Appraisal Of The Economic Implication Of Electronic Banking In Nigeria Banks

Appraisal Of The Economic Implication Of Electronic Banking In Nigeria Banks (A Case Study Of Diamond Bank)


In view of the appraisal of the economic implications of electronic banking in Nigeria banks, this research work is an attempt to examine the various ways through which electronic banking has contributed to the effective growth of the economy and banks in particular and hindrances if any, to the improvement of the electronic banking (e-banking).




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The everyone of electronic banking in Nigeria in the early 2000s has brought drastic  changes in Nigeria banking varying from, quick service delivery, more to a cashless society, easy settlement of financial transaction, electronic transfer system and among all dynamism in banking industries.

Inspite of all the positive impact of electronic banking which has contributed in one way or another to effective banking system in Nigeria much any has is its land on the problems and implications which has hindered the smooth operation of electronic banking and as such attracted some controversy from bank customers. Against this backdrop, the government has however attempted in improving the effectiveness of electronic banking system in the country.

Emphasis was also made on the various types of electronic payments, and also solutions on how these electronic systems can be boosted or grows stronger.

The recommendations if adhered to will go along way in improving electronic banking system in Nigeria and banks at large.

                                        CHAPTER ONE

1.1       Background Of The Study

            Before the emergence of modern banking system, the operation of banking where manually done which lead 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 computer and counted manually which were to 100% accurate thereby resulting human errors. Most bank them use only one computers in carryout transactions which ameliorate the sluggish nature of banking transaction.

Nigeria do not embrace internet banking earlier 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 seeks to bribe their way to avoid been checked in some sensitive in a output society.


Since electronic banking started in all Nigeria banks, it has been a woe for civil servants, checks, show that some staff in establishments such as the national boundary commission for instance, have yet to receive their salaries into their account have failed according to Ibrahim, D. (2009). Own banks and the banks used by their office.

“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, I. (2009) a worker at the federal secretariat Abuja reported to vanguard on Monday, December 1, 2008; Olekah, j. (2009) while acknowledging the initial accepts that dogged the system, advises stakeholders against being discouraged as such “teething problems” are normal.

James, A. (2009) a banker reported to vanguard annually reports on banks and cards on December, 1st, 2008 that “we should not destroy electronic-banking by looking at the negative aspects. We must strive towards perfecting it”. James, A. (2009) also says that the volume of data generated by the (Government ministry Agencies) in much making it a bit difficult for bank to cope.

But Mathew S. (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”.

From the above write up so far is good to know what e-banking is all about in the subsequent paragraphs.

According to Anyawaokoro, m. (1999) on theory and policy of money and banking defined electronic banking as the application of computer technology to banking especially the payment (deposited 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 Academic dictionary of banking (page 122) defines electronic banking 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 G. Omotayo in dictionary of finance (page 135) 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 .O in international Journal of investment and finance (page 148) defines electronic banking, as 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.

1.2 Statement Of Problems

            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 engaged was that banks do not have information backup to ball back on should there be any computer break down.

In investing in electronic banking, thee 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, they must be availability of infrastructural facilities such as electricity and telecommunication network, However, power supply fluctuates and the is still constant failure links in networks.

Since 1980’s 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 interconnects the ATM’s for card holders.

1.3       Objectives Of The Study

The researcher intends to determine the extent of electronic payment in banking activities as well as identify the various types of electronic banking.

The researcher will also evaluate the major problems associated with the development of electronic banking system in Nigeria as well as evaluate possible solutions to these problems.

The researcher will also assess the effect of electronic banking on profitability of banks. The researcher will like to evaluate the impact of this e-payment system on banking industries and also assess the impact of electronic banking in Nigeria economy.

1.4       Research Question

In order to get information from respondents the following questions where formulated:

What are the various types of electronic payment and the extent of electronic payment in banking activities?

In what extent can e-banking improve or enhance banking services.

What are the major problems associated with the development of electronic banking system in Nigerian.

What are the solutions to the problems associated with the development of e-banking?

What extent has e-payment affected banking activities?

The research shall attempt to find answers to these questions in the next chapter.

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1.5       Significance Of The Study

Electronic banking in our economy today is a welcome development and also its impacts in the society are over-whelming, so the research is significant in so many ways.

It will expose the strength and weakness of electronic banking,

It will motivate banks and other economic agents to computerize their services.

Knowledge in the area of electronic banking will be advanced.

Apart from contributing to the knowledge of electronic banking, it forms a reference for future research in this area.

1.6       Scope Of Study

This research is on economic implication of electronic banking in Nigeria banks and also the various forms of payment and electronic systems used by banks. The researcher will base this work concerns entire deposit money banks in Nigeria but to Diamond Bank in particular.

1.7       Limitation Of Study

Time is a major factor to the researcher as research of this kind requires enough time in gathering of data,  but it was not given to carryout the research, distribution, collection and analysis of questionnaire.

Also the school system has made it difficult for student to go out search for information by not granting exeat for student. Some banks had information from students who desires such information in other to maintain the banks secrecy thereby making it difficult for students to gather information for their research.

Finally finance was infact that most limited factor, in spite of this the researcher have to travel out to the sample organization to interview some of the managers and supervisors.

Appraisal Of The Economic Implication Of Electronic Banking In Nigeria Banks (A Case Study Of Diamond Bank)


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