ABBSTRACT
In recent years in Nigeria, there has been persistent public outcry as regards the new challenges, the electronic banking since its inception in 1996 has brought to financial institutions (banks) and general public. To many people, banking transaction via the internet is insecure and often congested. Hence, interruption is usually experienced in banking operations due to network failures. This hindered customers from carrying out transactions at that point in time. Besides, many people do not know what e-banking entails, or how to use its products. This aids in revealing the secrete PIN number (in the case of ATM card and other cards transaction) to the third party by the illiterate cardholders (customers) at any time they want to make withdrawals as they always request for assistance.
The utilization of conventional mode of payment in the banking segment had been used for a really long time a period. This mode of banking is obsolete and is portrayed with a great deal of issues, for example, time wastage, inconvenience to customers et cetera. In any case, the appearance of (EPC) in the banking sector has changed the essence of conveyance systems, queuing in the banks has been limited, affirmation of the legitimacy of transactions by customers explicitly for international transactions is practically prompt in contrast with the previous years, the new system has carried a great deal of cognizance to the banking industry through its effortlessness and efficiency in handling and conveyance of customers services dissimilar to in the previous system of payments which includes a ton of documentation and physical presence at the work desks of banks managers before finishing up such transactions. This development has encouraged decrease in the clearing cycle to T+2 for both local and upcountry instruments in clearing areas other than Lagos while the clearing cycle for Lagos was T+1 because of the usage of checks truncation exercise. This was not the situation in the previous years. Subsequently, this will investigate the effect of e-payment system on the efficiency of banks in Nigeria by using United Bank for Africa as a case study.
Contents
ABBSTRACT. 2
CHAPTER ONE. 2
INTRODUCTION.. 2
1.1 Background to the Study. 2
1.2 Statement of the Problem.. 4
1.3 Objective of the Study. 5
1.4 Research Questions. 6
1.5 Research Hypothesis. 6
1.6 Significance of Study. 7
1.7 Scope of the Study. 7
1.8 Limitation of the Study. 8
1.9 Definition of Terms. 8
CHAPTER TWO.. 11
LITERATURE REVIEW... 11
2.1 Banking Sector in Nigeria. 11
2.2 Major Product of Electronic Banking in Nigeria. 13
2.2.1 Smart Card. 13
2.2.2 Electronic Fund Transfer (EFT) 14
2.2.3 Mobile Telephone Banking. 15
2.2.4 Personal Computer (PC) Banking. 16
2.2.5 Automated Teller Machine. 16
2.2.6 The Internet Banking. 17
2.3 Central Bank of Nigeria Guidelines on Electronic Banking in Nigeria. 18
2.3.1 The Guidelines. 19
2.4 Economic Benefits of Electronic Payment System in Nigeria. 25
2.5 Challenges of Electronic Payments. 29
2.6 Evaluation of E-payment in Nigeria. 32
2.7 Theoretical Review.. 33
2.7.1 Technology Acceptance Theory. 33
2.7.2 Theory of Planned Behavior. 34
2.7.3 The Theory of Reasoned Action. 36
CHAPTER THREE. 38
RESEARCH METHODOLOGY. 38
3.1 INTRODUCTION.. 38
3.2 METHOD OF RESEARCH: 39
3.3 THE SURVEY AREA. 39
3.4 THE SAMPLE POPULATION/TECHNIQUE. 39
3.5. METHOD OF DATA COLLECTION.. 39
3.6 METHOD OF DATA ANALYSIS. 40
3.7 RELIABILITY. 40
References. 40
CHAPTER FOUR. 42
DATA ANALYSIS AND INTERPRETATION.. 42
Preamble. 42
4.2 Socio-Demographic Characteristics of Respondents. 42
Presentation of Results. 42
4.4 Testing Hypotheses. 47
4.5 Discussion of findings. 51
CHAPTER FIVE. 53
SUMMARY, CONCLUSION AND RECOMMENDATIONS. 53
5.1 Preamble. 53
5.2 Summary. 53
5.3 Conclusion. 53
5.4 Recommendations. 54
REFERENCES. 55
QUESTIONNAIRE. 56
CHAPTER ONE
INTRODUCTION
1.1 Background to the Study
The twenty first century has witnessed tremendous technology advancement in all spheres of human endeavour. The increasing advancement in information and communication technology has transformed the landscape of any business in the present world while this change is not unique to banking, banking industry now operates in a complex and competitive environment characterized by these changing conditions and highly unpredictable economic climate. Information and communication Technology (ICT) is at the focal point of this global change curve. In Nigeria, Modern banks currently understand that only those that update their payment service delivery and operations are probably going to endure and thrive in the 21st century. This is because of weight of globalization and quickly evolving innovation (Connel and Saleh, 2004).
Business today is directed during a time of profoundly complex technology forcing on banking authorities the need to execute advanced banking system which accord with present day needs. Therefore paper based transactions are currently being supplanted by electronic based transactions (Agboola, 2006). In recent years in Nigeria, there has been persistent public outcry as regards the new challenges, the electronic banking since its inception in 1996 has brought to financial institutions (banks) and general public. To many people, banking transaction via the internet is insecure and often congested. Hence, interruption is usually experienced in banking operations due to network failures. This hindered customers from carrying out transactions at that point in time. Besides, many people do not know what e-banking entails, or how to use its products. This aids in revealing the secrete PIN number (in the case of ATM card and other cards transaction) to the third party by the illiterate cardholders (customers) at any time they want to make withdrawals as they always request for assistance. Consequently there are increases in fraudulent activities in the banking industry. The CBN Annual Report and Statement of Accounts, (2009) have it that, the number of reported cases of attempted or successful fraud and/or forgery in the banking industry rose in 2009. According to the report, seventy percent of the fraud cases were perpetrated via the electronic system.
Despite the fact that the utilization of these payment components are not absolutely free from issues often, clients experience delay in approaching the services gave through this electronic channels (Olakah, 2012). One primary problem in the utilization of (EPC) is power outage. Power issue is a beast undermining each business in Nigeria. It might fluctuate for quite a long time and now and again not available. These payment systems may encounter disappointment whenever or malfunction and thus frustrate exchange which might be urgent. A typical hurt in the utilization of one of the electronic payments devices known as ATM is the trapping of cards for a considerable length of time by the terminals hence keeping customers from making transactions until the individual in question can recover his card from the machine. Every so often, the ATM may debit a customer's account without paying him or her, such case must be reported or the customer accepts liability. For the most part, in each electronic card based payment mechanism, "server down" is a typical slang, implying that there is a network failure. At the point when this happens, the machine is briefly incapable to work appropriately or obey instruction given by the customers at the payment terminals.
The improvement of various electronic payment systems has assisted with upgrading the payment of money in banks up to a furthest reaches of N500, 000 (Five Hundred Thousand Naira in particular) every day by singular customers and N 3,000,000 (Three Million Naira in particular) for corporate customers without attracting charges aside from withdrawal is over the limit stated. The payment has additionally promoted effectiveness in the clearing of money related instruments between the banks and Central Bank of Nigeria (2010). In spite of the difficulties credited to the utilization of electronic payments mechanism, the devices have sure given relieve and convenience to the banks as well as their customers, subsequently advancing exchange and business and assisting with developing the sectors of the economy.
1.2 Statement of the Problem
The utilization of conventional mode of payment in the banking segment had been used for a really long time a period. This mode of banking is obsolete and is portrayed with a great deal of issues, for example, time wastage, inconvenience to customers et cetera. In any case, the appearance of (EPC) in the banking sector has changed the essence of conveyance systems, queuing in the banks has been limited, affirmation of the legitimacy of transactions by customers explicitly for international transactions is practically prompt in contrast with the previous years, the new system has carried a great deal of cognizance to the banking industry through its effortlessness and efficiency in handling and conveyance of customers services dissimilar to in the previous system of payments which includes a ton of documentation and physical presence at the work desks of banks managers before finishing up such transactions. This development has encouraged decrease in the clearing cycle to T+2 for both local and upcountry instruments in clearing areas other than Lagos while the clearing cycle for Lagos was T+1 because of the usage of checks truncation exercise. This was not the situation in the previous years. Subsequently, this will investigate the effect of e-payment system on the efficiency of banks in Nigeria by using United Bank for Africa as a case study.
1.3 Objective of the Study
The main objective of the study is to examine the effect of e-payment system on the efficiency of Banks in Nigeria by using United Bank for Africa (UBA) as a case study. Specific objectives are:
i) To understand the effects of electronic payment system on banks operations in Nigeria
ii) To highlight the effects of electronic payment system on banks customer relationship
iii) To examine the availability of electronic payment facilities to banks customers
iv) To inquire the guidelines outlined by the Central Bank of Nigeria on the operations of electronic payment system by commercial banks in Nigeria
v) To investigate the economic benefits of electronic payment system by commercial banks on the economy of Nigeria
vi) To analyse the challenges facing electronic payment system in Nigeria.
1.4 Research Questions
The questions below will guide the research findings of this study:
i) What are the effects of electronic payment system on banks operations in Nigeria?
ii) What are the effects of electronic payment system on banks customer relationship?
iii) What are the electronic payment facilities available to banks customers?
iv) What are the guidelines outlined by the Central Bank of Nigeria on the operations of electronic payment system by commercial banks in Nigeria?
v) What are the economic benefits of electronic payment system by commercial banks on the economy of Nigeria?
vi) What are the challenges facing electronic payment system in Nigeria?
1.5 Research Hypothesis
The hypothesis below was formulated and tested in this study
i) There is no significant relationship between electronic payment system and banks customers’ satisfaction
ii) There is a significant relationship between electronic payment system and the efficiency of the bank
iii) There is no significant correlation between electronic payment system and the economy of Nigeria
1.6 Significance of Study
This study will be of great importance to the banking industry in the sense that the recommendations and findings of this study will assist commercial banks in Nigeria will identify and monitor challenges facing electronic banking adoption and also evaluate the development and growth of Electronic banking. In addition, banks will have the knowledge of electronic banking as a product of electronic commerce with a view to making strategic decisions
Also, academicians will also benefit from this research work since it will suggest possible solutions and strategies to the problems in electronic banking and have thorough knowledge of electronic banking.
In addition, the study will also contribute to the body of knowledge and to additional information in the banking industry. Scholars will use the study for reference and research based on findings of study. Thus, the study will bring out the differences arising from different environmental and organizational factors unique to the bank relevant for successful E-banking
1.7 Scope of the Study
The study examines the effect of e-payment system on the efficiency of Banks in Nigeria by using United Bank for Africa (UBA) as a case study in Nigeria as it relates to: electronic payment options used by bank customers as payment options for goods and services including POS, Debit cards, Credit cards transactions, internet banking, e-cheque, Tele banking, etc. The study will be carried out among the staff and customers of 10 selected UBA in two local government areas in Lagos state (Ikeja and Alimosho Locsssal Government Areas).
1.8 Limitation of the Study
Due to the fact that banking industry is highly competitive, bank refused to disclose certain information which they believe their competitors can be as advantages over them. I was unable to meet the computer manager of UBA Plc Lagos at the head quarter due to his tight schedule. Inability to have direct access to electronic system also limited my scope in the study.
Most of the questions asked were clearly and carefully avoided and regarded as very sensitive which could only be answered on the range from the board of directors.
1.9 Definition of Terms
The key terms used in this study are briefly explained below:-
ATM: Automated Teller Machine (ATM) is a machine where cash withdrawal can be made over the machine without going in to the banking hall. It also be used to buy recharge cards, pay bills, make card less withdrawal and transfer funds. It can be accessed 24 hours/7 days with account balance enquiry, mini account statements.
Cards: These are the most common form of electronic payments. There are three types of cards: credit, debit and prepaid cards. They are typically made plastics and have magnetic stripe on the back of the card. The customer gives the merchant the card while shopping, and the merchant swipes the card through a terminal or puts the relevant information into the data base.
Customer Satisfaction: According to Hansemark and Albinsson, satisfaction is an overall customer attitude towards a service provider, or an emotional reaction to the difference between what customers anticipate and what they receive, regarding the fulfillment of some need, goal or desire.
Electronic Fund Transfer (EFT): This is an electronic oriented payment mechanism. It allows customers’ accounts to be credited electronically within 24 hours (Ugwu, et al, 1999). Mark (1975) classified the basic elements of ETF system into three: Clearing network characteristics, remote service or points of sales characteristics and pre authorized debit and/or credit characteristics.
Internet Banking: Internet banking allows customers of a financial institution to conduct financial transactions on a secure website operated by the institution, which can be a retail or virtual bank, credit union or society. It may include of any transactions related to online usage. Banks increasingly operate websites through which customers are able not only to inquire about account balances, interest and exchange rates but also to conduct a range of transactions. Unfortunately, data on Internet banking are scarce, and differences in definitions make cross-country comparisons difficult.
Mobile Banking: Mobile banking (also known as M-banking, ) is a term used for performing balance checks, account transactions, payments, credit applications and other banking transactions through a mobile device such as a mobile phone or Personal Digital Assistant (PDA).
Mobile Payments: Although the number of transactions that can be carried out via a cell phone are limited, they can be used to facilitate some electronic transactions. Mobile phone manufacturers have enable their phones’ software to allow their customers to have a bank account on their cell phones numbers and can the funds in their accounts to carry out transactions.
Personal Computer (PC) Banking: PC banking refers to use of computer hardware, software and telecommunications to enables retail customers’ access to both specific account and general information on Bank’s products and services through a personal computer.
POS: Point of sale (POS) also sometimes referred to as point of purchase (POP) or checkout is the location where a transaction occurs. A ‘checkout’ refers to a POS terminal or more generally to the hardware and software used for checkouts, the equivalent of an electronic cash register. A POS terminal manages the selling process by a salesperson accessible interface. The same system allows the creation and printing of the receipt. POS systems record sales for business.
