THE EFFECT OF E-BANKING ON SERVICE DELIVERY TO BANK CUSTOMERS

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CHAPTER ONE

 INTRODUCTION

1.1     BACKGROUND TO THE STUDY

According to Auta (2010), the concept of e-banking is a delivery channel for banking services. Banks have used electronic channels for years to communicate and transact business with both domestic and international corporate customers. With the development of the Internet and the World Wide Web (WWW) in the latter half of the 1990s, banks are increasingly using electronic channels for receiving instructions and delivering their products and services to their customers. This form of banking is generally referred to as e-banking or Internet banking, although the range of products and services provided by banks over the electronic channel vary widely in content, capability and sophistication.

E-banking is defined as the automated delivery of new and traditional banking products and services directly to customers through electronic, interactive communication channels. The definition of e-banking varies amongst researchers partly because electronic banking refers to several types of services through which bank customers can request information and carry out most retail banking services via computer, television or mobile phone (Daniel, 1999; Sathye, 1999 cited in Auta 2010).

Salehi and Zhila, cited in Auta (2010), describes e-banking as an electronic connection between bank and customer in order to prepare, manage and control financial transactions. Electronic banking can also be defined as a variety of following platforms: Internet banking (or online banking), telephone banking, TV-based banking, (iv) mobile phone banking, and e-banking (or offline banking). E-banking includes the systems that enable financial institution customers, individuals or businesses, to access accounts, transact business, or obtain information on financial products and services through a public or private network, including the Internet or mobile phone.

Customers access e-banking services using an intelligent electronic device, such as a personal computer (PC), personal digital assistant (PDA), automated teller machine (ATM), kiosk, or touch tone telephone. While some literature restricts the use of the term to internet banking (Daniel 1999), elsewhere the term is limited to retail banking (Aladwani, 2001) or both retail and corporate banking (Simpson 2002).

According to Basel Committee Report on Banking Supervision (1998), e-banking refers to the provision of retail and small value banking products and services through electronic channels. Such products and services can include deposit-taking, lending, account management, the provision of financial advice, electronic bill payment, and the provision of other electronic payment products and services such as electronic money.

Imiefoh (2012) also added in the same manner that banking in Nigeria has come a long way from the time of ledger cards and other manual filling systems. Most banks today have electronic systems to handle their daily voluminous tasks of information retrieval, storage and processing. Irrespective of whether they are automated or not, banks in Nigeria by their nature are continually involved in all forms of information management.

He went further and described electronic banking (e-banking) as an umbrella term for the process by which a customer may perform banking transactions electronically without visiting a brick-and-mortar institution. That is, automated delivery of new and traditional banking products and services directly to customers through electronic, interactive communication channels. Thus, the following terms refer to one form or another of electronic banking: Personal Computer (PC) banking; internet banking; virtual banking; online banking; home banking; remote e-banking and phone banking. Personal Computer (PC) banking and Internet or online banking are the most frequently used designations. It should be noted, however, that the terms used to describe the various types of electronic banking are often used interchangeably.

1.2     STATEMENT OF THE PROBLEM

There is no contradiction to the fact that the Nigeria today experiences a problematic e-banking service. Also, over the years, the underlying issues have not been adequately addressed for the attainment of the objectives of e-banking. This has seriously affected and is still affecting the process of e-banking particularly in developing countries like Nigeria.

As it was evidenced in Wada and Odulaja (2012), ICT has also brought unintended consequences such as criminal activities, spamming, credit card frauds, ATM frauds, phishing, identity theft and other related cybercrimes.  Consequently, the above-listed problems lead to:

• Low level of usage of e-banking services by Nigerian banks’ customers.
• Low level of awareness of different types of e-banking service by the majority of banks customers, mostly, in rural areas.
• Ineffective service delivery by banks as a result of low level of usage of e-banking services by the customers.
• Perception of risks such as ATM, credit card fraud and others type of fraud which have negative impact on e-banking in Nigeria.

The above statements has led to the failure of e-banking in Nigeria thereby making this study a necessity.

1.3     OBJECTIVES OF THE STUDY 

The general objective of the study is to examine the significance of e-banking on service delivery of selected banks in Lagos.

The specific objectives of the study are to;

1. Examine the types of e-banking used by customers.
2. Examine how well customers have been using e-banking facilities.
3. Identify the effect of e-banking on service delivery to customers.
4. Find out the problems of e-banking to customers.

1.4     RESEARCH QUESTIONS

The following relevant questions were used for the study:

1. What are the types of e-banking services used by customers?
2. How well have customers been using e-banking facilities?
3. What are the positive effects of e-banking on service delivery to customers?
4. What are the problems of e-banking to customers?

 1.5     RESEARCH HYPOTHESES

Here are the relevant research hypotheses:

HYPOTHESIS 1

H₀:     There is no significant relationship between types of e-banking facilities used by customers and how well customers have been using them.

 HYPOTHESIS 2

H₀: E-banking does not have positive effect on service delivery to bank customers.

1.6     SIGNIFICANCE OF THE STUDY

This study is very important because it assesses the significance of e-banking on service delivery of Nigerian banks using selected banks in Lagos as case study.

Electronic banking in Nigeria today is a welcome development and also its impact on the banking industry is expected to be positive and yielding fruit to our economy, so this research is significant in so many ways as: It will expose the factors that are preventing Nigerian banks in putting effective and sustained e-banking in place.

Using e-banking as a strategic tool will make a provision on how a bank can embrace of opportunities and reduce threats in Nigerian business environment. This will provide a means through which banks can improve their performance, increase profitability and also increase their chances of survival. It will motivate banks and other economic agents to computerize their services. It will provide advanced Knowledge in the area of electronic banking in Nigeria.

Furthermore, to sustain effective e-banking in Nigeria, certain strategic measures will be revealed in order to reduce negative effects of the problems identified as obstacles to the smooth functioning of the system.

1.7     SCOPE AND LIMITATIONS OF THE STUDY

This research work focused on the effect of e-banking on service delivery of Nigeria Banks using selected banks in Lagos as case study. The study is limited to three selected Banks in Lagos-Island, Gtbank Plc, Union Bank Plc and Skye Bank.

In the course of this research work, the researcher was faced with some constraints which placed limit on the ability and performance of the researcher.

The population of the study which was the selected banks nationwide could not be reached as a result of number, distance involved and cost. Other encountered constraints are:

(1.) Short time: The time given for the project was very short. Also, the project activities were during the period when tests and exams were carried out.

(2) Financial factors: Money to visit the banks in order to collect more relevant data was a challenge.

1.8  DEFINITION OF TERMS

 Automated Teller Machine:  This is computerized machine that enables the customers to perform several banking operations without the help of a teller, such as to withdraw cash, make deposits, pay bills, obtain bank statements, effect cash transfers etc.

Automation: This is the use of control systems and IT to reduce the need for human work in the production of goods and services.

Bank: An organization offering financial services, especially, the safe keeping and lending of money.

Customer: A person or company that regularly patronizes a particular bank.

CyberCrime: This describes the dangers facing computer users on internet some of which are: online banking dangers, the dangers of dating online, bad online medicine, child pornography, spam, fake IDs.

E-banking: the use of computers to carry out banking transactions such as withdrawals through cash dispensers or transfer of funds at point of sale.

Electronic Money Transfer: Moving funds between different accounts in the same or different banks, through the use of wire transfer, automatic teller machines, or computers.

Information Technology (IT):  This represents set of tools, processes, and methodologies and associated equipment employed to collect, process, and present information.

Service delivery: This is the act of providing the needs of customers or clients.

Smart Cards:  plastic card with embedded microprocessor chip, electronic memory, and a battery. Used for information storage and management and authentication.

Spamming: This is the use of electronic messaging systems (including most broadcast media, digital delivery systems) to send unsolicited bulk messages indiscriminately.

Telephone Banking:  this means provision of certain banking services (such as account balance inquiry, funds transfer, and payment of bills) through telephone.

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