Appraisal Of The Economic Implication On Electronic Banking In Nigerian Banks

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Appraisal of the Economic implementation of electronic banking in Nigerian banks (a case study of Diamond Bank) was carried out to assess the extent of electronic payment in banking activities as well as to identify the various types of electronic banking. A descriptive research method was employed in carrying out the study. Questionnaire was drafted and distributed in order to elicit response from the respondents. The population of the study was 100 and a sample size of 80 was derived using Taro Yamane formula. Analysis was done using tables and simple percentage. Formulated hypothesis was also tested using X2 (Chi-square). The study revealed that electronic banking boosts the banking activities of any nation. It was also discovered that electronic banking offers speed up settlement of Transaction, Reduces the rate at which customers visit Banks, move into a cashless society and reduction of theft. Furthermore, it was discovered that electronic banking has suffered a lot of hitches as a result of power failure and communication link. Lack of computer backup, low public acceptance and high charges on machines. In conclusion, the researcher therefore recommends that uninterrupted power supply should be provided that is, standby generator should be in place in case of power failure, provision of skilled and computer literate in operation of the pay system. Finally government should provide some amenities for the smooth running of e-banking and create awareness to inform the public about the benefits derived on the payment system 





Title page                                                                                 i

Certification page                                                             ii

Dedications                                                                      iii

Acknowledgment                                                             iv

Abstract                                                                           vi

Table of contents                                                             vii


INTRODUCTION                                                              1

1.1      Background of the study                                          1

1.2      Statement of the problem                                        5

1.3      Objectives of the study                                            5

1.4      Research questions                                                  7

1.5      Research hypothesis                                                7

1.6      Significance of the study                                          8

1.7      Scope of the study                                                   9

1.8      Limitation of the study                                             9

1.9      Definition of terms                                                   10

        References                                                               12


Review of Related Literature                                         13

2.1      Theoretical framework                                             13

2.2      Conceptual framework                                             16

2.3      Historical background of Diamond Bank Plc           38

References                                                               42


Research Design and Methodology                                43

3.1      Research design                                                       43

3.2      Area of study                                                            43

3.3      Sources of data                                                                43

3.4      Populations  of the study                                         45

3.5      Sample size determination and sampling technique        45

3.6      Instrument of data collection                                   48

3.7      Validity of instrument                                              48

3.8      Reliability of the instrument                                    48

3.9      Method of data analysis                                           49

References                                                               50


Data Presentation, Analysis and Interpretation            51

4.1      Data Presentation                                                    51

4.9      Test of hypothesis                                                    58


Summary of Findings, Conclusion and Recommendations 68

5.1      Summary of findings                                                       68

5.2 Conclusion                                                                        69

5.3      Recommendation                                                     70

Bibliography                                                            73

Appendices                                                              75










Before the emergence of modern banking system, banking operation was manually done which led to a slow down in settlement of transactions. This manual system involves posting transactions from one ledger to another which human handles. Figures or counting of money which should be done through computers or electronic machine were computed and counted manually which were not 100% accurate thereby resulting to human errors. Most bank then use only one computer in carrying out transactions which ameliorate the sluggish nature of banking transaction.

Nigeria did not embrace electronic banking early compared to developed countries. Nigeria adopted electronic banking system in the early 2000s.  During the introduction of electronic banking system, the use of raw cash was said to have bred corruption through the “cash and carry syndrome” usually linked with the swift movement of Ghana-must go” bags by some politicians. Such bags as some analyst say, are a major source of corrupt practices as dubious persons seek to bribe their way to avoid been checked in some sensitive areas or places in a corrupt society.

Since electronic banking started in all Nigeria banks, it has been a woe for civil servants; checks show that some members of staff in establishments such as the national boundary commission for instance, are yet to receive their salaries for the previous months as efforts to electrically transfer salaries into their account have failed according to Ibrahim, Dikko. from FSDH group post (2009).

“One bank will tell you it has transferred your salaries but the supposed recipient bank will tell you it has not received anything leaving you even more confused”, says John Ime. (2009). Olekah, James. (2009) while acknowledging the initial hiccups that dogged the system, advises stakeholders against being discouraged as such “teething problems” are normal.

James, Adewale. (2009) a banker reported to vanguard annual report that “we should not destroy electronic-banking by looking at the negative aspects; we must strive towards perfecting it”. James, Adewale. (2009) also says that the volume of data generated by the Government ministry Agencies is much making it a bit difficult for banks to cope, Mathew Sunday. (2009) a worker says in his report to vanguard annual report on banks and cards that government should have done its home work “very well” before introducing the system, “they plugged us into a system they were not prepared for and the result is untold hardship visited on innocent people”.

At this juncture, it is good to know what e-banking is all about.

According to Anyawaokoro maduka. (1999). Electronic banking is defined as the application of computer technology to banking especially the payment (deposit transfer) aspects of banking. He also defined electronic banking as a system of banking with an electronic communication network which permits on-line processing of the same day credit and debit transfers of funds between member institutions of a clearing system.

According to Clive Wilson. (2007) in his Academic dictionary of banking, electronic banking is defined as a form of banking in which funds are transferred through an exchange of electronic signals between financial institutions, rather than an exchange of cash, cheques or other negotiable instruments.

According to Omotayo, Gbemi. (2007) defines electronic banking as a system in which funds are moved between different accounts using computerized on line/real time systems without the use of written cheques.

According to Edit Ofure. (2008) in international Journal of investment and finance, electronic banking is defined as a system by which transactions are settled electronically with the use of electronic gadgets such as ATMs, POS terminals, GSM phones, and V-cards e.t.c. handled by e-holders, bank customers, and stake holders. 



As earlier pointed out, there is delay in payment of cheques which lead to the adoption of electronic banking system. Adoption of electronic banking which suppose to ease banking transactions rather resulted to woes to customer. Most people complain of time wasted in banks. This occurs when there is power failure in banks resulting to slow down in operation.

Another problem that emerged was that banks do not have information backup to fall back on should there be any computer break down. In investing in electronic banking, the country will need a large amount of financial resources in computer technology, obviously, the resource is in short supply in Nigeria, couple with high level of poverty. For an efficient functioning of electronic payment system, there must be availability of infrastructural facilities such as electricity and telecommunication network, however, power supply fluctuates and there is still constant failure links in networks.

Since early 2000s banks have been developing and introducing payment cards for their customers as well as deploy ATM’s cards. Usage was however low due to lack of interconnectivity i.e. switching platform to interconnect the ATM’s for card holders.



ØThis research work intends to know the contribution of electronic banking to the development of banking system in Nigeria.

ØThe effect of electronic banking in the improvement of banking services.

ØTo evaluate the impact of e-Payment system on banking industry and also access the impact of electronic banking on Nigeria economy.

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Appraisal Of The Economic Implication On Electronic Banking In Nigerian Banks