Impact of electronic banking Essay Example

mobile banking, enabling individuals to check account balances and make fund transfers using their mobile devices. In Nigeria, e-banking has gained acceptance with various delivery channels such as ATMs, POS systems, and PCs utilized by banks to provide products and services through internet banking. Furthermore, delivering bank products on public platforms serves as a form of advertisement known as e-commerce which involves exchanging information over the internet for different types of business transactions between individuals and organizations. Electronic banking is a specific product within the field of banking and financial services that results from E-commerce.Various online services are offered, including balance inquiries, checkbook requests, stop payment instructions recording, balance transfers, account opening, and other traditional banking services. The Internet allows businesses to effectively utilize information by granting access to customers, suppliers, employees, and partners. In Nigeria, bank customers now demand efficient and convenient services that cater to their specific needs and support their business goals. For example, customers want personalized banking services for security purposes when traveling without cash. They also desire the ability to check their balance online, inquire about queue status, transfer funds between accounts and download transaction records onto their computers at work or home. Customers believe electronic banking is the solution to receive preferential treatment and undivided attention from their chosen bank. Several Nigerian banks have made significant investments in information and communication technology to enhance their services. The United Bank for Africa (UBA), Zenith Bank, and GET Bank are among these banks according to The Guardian Newspaper April 18 article on IPPP page 21.The study aims to assess the potential of electronic banking's impact on the bank's performance and determine

whether the bank's electronic banking guidelines align with the CAB electronic banking guideline policy.The research will investigate three main questions: Is electronic banking more cost-effective than traditional branch transactions? Does electronic banking provide higher customer satisfaction compared to face-to-face transactions? And does electronic banking influence the bank's future prospects?

Research Hypotheses:

Ho: Electronic banking adoption has prospects in Diamond Bank, but it does not have an impact on the bank.

He: Electronic banking adoption does not enhance the fortune of Diamond Bank.

Ho: Electronic banking improves the bank-customer relationship.

He: Electronic banking does not improve the bank-customer relationship.

Ho: The bank's electronic banking guideline complies with the CAB electronic banking guideline.

He: The bank's electronic banking guideline does not comply with the CAB electronic banking guideline deadline.

Significance of the Study:

This study is aimed at providing knowledge to banks executives and policy makers in banks and financial institutions about electronic banking as a product of electronic commerce. The goal is to enable them to make strategic decisions. The research conducted in Diamond Bank Pl focuses on identifying obstacles to implementing electronic banking, demonstrating its benefits, highlighting areas for improvement in banking operations through electronic banking, and serving as a valuable resource for various interested parties. This study specifically examines the adoption of electronic banking in Nigeria, with a focus on Diamond Bank Pl from 2007 to 2010. It's important to note that not all data collected will be limited to respondent and end user information. Electronic banking has been present in Nigeria since 1952 and has undergone significant regulatory and institutional advancements. Prior to bank mergers and acquisitions, control of the industry was primarily

held by five out of the 89 existing banks. In 2004, Nigerian banks had approximately 3,017 branches nationwide but faced challenges such as fraud and corruption that adversely affected public confidence.The Central Bank of Nigeria implemented banking reform in June 2004 to address various issues in the sector like poor capital base, distress and failure cases, and poor asset quality.

The aim of this reform was to decrease the number of banks and increase their dependability. The success of the reform led to the emergence of 25 large banks after the rationalization exercise concluded on December 31, 2005. These changes were made to align with global development goals and enhance service quality. Nigerian banks have made significant investments in technological advancements and have transitioned from manual systems to automated ones in recent years. In the past, banking transactions relied on ledge-cards; however, now banking is connected to information technology networks, allowing for inter-banking and inter-branch transactions. The introduction of mobile phones in 2001 and improved access to personal computers and internet services also contributed to the growth of electronic banking in Nigeria. Despite local banks commonly offering real-time online internet banking services, there is still a lack of customer integration into electronic banking processes. This can be attributed to Nigeria's reputation as the global headquarters for Advance Fee Fraud, which is mainly carried out through the internet during international affairs.The prevalence of internet fraud and the lack of regulatory framework pose risks to internet banking, which requires protective measures by banks. The recent literature on electronic money and banking primarily focuses on replacing currency with electronic gadgets and virtual currency, disregarding electronic banking. However, there are

still various research studies that address the challenges faced by electronic banking within this limited scope. Sandstorm and Setter (1996), Print (1999), Shy and Track (2002), along with other models suggest that under certain conditions, alternative electronic payments can replace physical currency. These models indicate that depending on the characteristics of the technologies and potential users, electronic substitutes for currency have the potential to become widely used. According to Bergsten (1998), substituting smart cards for physical currency will not significantly impact monetary policy or greatly affect the demand for central bank reserves. Goodhearted (2000) examines how monetary control would function in an economy where central bank currency is partially or completely replaced by electronic alternatives.Cohen (2001) distinguishes between monetary control and monetary autonomy. According to Cohen, the introduction of electronic currency substitutes will not diminish monetary control but may reduce monetary autonomy. Goblin (1997) supports this idea and argues that electronic banking and the card system are part of a larger technological advance and globalization process that is making national authorities ineffective. Via (2001) adds that electronic banking is a result of e-commerce in the banking and financial services field. In the Business-to-consumer domain, electronic banking includes traditional services like balance enquiry, queue book requests, stop payment instructions, balance transfer instructions, account opening, etc. Banks also offer payment services for their customers who shop in different e-shops. The card system is a unique type of electronic payment using smart cards with embedded integrated circuits for financial settlements. While paper cash remains widely used worldwide for financial transactions, its proportion is declining especially in advanced economies (Earned, 2005).Queue books, which are paper-based payment instruments, are gaining

popularity due to their automation features that aim to reduce clearing days and enhance security in settlement and collection processes. The Central Bank of Nigeria (CAB) has recently implemented online clearing, and Nigeria has shown interest in and joined this project (Monsoons, 2005). Electronic banking is becoming more widely accepted globally as a means of delivering banking services and a strategic tool for business growth. In Nigeria, it is also rapidly expanding with several banks entering the electronic banking market (Via, 2001). The introduction of net banking through existing bank websites indicates that Nigeria is on the verge of experiencing a significant banking revolution. However, the Nigerian banking system faces cyber-crime threats such as the well-known "419" scam that originated from Nigeria in the past. This fraudulent activity has evolved alongside advancements in information technology, initially utilizing postal letters as its primary medium. Early on, electronic banking was integrated into telecommunication facilities like telephone and fax systems. To regulate this ever-changing electronic banking environment, the Nigerian government and regulatory agencies have enacted decrees and acts such as the Failed Banks (Recovery of Debts) and Malpractices in Bank Decree No.18 of 1994 and the Money Laundering Act of 1995.Unfortunately, there was a lack of effective enforcement of regulations, leading to inadequate control over financial crimes. The increase in internet and computer usage in Nigeria during the late asses revealed that existing regulatory documents, like the Banks and Other Institution Act of 1991, did not include provisions for electronic banking. This resulted in gaps in the bank customer relationship contract, where valuable items were entrusted to a keeper without considering electronic banking. The banker is responsible for

these valuable items entrusted by the customer, who intends to retrieve them upon request. A contract governs this fiducial relationship between the banker and customer, including specific terms and conditions that should not be disclosed to a third party. Moreover, the customer has the right to personally or through an authorized proxy collect their deposit whenever they desire. Financial institutions play a crucial role as intermediaries between capital and debt markets by transferring funds from investors to companies in need of capital. They facilitate money flow within the economy by pooling savings to generate revenue. In the upcoming chapter on research methodology, we will outline our approach as researchers for conducting this study and gathering data. This will cover various aspects such as the study population, sampling techniques, sample size, data sources, methods of data collection, and methods for analyzing and testing hypothesesThe study focuses on all 40 credit officers at Diamond Bank Pl. The researchers will carefully choose a diverse sample to gather different perspectives on the impact of electronic banking in the bank. They plan to include all segments of this population to ensure comprehensive representation. Data collection will involve both primary and secondary sources. Primary data will be collected through questionnaires given to participants, while secondary data will be obtained from reliable sources such as CAB electronic banking guidelines, Unity Bank Pl annual reports, and CAB annual reports. Data analysis procedures will include descriptive statistics like frequency counts and percentages, as well as more advanced statistical tests such as the chi-square test.