduction of new product or services, so as to meet the changing needs of their numerous customers. SAP (Structural Adjustment Program) has equally brought to a end the kind of Banking service rendered by the first generation of Banks which have been described as arm chair Banking. Electronic Banking is a neutral out of the international competition going on in the market. I t was brought about by the effort of the Banks to introduce automation into banking system.

This electronic Banking age has tended to replace the intensive labor operation and this helps to reduce the waiting time of customer in the banking hall and bring to an end the era of mechanical and laborious banking. Meanwhile the introduction has played a vital role in Nigeria economy. It has place Nigerian in compliance world and brought an improvement to the technique. 1.1 HISTORICAL BACKGROUND OF ELECTRONIC BANKING Electronic Banking came into existence in the banking industry in 1986 during Babangida regime when the SAP was introduced. This has tremendously affected the Banking industry more than any other sector of the economy. It has changed not only the structure but also the content of the Banking business just as the number of banks grew tremendously from 40 in 1985 to 125 in 1991. This increase has equally brought changes in banking delivery techniques and image of product in the market. The changes have been described as revolution while other see them as another banking boom comparable to what was witnessed in decades. 1.2 STATEMENT OF THE PROBLEM Electronic Banking is a means that describes the disciplines encompassing computer, telecommunication networks and multimedia application, It is also a kind of money transmission where banking services are fully automated such that the transaction are concluded in jiffy, the process involves a lot of activities like acquiring the necessary electronic activities configuring an efficient computer network, installation of good communication device, education of customer and member of staff of the bank, how electronic banking is not yet generalized among the illiterate people etc. This will give room to question like what is electronic banking. How will it fit into operation system of the bank, what changes will it bring? What are the merit and demerit? What resources is sharing and what networking? 1.3 OBJECTIVE OF STUDY If Electronic banking is to make an impact in the Nigeria market, the momentum has to be driven by banks; banks should therefore address the problem and try to overcome them on behalf of their customers who are always seeking for a better banking environment. In some instances, this may mean temporary supplying the necessary equipment to enable their customer’s sample their opinion. 1.4 SIGNIFICANCE OF THE STUDY Electronic Banking is a new level of study in Nigeria situation and title research has been done yet this really set a serious problem in finding materials needed expect via the internet which is expensive and time consuming the study is essential in order to reduce the problem hindering banking development. 1.5 SCOPE OF THE STUDY

The research is basically on the paramount impact deducible on electronic banking in the Nigerian economic development and it is designed to cover various categories of employees in the bank. 1.6 LIMITATION OF THE STUDY Electronic banking is limited to some certain factor in the fact that it is limited in Nigerian one but the product rendered by the electronic banking system can only be used here in Nigeria and not in other advance countries, this also involve asking of numerous question also this can easily aid fraud and other fraudulent practices. 1.7 DEFINITION OF TERM ELECTRONIC MAIL This is a land of Electronic whereby a customer sent his ELECTRONIC MAIL account or address to the bank to transmit statement by electronic mail at specific period. Mostly employed for internal communication and it can be offered to customer through internet. IMAGE MACHINE This is an electronic machine that is used for photographic and signatory’s verification system that permit the bank to automatically store the signature and photograph of an account holder. SMART CARD This is a plastic device with an embedded old chip containing a processor and memory modules which allows the card to store and process information. The smart card can be implemented in a vanity of application including electronic purse credit and debit card. AUTOMATED TELLER MACHINE (ATM) This is a card dispense that enable a bank customer to carry out banking services without meeting the cashier, the ATM customer slot in a plastic card and supplies all personal identification in which the machine now supply the money. CHEQUE GUARANTY This product provides additional comfort to parties receiving cheque from individual user so that a seller is guarantee payment by the issuing bank in the event of a default CHAPTER TWO 2.0 LITERATURE REVIEW . 2.1 INTRODUCTION Electronic Banking is newly developed Banking system and it has a very great impact on the economy situation of every nation. Electronic Banking system allows the customers to transact business from the comfort of his/her home or office and wherever he may be

even while on traffic congestion. The customer can access their bank account to make enquiries or to initiate a transaction. They can link up to a store or shop to order for goods ranging from smaller to bigger price. Also their spending rate can easily be monitor and control. This electronic banking is a kind of banking system that involves electronic forms of money transaction. Banking services are fully automated such that every transaction are done with ease. This also involves the use of computer networking in dispensing cash and transfer of fund. 2.2 MEANING OF ELECTRONIC BANKING FRENZEL (1996) defines electronic banking as the term that described the discipline encompassing computer system, telecommunication networks and multimedia application. ALABA (1999) feels electronic banking is a kind of money transmission where banking service are fully automated such that the transaction are concluded in a jiffy. It involves the use of computer networking dispensing cash and transfer of funds. 2.3 POSITIVE EFFECT OF ELECTRONIC BANKING Electronic Banking has played very vital roles in the Nigerian Banking industries. Those roles are as follows: • It enables the banks to operate for 24 hours through electronic banking. It enables the banks operate for 24 hours and also the customer to make withdrawal of money any time of the day. • Reduction of mailing and delivery charges as those cost are transferred to the customer • Bank branches can operate with loss personal with the introduction of electronic banking the bank are able to work with less workers (personnel) • Support for branchless are universal banking electronic banking enables branchless bank to operate effectively with lesser cost. • It makes it possible for the bank to keep pace with modern technology. • Low business cost with the innovation of electronic banking the cost of business is lesser than the cost of business without electronic banking also the cost of personnel employed by bank is lower. 2.4 NEGATIVE EFFECT OF ELECTRONIC BANKING Having examined the positive impact of effect of electronic banking in the banking industry. It could not be considered as not posting some negative effect on the banks, the customer and society at large examined below are the disadvantages of electronic banking. • Banks will likely loose their customers who are ignorant i.e. illiterate about the use of mentioned product. • It aids guide fraud and banking i.e. fraud can be easily operated in the new innovation of electronic banking. • Wide spread unemployment which could subsequently lead to some social vices.

2.5 ELECTRONIC BANKING PRODUCT AND THEIR GLOBAL DIFFUSSION Where a customer goes to the bank it is not easy to withdraw or deposit money or cash, sometimes all the need is information which include information on account balance and transaction on account and unclear effect. Etc. with electronic banking customers services are rendered with in the shortest possible time below: COMPUTER BASED BANKING Among these innovations, we also have computer based banking which provides access to banking services from personal computer located in customer home or office. The customer establishes a dial up connection to the banks data base or connect through the internet through a remote access server. Computer based banking also called such product as treasury and trade finance activities. The only thing that will help this system to function is the convergence of telecommunication and computer technology. COMPUTER TELEPHONE Recent developments in technology have made it possible the using of computer and telecommunication and hence banking the time space barrier and announcing a distinct innovation called computer telephone. This simply the integration of the computer and telephone designed to convert test to both and vice versa. It is called telephone banking this service helps customer access banking service through telephone anywhere, anytime and whatever manner they want it. All the customer requires is a telephone equipped with or without fax capability. 2.6 THE NIGERIA ECONOMY Nigerian modern economy was created by Niger Royal Company of Britain which was a part of the colonial government, the nature of activities during the colonial period kept capital for development of the hands of private sector through refusal of bank loan. Instance of being a recipient and disqualification from being a recipient. The Nigeria economy is a great market for wily investor. The bank could consider what the economy is all about. The categories of people that make up an economy and how this innovation can be of use to them. Nigeria economy consists of various sectors in which the banking sector is one of it. The electronic banking promotes the growth experiencing by banking there by leading to innovation in the economy. 2.7 INTER-RELATIONSHIP BETWEEN ELECTRONIC BANKING AND THE NIGERIA ECONOMY The banking sector which is the main pivot of the real sector of the economy is attributed as the main pivot of any economy. Therefore the quality of service provided by this sector is any country will go a long way to affect the entire performance of that economy as a whole. The innovations in the banking sector will however, country’s economy in the below points: • Technological development in the economy. • It will facilitate financial activities in the real sector of the economy i.e. household. • It will encourage tourism from other countries that are short of funds can arrange for fund transfer from their countries as fast as possible.

It give rise to healthy competition among the banks thereby enabling the introduction of customer oriental services.

CHAPTER THREE 3.0 RESEACH METHODOLOGY Focus will be on how necessary data for this research project would be collected. Method of collection the procedures by which the data can analyze and interpretation of result for us to know the efficiency of electronic banking in Nigeria banking sector and to the public. A questionnaire would be drafted and administered and a non-random sample method whereby every one is not given equal opportunity of being selected would be used. 3.1 POPULATION OF THE VARIABLES The population of the variables deals with the level of hypothesis; hypothesis is a conjectural statement specifying an expected relationship between two or more variables. As a conjecture, it is only a guess of what is expected to occur under certain conditions prior to the collection of data. The population of the variable enables us to know the statement of populate which can either by: HO: Electronic Banking has not helped to provide efficiency in the Banking sector HI: Electronic Banking has helped to provide efficiency in the Banking sector. HO: Is the case indicate the Null hypothesis which is aimed to disprove or express about the researcher’s expected relationship between the set of variable HI: This is the alternative hypothesis; it is the research hypothesis which represents the expectation of the researcher in the study. 3.2 SAMPLE AND SAMPLE DESIGN For us to have a representative sample to represent data collected given certain material would be chosen in order to minimize and curtail sample errors. Non-probability sample technique would be utilized such that everyone is not given equal opportunity of being chosen but a person is given advantage over the other. More so, it is highly impossible to take a study to the whole population of the bank. Because of this it is now imperative to use a sample in order for us to achieve our aim. The sample method as easier said that we are going to use the non-probability sample method where a person is given an advantage over others. 3.3 SOURCES OF DATA COLLECTION The source through which this data is being collected is by the secondary sources of data collection. Secondary Data: This consists of existing information which may be useful for the purpose of a research at hand. Secondary data is an accessible form and can easily be found. For the purpose of this research work, I made use of website (Internet browsing) and other documental research, some business journal magazine and articles are used. CHAPTER FOUR

4.1 DATA ANALYSIS AND INTERPRETATION In this chapter, the research analyzed all the information gathered from the questionnaire give to various department and respondents. The researcher based his finding on the result so collected for the presentation and analysis of data a total number of twenty questionnaires were administered to staff of Electronic Banking and also the customers of Electronic Banking. A total number of 18 staff questionnaire were returned while other were not returned to determined whether returned questionnaire was the opinion of the majority, the calculation and analysis below give a clear picture. • Let A represent 20 questionnaire administer to the staff of Electronic Banking system. • Let B represent those that return which is 18 • Let C represent the one that are not returned which is 2 Since 90% is above average hence the generation of finding based on such percentage bring near to an accurate decision 4.2 ANALYSIS AND INTERPRETATION SECTION A: PERSONAL DATA OF THE REPONDENTS 4.2-1 Table A: Age Age Respondents Percentage % 21-40 10 52 41-60 6 38 61- Above 2 10 Total 18 100 This table show that larger size of the staff is between 21- 40 4.2-2 Table B: Sex Sex Respondents Percentage % Male 8 44 Female 10 56 Total 18 100 Table B show that there are more Female workers than the Male workers in Electronic Banking System. 4.2-3 Table C: Marital Status Marital Status Respondents Married 12 Single 6 Total 18

Percentage % 67 33 100

This table C shows that married people are more than the single. 4.2-4 Table D: Educational Qualification

Qualification SSCE OND/NCE HND/B.SC M.SC/other Total

Respondents 3 5 6 4 18

Percentage % 17 28 33 22 100

The Table D shows that the educational qualification of HND/B.SC is higher in Electronic Banking System. 4.2-5 Table E: Year of Service Year Respondents 1-7 10 8-14 5 15&above 3 Total 18

Percentage % 56 28 17 100

Table E shows that staff number who have spent 1-7 years have the largest population in Electronic Banking System. 4.3-0 Section B 4.3-1 Does Electronic Banking have an impact to the Banking Sector and the public? Option Frequency Percentage % Yes 16 89 No 2 11 Total 18 100 Out of 18 staff questionnaire return 16 agree that Electronic Banking System perform is growth and development in Nigeria while the other 2 staff disagreed with its performance. Since the number of staff who agreed are more than those who disagreed, we conclude that Electronic Banking of Nigeria perform their economy growth satisfactory. 4.3-2 Are there more advantages over the disadvantages of Electronic Banking? Option Frequency Percentage % Yes 14 78 No 4 22 No Idea Total 18 100 Out of 18 Customer questionnaire administered 14 Customer agreed that there more advantages over the disadvantage of Electronic Banking. And since the number of Customer who agree that electronic Banking has more advantages over the disadvantage are more than those who disagreed, we concluded that electronic banking has more advantage over the disadvantages. 4.3-3 Does this enhance smooth customer’s services

Option Yes No No Idea Total

Frequency 17 1 18

Percentage % 94 6 100

According to this table we can say Electronic Banking has enhance the customer’s services. 4.3-4 Do you welcome and encourage Electronic Banking? Option Frequency Yes 16 No 2 No Idea Total 18

Percentage % 89 11 100

From the table it show that Electronic Banking is highly welcome and encourage. 4.3-5 Does the Nigeria Banks through this made an impact in Nigerian market? Option Frequency Percentage % Yes 16 89 No 2 11 No Idea Total 18 100 From this table 16 questionnaires believed that Electronics Banking made an impact in Nigerian market while 2 questionnaires disagreed. So we then conclude that Electronics Banking has made an impact in Nigeria market. 4.3-6 Can this improve the welfare of the general public? Option Frequency Percentage % Yes 12 67 No 6 33 No Idea Total 18 100 From the table 12 agree that Electronic Banking improve the welfare of the general public while 6 disagree. From the information we can say that Electronic Banking has improved the welfare of the general public. 4.3-7 Can this made Nigerian Bank to be competent with its counterparts? Option Frequency Percentage % Yes 16 89 No 2 11 No Idea -




This table shows that 16 questionnaires agree that Electronic Banking made Nigerian Bank to be competent with its counterparts while 2 disagree from the table. We now conclude that Electronic Banking has competent with its counterparts. 4.3.8

Do you think that another improvement other than Electronic Banking can develop in Nigeria? Option Frequency Percentage % Yes 2 11 No 16 89 No Idea Total 18 100 From the table 2 agree that there is other way than Electronic Banking while 16 questionnaires disagree and say there is no other one except Electronic Banking. We conclude that there is no any another improvement other than Electronic Banking can develop in Nigeria. CHAPTER FIVE 5.0 SUMMARY, CONCLUSION AND RECOMMENDATION 5.1 SUMMARY In summary the paper is written to x-ray that the further of Nigeria Banking industry will be driven by technology. One of the most amazing trends in recent technology history has been the speed at which the internet is moving to dominate business. It is a global expansion and it has a far reaching impact on people, and Nations. Electronic Banking is developing internet technology and it potential to revolution usage long pattern of conducting banking transaction have not been fully acknowledged in Nigerian’s financial markets. The rest of the world is constantly on the move. 5.2 CONCLUSION Today a large majority of our banks have automated their operation leaving only a few banks to catch up with others. The fact is that most of the Bank Management considers computerization to be important and therefore appropriate allocations of organizational resources to attain it argue well for the future of Nigeria Banking. One needs not to debate the fact that in Nigeria we are still decades behind the advanced countries of the world in the employment of computer technology to solve management and operational problems in the Banking industry with the attitude of Nigeria Bank Management to computerization the gap will soon be narrow if ideal level of automation is a mirage and attention to attain it is like catching up with ones shadow. This is because technology advancement is born everyday.

What we must do is to attempt to move fast than what we do presently and apply the currently available technology to solve our numerous operations or operational problem in the Banking industry. There are lot that computer can do to aid Banking operation. It helps Bankers in carrying out banking services effectively to their customers. 5.3 RECOMMENDATION I will like to put forward some recommendations to back up the point raised. I therefore recommend that Banks should automate their operations so as to improve their services and individual complaints of the society with regard to the Banking industry. A giant power generating plant should be installed to avoid damages due to inadequate electrical power supply system by the power holding company of Nigeria (PHCN) that is grossly unreliable. Banks should also install double uninterrupted power supply (UPS) to ensure that adequate back up is maintained. Banks should also have good maintenance system. Bank should try and get adequate spare part (if it amounts) to importing and even train their staff in the maintenance or premises department so that they can have experts to work on the equipment. There should also be adequate and good telecommunications system. This needs to be improved quickly to facilitate easy data communication network for individual or group of Banks. The electronic Teller and electronic fund transfer facilities will be possible. It has been observed that the Banks approve it own computerization individually and as such there is lack of standardization of equipment and software and the Central Bank of Nigeria (CBN) also implemented it own computerization without due regard to interface problem between its system and those of other Banks. The effect is that most return and application form such as CBN file number etc are usually sent to key in series of entries so as to process information changes in financial regulations from CBN while always effect Banks computerized system e.g. Foreign transaction etc…With CBN especially in working out modalities or implementing a new and or revision of regulation on existing computer system. Banks all over the world aware of the stiff competition in their area of operation and only way to stay in business is to continue to seek avenue for improved Banking technology that will make their service equal to if not better than those of their competitors. The situation is different in Nigeria today. Banks need to make it a must organize computer course that must be undergone by all staff irrespective of their position in the Bank. Quarterly seminars and conferences should be organized by the management to update their staff on computer application in their operation and exporting the means and manner in which fraudsters are always operating through the computer and thereby providing means and solution in curbing these problems.

REFERENCE: Ayo C.K. (2001)

Information Technology, Trend and Application in Science and Business Unilorin 2nd edition

Ehaw Chew (1999)

Introduction to Computer and its Application 2nd edition

Wole Adewumi (1980)

The State of Computer Application in Nigeria Bank 1st edition Gradan Burn Publisher UK

Central Bank of Nigeria (2006: Bullion April-June Chartered Institute of Bankers: Computer in Banking Lagos Branch Internet Application Technology (2008)

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