THE IMPACT OF ELECTRONIC BANKING IN NIGERIA BANKING SYSTEM
(CRITICAL APPRAISAL OF UNITY BANK PLC)
CHAPTER ONE
INTRODUCTION
1.1. Background of the Study
The new millennium brought with it new possibilities in terms of information access and
availability simultaneously, introducing new challenges in protecting sensitive information
from some eyes while making it available
to others. Today’s business environment is extremely dynamic and experience
rapid changes as a result of technological improvement, increased
awareness and demands
Banks to serve
their
customers
electronically. Banks have traditionally been in the forefront
of harnessing technology to improve their products and services.
The Banking industry of the 21st century 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 centre of
this global change curve of
Electronic Banking System in Nigeria today. (Stevens
2002). Assert that they have over the time, been using electronic and telecommunication networks for delivering a wide range of
value added products and services, managers
in Banking industry in Nigeria cannot ignore Information
Systems because they play a critical
impact in current Banking
system, they point out that the entire cash flow
of most fortune Banks are linked to Information System.
The application of information and communication technology concepts,
techniques, policies and implementation
strategies to banking services has become a subject of fundamental importance and concerns to all Banks and indeed a prerequisite for local
and global competitiveness Banking.
The advancement in Technology has played an important role in improving
service delivery standards in the Banking
industry. In its simplest
form, Automated Teller Machines (ATMs) and deposit machines now allow consumers carry out banking transactions beyond
banking hours.
With online banking, individuals
can check their account balances
and make payments without
having to go to the bank hall. This is gradually creating a cashless society
where consumers no longer have to pay for all their purchases with hard cash. For example: bank customers can pay for airline tickets and subscribe 1to initial public offerings
by transferring the money directly
from their accounts,
or pay for various gods and services
by electronic transfers of credit to the sellers account.
As most people now own mobile phones, banks have also introduced
mobile banking to cater for customers who are always on the move. Mobile banking allows individuals to check their account balances and make fund transfers
using their mobile phones. This was popularized by First Atlantic Bank (now First Inland
Bank) through its “Flash
me cash” product Customers can also recharge their mobile phones via SMS. E-Banking
has made banking transactions easier around the World and it is fast gaining
acceptance in Nigeria.
The delivery channels today in Nigeria electronic
Banking are quite numerous has it is mentioned here Automatic
Teller Machine (ATM), Point of Sales (POS), Telephone Banking, Smart Cards, Internet
Banking etc Personal computers in the Banking
industry was first introduced into Nigeria by Society
Generale Bank as the popular PC easy
access to the internet
and World Wide Web (www) and internet is increasingly used
by Bank’s as a channel of delivering the products and services to the numerous
customers. Virtually almost all Banks in Nigeria
have a web presence; this form of Banking is referred to as Internet
Banking which is generally part of Electronic Banking. The
delivery of products by banks on public domain is an indication of advertisement which is known has E-Commerce.
Electronic commerce on the other hand is a general term for any type of business
or commercial transaction it involves the transfer of information
across the internet. E-Commerce
involves individuals and business organization exchanging business information and instructions over electronic media using computers, telephones and other communication
equipments. This covers a range of
different types of business from consumers
to retails products. However, Electronic banking as it is; is a product of E-Commerce in the field of banking
and financial services. It’s offers different online services like balance enquiry, request
for cheque
books, recording
stop payment instructions,
balance transfer instructions,
account opening and other form of traditional banking
services. The Internet allows
businesses to
use
information more effectively, by allowing customers, suppliers, employees, and partners
to get access to the business
information they need, when they need it. These Internet- enabled services all translate
to
reduced cost: there are less overhead, greater economies
of scale, and increased
efficiency. E-Banking’
greatest promise is timelier, more valuable
information accessible to more people, at reduced cost of information access. With the changes in business operations as a result
of the Internet era, security concerns move from
computer labs to the front page of newspapers. The promise of E-Banking is offset by the
security challenges associated with the disintermediation
of
data access. One security
challenge results from “cutting
out the middleman,”
that too often cuts out the information security the middleman
provides. Another is the expansion of the user community
from a small group of known, vetted users accessing data from the intranet, to thousands
of users accessing data from the Internet. Application service providers (ASP) and exchanges
offer especially stringent — and sometimes contradictory — requirements
of
per user and per
customer security,
while allowing secure data sharing among communities of interest.
E- Banking depends
on providing customers,
partners, and employees
with access to
information, in a way that is controlled and secure. Technology must provide
security to meet the challenges encountered by E-Banking. Virtually all software and hardware vendors
claim to build secure products, but