CS5038 ELECTRONIC SOCIETY
Assignment
Group I Individual Article
By
Anju, Anthony Utsu
On
Trust as key for customer adoption of Internet banking in
Nigeria
Introduction
Every part of our world today is connected and we have the internet to thank
for that. The great power and potential of the internet has revolutionized the way
individuals live, communicate and gather information, as well as the way they
conduct their various business transactions. There has been a rapid expansion of the
internet over the last ten years in a lot of countries in the world. The beauty of the
internet is its interactivity between numerous users and producers of the information
on the net. It has risen to such prominence and significance because it has proved to
be a priceless source for getting important information on time and providing new
dimensions to various social and economic activities. {1}
Consequently, this widespread expansion and adoption of the internet and its
various services and resources has provided efficient means of economic and social
growth for countries, especially developing countries. It has helped to reduce the cost
of many business transactions, increase efficiency of doing business and ensure
transactions are very expedient. Although the influence of the internet is felt in every
sector of life, its importance in the banking sector, i.e. in the transformation and
improvement of the banking industry is monumental. {1}
Bank consolidation and the emergence of e-banking in
Nigeria
The relevance of banks in the economy of any nation cannot be
overemphasized. They are the cornerstones, the linchpin of the economy of a
country. The economic well being of a nation is a function of its advancement and
development of her banking industry. {2}
Nigeria is a very diverse and multi-cultural nation. In many aspects, Nigeria is
not as advanced as the United States of America, England or many other European
countries. But in the banking industry, Nigeria is not doing badly at all. This
monumental improvement and technological advancement in the banking sector was
brought about by certain national reforms.
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In July 2004, the new Governor of the Central Bank of Nigeria (CBN), Prof.
Charles Soludo announced that the new minimum capitalisation for banks in Nigeria
is N25billion (approximately $181m). {3} Only banks that met this requirement could
hold public sector deposits and participate in the Dutch Auction System of buying and
selling foreign exchange. {4}
This monumental reform changed the way banks function in Nigeria. As a
result of this huge re-capitalization process, all the Banks in the country were totally
transformed. At the end of the capitalization exercise, of the initial 89 original banks
that existed, 25 bigger and better banks emerged. This bank consolidation in Nigeria
led to the adoption of large scale e-banking by the banks and customers.
What exactly is e-Banking?
E-banking involves the delivery of automated banking services directly to
customers via electronic, interactive communication means without the need for
physical presence. It includes the systems that enables individuals to easily access
account information, transact business or obtain required information on particular
services through a network, and that includes the Internet. {5}
With the use of e-banking services, almost all transactions can now be done
at the click of a button, which makes life much easier for the people, ensures
transactions are done promptly, saving time and ensuring an efficient service delivery
to everyone at all times, regardless of location.
There have been numerous cases of successes in e-banking all over the
world especially in the United States of America and in the United Kingdom. In
developing countries like Nigeria, issues of trust and privacy have been found to hold
back the complete adoption of Internet banking by everyone. {6}
Therefore, while a good number of the demographic utilize these banking
services, there are still a large number of people that are sceptical about such
services because of the threats associated with e-banking, and with good reason too.
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E-banking and fraud
E-banking fraud exists in numerous ways and the one with the highest
occurrence is called “phishing”. Here, some ingenious criminals send you an email
that looks like it has come from a certain Bank you bank with. These fraudulent
messages ask you to give details of your bank account information. In extreme cases
the customer is even told that failure to send such information would lead to the
closure of the account. Such cases of electronic fraud are well documented and
talked about all over the world and particularly in Nigeria.
In my opinion, people have a right to be wary of e-banking, because for all the
pros associated with it such as saving time, handling transactions rapidly, bill
payments from anywhere you are, they are also a lot of negatives associated with it.
For example, In August of 1995, Citibank in America had trouble with hackers
getting into their system. “A $10 million computer fraud against Citibank was the first
successful penetration by a hacker into the system which transferred trillions of
dollars a day around the world. Of the $10 million dollars illegally transferred,
$400,000 was not found”. {7}
In the United Kingdom, in 2006 there was a 55% rise in losses from online
fraud against banks, reaching £23m in the first half of 2006. {8}
Also, in the United States of America in 2004, nearly 2 million people had
their bank accounts infiltrated by fraudsters according to a survey by a market
research group Gartner. It amounted to a total loss greater than $2 billion for the year
and customers reportedly lost an average of $1,200 for each occurrence. {9}
These examples are just a few cases of e-banking fraud occurring around the
world. There are a lot of other cases of e-banking fraud that will go beyond the scope
and limit of this article.
Consequently, in a country like Nigeria that is still developing, the security
concerns about e-banking are compounded and with good reason. If advanced
countries such as the United States of America with all its security initiatives have
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instances of online banking fraud as well as breach of an individual’s personal
privacy as cited earlier above; it is no wonder that people in Nigeria are still sceptical
about converting totally to the e-banking craze that is enveloping the whole world.
Building Trust in e-banking
It is my opinion that customers of online services are quite comfortable
providing general information to websites such as the kind of products they like for
example; however they become very uncomfortable when asked to provide more
sensitive information such as credit card numbers and bank information. These
feelings are due not only to the defects of the Internet and e-commerce security, but
also to the customers’ distrust of them. {9}This state of affairs is seen a lot in the
case of e-banking. A bank websites is a large repository where extremely sensitive
personal and financial information can be manipulated. Customers are concerned
about the security issues of e-banking and the customer’s concerns inhibit his/her
use of e-banking. {10}
For the e-banking trend to fully be adopted by everyone, it is the responsibility
of the various banks involved to be able to convince customers that they can provide
a safe and secure service for them as they perform their transactions. Customer trust
is a major factor influencing the growth and sustained use of e-banking services.
Research across many disciplines has examined trust in both social and
organizational contexts and it was observed that trust plays a key role in customers’
online purchasing decisions .{11} As a result it is also logical to assert that trust also
plays an important role in the relationship between customers and their banks.
{12}This is because the cultivation of trust is particularly important where uncertainty
and risk are inherent and where contracts and warranties are often absent. {13} In
the Internet environment, remote users in all corners of the world are allowed to
access critical files on computers and information transferred via the Internet is,
therefore, inherently risky from the viewpoint of security. Moreover, e-banking is
highly uncertain, because the parties involved in a transaction are not in the same
place at the same instance. {14} Therefore, customers cannot observe a cashier’s
body language, behaviour or see any visual signals that may give a hint of
trustworthiness or untrustworthiness.
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To allay customers fears about e-banking, various banks adopt a lot of
ingenious strategies to make the customers trust them. I really think some of them
are quite brilliant. For example Zenith bank, one of the biggest banks in Nigeria puts
on its e-banking webpage a big section on security and privacy. It tells the customers
“At Zenith Bank we know that issues like security, protection from fraud and personal
privacy mean as much to you as it does to us. With that in mind, our advanced
security measures with a state-of-the art website that employs 128-bit encryption,
the highest level of protection for financial transactions.
This encryption technology ensures that data passing between your computer and
the Bank is secure and that your accounts cannot be accessed by anyone else
online. Our log in process also requires the use of unique customer access code,
username and password. This also provides another layer of security.” {15}
The Bank goes on and on about firewalls, online certificates and a host of
other security measures which the customers don’t even have any idea of but
eventually believe because of their wonderful sales pitch and the trust the customers
may now have by reading all the various security features they have in place.
Additionally, numerous banks in Nigeria adopt online fraud prevention
systems that detect out of the ordinary online customer expenditure. Once a
customer starts making transactions in a way that is contrary to his/her normal
spending or withdrawal pattern, the Bank usually calls the customer to confirm and
validate such transactions before the transactions can go through.
Furthermore another strong incentive and possibly the greatest technique that
I feel banks utilize to make more customers trust and adopt e-banking is the promise
of a refund of money collected from the customers by phishing scams, provided the
customer is not in breach of the banks terms and conditions. This gesture is a
significant step in the right direction for establishing a considerable amount of trust in
a bank and its e-banking services and policies. It also serves as a strong motivation
for the customers to embrace e-banking.
These are just a few of the numerous measures that the Banks in Nigeria
adopt to try and build some measure of trust about their efficient security measures
for safe e-banking.
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In my opinion however, I do not doubt completely the effectiveness of such
security measures, I tend to believe that all banks use similar tactics as part of their
marketing strategy to make more people participate in e-banking because of the
obvious benefits to the bank. It is apparent that no system can be 100% secure, even
in the developed countries of the world, but what the Banks have tried to do, is to
make people believe that e-banking can actually be 100% secure always. Only time
will tell if this brilliant marketing strategy will work effectively enough to build a huge
amount of trust in the customers especially the pessimistic ones.
In my own view, we must remain realistic. Banks must acknowledge the fact
that in practice, certain customers will easily be swayed into the regular usage of ebanking services, while some may take a whole lot longer and others may never
embrace it.
At the end of the day, I strongly believe that customers will agree to use only
those banking services they trust completely and will always decline to use those that
give them any cause for suspicion, distrust or doubt.
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Conclusion
From the above discussion, it is very clear that e-banking in Nigeria has
positively changed the lives of the people in the country. Before the e-banking
innovation, the banking sector was very basic and could not offer specialized
services to customers who are always on the move. E-banking has revolutionized the
way Nigerians transact business and make payments for various goods and services.
Security, fraud and privacy concerns remain a major hurdle that must be
tackled by the Banks and government as a whole for e-banking to be religiously
adopted by all.
Many people can go on and on about the security concerns and privacy
issues that affect the full adoption of e-banking by the general public in Nigeria and
also in the world as a whole, but the onus here is on the banks themselves to build
trust in the minds and hearts of their various customers. In any relationship, trust is
very important and the absence of it hinders any meaningful bonds regardless of
whether it is a social or business relationship.
In my opinion, trust here is the ultimate key. Find a way to make people
believe that you can provide a perfectly safe and secure service, even if it is not
actually feasible, and the world is yours for the taking. When all the banks in Nigeria
can totally convince people and allay their security and privacy concerns, then and
only then will the e-banking craze that has taken over the whole world be fully
accepted and adopted.
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References
1. Using IT to boost agricultural productivity in Nigeria
By Emeka Aginam
Wednesday, 10 October 2007
http://www.vanguardngr.com/articles/2002/features/technology/tec910102007.html
2. Banking Consolidation in Nigeria and the Strategies for Generating Better
Returns
By Oviemuno Anthony Oke
http://searchwarp.com/swa75082.htm
3. Consolidation in the Nigerian Banking Sector: Brand Scenarios &
Implications
http:www.alder-consulting.com/n25bcap/implications.asp
4. Banking Sector Reforms in Nigeria
Friday, December 10, 2004
By Sam N. Okagbue & Taiwo B. Aliko
http://www.imakenews.com/iln/e_article000336415.cfm?x=b11,0,w
5. FFIEC IT Handbook InfoBase
Booklet: E-Banking
Section: Introduction
http://www.ffiec.gov/ffiecinfobase/html_pages/ebanking_bookframe.htm
6. Ezeoha, A.E. (2005)
Regulating internet banking in Nigeria: Problems and challenges—Part 1
Journal of Internet Banking and Commerce, 10(3)
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7. THE SECURITY OF ELECTRONIC BANKING
http://csrc.nist.gov/nissc/1997/proceedings/041.pdf
8. Online banking fraud rises fast
http://news.bbc.co.uk/1/hi/business/6122116.stm
9. Survey: 2 million bank accounts robbed
Criminals taking advantage of online banking, Gartner says
June 14, 2004
By Bob Sullivan
http://www.msnbc.msn.com/id/5184077/
10. Effect of trust on customer acceptance of Internet banking
By Bomil Suh and Ingoo Han
http://www.sciencedirect.com/science?_ob=ArticleURL&_udi=B6X4K47C3NW12&_user=152381&_coverDate=12%2F31%2F2002&_rdoc=1&_fmt=&_orig=searc
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11. Pavlou, P.A. (2003) Consumer acceptance of electronic commerce:
Integrating trust and risk with the technology acceptance model.
International Journal of Electronic Commerce, 7(3), 101–134.
12. Chau, P.Y.K., & Lai, V.S.K. (2003) An empirical investigation of the
determinants of user acceptance of internet banking.
Journal of Organizational Computing & Electronic Commerce, 13(2), 123–145.
13. A. Crosby, K.R. Evans and D. Cowles, Relationship quality in services selling:
an interpersonal influence perspective.
Journal of Marketing 54 3 (1990), pp. 68–81.
14. Promises and threats in electronic commerce,
By Roger Clarke, 1997
www.anu.edu.au/people/Roger.Clarke/EC/Quantum.html
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15. Online Security
http://www.zenithbank.com/ibanksecurity.cfm
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