ELECTRONIC BANKING AS A VERITABLE PLATFORM FOR BETTER SERVICES BY BANKS

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CHAPTER ONE

INTRODUCTION

1.1 Background to the Study

Electronic banking (e-banking) have been around for over a decade now, and have already undergone a considerable degree of evolution, from so-called PC banking to modern era of digital divide.  The definition of electronic banking varies amongst researchers partially because electronic banking refers to several types of services through which a bank’s customers can request information and carry out most retail banking services via computer, television or mobile phone (Aladwani, 2001).

Electronic banking varies in the following platforms: (a) Internet banking (or online banking), (b) telephone banking, (c) TV-based banking, (d) mobile phone banking, and (e) PC bank (or offline banking). In this research study, the ATM (Automated Teller Machine) channel is also added to the research (Birch and Young, 1997).

Electronic banking services are delivered to customers through the Internet and the web using Hypertext Markup Language (HTML). In order to use electronic banking services, customers need Internet access and web browser software. Multimedia information in HTML format from online banks can be displayed in web browsers. The heart of the e-banking application is the computer system, which includes web servers, database management systems, and web application programs that can generate dynamic HTML pages.

According to research, in the late 2002, Internet bankers represented 37 percent of Internet users and online banking services now attract 18 percent of all European adults (Forrester, 2003). Forrester (2003) projects that the number of Europeans using online banking will double to reach almost 130 million users in five years ” a total of 21 percent. While online banking penetration in the Nordic countries and the Netherlands will climb to 60 percent of Net users in 2003, Italy and Greece, which had fewer than 5 percent of adults banking online a year before, struggled to achieve a situation with a third of Net users banking online in 2003.

According to Forrester (2003), a typical European bank has the following perspective” in six years the proportion of transactions made online exceed 40% of all transactions, while the transactions in the traditional branches was below 10% (Forrester, 2003).

1.2 Statement of the Problem

The major challenge of electronic banking is security. Without great confidence in security, customers are unwilling to use a public network, such as the Internet, to view financial information online and conduct financial transactions. Some of the security threats include invasion of individuals’ privacy and theft of confidential information.

Again, the level of awareness and use of electronic banking in Nigeria appears to be very minimal. Organizational, environmental and cultural factors stand against the good and perceived will of the use of electronic banking.

Another constraint that affects the use of electronic banking in Nigerian banking sector is low level of computer culture. When bankers are not computer literate, utilizing the facility would be a problem. In other words, having a good background in computer skill makes the use of computers in work places very practicable. Lack of awareness on the other hand makes availability impossible.

1.3 Aim and Objectives of the Study

This research work seeks to study electronic banking as a veritable platform for better services by banks and the objectives of this study include:

1. Examine the effectiveness of electronic banking in service delivery,
2. Identify the security threat in electronic banking.

3. Examine the benefits of electronic banking over traditional banking system.
4. Evaluate the effect of electronic banking with respect to customers’ satisfaction in banking services.

1.4 Relevant Research Questions

1. How effective is electronic banking in service delivery?
2. How can the security threat in electronic banking be resolved?

3. What are the benefits of electronic banking over traditional banking system?
4. How effective is electronic banking with respect to customers’ satisfaction in banking services?

1.5   Relevant Research Hypotheses

In carrying out this research work these theoretical statements are made to serve as a direction on which the work is premised.

1. H_o: There is no positive relationship between Electronic Banking and customers’ satisfaction

H₁:  There is positive relationship between Electronic Banking and customers’ satisfaction.

1. H_o: There is no significance difference between Electronic Banking system and traditional banking system.

H₁ There is significance difference between Electronic Banking system and traditional banking system.

1.6 Scope of the Study

The research work evaluates electronic banking as a veritable platform for better services by banks with a view to explore Zenith Bank Plc, Surulere, Lagos.

1.7     Significance of the Study

This research work is useful and relevant to the entire society, as it helps banks and other sectors of the economy in knowing and appreciating the positive effect of electronic banking in service delivery.

To this end it therefore serves as a guide that will equip students on the relevance of Electronic banking in service delivering. This can take the form of funds transfer, signature verification in minutes etc.

The study gives customers insight on how Electronic banking services can help to ensure accurate and timely transactions, unlike when done manually which is prone to human errors which is embarrassing.

Furthermore, the study serves as added advantage to the banking sector, revealing ways in which Electronic banking technology can ensure safety of banks dealings with its customers. The banking technology prevents this through its signature verification voice mail and prints verification and unauthorized access into the computer system.

Finally, the study helps organization to reduce the use of files which are archaic thereby reducing storage space. Using files could lead to loss of vital information about bank customers through mutilation easy and unauthorized access of files and misplacement of important documents. This can be prevented through storage of information in diskettes, hard disks and back-ups of important information.

1.8 Definition of Terms

Bank: A bank is a financial institution and financial intermediary that accepts deposits and channels those deposits into lending activities, either directly or through capital markets.

 Electronic Banking: Electronic Banking is a system in which funds are moved between different accounts using computerized on line/real time systems without the use of written cheques.

Electronic Payment: the term electronic payment can refer narrowly to e-commerce “ a payment for buying and selling goods or services offered through the internet, or broadly to any type of electronic funds transfer.

Electronic funds transfer (EFT): this is the electronic exchange or transfer of money from one account to another, either within a single financial institution or across multiple institutions, through computer-based system.

Customer Base: this is the group of customers that the bank or a business serves. In the most situations, a large part of this group is made up of repeat customers with a high ratio of patronage over time.

Customer Service: this is the provision of assistance to customers of clients of a particular bank.

Payment System: this is a system used for transferring money. What makes it a system is that it employs cash-substitutes; traditional payment system or electronic payment system.

REFERENCES

Aladwani, A. (2001). Online Banking: A Field Study of Drivers, Development Challenges, and Expectations, International Journal of Information Management, 21, pp. 213“225.

Aladwani, K.. (2001). Online Banking: A Field Study of Drivers, Development Challenges, and Expectations, International Journal of Information Management, 21, pp. 213“225.

Birch, D. and Young, M. (1997). Financial services and the internet-what does the cyberspace mean for the financial services industry? Internet Research: Electronic Networking Applications and Policy, vol.7, n.2, pp. 120-128.

Daniel, E. (1999).  Provision of electronic banking in the UK and the Republic of Ireland,International Journal of Bank Marketing, 17, 2, , pp. 72“82.

Toomla, R. (2003). The Business Case for Right-Channeling Forrester Research,      p. 14.

Toomla, R. (2000). The hollow promise of Internet banking. The Economist, p. 9.

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