THE IMPACT OF ELECTRONIC BANKING IN THE DEVELOPMENT OF NIGERIA ECONOMY A CASE OF UBA

CHAPTER ONE

INTRODUCTION

1.1 Background of the study

The revolution of information technology has influenced almost every facet of life, among them is the banking sector. The introduction of electronic banking has revolutionized and redefined the ways banks were operating. As technology is now considered as the main contribution for the organizations’ success and as their core competencies. Banking has in the last few years, transformed from manual to automated systems. The numerous advances in internet technology have made considerable impact in business environment and have in particular brought about a shift in banking operations. This has necessitated the adoption of internet banking by banks with the application of the internet to banking, banks are able to work effectively and make high profits. The chief driving forces of internet banking among customers include better access to the services, better prices and higher privacy. Through internet banking customers can transact banking operations at the comfort of their homes and office, Ovia (2003) posited that the type of e-commerce, e-banking and e-everything is gradually being embraced by Nigerian financial institutions that are poised to be in the vanguard of narrowing the digital divide.

        So the banks, be it domestic or foreign are investing more on providing on the customers with the new technologies through e banking. PC banking, mobile banking, ATM, electronic funds transfer, account to account transfer, paying bills online, online statements and credit cards etc. are the services provided by banks. Also the feature which is commonly unique to internet banking includes importing data into personal accounting software. Some online banking platforms support account aggregation to allow the customers to monitor all of their accounts in one place whether they are with their main bank or with other institutions. Banking through internet is considered as a complimentary delivery channel for the services rather than a substitute for the brick and mortar banking branches.

         In its survey on the extent of e-banking adoption by Nigerian banks, the Central Bank of Nigeria (CBN), in September 2002, found out that out of the 89 licensed banks in Nigeria, only 17 were offering, internet banking, 24 were offering basic telephone, 7 had ATM (Automated teller machine) services while 13 of the banks were offering other forms of e-banking. This implies that as of then, 19.1percent of the banks were offering internet banking, signifying that internet banking was yet to takes central stage despite its widely acclaimed benefits against the traditional branch banking practice (Ezeoha, 2005). Part of the reasons identified by Ezeoha (2005) why internet banking was having a moderate economic impact in the country includes a lack of adequate operational infrastructure like proper telecommunications and power. In addition cyber- criminals have made the window unattractive. This study examines the concept of e-banking, the current level of e- banking in Nigeria and how it has developed Nigeria banks. It identifies the major inhibiting factors to e-banking in Nigeria and makes recommendations on how Nigeria can narrow the digital divide.

1.2    Statement of the problem

In Nigeria, customers of banks today are no longer interested about safety of funds and increase returns on their investment only. Customers demand efficient, fast and convenient services. They want a bank that will offer them services that will meet their particular needs (personalized banking) and support their business goals for instance; business men want to travel without carrying cash for security reasons.

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