THE IMPACT OF ELECTRONIC BANKING ON BANK

PERFORMANCE; A STUDY OF FIRST BANK OF NIGERIA PLC

TABLE OF CONTENTS
Title page - - - - - - - - - - i
Declaration - - - - - - - - - - ii
i
Approval page - - - - - - - - - iii
Dedication - - - - - - - - - - iv
Acknowledgements - - - - - - - - v
Table of contents - - - - - - - - - vii
Abstract - - - - - - - - - - x
CHAPTER ONE: INTRODUCTION
1.1 Background to the Stud - - - - - - 1
1.! "roblem of the Stud - - - - - - - #
1.$ %b&ectives of the Stud - - - - - - - '
1.( )esearch *uestions - - - - - - - '
1.+ )esearch ,potheses - - - - - - - 1-
1.# Significance of the Stud - - - - - - 11
1.. Scope and the /imitation of the Stud - - - - 1$
1.0 Structure of the Stud - - - - - - - 1(
1.' Definition of Terms - - - - - - - 1+
)eferences - - - - - - - - - 1'
CHAPTER TWO: LITERATURE REVIEW
!.1 1ntroduction - - - - - - - - !-
!.! The 2oncept of 3lectronic Banking - - - - - !1
!.$ The 4unctions of 3-Banking - - - - - - !(
!.( )eview of 3-Banking Services - - - - - !+
!.+ The Benefits or 1mportance of 3-Banking - - - - !'
ii
!.# 3-Banking And Bank "erformance - - - - - $1
!.. "roblems of 3-Banking - - - - - - - $.
!.0 "rospects of 3-Banking - - - - - - - (1
)eference - - - - - - - - - ($
CHAPTER THREE: RESEARCH METHODOLOGY
$.1 1ntroduction - - - - - - - - ((
$.! )esearch Design - - - - - - - - ((
$.!.1 "opulation and Sampling "lan - - - - - (.
$.!.! 1nstrumentation of Data 2ollection - - - - - (0
$.!.$ "rocedure of Data 2ollection - - - - - - ('
$.!.( Definition of 5ariables - - - - - - - +-
$.!.+ 6odel Specification - - - - - - - +!
$.!.# Techni7ues of Data "rocessing and Analsis - - - +(
)eference - - - - - - - - - +#
CHAPTER FOUR: DATA ANALYSIS AND RESULTS
(.1 1ntroduction - - - - - - - - +.
(.! Data "resentation and Analsis - - - - - +.
(.$ Test of ,potheses - - - - - - - #$
CHAPTER FIVE: SUMMARY, CONCLUSION AND
RECOMMENDATIONS
+.1 1ntroduction - - - - - - - - #+
+.! Summar of 4indings - - - - - - - #+
iii
+.$ "eculiarities and /imitations of the Stud - - - ##
+.( 2onclusion - - - - - - - - #.
+.+ )ecommendations - - - - - - - #0
+.# Suggestions for 4urther )esearch - - - - - #'
)eferences - - - - - - - - - .-
Appendices - - - - - - - - .!
ABST)A2T
Prior to the advent of electronic banking, the manual system of banking data,
recording and retrieval was in use. As the wind of change started blowing most
banks if not all adopted the use of electronic banking (e-banking) for
transaction just like any other part of the world, in igeria today, e-banking is
fast becoming the rule rather than e!ception. A number of good reasons are
adduced for this dynamic change in banking systems. "ne of these reasons is
the inherent benefit of e-banking to save time and magnificent efficiency in the
speed in the transaction of banking activities and conse#uently enhancing the
performance of banks. Another benefit is the accuracy and reliability of this
information if accurate data are inputted. $his work is designed to find out the
following things% the benefit and problems of electronic banking on banks. $he
method of data collection were secondary data which comprises of electronic
banking guidelines, financial summary of the bank over the years, annual
report of the bank, journals and maga&ines of e-banking, computer data base
accessed through the internet. $he analysis tool used to test the hypotheses is
the simple linear regression and the student's t-test. $he findings were( the
application of e-banking has enhanced the profitability (operating profit, profit
before ta! and profit after ta!) of banks. $he study recommends that there is the
need for banks to upgrade their information and communication technology
infrastructural facilities, cost of installing a sound )*$ should be minimi&ed or
regulated by the government and more so, +overnment should as matter of
urgency fi! the issue of power supply.
iv
CHAPTER ONE
INTRODUCTION
1.1 Back!"#$% &" &'( S&#%)
Banking has come a long wa from the time of ledger cards and other
manual filing sstems. 6ost banks toda have electronics sstems to handle
their dail voluminous task of information retrieval storage and processing.
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96S":.
1.* P!"+,(- ". &'( S&#%)
v
3insten and 1nfield 91'.1;!(-$1: asserts that <the formulation of a
problem is often more essential than its solution=
3lectronic banking as adopted b banks across the countr and 4irst After
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.
1./ O+0(c&12(3 ". &'( S&#%)
)esearch work is normall goal oriented. This stud intends to discuss
and exchange views on the impact of electronic banking on the performance of
banks in >igeria.
This research work is designed to achieve the following ob&ectives;
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1.4 R(3(a!c' 5#(3&1"$3
This research is an attempt to stud the impact of e-banking on bank
performance and also to indentif the problems and prospects. To fulfill this? the
researcher will answer the following 7uestions via findings@
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1.6 R(3(a!c' H)7"&'(3(3
Aeliger 91'.$;($1-(0+: described hpothesis as <con&ectural statement of
relationship between two or more variable and these must be measurable.
A hpothesis is ver necessar because it makes available to a stud? a sense
of direction and purpose. 1t narrows the scope within which the researcherBs
thinking with respect to the previous work and the work that foll The fact the
researcher intends to investigate is the impact of electronic banking on bank
performance. Stating the hpothesis we have@
vii
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1.8 S1$1.1ca$c( ". &'( S&#%)
Cith the rapid development of 1nformation Technolog 91T: banks are
beginning to rel heavil on conducting banking transactions electronicall.
The stud would enable the banks executives and indeed the polic
makers of the banks and financial institutions to be aware of electronics banking
as a product of electronic commerce with a view to making strategic decisions.
The research is e7uall significant because it would provide answer to factors
militating against the implementation of electronic banking in 4irst Bank of
>igeria plc.
1t is the researcherBs intention that when this work is completel carried
out? it will contribute immensel to the existing literature on the general
application of e-banking services in modern da business. 1t will also contribute
to efficient and effective performance of the staff that comes closer to the use of
electronic banking services. This will eventuall widen the horiDon of business
viii
executive and emploee in the application of electronic banking services in such
vital accounting sstems? investment appraisal and a host of others.
4urthermore? the problems associated with the manual process like dela?
inaccurac? inefficienc which is the bottleneck? the impact of e-banking will
show how it has completel phased it.
1.9 Sc"7( a$% &'( L1-1&a&1"$ ". &'( S&#%)
1n pursuance of the ob&ective of the stud@ attention shall be focused on
electronic banking among other banking services or electronic commerce
implementation.
1n order to conduct an empirical investigation into the adoption electronic
banking in >igeria and will also examine the nature of e-banking operations of
first bank of >igeria plc.
This work? for want of time could not cover all the banks in >igeria that
have e-banking services. The work is therefore limited to 4irst Bank of >igeria
plc? 6akurdi branch onl. These limitations in one wa or the other might have
affected the fullest realiDation of this research. The limitation are lack of
ade7uate and up-to date data necessar for successful completion of t his work.
1t is a laid down fact that the 1nformation and 2ommunication Technolog
912T: Corld is an ever dnamic world. 1t takes an appreciable account of
ix
mone and time to get these developments to this part of the world. 4or this
reason? the researcher then decided to conduct the stud within the
technological framework available in >igeria and at first bank to be precise.
Another problem that has affected the full realiDation of this stud is time
constraint. This work is to be concluded within a short period of time and this
restriction in time emploed made it impossible for the researcher to exhaust all
areas affected.
1.: S&!#c&#!( ". &'( S&#%)
The researcher has planned the research work such that the first chapter
introduces how it will be carried out? the background to the topic of the stud
and the problems being faced b the researcher in the course of doing the
research. Also? ob&ectives of the stud are being stated? the research 7uestions?
hpotheses and significance of the stud are being stated. 1nclusivel? the scope
and structure of the stud and finall? definition of terms and rendered up with
references.
2hapter two will deal basicall with the literature review of e-banking
services? functions and identif the benefits of e-banking among other things.
This chapter will also analDe the problems of e-banking and recommendations
of the possible e-banking sstem solutions.
2hapter three will be concerned with research methodolog and design.
The various methods use in this research to collect data will be stated in the
chapter.
x
2hapter four will be more of data presentation? analsis and
interpretations.
4inall? chapter five contains the summar? conclusion and suggested
recommendations.
1.; D(.1$1&1"$ ". T(!-3
ATM <A#&"-a&(% T(,,(! Mac'1$(=: An AT6 combines a computer terminal?
record keeping sstem and cash vault in one unit? permitting customers to enter
a financial firmBs book keeping sstem with either a plastic card containing a
"ersonal 1dentification >umber 9"1>: or b punching a special code number
into a computer terminal linked to the financial firms computeriDed records !(
hours a da. The AT6 card is a complex circuit that process micro-processors
with a single clip that contain complete arithmetic and logic unit of computer.
POINT OF SALE <POS=: This refers to a computer facilit that permits a
customer to instantl pa for goods and services electronicall b deducting the
cost of each purchase directl from his or her account. The customer presents an
encoded debit card to the store clerk who inserts it into a computer terminal
connected to the financial firmBs computer sstem. The customerBs account is
charged for the purchase and funds are automaticall transferred to the stores
deposit account.
ELECTRONIC DATA INTERCHANGE <EDI=: this is the transfer of
financial or business information or document between originations in machines
readable form.
xi
ELECTRONIC MONEY: this is referred to the mone value measured on an
electronic device in the customerBs possession. This electronic value can be
purchased and hold on the device until reduced through purchases or transfer.
INTERNET BANKING; this is a banking service that uses the internet to
carrout financial transactions and also linking customers with financial service
providers. Through the internet a customer can verif real-time account
balances antime from an location? move funds instantl from one account to
another? confirm that deposits have been made? che7ues have been cleared and
submit an application for loan and credit cards. 1t has to be noted that internet
banking is &ust and aspect of electronic banking.
MOBILE BANKING; this is a product that offers customers of a bank access
to services as the move from one place to another. 2ustomers can make their
transactions anwhere? such as account balances transaction en7uir? account
verification? bill pament? electronic fund transfer? updates and histor and
transfer between accounts etc.
TRANSACTION ALERT; 2ustomers carrout transactions on their accounts
and need to keep track of these transitions prompted the creation of alert
transactions. The sstem also serves as notification sstem to reach out to
customers when necessar information need to be communicated.
ELECTRONIC BANKING <E>Ba$k1$=: This is a web based service that
enables a banks customer to access hisEher account.
xii
INFORMATION TECHNOLOGY: This represents the various tpes of
hardware? data base management? telecommunication and other information
processing technologies used in a computer based information sstem.
COMPUTER: A compute is an automatic device usuall electronic which is
capable of storing relativel large complicated se7uence of mathematical and
logic operations without human intervention.
ELECTRONIC DATA PROCESSING <EDP=: This is the use of electronic
computer to process data automaticall.
REFERENCES
2lark F. 91''':? international dictionary of banking and finance. 4itDro
dearbon publishers? /ondon.
3insten and 1nfeld? 91'.1:. ,esearch methodology in social relations. 1n selltiD
2. et al 6eltinwan G co. ltd. 11 new )etterlance.
Hold face-1rokalibe 1.F. 9!--.:. -aw of banking in igeria; matthouse "ress /td.
Aerlinger ".>. 91'.$:? .oundation of /ehavoiural research@ !
nd
edition? ,olt
)inehart and Ciston 1nc. >ew Iork.
%BBrien A.F. 9!--!:? 0anagement information systems; managing information
technolog in the internetworked enterprise. 6cHraw-,ill 1rwin? >ew
Iork.
"eter S.). and Slvia 2.,. 9!--0:? /ank 0anagement and financial services(
6cHraw-,ill 1rwin? >ew Iork.
"ost 5.H and Anderson /.D. 9!--#:? 0anagement information systems% solving
Business problems with information technolog. 6cHraw- ,ill 1rwin?
>ew Iork.
xiii
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