CHAPTER ONE
INTRODUCTION
1.1. Background of the study
Mobile banking is an innovation that has
progressively rendered itself in pervasive ways cutting across several
financial institutions and other sectors of the economy. During the 21st
century mobile banking advanced from providing mere text messaging
services to that of pseudo internet banking where customers could not
only view their balances and set up multiple types of alerts but also
transact activities such as fund transfers, redeem loyalty coupons,
deposit cheques via the mobile phone and instruct payroll based
transactions(Vaidya 2011). The world has also become increasingly
addicted to doing business in the cyber space, across the internet and
World Wide Web. Internet commerce in its own respect has expanded in
various innovative forms of money, and based on digital data issued by
private market actors, has in one way or another substituted for state
sanctioned bank notes and checking accounts as customary means of
payments (Cohen 2001). Technology has greatly advanced playing a major
role in improving the standards of service delivery in the financial
institution sector. Days are long gone when customers would queue in the
banking halls waiting to pay their utility bills, school fees or any
other financial transactions. They can now do this at their convenience
by using their ATM cards or over the internet from the comfort of their
homes. Additionally due to the tremendous growth of the mobile phone
industry most financial institutions have ventured into the untapped
opportunity and have partnered with mobile phone network providers to
offer banking services to their clients. ATM banking is one of the
earliest and widely adopted retail e-banking services in Nigeria
(Nyangosi et al. 2009). However according to an annual report by Central
Bank of Nigeria its adoption and usage has been surpassed by mobile
banking in the last few years (CBK 2008). The suggested reason for this
is that many low income earners now have access to mobile phones. A
positive aspect of mobile phones is that mobile networks are available
in remote areas at a low cost. The poor often have greater familiarity
and trust in mobile phone companies than with normal financial
institutions.
1.2. Statement of the general problem
A fundamental assumption of most recent
research in operations improvement and operations learning has been that
technological innovation has a direct bearing on performance
improvement (Upton and Kim, 1999). Strategic management in financial
institutions demand that they should have effective systems in place to
counter unpredictableevents that can sustain their operations while
minimizing the risks involved through technological innovations. Only
financial institutions that are able to adapt to their changing
environment and adopt new ideas and business methods have guaranteed
survival. Some of the forces of change which have impacted the
performance of financial institutions mainly include technological
advancements such as use of mobile phones and the internet. Since the
beginning of e-banking Nigerian financial institutions have witnessed
many changes. Customers now have access to fast, efficient and
convenient banking services. Most financial institutions in Nigeria are
investing large sums on money in information and communication
technology (ICT). However while the rapid development of ICT has made
some banking tasks more efficient and cheaper, technological
advancements have their fair share of problems; for example they take a
large share of bank resources, plastic card fraud particularly on lost
and stolen cards and counterfeit card fraud. Thus there is a need to
manage costs and risks associated with internet banking. It is crucial
that internet banking innovations be made through sound analysis of
risks and costs associated to avoid harm on banks performance. Bank
performance is directly dependent on efficiency and effectiveness of
internet banking and on the other hand tight controls in standards to
prevent losses associated with internet banking. In order not to impair
on their prosperity, financial institutions need to strike a balance
between tight controls and standards in efficiency of internet banking.
This is only possible if the effects of internet banking on financial
institutions and its customers are well analyzed and understood. Mobile
money has emerged as a strong competition to financial institutions in
Nigeria. Initially cellular phones were developed to improve
communication from the earlier primitive forms of communications such as
smoke and drums. Financial institutions introduced ICT as an
improvement to the banking channels. This has thus enabled bank
customers’ access information relating to their accounts, (Tiwari, Buse
and Herstatt, 2007.). In this regard mobile phone service providers have
taken mobile money services deeper into the financial sector by
offering a range of financial services through their networks.
1.3. Objectives of the study
The following would be the aims and objectives of this study
- To examine the impact of internet banking on organizational productivity.
- To examine the extent to which organizations in Nigeria make use of internet banking.
- To recommend better ways of improving internet banking in Nigeria.
1.4. Research Questions
- What is the impact of internet banking on organizational productivity?
- What is the extent to which organizations in Nigeria make use of internet banking?
1.5. Research hypothesis
H0: internet banking does not influence organizational productivity
H1: internet banking influences organizational productivity
1.6. Significance of the study
The study will be crucial to emerging
financial institutions as it will provide answers to the factors against
the implementation of internet banking in Nigeria, prove of the success
and growth associated with the implementation of internet banking and
highlight the areas of banking operations that can be enhanced via
internet banking. It is equally significant for bank executives and
indeed the policy makers of the banks and financial institutions to be
aware of internet banking as a product of internet commerce with a view
to making strategic decisions. The study is also expected to give an
insight on the state of mobile money services as a competition to the
commercial banks in Nigeria and the factors that have greatly influenced
its growth. Players in the financial institution sector and
telecommunications industry will find the study useful as they can use
the findings to strategize on how they can mutually benefit from this
development. Finally, our study adds to the existing literature, and is a
valuable tool for students, academicians, institutions, corporate
managers and individuals who want to learn more about mobile and
internet banking.
1.7. Scope and limitations of the study
This study is restricted to the impact of internet banking on organizational productivity.
Limitation of the study
Financial constraint-
Insufficient fund tends to impede the efficiency of the researcher in
sourcing for the relevant materials, literature or information and in
the process of data collection (internet, questionnaire and interview).
Time constraint- The
researcher will simultaneously engage in this study with other academic
work. This consequently will cut down on the time devoted for the
research work.