CHAPTER ONE
INTRODUCTION
1.1. Background of the Study
Today’s business environment is
extremely dynamic in nature. It has experienced rapid changes as a
result of technological improvements, increased awareness and demands
for banks services. The Banking industry of the 21st century operates in
a complex and competitive environment characterized by these changing
conditions and highly unpredictable economic climate, thus, information
and communication technology (ICT) is at the centre of this global
change. Amedu (2005) asserts that banks over the time have been using
electronic and telecommunication networks for delivering a wide range of
value added products and services. Therefore, information systems could
not be ignored because they play a critical role in current Banking
system in Nigeria.
Electronic banking is known as
e-banking, virtual banking or an online Banking, it is a service that
allows customers to access their bank information, conduct financial
transactions, make deposits, withdrawals and pay bills through the
internet without having physical visit to their banks. It provides the
convenience of accessing banking facilities from the comfort of their
home/offices. (Awamleh & Fernandez, 2005).
The concept of electronic banking system
began when the first Automated Teller Machine were instated in the
1970s. An ATM machines allowed deposits to be made from the remote
locations-- a convenience for customers who otherwise would have had to
withdraw cash personally from their bank. The advantages offered by ATM
Machines quickly split over to encompass other areas of bank services,
computerizing manual system for greater efficiency and time savings. The
concept behind ATM machines gave rise to smart cards, intranets and
internet banking, electronic funds transfer {EFT}, NIBSS (Nigerian
interbank settlements system), POS {Point of Sales Service.}, Access
mobile, and other electronic devices (Ahasanul, 2010).
The growth in the application and
acceptance of internet-driven technologies means that delivering an
enhanced service is more achievable than ever before, however it is also
more complex and fraught with potential costs and risk. The internet
introduces customers to a new perception of business time as always
available and demanding an urgent and rapid response. The serves as a
challenge for managers who must to reconcile their business and their
own personal perceptions of time with the perceived reality of internet
time, as the internet has decisively shifted the balance of power to the
customer.
Presently, banks in Nigeria are adding
value to their services for customer’s satisfaction. The customers have
more choices in choosing their banks because the new age IT (Information
Technology) is bringing about sweeping changes in the banking industry,
forcing them to reengineer many of their basic processes and systems.
Few of the technology-driven electronic banking services being offered
are viz. Automated teller machines ATM, Electronic Clearing Service
(ECS), electronic funds transfer (EFT), tele-banking, internet banking
etc. New technological capabilities are now being effectively used to
create value and to better manage customer relationship in Nigeria
banking system. (Raji, 2010).
1.2 Statement of the problem
In Nigeria, customers of banks seek for
safety of their funds and increased returns on their investment.
Customers demand efficient, fast and convenient services. Many customers
today want banks that offer them services that will meet their
particular needs and support their business goals. For instance, a
business man wants to travel without carrying cash for security reasons.
The central bank of Nigeria has emphasized the need for banks to
provide more efficient services to their intending and potentials
customers. Therefore, the introduction of electronic banking system in
the Nigerian financial industry is expected to play an important role in
the delivery of efficient and effective services. Unfortunately, most
Nigerian banks are still lagging behind in adopting and equipping
themselves with the current and sophisticated electronic devices as a
results of non availability of financial, management and human
resources, which would have given them more competitive advantages and
attract more customers to themselves. One is therefore inclined to
wonder what could be responsible for the non adoption of the present
banking gadgets. Is it that the present employees of the banks cannot
make use of these advance gadgets? Or are the gadgets too costly to be
acquired by the banks? These are the questions which this project
intends to seek appropriate solution.
1.3 Objectives of the study
The main objective of this research is
to appraise the effect of electronic payment system on customer
satisfaction in Nigeria banking system. Specifically, the study will
examine the following objectives:-
- To evaluate the effects of electronic payment system on banks customers.
- To assess the impact of electronic payment system on the bank’s service delivery.
iii. To examine the effect of electronic payments on competitive advantage of the bank.
- To ascertain the effect of electronic payment system on increase in market size of the banks.
1.4 Research questions
The following research questions were developed in order to guide the study:
- Does the electronic payment system enhance service delivery in the banking system?
Does the electronic payment