AN ANALYSIS OF THE IMPACT OF E-BANKING ON THE BANKING INDUSTRY IN KOGI STATE

AN ANALYSIS OF THE IMPACT OF E-BANKING ON THE BANKING INDUSTRY IN KOGI STATE 

(A CASE STUDY OF SOME SELECTED COMMERCIAL BANKS IN LOKOJA

ABSTRACT

This project was carried out to investigate the analysis of the impact of e-banking on the banking industry in Kogi State (A case study of some selected commercial banks in Lokoja which includes; first bank, UBA and Union Bank) e-banking is now being used in creating niche in the banking industry. It has become the major sources of attracting new customers and retaining the existing ones through satisfaction of their ever-increasing appetite for solution to their banking problems. The method used in collecting relevant data concerning this study is majorly through the primary sources which include administration of questionnaire and personal interview with some of the bank staff. From the research carried out, it was discovered that e-banking improve bankers customers relationship and also help the customers to enjoy banking services at the comfort of their home. It was also discovered that e-banking has increased the level of productivities of the bank. The study also shows that banks have to be computerized in order to make their services effective. The researcher also recommended in the study among others that banks should computerize their banking system not even minding how much it will cost them because that will help in improving their services to their customers. Also, that personnel should be re-trained in order to get acquainted with the use of computers which will help them to avoid poor banking services and they will be able to compete with others in the banking industry.

CHAPTER ONE

INTRODUCTION

1.1   BACKGROUND OF THE STUDY

The banking industry is a service organization primary used with the civilization of saving and the application of such fund into projects or giving it as loan to businessmen for the purpose of earning interest.

The 1969 banking act and banking (Amendment) decree 3 of 1970 defined banking business as the business of receiving money from outside source as deposits irrespective of the payment of interest and the granting of loan.

In the banking industry, the use of e-banking is universal and it is an acceptable way or method of making a transaction activities very easy. And for the banking industry to achieve the desired credibility, it must strive hard to attract a good proportion of its customers fund in order to earn return on investments.

e-banking is also known as Electronic Fund Transfer System (EFTS). It exists where the computer system is incorporated into the banking system. It is used to transfer funds in an out of account using electronic signal to indicate amount of money. The system also show which account to be credited or debited.

e-banking is a banking activity that involve the transfer of data over computer mediated network and makes transaction activities very easy. It could also be said that e-banking to customer is a part of life which cannot be avoided in the banking operations but can be controlled.

The major effect of e-banking on banking industry and customers include; unemployment, high rate of fraud, it saves time and the risk of traveling by customers with huge amount of money is also reduced as they can now enjoy banking services without leaving their homes.

Commercial banks on the other hand is a monetary institution owned by businessmen for the purpose of making profits.

Lawal and Abimaje (2003), said that the main objectives of commercial bank is to provide financial services and adequate returns on capital to customers and shareholders respectively.

The research will reveal the impact of e-banking strategy on banking operations and some of the selected commercial banks in Lokoja under study are First Bank Nigeria Plc, United Bank for Africa (UBA) and Union Bank all in Lokoja.

Therefore, the aim of this project is to critically and deeply analyze the impact of e-banking on banking industry in Kogi State and it effects on the state as a whole.

1.2   STATEMENT OF THE PROBLEM

It should be noted that banking industry in Kogi State requires system to perform the e-banking operations. Every system however is designed to solve some problems being encountered by bankers. Also computer in the banking industry is introduced to ameliorate the limitless stress in manual records.

The introduction of e-banking in banking industry in Kogi State has made all customers waiting to be reduced and has also saved customers the burden of carrying huge amount of money about. It has indeed helped in saving time for both bankers and customers but on the other hand, works that were handled by man have now been taken over by computer which has made some people to be laid off from bank jobs and has also increased the rate of crime activities in the state.

In view of these problems, the researcher have come up with solution to some of the problems. Firstly, instead of laying off people from bank work because of lack of computer knowledge, they can be trained to acquire the necessary skills needed to work with the computer so that the problems of unemployment can be reduced. Also, crime rate in the state can be reduced and customers can enjoy banking services without leaving their home and lastly, it will increase customers satisfaction and banks productivities will also increase.

1.3   OBJECTIVES OF THE STUDY

Attempt is being made in this project to critically examine the Impact of e-baking on the Banking Industry in Kogi State.

In this case, some selected commercial banks that will be examined are; UBA., First Bank and Union Bank. How computerization has immensely enhanced their services to customers and to what extent is the banks operational efficiency. Therefore, the aim of this project is to critically and deeply analyze the impact of e-banking on banking industry in Kogi State and it effects on the state as a whole.

The aim of the research will be centered around the following:

i.            To ascertain the impact of the adoption of e-banking strategy on banking operation.

ii.          To investigate how computers in banking operations ensure accuracy in recording daily transactions

iii.        To examine the major problem of e-banking and facts responsible for those problems with a view to guiding against future occurrence

iv.         To recommend how computerization of banking activities can increase the productivity of the banks under considerations.

1.4   SIGNIFICANCE OF THE STUDY

In the light of the difference innovations being introduced in Nigeria banking industry, the need for better and more efficient bank services to customers and bank efficiency is definitely necessary.

The study is relevant, because it will help to reveal the importance of the computerization on banking activities and its effects on personnel performance and customers satisfaction.

It will also help to identify some of the problems which customers encountered in banks with inadequate computer facilities.

It will reveal how the computerization of banking activities can enhance bankers and customer’s relationship.

It will also help to increase customers and employees satisfaction which can bring about increase in profit and the growth of those banks.

1.5   RESEARCH HYPOTHESIS

Hypothesis are ideas or working  statement put forward as a starting point for reasoning or expectation which may be accepted or rejected after testing. In analyzing the hypothesis, two options are analyzed which are the Null hypothesis (HO) and the Alternative hypothesis (H1). For this study the following hypothesis have been formulated.

1.   HO:  The adoption of e-banking is not the reason behind   bankers and customers relationship.                                

 HI:  The adoption of e-banking is the reason behind bankers and customers relationship.

2.   H0:  The introduction of e-banking into the banking sector does not reduce customers waiting.

HI:  The introduction of e-banking into the banking sector has reduced customers waiting.

3.   H0: The computerization in the banking sector does not benefit both the banks and the society.

HI:  The computerization in the banking sector has benefit both the banks and the society.

4.   HO:  The adoption of computer in banking operation  does  not ensure accuracy in recording daily transaction.

H1:  The adoption of computer in banking operation has ensured accuracy in recording daily transaction.

1.6   SCOPE OF THE STUDY

The analysis of the study of the impact of e-baking on banking industry is like the major function of the banking industry.

This project will analyze the impact of e-banking on banking system in Kogi State and it will cover some selected commercial banks in Lokoja which includes the United Banks for Africa (UBA), First Bank of Nigeria Plc and Union Bank and the economy in which such banks operates.

1.7   LIMITATIONS AND CONSTRAINT OF THE STUDY

Below are  some of the factors that the researcher faced in the Corse of gathering relevant  data for this study

i.            Lack of sufficient time: The research project is expected to be completed within a semester during which the researcher will be having lectures, assignments, doing personal reading and examinations in other courses of study that is why the research work is limited to some selected commercial banks in Lokoja.

ii.          Banks always have a busy schedule and this contributed to their inability to answer some of the research questions.

iii.       Insufficient fund: Due to the nature of what is going on in the economy and the level of corruption in the state, there is no sufficient fund to carry out the research work because some of the bankers want the researcher to give them some thing (bribe) before they can answer some of the questions.

iv.        Some of the banks also keep some of the information needed by the researcher as secret which they will never reveal to anyone no matter what because of the level of criminal activities going on in the country.

1.8   DEFINITION OF RELEVANT TERMS

BANK: According to Sir John Paget, bank is a corporate or person(s) who accept money on account, pay cheque on such account and collect cheque for customers.

E-BANKING:  It is a banking activity that involves the transfer of data over computer medicated network.

COMMERCIAL BANK: It is a monetary institution owned by business men for the purpose of making profit Lawal and Abimaje (2003).

COMPUTER: It is an electronic device that can accept data and information presented it in prescribed form, carryout some operations in a specified format as information or a signal to control some other processes.

INPUT: This is a data which entered into a computer for processing into useful information

OUTPUT: Process of transferring the processed data by the central processing unit through a suitable medium.

DATA: A piece of basic raw data that serves as input to computer.

HARDWARE: The physical or visible parts of the computer system.

PROGRAM: The set of coded instruction that direct the computer to solve a particular task.

SOFTWARE: Same as programs

DATA PROCESSING: Activities responsible for the gathering, manipulation and conversion of raw facts and data into what is humanly decipherable and meaningful.

INFORMATION: It is the outcome or result of the raw facts that have previously been collected, collated and finally processed.

MANAGEMENT INFORMATION SYSTEM: It is a system which allows customers account to be credited electrically in a matter of few hours any where in the country.

AUTO-PAY: It is a secure pre-base re-curing payment and pre-payment solution across several banks.

AUTOMATED TELLER MACHINE (ATM):  It is an electronic device that enables one to perform some basic banking operations such as account balance enquiry, cash withdrawal, transfer between own accounts etc a self service bases. 

MASTER CARD: It is the international leading global electronic payment solution company that provides a broad variety of innovative services in support of their global members ranging credit, deposit, access and other related payment programs.