TABLE OF CONTENTS
Table of contents
1.1 Background of
1.2 Statement of
1.4 Objective of
of the study
1.7 Scope and
delimitation of the study
2.2 The nature of
2.3 Challenges for
2.3.1 Features of the
Nigerian Payments System
2.3.2 Development of electronic
banking system in Nigeria
2.4 Features of
electronic Banking system
2.4.1 Statetic and
technical issues for Central Bank of Nigeria
3.3 Research design
3.4 Population of
3.5 Sample size
3.6 Restatement of
3.7 Restatement of
3.9 Data analysis
3.10 Limitation of
and interpretation of result
4.1 Data Analysis
findings, conclusion and recommendation
5.0 Summary of
A Bank for International Settlement (BIS) workshop on
electronic banking was held on 2-3 July 2001, focusing on current and
potential; change in exchanges and trading system payment-system and financial
This overview is based on the presentations given during
the workshop, some of which included in this volume, and ensuring discussions.
The most significant development of the millennium which
has substantially influenced business operation in the world is the emergency
of the information age. The remarkable progress achieved in information and communication
technology (ICT) has made it possible for information to be digitalized and
transmitted faster and cheaper in mega or terrabytes taking advantage of rapid
technology. Progress and innovation product for making payment have been
developed in recent years. Payment involves the transfer of monetary value for
one person to another thus, a payment system consists of rules and technologies
that make the exchange of payment possible.
However, transaction made using these innovation products
are accounting for an increasing proportion of the volume and value of domestic
and cross border retail payments. Currencies are notes are converted to data.
Which are transmitted through telephone lines and are converted to data, which
are transmitted to satellite transponders (Ovia 2002).
These new financial services created through electronic
banking system have resulted m a Substantial reductions in financial cost and
in the case of transfer of funds. Electronic banking system otherwise e-payment
system consisting of electronic mechanisms, which make the exchange of payment
possible. It can simply be define as payment or monetary transactions made over
the Internet or a network of computers Internet, (kulkarni 2004). In other
words it involves the provision of payment services and transfer through
devices which include Telephones, Computer Internet, Automated teller machine (ATM) and Smart Cards it is a paperless system of
payment which involve the case of cheques.
Infact, electronic banking system can be broadly
classified into two group namely wholesale payment system exist for non-consumer
transaction that is large value payment initiated among and between banks
government and other financial services firms.
1.1 BACKGROUND OF THE STUDY
The need for electronic banking in particular nation and
the challenges facing them cannot be overlook simply because it serve as a
stepping stone for economic and financial sector development of the nation.
Many developed countries of today do not stay with
development and survival of electronic banking because they know how it's
important to their' economic and financial sectors.
Besides, the history of electronic banks. Started in 1990
where the interest and other innovative information technology (IT) have
affected the financial system greatly, such
as moving from restricted proprietary system to open networks.
Since mid-2002 there has been a correction In public
perceptions about Internet related activities sharp in general, as reflected in the sharp
falls in the price of high tech stocks and disillusion with the earlier
electronic commerce as financial services are information commerce euphoria.
However these was less speculative mania surrounding application of the
Internet in the financial industry. Perhaps due to the moderating rule of
supervisors and improved information technology management (IT) following the
In many ways, electronic banking/ finance would see one of
the most promising area of electronic - intensive and often require no physical
delivery it is now realized that there are some relatively simple but time -
sensitive product such as banking is very successful and other where it has be
very successful and other where it has be very slow to catch on (e.g.
electronic -money, e -insurance).
There are some area where new Internet based technology may be transformation allowing (or forcing) a fundamental
redesign of market architecture.
In other, it will give rise to new business models, but in
some area it will have little impact (e.g. banks cooperation advisory work) as
well as its transformational impact. The network/internet could represent a
modem example of an old problem of banks.
A very rapid expansion of lending to a single industry
based on excessive enthusiasm about a new technology (earlier example include
steam, rail electricity, car and radio) whose implication are hard to predict.
The differences this time may be that the technologies also directly affect the
banking system itself.
Interest, policy maker face uncertainty about which part
of the financial system will come under stress, (Tuner 2001). They generally
wish to be technology guideline and neutral/balancing the desire to set
regulatory guideline before market development go too far and too quickly
(given that with financial rises, prevention is better than cure) against the
risk that a heavy handed regulatory approach may stifle innovation.
There are differences in the way authorities in various economics have responded
to those trades - offs. Some Asian and European economies favour limiting
electronic banking to regulated institutions while the united states trend to
favour a more hand-off approach (albeit with frequent on site reviews of
unregulated services providers.
1.2 STATEMENT OF THE PROBLEM
This section of the research put the research problems
clearly most of the problems facing the electronic banking system in most of
the developing countries such as Nigeria, Sweden, India, Poland Thailand etc.
and there challenges initiated the need for this research project.
It is pertinent to say that since electronic banking is all about more
efficient transmission and use of data, statistics on electronic banking is all
about more efficient transmission and use of data efficient transmission and
use of data. Statistics on electronic banking itself are so lacking that
analysis of development is difficult. As a result many articles merely repeat
exponentially extrapolated estimate of dubious provenance and cross - country
comparison are often based on differing definitions.
Paradoxically, adding electronic banking services In Nigeria
requires high initial set- up cost. (Both technological and marketing).
A fundamental restructuring of banks business model and
operations (such as clearing and settlement procedure) and significant
retraining may be necessary to reap their full benefit. Another problem of
banking practices initiate the fact that banks may have invested. Too much, too
quickly in new technology without a clear business plan.
In some cases, banks may not be achieving potential cost
saving because they are not providing strong price. Incentives for customer to
switch to electronic banking infact bankers, seem to be promoting electronic
banking more as offering convenience and. This is not proving enough to
overcome customer's inertia or concerns about security.
Another problem facing electronic-banking system In
Nigeria and most of the developing countries are the operational risk that is
involved. Security concerns are an important factor discouraging many Internet
users from electronic banking, supervision need to be assured
that banks have conducted adequate assessments of the vulnerability of
operating system to hackers and denial-of services attacks (i.e. deliberate
overloading of web sites and their and emergency procedures.
The Basel Committee on Banking Supervisions electronic banking
Group (EBG) has management principle but has not yet developed the desirable
global but flexible security benchmark.
1.3 RESEARCH QUESTIONS
In order to achieve the objective of the research study.
The research study will attempt to provide answers to the following research
- To what extent do the banking sectors
ensure successful performance of electronic banking / finance in Nigeria?
- Can Nigeria banking sectors maintain the
same level of electronic - banking system with USA, Japan or China?
- Would there be any implication for those
banks offering electronic banking in Nigeria?
- Would there be any profit for those
banks offering electronic- banking in Nigeria?
Can Nigeria banking sectors com pit with other countries
on electronic banking transaction?
1.4 OBJECTIVE OF THE STUDY
The primary objective of this research is to identify and
then suggest probable solutions various problems hinder the survival of
electronic banking development and the challenges of the Nigeria operating
Specifically, the purpose of this research will also
include the following:
- Development of electronic payment system
- Features of electronic payments system
- To make suggestions for efficient and
effective usage of electronic banking in Nigeria.
- To examine the strategic and technical
issues for central bank of Nigeria
- To determine the important of electronic
banking in the Nigeria economy.
- To examine the
implication of electronic bank for central banks.
motivation for electronic payments system in Nigeria.
- To examine
the cross border of electronic banking/ finance system.
1.5 RESEARCH HYPOTHESES
To provide answer to the research questions the following hypothesis
will be tested.
banking sector do not ensure successful performance of electronic banking in
banking sector ensure successful performance in electronic banking in Nigeria.
is no implications for those banks offering electronic banking system in
is implications for those banks offering electronic banking system in Nigeria
It might affect the stability of the money demand since
the velocity of money is affected and consequently reduce the importance of
monetary aggregates as guides for monetary policy making. So those banks
practicing electronic banking in Nigeria Would not experience any implication
will only affect the monetary policy makers.
1.6 SIGNIFICANCE OF THE STUDY
A study of this kind is expected to make the survival
rapid development of electronic banking in Nigeria. The study will also provide
a basis for closer security of the process and applications of the different
relevant aspect of electronic banking and is challenges in Nigeria operating
Answers could then be sought regarding effective
application of electronic banking in some selected banks in Nigeria. Also this
research will contribute to electronic banking acceptability and payment of
monetary transaction made over the
Internet or a network of computers (Kuikarni 2004), which involved the
provision payment of services and transfer through devices and transfer through
devices such as telephones, computers, Internet, automated teller machines
(ATM) and smart card in Nigeria.
Infact, this research will be useful for the development
of electronic banking and motivation of individual in Nigeria, because it will
stimulate and solidity' there dayto-day activities.
1.7 SCOPE AND DELIMITATION
OF THE STUDY
This basic premise on which this study is that performance and
development of electronic banking system in Nigeria dependent solidity on
efficient and effective transmission of network and internet to generate better
electronic banking system in Nigeria.
This research study will concentrate on electronic banking
and the challenges in Nigeria operating environment and the relationships
existing between them, which also
include the banking sectors performance measure.
Generic perspective of banking evolution has extended
banking practices to profit making and allocates which perform financial
transactions over the Internet through a bank's website. Infact, making use of
online banking, commercial banks may greatly increase the market coverage and
better track customers as well.
Besides this research will focuses on the online banking/electronic
banking in Nigeria such as Zenith Bank Plc and Intercontinental Bank Plc. Etc.
This research is exploratory in nature and it limitation
can be clearly under stood although, the usual problems associated with the
survey research methodology may also constitute some of the delimitation of the
(2001) "Risk Management Principle for Electronic
Banking". Pare 82, May, (www. bisorg).
international settlement (BIS 1996): implications for central banks of
development of electronic money, October.
international settlement (Bis 2004): survey of development in Electronic money, Internet and
mobile payments pp 123-125, March.
Banks, E. (2001): E-Finance: The
Electronic Revolution Johnwiley and Sons.
Central Bank of
Nigeria (2002/2003): payment
in Nigeria Briefs Research Department. Pp
Central Bank of
Nigeria (2003): Guideline on
Electronic Banking in Nigeria, August.
Ovia, J. (2002); Payment and financial
innovation a proper presented at the CBN Annual Monetary Policy Conference Abuja
(2002): Issues on Electronic Banking: an Overview, Policy Discussion paper
international monetary fund, (PDP/02/6).
Turner P. Adams (2001):
E - banking and financial stability in R. Litani Mason and M Pomerleano. Open
doors, foreign participation in financial system in developing countries,