ELECTRONIC BANKING AS AN AID TO COMMERCIAL BANK
OPERATIONS IN NIGERIA
BY
OLASOPE TOSIN
BF/2008/110
DEPARTMENT OF BANKING AND FINANCE,
FACULTY OF MANAGEMENT AND SOCIAL SCIENCES,
CARITAS UNIVERSITY, AMORJI-NIKE ENUGU, ENUGU STATE,
AUGUST, 2013
i
TITLE PAGE
ELECTRONIC BANKING AS AN AID TO COMMERCIAL BANK
OPERATIONS IN NIGERIA
BY
OLASOPE TOSIN
BF/2008/110
BEING A PROJECT REPORT PRESENTED TO THE DEPARTMENT OF
BANKING AND FINANCE, FACULTY OF MANAGEMENT AND SOCIAL
SCIENCES, CARITAS UNIVERSITY, AMORJI-NIKE ENUGU, ENUGU STATE,
IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE AWARD OF
BACHELOR OF SCIENCE (B.Sc) DEGREE IN BANKING AND FINANCE
ii
APPROVAL PAGE
This research was read and approved for meeting the requirements‟ is
recommended for the award of Bachelor of Science (B.Sc) Degree in Banking and
Finance, Caritas University, Amorji-Nike, Enugu State.
_____________________
________________
Nsofor E.S.
Mr. Okafor I.G
(Project Supervisor)
(Head of Department)
iii
CERTIFICATION
I, Olasope Tosin, an undergraduate student of Banking and Finance with the
Registration Number BF/2008/110, have submitted this project report for the award
of the Degree of Bachelor of Science (B.Sc) in Banking and Finance. The work
embodied in this project report is my original work and has not been submitted in
part or full for any other Degree or Diploma in this University or any other
Institution.
______________
___________
Olasope Tosin
Date
We certify that this project report has been successfully defended and accepted for
the award of the Degree of Bachelor of Science (B.Sc) in Banking and Finance.
______________
___________
Nsofor E.S
Date
(Project Supervisor)
______________
___________
Mr. Okafor I.G.
Date
(Head of Department)
______________
___________
Dr. Onwumere J.U.J
Date
(External Examiner)
iv
DEDICATION
With much gratitude to Almighty God for sparing my life to see this day, his love,
mercies and kindness for giving me strength and seeing me through in all my
endeavors. To him I owe all thanks. I dedicate this whole work of study to the entire
members of my family, whose love and guidance has put me in this present position.
They stood by me and I stood tall! What more could I ask for?
v
ACKNOWLEDGMENT
My sincere and utmost gratitude goes to Almighty God on whose favour and
blessings, I have completed this study at Caritas University, Enugu.
I must express my appreciation to Nsofor, E.S, my supervisor, whose enthusiasm for
this work, encouragement, support and constructive criticisms made, even the most
difficult challenge feasible.
My endless appreciation also goes to my Head of Department Mr I.G. Okafor and my
Departmental lecturers, Prof. F.O. Okafor, Dr. S.M. Takon, Mr. M.C. Ezeamama, and
Mr. A.O. Nwadiubu, for their help and encouragement in my academic pursuit.
Even in a hurry, I will not forget to appreciate my loving parents for their endless
support and seeing me through in this work; there are no words that can express
my heartfelt gratitude for laying down a solid foundation for my education and
ensuring that my dream of being well educated turns into a reality. Special thanks to
both of you for your love, blessings, support and prayers.
vi
ABSTRACT
This study focuses on Electronic banking as an aid to commercial bank operation.
The main objective of this work is to identify how electronic banking aids commercial
banks in carrying out their daily activities. In other to achieve this, primary data
which exist inform of questionnaire and oral interviews and secondary data inform of
journals, articles and books were used. Three hypotheses were formulated and
analyzed with simple percentage and Chi-Square statistical methods. Results show
that poor staff orientation, poor infrastructures and high cost of adoption are factors
that affect the effectiveness of electronic banking in aiding operations in commercial
banks. IT recommends that banks should carryout more seminars and training for
staffs to enlighten them on being computer literate and on the use of electronic
banking and also put in place the appropriate facilities for its effectivity.IN conclusion
the study reveals that electronic banks plays a major role in aiding of operations of
commercial banks through execution of transactions at faster rate and enhancing
banks profitability and effectiveness.
vii
TABLE OF CONTENT
Cover Page
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Title Page
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Approval Page
Certification
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Dedication
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Acknowledgments
Abstract
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Table of Contents
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CHAPTER ONE: INTRODUCTION
1.1
Background of the Study
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Statement of the Problem -
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Objectives of the Study
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Research Questions
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Research Hypotheses
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Scope of the Study
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Significance of the Study
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Limitation of the Study
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Definition of Terms -
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CHAPTER TWO: REVIEW OF RELATED LITERATURE
2.1
Theoretical Study
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2.1.1 Meaning of Electronic Banking
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2.1.2 Origin of Electric Banking -
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2.1.3 Benefits of e-banking
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2.1.4 Component of e-banking
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2.1.5 Problems of e-banking
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2.1.6 Solution to e-banking
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2.1.7 Empirical Process of the Literature
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CHAPTER THREE: RESEARCH METHODOLOGY
3.1
Research Design
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Sources of the Data
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Population of the Study
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Sample Size
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Techniques of Analyses
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CHAPTER FOUR: DATA PRESENTATION AND ANALYSIS
4.1
Data Presentation
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4.2
Analyses of Key Research Question to Bank Staff
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4.3
Analyses based on data received from bank customers
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Analyses based on Key Research Questions
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Test of Hypotheses -
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4.1.2 Data Analyses
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CHAPTER
FIVE:
SUMMARY
OF
FINDINGS,
CONCLUSIONS
AND
RECOMMENDATIONS
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Summary of Findings-
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Conclusions -
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Bibliography -
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Appendix
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LIST OF TABLES
Tale 4.1
Distribution of Respondents by Gender -
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Table 4.1.5
Distribution of Respondents according to Position held
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Table 4.2.1
Offering of E-banking Services
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Table 4.2.2
Electronic Banking Service Offered
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Table 4.1.2
Distribution of Respondents by Age
Table 4.1.3
Distribution of Respondents According to
Educational Qualification
Table 4.1.4
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Distribution of Respondents according to
Working Experience
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Table 4.2.3 Difficulty in Assessing E-banking Services
Table 4.2.4
Challenges of Electronic Banking -
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Table 4.2.5: E-banking replacing the Physical Banking
Table 4.2.6 Efficiency of E-banking to its increasing of bank services -
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Table 4.2.7
Increased bank‟s profitability
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Table 4.3.1 Distribution of Respondents by Gender
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Tale 4.3.2
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Table 4.4.1 Knowledge of Electronic Banking
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Table 4.4.2 Improved Service Delivery
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Distribution of Respondent Age
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Table 4.3.3 Distribution of Respondents according
Educational Qualification
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Table 4.4.3 Reduction of Waiting Time Experience in the Banks
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Table 4.4.4
Use of E-banking Products
Table 4.4.5
How often
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Table 4.4.6 Negative Impact of E-banking on Commercial
Bank Operation
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Table 4.4.7 Negative impact between Staff Orientation on E-banking -
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Table 4.4.8 Negative impact of poor infrastructural facilities
on commercial bank operations
xii
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CHAPTER ONE
INTRODUCTION
1.1
Background of the Study
The Nigerian banking industry has witnessed a lot of changes since the mid 1980s
and this is reflected in the increased volume and complexity of operations, increased
innovations and varieties in product and services delivery.
These development have not only been technologically driven, but have influenced
more technological advances.
Information technology, which is the foundation of modern electronic banking,
through desktop computers and terminals, provide tools for delivery of new products
and innovations characterized by Automated Teller Machines (ATM) and Credit
Cards. Information technology (IT), through electronic banking, is rapidly changing
how banking is done all over the world.
E-service is becoming more important, not only in the area of determination of
success or failure of electronic commerce (Yang, 2001), but also in the provision of
customers with superior experience with respect to the interactive flow of
information.
Recently, however, technology has had remarkable influence on the growth of
service delivery options (Dabhollear and Bagozzi, 2002).
According to (Dabhollear, 2000) he claims that when the customer is in direct
contact with the technology, there is a greater control such as with internet banking.
1
However, if the absence of direct contact such as with telephone banking, it is
assumed that there is less perceived control by the customer during this transaction.
He suggests that direct contact with such technology gives the customer a feeling of
great control. He also goes on to say that internet banking allows customers to
perform task at time and places convenient for them.
(Ovia, 1997, p.2) states that the new technology has created an unparallel wired
economy, transferring money from point A to point B‟ using bits and bytes through
satellite transponders, fibre optic cables or regular telephone lines.
The installation of customer friendly technology, such as Automated Teller machines
and internet banking service, as a means of delivering traditional banking service,
has become common as a way of maintaining customer loyalty and increasing
market shares. This technology is used by banks to meet the competitive challenges
posed by online banks as well as a method of reducing the cost of producing
services that were once delivered exclusively by bank personnel (Joseph and Beatriz,
1997; Akinyele, 2007).
Millions of Naira is being spent on information technology by bank, making the use
of electronic banking expensive, yet it is still suited in Nigeria where transport,
telecommunication and energy is inefficient and ineffective, hampering the
movement of goods and service. The willingness of banks to take up efficiency
seeking technology depends just as much on internal factors like cost of adoption
and ownership of infrastructure like telecommunication.
Al-Haari and Tony, (2006) describes that service equality impact on customer
satisfaction which in turn affects the financial performance of the banks.
2
1.2
The Statement of the Problem
Since the inception of the use of electronic banking product in the late 1980s, banks
have not made their presence felt much and this is arising as a result of problems
associated with the use of electronic banking which includes:
1. Cost of ownership and Adoption: Cost of ownership or acquiring electronic
banking by the banks tend to e very expensive, as it entails the acquisition of
computers and telecommunication gadgets which are usually brought from
overseas, making the bank spend more on the shipment and installation of
these gadgets by the experts, as a result, most banks could not afford Ebanking.
2. Poor Orientation: The lack of knowledge about the use of the computer by
employees can also be said, as most bank staffs are not computer literate
which serves as a perquisite for e-banking operation.
3. Lack of Infrastructure: The poor condition of power supply in the country as
well as the unavailability of property installed telecommunication system are
said to be great setbacks in the use of electronic banking.
1.3
The Objectives of the Study
The main objective of these study includes the following:
1. To identify the extent to which cost of installation of e-banking has impacted
on bank‟s operation.
2. To examine the extent to which staff orientation to e-banking has aided
commercial bank operations.
3
3. To examine the impact of infrastructural facilities on e-banking operation in
commercial bank.
1.4
Research Questions
1. How has the high cost of adoption and ownership of electronic banking
affected commercial bank operations?
2. To what extent is the orientation of staff on e-banking accountable for
commercial bank operation?
3. In what way can commercial banks improve on infrastructures of electronic
banking?
1.5
Research Hypotheses
1. High cost of electronic banking does not have a negative impact on
commercial bank operation.
2. There exist negative impacts between staff orientation on electronic bank and
commercial bank operations.
3. Poor infrastructural facilities do not have a negative impact on commercial
bank operation.
1.6
Scope of the Study
The scope of the research is limited to Enugu State. The commercial banks in Enugu
States are selected, namely:
1. First Bank of Nigeria Plc
2. Guarantee Trust Bank
3. United Bank of Nigeria
4
1.7
Significance of the Study
It is hoped that the finding and recommendation in this study would include:
1. For customers: increased convenience, reduction in risk of cash related
crimes, access to credit and cheap access to banking service.
2. For Corporations: Better access to capital due to shorter payment processing
times, increased efficiency of payment process and accounting, reduced
revenue leakage and efficiency in treasury management.
3. For Government: increased tax collection, increased economic growth.
4. For Banks: Efficiency through electronic payment processing, reduced cost of
operation and increased banking penetration.
1.8
Limitation of the Study
The study of this nature cannot be carried out without difficulties in the process. One
of the major limitations encountered in this work is the scarcity of data and material;
another is the problem of finance. A study of this nature would require a lot of
financial commitment in the area of the researcher moving around and also in the
area of the questionnaire distribution.
1.9
Definition of Terms
ATM: Automated Teller Machine.
IT: Information Technology
E-banking: Electronic Banking
5
CHAPTER TWO
2.1
Theoretical Study
2.1.1 Meaning of Electronic Banking
The Oxford Learners Dictionary defines electronic banking as something that is
operated and based on electronics; it then goes further to define it as a science and
technology of electronic phenomena, devices and system as in computer, radio, etc.
It can therefore be deduced that the meaning of electronic banking is the banking
business which is carried out using electronic devices and systems or done
electronically so as to provide a speedy and accurate financial service.
2.1.2 Origin of Electronic Banking
According to Anibuze (2006), electronic banking started in the mid 1980s with
technology drive product which has influenced more technological advances. He
further stated that what used to be termed electronic data process has been
transformed into electronic banking through information technology.
Anibueze emphasized that „this change in technology reflects on equivalent
transformation to use of computer from the use of paper flow bringing about a
reduction in the unit cost and replacement of the manual process of writing with
computer processing today‟s focus on electronic product and service delivery‟. All
these being in line with today‟s modern international banking climate.
6
2.1.3 Benefits of E-banking
According to Aleen Greenspan (2007), the expected benefit of e-banking consists of
the following, in the following order:
1. Improve customer service: Electronic banking enables banks provide new,
faster and better service to its customers, thereby, bringing up the banks to
international standards and enhancing competition amongst the banks. These
can be in the form of file transfer, signature verification within minutes, etc.
2. Reliability of transaction: Electronic banking helps to ensure accurate and
timely transactions unlike when done manually, which is prone to human
errors that can cause setbacks.
3. Satisfy: Electronic banking technology ensures the safety of bank dealing with
its customers. Unsafe banking practice can cause huge looses to the bank
practice can cause huge looses to the bank, especially in the cause of
misrepresentation of account owners. This banking technology (electronic
banking)
prevents
this
through
its
signature
verification
preventing
unauthorized access into the computer.
4. Redundancy of Storage Space: Electronic banking technology helps to reduce
the use of files which are archaic, thereby, reducing use of storage space.
The use of file could lead to loss of vital information about bank customers either by
mutilation or easy and unauthorized access to file and also misplacement of
important documents. This can be prevented through storage of information in hard
drive, diskettes and compact disc.
7
2.1.4 Component of E-banking
The electronic banking relies on a number of component or processor. The following
list includes many of the potential components seen in a typical institution.
1. Website design and hosting
2. Firewall administration
3. Security management
4. Internet banking service
5. Automated decision system support
All these components work together to deliver e-banking service; each component
represents a control to consider. Through a combination of intervals and outsourced
solutions, management has many alternatives when determining the overall system
configuration for the various component of the e-banking system.
However, the research presents only two variations.
Finally, one or more technology service providers can host the e-banking application
and numerous network components. In this configuration, the institution service
provider host the institution website, internet banking server, firewall and intrusion
detection system.
While the institution does not have to manage the daily administration of these
component system, its management and board remains responsible for the contents
performance and security of the e-banking system.
Secondly, the institution can host all, or a large portion of its e-banking system,
internally. In this case, a provider is not between the internet access and financial
8
institution cote processing system. Thus, the institution was the day to day
responsibility of system administration.
2.1.5 Problems of E-banking
The following problems can be seen to be faced by e-banking according to Ernest
and Fadiya (2002). They include:
1. Power: The situation of power must be improved to accommodate the smooth
operation of financial activities.
2. Literacy: As noted, the literate rate in Nigeria is still low especially in the
Northern part of the country. Hence, business people prefer to keep this
money in their own vault while their banks are scattered all over the country.
3. Prevalence: Another major concern would be the risk involved because if the
process is rushed and the economy looses confidence in the system due to
high level of fraudulent activities, it would be devastating to the economy of
the country (Nigeria).
4. Infrastructure deficit: The financial infrastructure in Nigeria is not adequate to
carry the load of a cashless society, ATM points of load of sale system, mobile
banking and other mediums have to be dramatically expanded to touch, at
least, 40% of the whole economy before any meaningful effect can be felt.
2.1.6 Solution to E-banking
Addressing the problems associated with the e-banking, every bank must take
consideration of the following recommendations:
9
i.
Adequate and well functioning infrastructural facilities must be in place,
more especially, the issue of electricity must be tackled by the government
to facilitate the usage of e-banking.
ii.
To encourage Nigerians to patronize such services; the cost should not be
too high.
iii.
Collective and individual analysis should be made of the various e-banking
channels to determine relative impact on the economy.
iv.
Effective regulatory measures must be implemented at the domestic and
international level.
v.
There must be clear cut intention to purse either inflation targeting goals
or economic growth and development goals.
vi.
The Central Bank must redesign its monetary policy framework in such a
way to recognize the effect of reduced production of currency notes.
2.1.7 Empirical Process of the Literature
Olorunleke (2010) carried a study on „technology and service quality in banking
industry: An empirical study of various factors in electronic banking service‟. The
research work was carried out through a cross section survey design which
questioned respondents on e-banking services. The population of study mainly
constituted of customers of Oceanic Bank within Lagos and its environs. The
respondents were customers of banks using e-banking services (internet banking,
mobile banking and ATM). The data collected was analyzed by use of frequency,
percentage, mean and correlation analysis. The finding revealed that secure services
was the most important dimension, followed by convenient location of ATM,
10
efficiency (not need to wait ability to setup accounts so that the customers can
perform transactions immediately).
Alewoye (2007), researched on the „impact of information technology investment on
banking operations in Nigeria‟. The study was carried out mainly on 10 insured premerger banks within the South-Western geographical zone of Nigeria in which 8
banks were selected from Lagos via a purposive sampling technique while 2 banks
(old generation and new generation banks) were picked from outside Lagos. The
study developed a production function of the form in line with Cobb Douglas
function. This was used to determine the nature of relationship between investment
and firm‟s I.T productivity and profitability. Data for the study was essentially from
the financial reports of the selected banks, covering a period of 5 years.
Questionnaires and scheduled interviews were administered on head of system units
and engineers in the selected banks. Two-stage leas squares, ordinary least square
and analysis of variance were used to determine the nature of the relationship
between I.T investments and productivity, I.T investment and profitability. Results
showed that while I.T investment made positive contributions to gross marginal
output and net marginal output, I.T capital made zero and perhaps negative
contribution to output. However, investment in I.T labour was associated with a high
increase in the output of the banks given its elasticity values which were 104.189144
and 2.304. However, I.T investment made zero contribution to and not significant to
bank‟s profit. Findings indicate that I.T investment have increased productivity but
have not resulted in supernormal business profitability, rather, there were some
evidence of small or negative impact on profitability. It was concluded that while
11
modeling techniques used need to be improved, these results were consistent with
economic theory.
Idowu (2002), Alu (2002) and Adagun (2002) carried out a study on „Effect of
Information technology on the growth of Banking Industry in Nigeria‟. In this study,
the impact of I.T on banking industry in Nigeria is described. A questionnaire was
employed to collect data from customers at five major banks in Nigeria on the extent
to which customers believe that it exerts an impact on banking services. The result
of the study clearly indicates that I.T has contributed immensely to the growth of
banking industry in Nigeria.
Audu (2010), carried out research on „Effect of Electronic Banking Facilities,
Employment Sector and Age-group on Customer‟s Choice of Banks in Nigeria‟. In this
study, both descriptive and inferential statistics were used. The results show that no
significant relationship between electronic banking facilities and customers‟ choice of
banks and also on the other hand, there exist a relationship, it was recommended
that management of Nigerian Commercial Banks should find the relevant factors that
are considered important by customers of various age group of appropriately
segmenting the target market.
Aboyade (2005) carried out research on „Information and Communication
Technology in Nigeria: Revolution or Evolution‟. The paper emphasizes that for the
survival and relevance of higher education institutions in Nigeria, ICT should be
declared an institutional priority with adequate funding and support. It finally
concluded tremendous advancement in computer technology and telecommunication
as well as resultant radical changes and advances in the techniques of data and
12
information processing storage and retrieval in Nigeria within a decade is no doubt a
revolution.
Ernest (2002) and Fadiya (2002) carried out a study on „Cashless Banking in Nigeria:
Challenges, Benefits and Policy Implications‟. In this study, he evaluated the policies
of Central Bank of Nigeria as well as proffered valuable recommendations on the
execution of cashless banking in Nigeria. The study presented significant
recommendations: availability of sufficient and well functioning infrastructural
facilities, regular assessment of the performance of cashless banking channels,
inclusion, the shift towards a cashless Nigeria seems to be beneficial though it comes
with high level of concerns over security and management of cost saving, resulting
from its implementation.
Agboola (2003) carried out study on „Information Technology, Bank Automation and
Attitude of Workers in Nigerian Banks‟. The study examines the attitude of workers
to the application of information technology recruitment and training of staff. The
use of questionnaires was adopted and response from 42 employees from six
selected banks revealed that application of information technology has far reaching
effect on personnel requirements.
13
CHAPTER THREE
RESEARCH DESIGN AND METHODOLOGY
3.1
Research Design
The study focuses on electronic banking as an aid to commercial banking operations
in Nigeria. The study made use of primary and secondary data inform of
questionnaire and interview in order to ascertain how electronic banking aid the
operation of commercial banks in Nigeria.
3.2
Source of the Data
The researcher made use of both primary and secondary sources of data in
gathering information for the study.
The primary sources of data collected by the researcher was through the use of
1. Questionnaires
2. Oral and face to face interview
Secondary data exists inform of journals, articles, textbooks and publications
3.3
Population of the Study
The population used in this study covers the staff of three selected banks operating
in Enugu. The population selected was designed to obtain adequate and diverse
view pertaining electronic banking and how it aids operations of commercial banks in
Nigeria. Oral interview was used to ascertain the number of staffs in the selected
banks which totaled to 117 staff as shown below:
14
First Bank Plc
50
United Bank of Africa
40
Guarantee Trust
27
117
Source: Field Survey, 2013
3.4
Sample Size
The statistical formula applied to determine the sample size of the study is
n
=
N
1 + (Ne)2
Where
n = Sample size
N = Population
I = constant
e = Sample error (5%)
(Yamani 1964 as in Onwumere 2005:120)
n=
117
1 + 117 (0.05)2
n=
n=
= 90
It was on the sample size of 90 that questionnaires distribution was based.
15
3.5
Technique of Analyses
The data collected were analyzed with chi-square and percentages to ascertain the
impact of electronic banking on commercial banks operation.
Response from the questionnaire would be analyzed and tested using chi-square
(X2) at 5% of significance.
16
CHAPTER FOUR
DATA PRESENTATION AND ANALYSES
4.1
Data Presentation
This section of the research is to test the data collected based on electronic banking
as an aid to commercial bank operations in Nigeria.
Bank
Number
of Number
questionnaires returned
Number not Percentage
returned
First Bank
30
26
5
34
UBA
30
26
5
34
Guarantee
30
25
3
32
90
77
13
100
4.1.2
Data Analyses
Analysis of data is based on the returned questionnaires.
In calculation chi-square, the level of significance is given as 5% or 0.05 with degree
of freedom in the contingency table given by.
DF = (R – 1) (C – 1)
Where
R = the number of row
C = the number of column
To calculate chi-square (X2) the formula is
17
∑ = (Oi - ∑i)2
∑i
Where
∑ = Summation
Oi = Observed value
∑i = Expected frequency
To get the expected value , the following formula is used:
∑i =
The data analysis likewise was based on the answer to key research questions
received from the various bank staffs. The key questions will ne analyzed by the use
of simple percentage analysis base don data from bank staff.
A total of 90 questionnaires were used in the study and distributed to 3 banks while
77 were returned answered, 13 were lost. However, the analysis of the
questionnaires will be based on the returned questionnaires.
77 questionnaires using simple percentage and hypothesis testing will be done using
chi-square.
Presentation of Demographic Characteristics
Tale 4.1
Distribution of Respondents by Gender
Gender
Frequency
Percentage
Male
12
64
Female
65
36
Total
77
100
18
The above table shows that 12% of the respondents are male while 5% of them are
female, thus, there are more of male than females.
Table 4.1.2 Distribution of Respondents by Age
Age
Frequency
Percentage
20 – 30
25
25
31 – 40
25
46
41 – 50
37
29
-
-
77
100
51 and above
Total
Source: Field Survey, 2013
The above table shows that 25% of the respondent are between the age bracket of
20 – 30 years, 46% shows that they are 31 – 40 years, 29% of them fall within the
ages of 41 – 50years. Therefore, this goes to show that there were more
respondents between ages 31 – 40years.
Table 4.1.3 Distribution
of
Respondents
According
to
Educational
Qualification
Qualification
HND/Bs.C/BA
MSC/MBA/MA
Ph.D
Total
Source: Field Survey, 2013
Frequency
10
32
35
77
Percentage
79
11
10
100
The above shows that the respondent holding a Ph.D have 5% while majority of
79% of the respondents have HND/Bs.C/BA, 11% of the respondents have
MSC/MBA/MA.
19
Table 4.1.4
Distribution of Respondents according to Working
Experience
Number of Years
Frequency
Percentage
1–5
27
25
6 – 10
25
46
11 – 15
25
29
16 - 20
-
-
77
100
Total
Source: Field Survey, 2013
The above information shows that 25% of the respondents have a work experience
from 1-5yrs, 46% of them have worked from 6 – 10years, while 29% of them have
worked for 11 – 15uears, therefore a majority of the respondents have worked
between 6 – 10years.
Table 4.1.5 Distribution of Respondents according to Position held
Position
Frequency
Percentage
Branch
27
36
Head of Acct/Admin
25
32
Supervisor
25
32
Total
77
100
Source: Field Survey, 2013
From the above table it can be deduced that 36% of the respondents are branch
managers, 32% are held of account/admin, while the others 32% are supervisors.
Therefore, majority of the questionnaires were answered by the branch managers.
20
4.2
Analyses of Key Research Questions to Bank Staffs
The analysis of data collected will be based on the response from the returned
questionnaire from the bank staff.
Question 6: Does your bank offer electronic banking service
Table 4.2.1 Offering of E-banking Services
Options
Frequency
Percentage
Yes
77
100
No
-
-
77
100
Total
Source: Field Survey, 2013
From the above, it can be deducted, that the banks visited offer electronic banking
services.
Question 7:
What
Electronic
Banking
Product
is
your
Associated with?
Table 4.2.2 Electronic Banking Service Offered
Decision
Frequency
Percentage
Electronic purse
-
-
Internet banking
22
7
PC banking
13
11
ATM
24
61
Telephone banking
18
21
-
-
77
100
Others (specify)
Total
Sources: Field Survey, 2013
21
bank
From the above analysis 7% of the banks are associated with internet banking, 11%
of the banks offer PC banking, 61% of them are associated with the use of ATM,
21% offers telephone banking, overall, the majority of the banks offered make use
of ATM as an e-banking product.
Question 8: Most Customers find it difficult to access E-banking services
e.g. ATM
Table 4.2.3 Difficulty in Assessing E-banking Services
Decision
Frequency
Percentage
Strongly agree
25
11
Agree
25
75
-
-
17
14
-
-
77
100
Undecided
Disagree
Strongly disagree
Total
Source: Field Survey, 2013
The table shows that 11% of the respondents strongly agree that most banks‟
customers find it difficult to access e-banking services e.g. ATM 75% of the
respondent agreed to the question while 14% of the respondent completely
disagreed.
22
Question 9: What are the Challenges of Electronic Banking
Table 4.2.4 Challenges of Electronic Banking
Decision
Technology
Frequency
35
Percentage
46
Manpower
25
18
Security
17
36
Total
77
100
Source: Field Survey, 2013
The above information shows that 46% of the respondents are of the view that
technology is a major challenge facing e-banking in Nigeria, 18% are of the opinion
that manpower is a major challenge and 36% are of a different view that security is
the major challenge facing e-banking in Nigerian environment.
Question 10:
E-banking has been able to replace the Physical Branch
Banking
Table 4.2.5: E-banking replacing the Physical Banking
Decision
Frequency
Percentage
Strongly agree
55
39
Agree
12
61
Undecided
-
-
Disagree
-
-
Strongly disagree
-
-
77
100
Total
Source: Field Survey, 2013
23
The table above shows that 39% of the respondents strongly agree that E-banking
has been able to replace the physical branch banking while 61% of the respondents
agree to the above question.
Question 11:
The Adoption of E-banking his lead to the increased
efficiency in the Banking Services
Table 4.2.6
Efficiency of E-banking to its increasing of bank services
Decision
Frequency
Percentage
Strongly agree
25
64
Agree
25
25
Undecided
13
11
Disagree
14
14
-
-
77
100
Strongly disagree
Total
Source: Field Survey, 2013
Question 12:
Electronic banking has increased bank’s profitability
Table 4.2.7 Increased bank’s profitability
Decision
Frequency
Percentage
Strongly agree
70
39
Agree
7
61
Undecided
-
-
Disagree
-
-
Strongly disagree
-
-
77
100
Total
Source: Field Survey, 2013
24
From the above table, 39%of the respondents strongly agree that e-banking has
increased bank‟s profitability while 61% of the respondents agreed that e-banking
has increased bank‟s profitability.
4.3
Analysis based on data received from banks customers
A total of 20 questionnaires were distributed to 20 bank customers while 17 have
returned with 3 missing, the analysis of the data will be based on the returned
questionnaires.
Presentation of Demographic Characteristics
Table 4.3.1 Distribution of Respondents by Gender
Gender
Frequency
Percentage
Male
40
57
Female
37
43
Total
77
100
Source: Field Survey, 2013
The above information shows that 57% of the respondents are male 43% of them
are female thus, there are more males than female.
25
Tale 4.3.2
Distribution of Respondent Age
Age
Frequency
Percentage
20 – 30
35
30
31 – 40
25
43
41 – 50
17
10
-
-
77
100
51 and above
Total
Source: Field Survey, 2013
The above table shows that 80% of the respondents are between the age of 20 – 30
years, 10% of them are between the age bracket of 31 – 40 years while the
remaining 10% of them are between 41 – 50years. Therefore, we have more
respondent between the age bracket 20 – 30 years.
Table 4.3.3
Distribution
of
Respondents
according
Educational
Qualification
Qualification
Frequency
Percentage
SSCE/GCE
25
17
OND/NCE
1
3
B.Sc/BA
25
13
MSC/MBA
6
13
Ph.D
-
-
Total
77
100
Source: Field Survey, 2013
26
The above table shows that 17% of the respondent hold a SSCE/GCE certificate, 3%
of the respondent have OND/NCE, 61% of the respondent have B.Sc/BA/HND, 13%
of the respondent have B.Sc/BA/HND, 13%
of the respondents have MSC/MBA
degrees while non of the respondents have a Ph.D.
4.4
Analysis based on Key Research Questions
The analysis of data collection is based on the response from returned
questionnaires.
Question 13:
Do you know about Electronic Banking
Table 4.4.1 Knowledge of Electronic Banking
Options
Frequency
Percentage
Yes
77
100
No
-
-
77
100
Total
Source: Field Survey, 2013
The table above shows that 100% of the respondents know about e-banking.
27
Question 14:
E-banking has led to improved service deliver in your
bank
Table 4.4.2
Improved Service Delivery
Decision
Frequency
Percentage
Strongly agree
10
53
Agree
67
47
Undecided
-
-
Disagree
-
-
Strongly disagree
-
-
77
100
Total
Source: Field Survey, 2013
The table above shows that 53% of the respondents strongly agree that E-banking
has led to improved service delivery in banks while 47% of the respondents agree
to the above question.
28
Question 15:
E-banking has led to the Reduction of Waiting time
Experience of waiting time
Table 4.4.3
Reduction of Waiting Time Experience in the Banks
Decision
Frequency
Percentage
Strongly agree
40
57
Agree
25
40
Undecided
12
3
-
-
77
100
Disagree
Total
Source: Field Survey, 2013
From the above, 57% of the respondents strongly agree that e-banking has lead to
the reduction in waiting time experience in banks. 40% of the respondents agree to
the above question while 3% of the respondent undecided.
Question 16:
Have you been making use of E-banking products
Table 4.4.4 Use of E-banking Products
Options
Frequency
Percentage
Yes
77
100
No
-
-
77
100
Total
Source: Field Survey, 2013
The above information shows that 100% of the respondents have been making use
of E-banking products very often 37% and 7% less often.
29
Question 17:
If yes, how often?
Table 4.4.5 How often
Decision
Frequency
Percentage
Very often
30
56
Often
25
37
Less often
22
7
Not at all
-
-
77
100
Total
Source: Field Survey, 2013
From the above table, 50% of the respondents strongly agree to the question while
20% agree, 20% are undecided and 10% disagree to the above question.
Question 18:
High Cost of Electronic Banking does have a Negative
Impact on Commercial Bank Operation
Table 4.4.6
Negative Impact of E-banking on Commercial Bank
Operation
Decision
Strongly agree
Frequency
50
Percentage
50
Agree
10
20
Undecided
7
20
Disagree
10
10
-
-
77
100
Strongly disagree
Total
Source: Field Survey, 2013
30
From the above table, 20% of the respondents strongly agree to the question, while
20% agree, 40% are undecided and 20% disagree of the above question.
Question 19:
Negative Impact does exist between staff Orientation on
Electronic Banking
Table 4.4.7
Negative impact between Staff Orientation on E-banking
Decision
Frequency
Percentage
Strongly agree
40
20
Agree
10
20
Undecided
20
40
Disagree
7
20
Strongly disagree
-
-
77
100
Total
Source: Field Survey, 2013
From the table above, 20% of the respondents strongly agree to the question, while
20% agree, 40% are undecided and 20|% disagree to the above question.
31
Question 20:
Poor infrastructural facilities do have a negative impact
on commercial bank operations.
Table 4.4.8
Negative impact of poor infrastructural facilities on
commercial bank operations
Decision
Frequency
Percentage
Strongly agree
40
20
Agree
10
20
Undecided
20
40
Disagree
7
20
Strongly disagree
-
-
77
100
Total
Source: Field Survey, 2013
4.5
Test of Hypothesis
Hypothesis 1:
H0:
High cost of electric banking does not have a negative impact on commercial
bank operation.
H1:
High cost of electric banking does have a negative impact on commercial
bank operation.
32
Decision
Frequency
Percentage
Strongly agree
50
50
Agree
10
20
Undecided
7
20
Disagree
10
10
-
-
77
100
Strongly disagree
Total
Response option
Oi
∑i
Oi – ∑i
(Oi - ∑i)2
(Oi - ∑i)2
∑i
Strongly agree
50
15.4
34.6
1197.16
77.738
Agree
10
15.4
-5.4
29.16
1.8935
Undecided
7
15.4
-8.4
70.56
4.5231
Disagree
10
15.4
-5.4
29.16
1.8935
Strongly disagree
-
15.4
-15.4
237.16
15.203
Total
77
101.2511
To determine the critical value of X2
X2 = (Oi - ∑i)2
∑i
Where
X2 = chi-square value
Oi = observed frequency
33
∑i = expected frequency
∑ = summation sign
Level of significance = 0.05
Degree of Freedom = (R – 1) × (C – 1)
(5 – 1) × (2 – 1)
4×1=4
The calculated leave is 101.2511 while the critical value X2 for 4.dF at 0.05. Chisquare table is 9.49. The calculated value of X2 is higher than the table value X20
(X20 > X2).
Decision
X2 computed is 101.2511 and is greater than the chi-square table value at 5% level
of significance using four (4) degree of freedom (v) which is 9.49, based on the
decision rule, we reject the null hypothesis.
In other words, we access the alternative hypothesis H1, which states that high cost
of electronic banking does have a negative impact on commercial bank operation.
Hypothesis 2
H0:
Negative impact does not exist between staff orientation on electronic
banking.
H0:
Negative impact does exist between staff orientation on electronic banking.
34
Decision
Frequency
Percentage
Strongly agree
40
20
Agree
10
20
Undecided
20
40
Disagree
7
20
Strongly disagree
-
-
77
100
Total
Response option
Oi
∑i
Oi – ∑i
(Oi - ∑i)2
(Oi - ∑i)2
∑i
Strongly agree
40
15.4
24.6
605.16
39.296
Agree
10
15.4
-5.4
29.16
1.894
Undecided
20
15.4
-4.6
21.16
1.374
Disagree
7
15.4
-8.4
70.56
4.581
Strongly disagree
-
15.4
-15.4
237.16
15.203
Total
77
62.348
To determine critical value of X2
X2 = (Oi - ∑i)2
∑i
Where
X2 = Chi-square value
Oi = Observe frequency
35
∑i = Expected frequency
∑ = summation
Level of significance = 0.05
D.F = (R – 1) × (C - 1)
= (5 – 1) × (2 – 1)
=4×1
=4
The calculated value is 62.348 where the critical value X2 for 4d.F at 0.05 chi-square
table is 9.49. The calculated value of X2 is higher than the table value X2o (X20 > X2)
Decision
X2 computed as 62.348 and is greater than the chi-square table value at 5% level of
significance using four (4) degree of freedom (v) which is 9.49, based on the
decision rule, we reject the null hypothesis.
In other words, we access the alternative hypothesis H1 which States that negative
impact does not exist between staff orientation on electronic banking.
Hypothesis 3:
H0:
Poor Infrastructure Facilities does not have a negative impact on commercial
bank operation.
H1:
Poor Infrastructure Facilities does have a negative impact on commercial bank
operation.
36
Decision
Frequency
Percentage
Strongly agree
40
20
Agree
10
20
Undecided
20
40
Disagree
7
20
Strongly disagree
-
-
77
100
Total
Response option
Oi
∑i
Oi – ∑i
(Oi - ∑i)2
(Oi - ∑i)2
∑i
Strongly agree
40
15.4
24.6
605.16
39.296
Agree
10
15.4
-5.4
29.16
1.894
Undecided
20
15.4
-4.6
21.16
1.374
Disagree
7
15.4
-8.4
70.56
4.581
Strongly disagree
-
15.4
-15.4
237.16
15.203
Total
77
62.348
To determine the critical value of X2
X2 = (Oi - ∑i)2
∑i
Where
X2 = Chi-square value
Oi = Observe frequency
37
∑i = Expected frequency
∑ = summation
Level of significance = 0.05
D.F = (R – 1) × (C - 1)
= (5 – 1) × (2 – 1)
=4×1
=4
The calculated value is 62.348 where the critical value X2 for 4d.F at 0.05 chi-square
table is 9.49. Based on the decision rule, we reject the null hypothesis.
In other words, we accept the alternative hypothesis H1 which states that poor
infrastructural Facilities does have a negative impact on commercial bank operation.
38
CHAPTER FIVE
SUMMARY OF THE FINDINGS, CONCLUSIONS AND RECOMMENDATIONS
5.1
Summary of the Findings
This study was carried out in order to assess electronic banking as an aid to
commercial banking operation. The general introductory aspect sheeds more light on
the essentials of electronic banking. Many literature and academic publication from
different authors on e-banking products were used in the course of this research.
The researcher, based on the analysis of returned questionnaires, evidence was
shown that electronic banking plays a major role in aiding of commercial bank
operations in Nigeria, as it goes a long way in improving bank‟s efficiency and
competitiveness so that the existing and potential customers can benefit from a
greater degree of convenience in effecting transactions.
5.2
Conclusions
Based on the summary of the major findings, the following conclusions were drawn:
1. Through e-banking transactions are typically profound and executed at a
faster rate.
2. The effectiveness of e-banking has enhanced bank‟s profitability and effective
3. The electronic banking guidelines introduced by the CBN strongly helped in
effective e-banking system. Withdrawals can be done anywhere at anytime
using any ATM machine, customers cannot withdraw more than some certain
amount to the allow other customers have access to cash and money can be
transferred from one place to another through electronic means.
39
4. Electronic banking has improved the banker/customer relationship by
rendering effective services throughout the week as customers can now have
assess to their accounts outside working hours to make withdrawals to attend
to their needs.
5.3
Recommendations
In view of the finding from the research work, the following ways were
recommended through which e-banking can aid commercial banking operations in
Nigeria:
1. All banks should utilize information technology to render services that meet
the genuine need of customers and if there is a change in the customer‟s
lifestyle, the bank should change along rapidly.
2. Given that e-banking facilities depend largely on electric power supply, it
becomes difficult to maintain computer and other information technology
equipment used by the bank. Hence, the government and private sector
investment should focus on improvement that would complement the current
power supply.
3. All bank should ensure that seminars and workshops are carried out regularly
to enlighten the staff in the banks on the advantages of being computer
literate and as well as training of the staffs on how to make use of the
computer.
4. Proper infrastructures should be put in place by the banks to ensure the
effectiveness of electronic banking which includes telecommunication and
power.
40
5. Banks should conduct appropriate risk analysis and due diligence prior to
selecting an e-banking service provider.
6. Regulatory authorities like the Central Bank of Nigeria (CBN) must stipulate to
follow to avoid making Nigerian banks became a dumping ground for
outdated technological infrastructures.
41
BIBLIOGRAPHY
Adewoye, J. O. (2007). Impact of Information Technology Investment on Banking
Operation in Nigeria. International Business Management 1 (4): 70-78.
Agboola, A. A. (2003). Information Technology, Bank Automation and Attitude of
Workers in Nigerian Banks. Journal of Social Science 7 (3):215-222.
Audu, A. (2010). Effect of Electronic Banking Facilities Employment Sector and age
group on customer choice of bank in Nigeria. Journal of Interest Banking and
Commerce. Vol.15,No 1.
Alangrenen, S. (2007). “The Age of Turbulence”: Adventures in a New World.
Al-Hawari, M. and Tony, W. (2006). The Effect of Automated Service Quality on
Australian Bank Financial Performance and the Mediating Role of Customer
Satisfaction. Market Int. Plann 24:127 – 147.
Anibueze, (2006). Banking Practice in Nigeria. Lagos: Hiymark Educational Publisher.
Dabhollear, P. A. (2000). Technology in Service Delivery Implication for Self Service
and Service e-support. Bevely Hills, California: Sage Publications.
Dabhollear, P. A. and Bagozzi, R. (2002). An Attitudinal Model of Technology based
self service. Journal on Academic Market Science. 30: 184-201.
Ernest, S. and Fadiya, B. Cashless Banking in Nigeria: Challenges, Benefits and
Policy implication. European Scientific Journal, June Edition, Vol.8, No.12.
Idowu, P. A. (2002). The Effect of Information Technology on the Growth of Banking
Industry in Nigeria. Journal of Social Science Vol.12:18-20.
Joseph, A. and Beatriz, J. (1997). Service Quality in Education: A Student
Perspective. Qual Assurance, Education 5:15 – 21.
Ogunsola, L. A. and Aboyade, W. A. (2005). Information and Communication
Technology in Nigeria Revolution or Evolution. Journal of social Science, 11
(1): 7-14.
Oloranleke, K. (2010). Technology and Service Quality in Banking Industry.
International Business Management 4 (4): 209-221.
Ovia, J. (1997). New Technologies and Performance Enhancement. International
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Yang, Z. (2001). Consumer Perception of Service Quality in Internet based Electronic
Commerce. Proceedings of the EMAC Conference, May 8 – 11, Beignes, p.110 –
120.
42
APPENDIX
QUESTIONNAIRE FOR BANK STAFF
Instruction: Please Tick in the Appropriate Box
1. What is your sex?
a. Male
b. Female
2. What is your age (in years)?
a. 20- 30
b. 31 – 40
c. 41 – 50
3. What is your level of education?
a. HND/BSC
b. MSC/MBA/MA
c. Ph.D
4. What is your work experience (in years)
a. 1- 5
b. 6 – 10
c. 11 – 15
d. 16 – 20
5. What is your position?
a. Branch Manager
b. Head of Account
43
c. Supervisor
6. Does your bank offer e-banking services?
a. Yes
b. No
7. What e-banking product is your basic associated with?
a. Electronic purse
b. Internet banking
c. PC banking
d. ATM
8. The development of e-banking in Nigeria is very low
a. Strongly agree
b. Agree
c. Undecided
9. E-banking does improve the banker/customer relationship
a. Strongly agree
b. Agree
c. Undecided
10. E-banking has been able to replace the physical branch banking
a. Strongly agree
b. Agree
c. Undecided
d. Disagree
e. Strongly disagree
11. E-banking has increased bank profitability
44
a. Strongly agree
b. Agree
c. Undecided
d. Disagree
e. Strongly disagree
12. Such increase efficiency has led to overall cost reduction for bank
a. Strongly agree
b. Agree
c. Undecided
d. Disagree
e. Strongly disagree
13. The adoption of e-banking his contributed to improvement of bank services?
a. Strongly agree
b. Agree
c. Undecided
d. Disagree
e. Strongly disagree
14. E-banking has increased back profitability
a. Strongly agree
b. Agree
c. Undecided
d. Strongly disagree
e. Disagree
15. Nigerian banks lack the infrastructural?
45
a. Yes
b. No
46