EFFECT OF ELECTRONIC BANKING ON NIGERI BANKING SYSTEM

PERFORMANCE

( A CASE STUDY OF GTB TANKE, ILORIN)

CHAPTER ONE

INTRODUCTION

1.1 Background to the Study

21st century has witnessed tremendous technology advancement in all
spheres of human endeavor. 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 centre of this global change
curve. In Nigeria, modern banks now realize that only those that overhaul their
payment service delivery and operations are likely to survive and prosper in the
21st century. This is due to pressure of globalization and rapidly changing
technology [Connel and saleh,2004]
Business today is conducted in an age highly complex technology
imposing on banking officials the need to implement sophisticated banking
systems which accord with present day needs. Consequently proper based
transactions are now being replaced by electronic based transactions [Agboola,
2006]
The importance of managing the economy efficiently cannot be over
emphasized. The monetary authority, by controlling the supply of money,
maintain price stability and influence economic activities especially when
combine with appropriate fiscal measures.
The banking system remains the major channel for monetary control by the
Central Bank of Nigeria (CBN) and the monetary authorities in general.
Unfortunately, it is estimated that about 65% of the cash in circulation in the
Nigerian economy is outside of the banking system, thus severely limiting the
impact of the CBN’s efforts at price and economic stabilization (CBN 2011).
Consequently, the amount of money in the form of deposits available to banks
for the creation of more money is reduced. The profitability of the banks, which
to a large extent depends on the amount of money at their disposal for lending,
is therefore affected by the large size of this informal sector [Alagh and Emeka,
2014].
Apart from the above mentioned, the breakthrough in Information
Communication Technology (ICT) has revolutionized human society in terms of
communication, efficiency in processes, general exchange of information, and
in the exchange of goods and services. Within seconds, businesses are carried
out online across different geographical location making it impossible for
physical cash to be used as a medium of such exchange.
Indeed, the world has become a global village and the economic agents to adopt
technologies for their activities and service delivery [Alagh and Emeka]
Particularly, the banking institutions as major players in the process of
financial intermediation, and important economic agents in the payment
system, must be strongly equipped with the relevant information technology
that would encourage trade, commerce and industry while promoting
globalization by easing global access to fund without any barrier. Customers in
recent time demand more than the traditional role of safe-keeping their money.
They require their banks to meet financial obligations for e-transaction almost
on real time basis. But in reality, not all Nigerians have access to e-banking
services. According to [Micro finance Information Exchange,2012] in [this
day,2013], Nigeria and the Democratic Republic of Congo have the largest gap
between populations living in poverty and those with access to financial
services – 80 million in Nigeria and 48 million in Congo.
The central Bank of Nigeria [CBN] in collaboration with the Bankers
committee, introduced the cashless policy designed to provide mobile payment
services that aim to breakdown traditional barriers hindering the financial
inclusion of millions of Nigerians, secure and make convenient financial
services to urban, semi-urban and rural areas across the country. However,
implementing the cashless policy requires that the banks make huge
investments on ICT and other technologies that would enhance the proper
implementation of the cashless system. [Alagh and Emeka,2014].
In recent years in Nigeria, there has been persistence public outcry as
regards the new challenges, the electronic banking since its inception in 1996
has brought to financial institution [banks] and general public. To many
people, banking transaction via the internet are 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 secret PIN number [in the
case of ATM card and other cards transaction] to the third party by the
illiterate card holders [customers] at anytime 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. These issues to this group of people have
posed problems to the smooth operations of electronic banking in Nigeria.
1.2 Statement of the Problem
In the past, customers “demand for banking services was driven basically
by safety of their monies as well as interest accruing from such savings.
However, the present day customers” demand has shifted from just safety of
money to how banks deliver their services. The reason is that the present day
customer requires efficient, fast and convenient services.
The financial market has become so competitive in recent times due to
largely liberalization of the banking industry. Also due to Information
Communication Technology (ICT) advancement, the bank has ceased the
opportunity to automate its processes and introduce e-banking products.
Although, banks own business culture has seen some changes, it appears long
queues and system failure still exists and remains a major issue to be resolved.
The E-banking is a global phenomenon which no nation can opt away
from. However, the problem of transparency of the system and poor
dissemination of accurate financial information and protection of consumers
remains an issue on point.
Secondly, sharp practices are noticed by the customers many a time
especially when financial information are electronically generated by the
banking, where the accuracy and ability to verify same by the customers might
be difficult.
1.3 Research Questions
1. Why did financial market become so competitive in recent days?
2. Why does a customer demand in the present day shifted from just safety
of money to how banks deliver their services?
1.4 Objective Of Study
The main objective of this work is to evaluate the effect of electronic
banking on Nigeria banking system performance.
1. The specific objectives were:
2. To evaluate the impacts of electronic banking in Guaranty Trust Bank
Plc
3. To evaluate the extent to which the system is transparent and the
accuracy of financial information electronically generated by the E-
banking system.
4. To evaluate the prospects of electronic banking in Guaranty Trust Bank
Plc.
1.5 Research Hypothesis
The following hypotheses are formulated in null form to guide the study:
H0: Electronic banking does not have prospect in Guaranty Trust Bank Plc
H0: Electronic banking does not improve Bank customer relationship.
H0: Adoption of Electronic banking does not enhance the fortune of Guaranty
Trust Bank Plc.
1.6 Significance of the Study.
The introduction of ICT into the banking industry has affected service
delivery in the service industry. Many banks are shifting gradually from the
traditional way of banking and are gradually introducing ICT into their service
delivery. This work seeks to examine the impact of the use of electronic service
delivery to customers and it would be of great significance to the banks, the
regulatory body, the consuming public and to business world at large.
 In the first place the study will help the bank identity the perception the
consuming public have about the electronic banking services they are
providing .The satisfaction of the customer is the prime occupation of the bank,
thus this study will provide evidence for the improvement of the services. Also,
the study through the examination of service quality will enable the bank judge
its performance in the light of how customers judge it.
The study is also of significance to the customer and the business world
in general. The outcome of the study will provide evidence for banks to improve
their service delivery and the performance of customer care units which are
geared towards the satisfaction and comfort of the customer.
Finally, the study will add to literature in the area of marketing,
customer satisfaction and quality service delivery in the banking industry.

1.7 Scope of the Study

Existing studies has looked the ICT and financial system holistically
specifically looking on E-banking. The vast majority of the recent literature on
electronic money and banking suffers from a general focus. It generally ignores
electronic banking entirely and equates electronic money with the substitution
of currency through electronic gadget such as smart cards and virtual
currency.
For example, freedom (2000) proposes that electronic banking and electronic
money consist of three devices; access devices, stored value cards, and network
money. Electronic banking is simply the use of new access devices and is
therefore ignored. This has prompted a fresh look on this subject.
E-banking has produced changes in the structure of bank income. As a
result of increased competition that lowered margins in lending operations (the
banks’ traditional business) banks have diversified their sources of income and
rely increasingly on income from fees services rather than interest rate
spreads. Fees charged for services include typical banking activities like
payment transactions, safe custody and account administration. These
activities are in general less volatile than fees and commissions charged on
activities which are affected by economic and cyclical developments (e.g. under
writing activities, brokerage services, treasury management, transactions on
derivatives, private banking, credit card business). This change is also reflected
in the increasing size of off-balance sheet items in the banks’ financial
accounts [Josiah and Nancy, 2012].
It is against this background, this study investigated how difference
electronic channels enhance the delivery of consumers and retails products,
and also how banks choose to support their electronic banking
component/services internally, such as internet services internally, such as
internet service provider, internet banking software, core banking vendor,
managed security service provider, bill payment provider, credit business and
credit scoring company, which E-banking systems rely on. This research
concentrates on the effect of e – banking on the banking sector, in order to
examine in detail how the recent [ and foreseeable] advances in ICT are
effecting the sector and can affect its future evolution. As ICT are having a
strong influence on the banking, the study investigate influence e-banking has
on the banking sector and the payments system. Therefore, the purpose of this
study was to investigate the relationship between e-banking and bank
performance, specifically among the commercial banks in Nigeria.

1.8 Limitation of the study

In view of the technicalities involved, it would be unrealistic to assume
that all necessary facts have been gathered in the process of the study.
Information gathered is limited to those accesses and made available by the
respondents and also those gathered from end users. However, the impacts of
this limitation will be reduced to the barest minimum.

1.9 Definition of related terms.

E-Mobile Banking: This is a product that offers customers of a bank to access
services as you go. Customer can make their transactions anywhere such as
account balance, transaction enquiries, stop checks, and other customer
service instructions, Balance inquiry, Account Balances, Updates and history,
Customer service via mobile, Transfer between accounts etc.
ATM Card: UB debit card is a chip device consisting of circuit element on
single silicon chip. The card is a complex circuit that process micro processors
with a single chip that contain the complete arithmetic and logic unit of
computers. It provided for Unity Bank customers to perform balance inquiring,
mini statement and cash withdrawal as well as transfers through the use of
Automated Teller Machines. This green card can also be used for
Internet/Online and POS transactions.
Chip Card: Also known as an integrated circuit [IC] card. A card containing
one or more computers chips or integrated circuits for identification, data
storage or special purpose processing used to validate personal identification
numbers, authorize purchases, verify account balances and store personal
records.
Electronic Data Interchange [EDI]: The transfer of information between
organizations in machine readable form.
Electronic Money: Monetary value measured in currency units stored in
electronic form on an electronic device in the consumer’s possession. This
electronic value can be purchased and held on the device until it reduced
through purchase or transfer.
Electronic Recruitment: This is an online recruitment services to all kinds
and categories of clients such as [Army, navy, police and the paramilitary]
through conduct and customizable web portals and the use of scratch
cards/pins for a prospective applicants simply buy the scratch cards, visit
portal and fill relevant information. Information collected about applicants
could then be analyzed appropriately using what if capabilities and filtered
according to several criteria to be set by client. Short listed applicants could
then be contacted automatically via email or sms or both.
Electronic Web Collected: This enables the Bank partner with universities
and higher institutions of learning to handle Admission, Registration,
Examination Management and fees collection needs. Electronic Admission by
prospective candidate, Electronic school fees payment, Automated Registration,
Examination and Results publication/ management.
Mobile Banking: This is a product that offers customers of a Bank to access
services as you go. Customer can make their transaction anywhere such as
account balance, transaction enquiries, stop checks, and other customer’s
service instructions, Balance inquiring, Account verification, Bill payment,
Electronic fund transfer, Account balance, updates and history, customer
service via mobile, Transfer between accounts e.t.c.
Payment System: A financial system that establishes that means for
transferring money between suppliers and of fund, usually by exchanging
debits or credits between financial institutions.
Point Of Sale [POS] Machine: A point of sale machine is the payment device
that allows credit/debit card holders make payments at sales/purchase
outlets. It allowed customers to perform the following services. E.g. Retail
Payment, Cashless payment, Cash Back Balance Inquiry, Airtime Vending,
Loyalty Redemption, Printing Mini Statement. Etc
Smart Card: A card with a computer chip embedded, on which financial
health, educational and security information can be stored and processed.
Transaction Alert: Our customers carry out debit/credit transactions on their
accounts and the need to keep track of these transactions prompted the
creation of the alert system by the Bank to notify customers of those
transactions. The alert system also serves as notification system to reach out to
customers when necessary information needs to be communicated.
Western Union Money Transfer [WUMT]: Western Union Money transfer is a
product that allowed people with relatives in Diaspora who may be remitting
money home for family upkeep, project financing, school fees e.t.c. Nigeria
communities known for having their siblings gainfully employed in other parts
of the world are idle markets for Western Union Money Transfer.
SMS Alert: Our customers carry out debit/credit transaction on their accounts
and the need to keep track of these transactions prompted the creation of the
alert system by the Bank to notify customers of those transactions. The alert
system also serves as notification system to reach out to customers when
necessary information need to be communicated.
 CHAPTER TWO
LITERATURE REVIEW
2.1 Conceptual Issues

2.1.1 Concept of E-Banking in Banking Industry

According to literature, some researchers limit the concept of e-banking
to internet banking while others limit it to retail banking (Aladwani, 2001) and
yet others define e-banking to include both retail and corporate banking
(Simpson 2002). Also the Basel Committee Report on Banking Supervision
(1998) advanced that e-banking involves the provision of retail and small value
banking products and services (e.g. deposit-taking, lending, account
management, the provision of financial advice, and electronic bill payment)
through electronic channels.
Karjaluoto,et. al., (2002) argued that banks have the prerogative among
the numerous e-banking services, the suitable for their operations.
Additionally, they stressed that internet technology is the main electronic
distribution channel in the banking industry. Similarly, Wang,et. al., (2003)
postulated that e-banking was underutilized in the 1990s primarily because
organizations limited it to the marketing of their products and services. The
assertion that e-banking has been underutilized could be due to lack of
knowledge or the high illiteracy level of a section of the banking population. In
Nigeria for instance, several people especially the rural folks have not benefited
from e-banking services even when such services are incorporated into the
operations of the operations of a banks.
Further, Thornton and White (2001) in a study of customer orientation
and usage of financial distribution channels in the Australian financial
industry, revealed that due to the competitive pressure following the
deregulation in the 1980s, most financial institutions adopted Information
Technology (IT). In addition, Rafiu (2007) asserted that the challenge to expand
and maintain banking market share has influence many banks to invest more
in making better use of the internet. The emergence of e-banking had made
many banks rethink and review their IT strategies in the competitive markets.
This translates to the fact e-banking services have significant reduction in long
queues in some Nigerian banks and hence the reputation of such banks has
increased.
In support of the above findings, jasimuddin (2004) demonstrated in a
Saudi Arabia study that the majority of Saudi banks took advantage of internet
technology to establish web sites but few offered e-banking services. Banking
services should be tailored towards the needs of the banking population. In line
with this, it is important that e-banking services are designed in such a way
that both literate and illiterate customers can use them without one being
assisted to use them.
Ayo (2006) investigated the prospects of e-commerce based on Ability,
Motivation and Opportunities (AMO) model and observed that virtually all
companies have online presence. The paper reported the motivation and
opportunities for e-commerce as low based on lack of e-payment infrastructure
and access to Information and Communication Technology (ICT) facilities. Also,
in an empirical assessment of customer acceptance of commerce carried out in
Germany, Buse and Tiwari (2006) observed that: the highest mobile users are
top management, followed by self-employed, salaried class, students and
others. Government employees are found not to patronize mobile banking; the
most favoured reason for carrying out mobile banking ubiquity, next is
overview of bank account, followed by immediacy; and the highest fear of
customers about mobile banking is that of insecurity, next is cost, and
uncomfortably. This implies that, e-banking services generally focus on the
formal sector workers as well as the educated who patronize banking services.
Does it mean therefore that, the unbanked do not work or the banking sector is
meant for only the educated workers and students, who can read, interpret
and write things? In line with this reasoning, it is not surprising that, e-
banking services are being underutilized in most parts of the world especially
Africa when illiteracy levels are extremely high.
2.1.2 Role of E-Banking in the Banking Industry
Apparently, there are always potentials crisis which make the bank endure an
insufficiency; advanced Information Technology supported by a superior
mechanism control is required to make certain that Information Technology
has achieved the required processes insufficiency; thus, advanced information
system supported by a superior mechanism control is required to make certain
that Information Technology has achieved the required processes. A review of
some related literatures reveals that Information Technology may essentially
affect negatively banks efficiency and may reduce productivity (Kozak, 2005).
This notion was noted by solow (1987), “you can see the computer age
everywhere these days, but in the productivity statistics”
However, since 1970s to the time Solow was claiming that there was a
huge decelerating in growth as the technologies were becoming ubiquitous. On
the same vein, the paradox has been defined by Turban,et.al., (2008) as the
“discrepancy between measures of output at the national level”. Information
Technology has been one of the essential dynamic factors relating all efforts;it
cannot improve banks’earning. This was revealed in an extensive survey
conducted in USA for the period of 1989-1997 by Shu and Strassmann(2005).
Conversely, there are various literatures that debunk Solow’s claiming in
totality and approve the positive impacts of Information and Communication
Technology expenses to business value.In a comprehensive research conducted
by Saloner and Shpard (1995) in USA within the time frame of 1971-1979
reveals that the interest of network effect is significant in utilizing an
Automated Teller Machine (ATMs) . Milne (2006) also encourages and
supported the notion of the above authors. Interestingly, Kozak (2005)
investigates the influence of the Information Technology evolution on the profit
and cost effectiveness of the banking industry within the stipulated period of
1992-2003. For this period, the study declares a significant relationship
between the executed Information Technology, productivity and cost savings.
The modernization of Information Technology has set the stage for
extraordinary improvement in banking procedures throughout the world. For
instance the development of worldwide networks has considerably decreased
the cost of global funds transfer. Berger (2003), reveals’ banks that are sing ICT
related products such as online banking electronic payments, security
investments, information exchanges financial organizations can deliver high
quality customer services delivery to customers with less effort.
Information Technology has completely reshaping the landscape and
dimension of competitive in the banking industry. Following the introduction of
online banking, ATMs and Mobile banking, which are the initial milestones of
electronic banking, the diffusion of Information Technology and increased
penetration of internet has added a new challenges and distribution channel to
retail banking: online banking for the delivery of services and products.
2.1.3 Information Technology and Banks’ Performance
Studies from decades ago revealed that research on the impact of
Information Technology on banks’ performance is insufficient and the available
studies are more of US, European and Australian banking industry. Corloan et
al (2000) and Furst et., al (2002) conducted an intensive research whether
there is a positive relationship that exists between offering electronic banking
and bank’s profitability. Furst et., al (2002), reveals the federally chartered US
banks had higher Return on Equity (ROE) by using the conventional business
model, ICT was one of the major factors that affect bank’s profitability within
the period under study and they also observe that more profitable banks adopt
ICT after 1998 but yet they are not first movers. On the same note, England et
al (1998), conducted a study and found no evidence of major differences in
performance of electronic banking in the US subject to two caveats:
1. This result may not be the case for all the banks
2. Such results are open to change over time as banks become more
severe in the use of innovation.

While in a similar study in Kansas USA, Sullivan (2000) also found no

systematic evidence that multi-channel banks in the 10th Federal Reserve
District were either helped or harmed by having transactional websites. These
finding were among the previous findings of Sathye(2005), for the credit unions
in Australian banks for the period of 1997-2001, shows that electronic banking
has not proved to be yard stick for performance enhancing tool. According to
Haq (2005) banks’ existence depend on their ability to achieve economies of
scale in minimizing asymmetry of information between savers and borrowers.
Today, one of the major challenges facing the banking industry is how ICT has
helped banks to sustain the economies of scale whilst shifting from bricks and
mortar banking to online banking.
Claessens etb al (2001) buttresses that, “Role of ICT in the banking
industry can allow global economies to setup a financial system before first
establishing a fully functioning financial infrastructure instead. Virtually, since
electronic banking is much cheaper, it involves reduced processing costs for
providers and products involving smaller transactions to lower income
borrowers, even in remote areas.
However, in a recent study, DeYoung et., al (2007) invoke and find that,
for US community banks and traditional community banks, those multi-
channel banks are some what more profitable, mainly via increased non-
interest income from deposit service charges. Movements of deposits from
checking accounts to money market deposit accounts, increased use of
brokered deposits, and higher average wage rates for bank employees were also
observed for click and mortar banks. Whereas no change was explored in loan
portfolio mix, these findings confirm Hernando and Nieto (2007) that internet
banking is seen as a complementary channel.

2.1.4 Customer Service Delivery in the Banking Industry

Bloemer et., at (1998) were on the view that most models in the banking
industry of customer evaluations of services focus on the comparative
judgment of perceived service quality and customer satisfaction. For example:
1. Customers access service delivery by comparing their expectations
prior to their service encounter with a bank (employee).
2. Customers also, develop perceptions during the service delivery
process and then compare their perception with the actual service
received from bank’s employee.
Thus, customer expectations are unique prior to a service. They
influence customer’s evaluation of service performance and customer
satisfaction. Customer services, by definition, are intangible and easily
duplicated. They can be divided into high-touch or high-tech services.
1. High-touch services are mostly dependent on people in the service
process producing the service.
2. Whereas high-tech services are predominantly based on the use of
automated systems, information technology and other types of
physical resources.
However, one should always remember that high-touch also includes
physical resources and technology based systems that have to be managed and
integrated into the service process in a customer oriented fashion (Gronroos,
2001). Consequently, electronic banking services include both high-tech and
high-touch services. For example, high tech services include online banking,
Mobile Banking, ATM machine, etc whereas high-touch services consist of
instructions and personnel assistance in using the services.
Interestingly, Information Technology in particular play an important role
in the financial industry and this is one reason why the banking sector is
among the most intensive in deploying Information Technology (Shoebridge;
2005). With the increase of internet service and cash machines available in
various locations, the most recurring problems have been mitigated and, in
some cases, solved; as an effect, the volume of customer services increased
became easier, and the customern experience turned out to be more
comfortable. It is noticeable that the new technologies, particularly in
Information Technology, enables banks to service customers not only in
branches and other dedicated servicing sites, but also in domiciles, work places
and store, as well as in a myriad of other channels (Al-Hawari et., al, 2005)

2.1.5 Significance of E-banking in the Banking Industry

ICT revolution has distorted the conventional banking business model by

making it possible for banks to break comfort zones and value creation chain
so as to allow customer service delivery to be separated into different
businesses. Thus, for example, primarily internet banks distribute insurance
and securities as well as banking products, but not all the products they
distribute are produced by their group (Delgado and Nieto, 2004)
However, the main economic argument for diffusion of adopting the
internet as a delivery channel is based on the expected reduction in overhead
expenses made possible by reducing and ultimately eliminating physical
branches and their associated costs. This specifically applies to and relevant in
the Spanish banking system, which is one of the most “over branched” in
Europe. As stated by DeYoung (2005) and Delgado et.,al (2006), the internet
delivery channel may generate scale economies in excess of those available to
traditional distribution channels.
Beside them, Haq (2005) also states that bank exists because of their
ability to achieve economies of scale in minimizing asymmetry of information
between savers and borrowers. The unit costs of internet banking fall more
rapidly than those of traditional banks as output increases as a result of
balance sheet growth. In this context, DeYoung et.,al (2007) refer to the
internet banking as a “process of innovation that functions mainly as a
substitute for physical branches for delivering banking service”. In the case of
the Spanish banks, there is some in dependable evidence that shows that the
internet distribution channel has lower unit transaction costs than the two
other distribution channels (branch and telephone) for a given type of tradition
(money transfer, mortgage loan, brokerage or demand deposits).
Apparently, Information Technology creates unprecedented opportunities
for the bank sector in the ways they organize financial product development,
delivery, and marketing via the internet. While it offers new opportunities to
bank sector, it also brings many challenges such as the innovation of
Information Technology application, the blurring of market boundaries, the
breaching of industrial barriers, the entrance of new competitors, and the
appearance of new business models Cheung, et.,al (2003) and santeioglu et., al
(2001). Basically, Information Technology is associated with a lot of benefits,
risks and new challenges for human governance of the development (Hamelink,
2000). Today, the challenges are rapidly increasing with the pervasiveness of
the internet and the extension of information economy (Holland and Westwood,
2001).
 However, to successfully cope with the challenge of the ICT, the bank
sector must understand the nature of the changes that revolves around them,
change in terms of ICT, innovation and Demography. Within this
understanding, attempt to migrate to ICT maybe doomed to failure. Today,
banks that are well equipped with a good grasp of the electronic banking
phenomenon will be more able to make informed decisions on how to transform
ICT and to exploit the opportunity in electronic banking.(Southard et.,al, 2004).
In today’s competitive market, establishing core capabilities can help the
banking industry re-organize their product and customer service delivery, so as
to sustain competitive advantages and to achieve congruence whilst shifting
from the conventional banking to economic banking.

2.1.6 Threats of Cyber-Crimes on the Nigerian Banking

The advance fee fraud or 419, which is one of the most popular of all
internet frauds, has its origin from Nigeria in the 1980s.Its development and
spread follows the path of the developments in information technology at
inception, postal letters were used as key medium for committing 419 frauds.
Later in the early 1990s, it became integrated into telecommunication facilities
sch as the telephone and fax from the late 1990s following the introduction of
computers and internet, 419 crimes become prevalently perpetrated through
the use of e-mail and other internet means (Amedu,2005). The latest dimension
taken by the perpetrators of this crime is the use of fake internet bank site,
and using that to encourage victims to open accounts with them.
The country is the third highest ranked in internet ‘money offer’ frauds.
As was reported in one of the national newspapers, frauds and forgeries in
Nigerian bank as at June 2005 stood at 329 or N1.15billion monetary
equivalent, against 222 cases or N1.47 billion monetary equivalent in April
same year. There is even global suspicion that a Nigerian crime syndicate that
coordinates global crimes such as money laundering, bank fraud and 419
seems to exist today. These issues basically defeat the key ingredients of
electronic banking, which includes confidentiality, integrity and availability.
Several factors are responsible for the above situation. They include
inordinate tolerance for corruption among Nigerian public and government
agencies; weakness of the existing legislative/judicial institutions make and
enforce relevant laws on cyber crimes; quality of graduates in terms of
professional values and ethics unemployment among graduates, and the
widening gap between the few rich and the many poor caused mainly by bad
governance. In the main, erosion of good value principles and corruption
constitute the greatest cause of rising cyber-crimes among Nigerian (Domestic
electronic payment in Nigeria) (Amedu, 2005). This, according to transparency
international, is worsened by fact that several generations of Nigerians have
been raised in this norm. Hence, what is seen as a dangerous global crime is
socially acclaimed and glamorized in Nigeria.
The above situation constitutes the environment upon which Electronic
banking has emerged in Nigeria. Although the level of the adoption and
practice of electronic banking (especially internet banking) has remained quite
insignificant, global projections still remains that Information Technology
would continue to play a revolutionary role in the development and delivery of
banking products and services all over the world. In effect, it is this projection
that has raised pertinent regulatory questions concerning Electronic banking,
especially in rising level of frauds and forgery prevalent in the entire banking
system; and how to make internet banking fit well in the banking structure of a
country so notoriously identifiable with criminals use internet access.

2.1.7 The Regulatory Challenges

At the national level, the Nigerian government and the relevant agencies
have strived to match the rapidly changing electronic banking environment
with necessary regulations and frameworks (Soludo, 2005). Earlier efforts
made to this effect included the enactment of the failed Banks (Recovery of
Debts) and Malpractices in Bank Decree No. 18 of 1994, and the Money
Laundering of 1995. However, as noted above, poor enforcement procedure
rendered these instruments very inactive in checking the menace of financial
crimes. By the idle 1990s, following record growth internet and computer usage
in the country, almost all the regulations guiding the banking industry,
including the banks and other Institution Act of 1991, were lacking adequate
provisions to accommodate the emerging trend. Not even a mention of
electronic banking or any manner of its application was mentioned in any of
those prevailing regulatory documents. The situation created a lot of gaps
between the levels of CBN regulatory tools and the advances I information
technology. This at the same time made the banks vulnerable to all kinds of
risks, including transaction, strategic, reputation and foreign exchange risks
(soludo, 2005). This deficiency notwithstanding, it is not until 2003 when the
maiden guidelines on Information Technology came into force.
The electronic banking guidelines emerged from the findings of a
Technical Committee on Electronic Banking set up by the Central Bank of
Nigeria in 2003 to find appropriate modalities for the operation of electronic
banking in the country. It was indeed the findings and recommendations of the
committee that led to the adoption of a set of guidelines on Electronic Banking
in August 2003. Of the key provisions of the guidelines, only a section deals
with issues relating to Internet Banking Section 1.3 paragraph 4 of the
guidelines, exceptionally stresses that banks should put in place procedures
for maintaining the bank’s Website, including the various security features
needed for internet banking services (CBN , 2003).
Despite its numerous technical-specifications, the guidelines have been
widely criticized as not being enough to check the growing popularity of
Electronic banking against the backdrop of growing sophistication in
technology related crimes and frauds. Closer examination of the contents of the
guidelines equally shows that the document fails to meet up with the four key
areas where Electronic banking may nave regulatory impact changing the
traditional lines upon which existing regulatory structures are laid; handling
concerns about existing public policy issues; changing the nature and scope of
existing risks; and rebalancing regulatory rules and industry discretion. Again,
some important recommendation of the Technical Committee that gave rise to
the adoption of the guidelines was completely omitted. This is especially so
with paragraph 6.1 of the committee’s report, which among others
recommended that all banks, intending to offer transactional services on the
internet/other e-banking products, should obtain an approval-in-principle
from CBN prior to commencing these services (Amedu, 2005).
Part of the criticisms is that the recent guidelines are capable of
constraining the practice and development of Electronic Banking in Nigeria.
One of such areas, for instance, is the requirement on electronic banking
product development. While acknowledging that the existing regulations would
apply wholly on electronic banking, section 4.2 of the Guidelines emphasizes
that only banks, which are licensed, supervised and with physical presence in
Nigeria, are permitted to offer electronic banking services in Nigeria, and that
virtual banks are not to be allowed. The Guidelines also gives indications that
the products/services can only be offered to residents of Nigeria with a
verifiable address with the geographic boundary of Nigeria; any person residing
physically in Nigeria as a citizen, under a resident permit or other legal
residency designation under the Nigerian Immigration Act; any person known
herein as a “classified person” who neither is temporarily in Nigeria. The
Guidelines go further to indicate that the e-banking service should be offered in
Naira only; and that where such a service is to be provided in foreign currency,
it should be to only the holders of ordinary domiciliary accounts, and conform
with all foreign exchange regulations. On some other aspects, the guidelines
have been criticized by Bank executive and customer for not addressing
adequately the critical issues concerning internet security. It failed to explicitly
recommend a standard that allows banks to examine potential threats that
may already be in existence in each individual financial institution’s current
network (Amedu, 2005).
In addition to this array of criticisms, the workability of proper internet
framework is also queried amidst the poor state of basic information
technological infrastructure in the country. This is essentially necessary since
Electronic Banking generally relies on the existence of adequate operational
infrastructure like telecommunications and power to function effective. Though
little success has bee recorded, the supply of these requisite facilities is very
erratic in the Nigerian case. Where they exist, high cost of acquisition and
maintenance tend to deny a greater percentage on the population access to
them. The case of internet access is a glaring one where majority of the citizens
rely solely on the services of commercial cyber cafes to meet their internet
needs. It is expected of the E-banking Guidelines to provide procedures not
only for banks investment in internet facilities, but also in promoting
customers’ access to such (Amedu, 2005).

2.1.8 Bank Customer Relationship

 Bank customer relationship, is just a special contract where a person
entrust valuable items with another person with an intention that such items
shall be retrieved on demand from the keeper by the person who so entrust.
Thus the banker is the one who is entrusted with above mentioned valuable
items, while person who entrust the items a view to retrieving it on demand is
called the customer. Despite the potential benefits of ICT and e-commerce,
there is debate about whether and how their adoption improves bank
performance. Use of investment in ICT requires complementary investments in
skills, organization and innovation and investment and change entails risks
and costs as well as bringing potential benefits. The impact of ICTs and e-
business strategies on bank performance are positive over all, but that ICTs are
not a panacea in themselves. This study showed the positive impacts of e-
banking on their turnover and profitability and to a lesser extent on
employment, most notably when e-commerce is part of larger business
strategies of bank. Further (kariuk, 2005) provides evidence that the use of e-
banking can contribute to improved bank performance in terms of increased
market share, expanded produce range, customized products and better
response to client demand.

2.2 Theoretical Frame Work

2.2.1 Quantity theory of money
In examining the implication of cash-less system, it is necessary to
review how conventional money has evolved over time. Money performs a
number of roles in economic activities; it is a unit of account, store of value,
medium of exchange and means of deferred payment. Also, money has evolved
over centuries to minimize the friction of transaction costs that are involved in
mediating exchange. In fact, the process can be observed from the development
of the very first monetary products. For instance, conducting economic
transaction in barter economics involved high transaction costs as
considerable time and effort was required in finding suitable partner.
Subsequently, another facet in the evolution of money was the need for
durability and divisibility. Hence, the advert of study money (notes and coins)
made the process less costly by allowing people specialize in production based
on their strengths and by enabling the monetary authorities to mint coins in
convenient denominations, thereby creating divisibility(Baddeley, 2004)

The theory of money has its root in the 16 th century during which
classical economists such as jean boldin at that time sought to know the cause
of the increase in French prices, he concluded that, among other factors,
increases in gold and silver which served as currencies were responsible for the
rise in the demand for French-made goods and, hence, French prices, thus
linking movements in the prices to movements in money stock. By 1960’s, the
quantity theory of money was further advanced by John Locke to examine the
effects of money on trade, the role of interest rate and demand for money in the
economy (Omanukwe, 2010). In particular, the role of money as a medium of
exchange to facilitate trade transaction was born. Economists at the time that
the quantum of money needed for such transactions would depend on the
velocity of money in circulation and the relationship between the demand and
supply of money such that where there was excess demand over supply
interest rare rose and vice versa contillon, mss; Locke 1692 as citedin Ajuzie,
Etal, 2008). The theory of money has been described by different schools of
thoughts in their opinions. For example, the modern classical schools of
thought who are also called the monetarists are concerned with the
explanation for the changes in price level. To them, a stable and equilibrating
relation exists between the adjustment in the quantity of money and the price
level. In other words, they refute any form of monetary influence on real output
both in the short and long-run.

The introduction of the modern banking system has to a great extent

brought about the gradual elimination of cash based economy in most
countries. In Nigeria for instance, most banks have adopted this cashless
policy to earn and gain a strong competitive ground over other banks. There
have been several arguments for and against the use of ICT in the banking
system. The arguments for the use of ICT in the banking system are as follows;
(Humphrey et al, 2001) supports the fact that the introduction and use of
electronic payment instruments holds the promise of broad benefit to both
business and consumers in the form of reduced costs, greater convenience and
more secure, reliable means of payment and settlement for a potentially vast
range of goods and services offered worldwide over the internet or other
electronic networks. One such benefit is that an electronic payment enables
bank customers to handle their daily financial transactions without having to
visit their local bank branch. Electronic handling cash (Appiah and Agyemang,
2006).

2.2.2 Other Financial Theories

There are various theories in the field of finance that could be adopted to
anchor the variable of the study. This includes; shareholders theory that
describes and tell how the wealth of the shareholders could be maximized to
give the optimum value expected. Stakeholders’ theory further talks about the
different interests of those who have a stake in the organization. Opportunity
theory looks upon and considers the various opportunities available to an
organization to meet its targeted goals. Furthermore, there also exist the
technology theory that looks upon the technology development and its
application in the organization for possible growth. Similarly, the agency theory
the best and accepted way the agent discharge their duties to help the
business grow. Other theories are; peel theory, routine activity theory.
However, the study is underpinned by the agency and the technology theories.
The justification for their use is base on the fact that better performance of an
organization can only be attained when agents (managed) of the business are
efficient and effective in their duties. Also, it is expected that new technological
knowledge should be employed to help business do better.

2.3 Empirical Review

Agboola (2001) studied the impact of computer automation on banking

services in Lagos using 6 banks and concluded that electronic banking has
tremendously improved the services at the banks to their customers.

Trajhavo (2005) carried out an empirical investigation on the impact of

electronic banking on bank profitability. The study was designed to test profit
sensitivity to such factors as the size of institution in terms of both number.
The model of the study projects profitability measured in net present value and
internal rate of return over a five years time horizon considering anticipated
migration of customers from traditional to online channels. The results of the
study revealed that it is not possible to blindly state that internet banking is
always profitable because very small institutions only offer a limited set of
internet banking and are not likely to achieve profit unless they are able to
persuade a very substantial portion of their customers to bank Online; that
internet banking provides financial institutions with array of applications
including home banking with electronic bill payment, check images,
authenticated online applications, online statement modules, e-commerce
finance services portal and online lending application for consumers loans. The
implication of the study above is that there will be increase in bank
performance if the use of electronic banking system is improved and practiced
in Nigeria irrespective of size.
 Siam (2006) examined the effect of electronic banking on banks
profitability in Jordan. The population of the study included all working banks
in Jordan which have sites on the internet for the periods of 1999-2004. The
result from the data analysis that was gathered from the study instrument
(questionnaire) showed that there is a correlation with statistical significance
between electronic banking and banks profitability in the long run. This
managers and bank employees in the area prefer their bank to expand their
electronic operative in servicing customer but not converting all banks to total
electronic banks.

Hernando and Nieto (2007) attempted to fill this gap by identifying and
estimating the impact of the adaptation of a transactional website on financial
performances using a sample of 72 Deposit Money banks in Spain over the
period 1994-2002. The analysis of the sample is based on several financial
performance ratios. These financial ratios measure business activity as a
percentage of average total assets and profitability. The results showed that the
impact of transactional web adoption on banks performance take to appear.
The adoption of the internet as a delivery channel involves a gradual reduction
in overhead expenses. This effect is statistically significant after one and half
year after adoption. The cost reduction translates into an improvement in
banks profitability, which becomes significant after one and half year in terms
of return on assets (ROA) and after three years in terms of return on equity
(ROE).

Contrarily, Malhotra and Singh (2009) examined the impact of internet

banking on performance and risk tracing the experience of Indian commercial
banks during June 2007 and found that the profitability and offering of
internet banking does not have any significant association, which was
correspond to the findings of DeYoung (2005) and Arnaboldi and Claeys (2010).
In addition, Mohammad and Saad (2011) examined the impact of electronic
banking on the performance of Jordanian banks over the period (2000-2010)
using OLS regression and found that electronic banking has a significant
negative impact on banks performance which was similar to the findings of
Delgado et al. (2007) and Siam (2006).

Onay,Ozsoz and Ash (2008) investigated the impact of internet banking

on banks profitability. Their analysis covered thirteen (13) banks that have
adopted online banking in Turkey between 1996 and 2005. Using the approach
of Hernando and Nieto (2007) and by using specific and macro-economic
control variables; they investigated the impact of internet banking on the
return of assets (ROA) and return on equity (ROE) with a time lag of two years
confirming the findings of Hernando and Nieto while a negative impact is also
observed for one and half year of its adoption.
Madueme (2010) studied the impact of ICT on banking efficiency in
Nigeria employing a survey of 13 banks. Based on the CAMEL rating and a
transcendental logarithmic function of the banks, it was revealed that the
efficiency values obtained through the CAMEL rating system were higher
during post adoption era than before adoption and estimated that 1% increase
in ICT capital on average leads to 0.9185 Naira increase in bank output post
ICT adoption era Maiyaki and Mokhtar (2010) employing a survey of 407 bank
customers in 33 organizations in Kano State of Nigeria studied the effects of
availability of electronic banking facilities among other factors. They study
reveals that the availability of electronic banking facilities such as ATM, online
banking and telephone banking do not have significant influence on customer’s
bank choice decision.
Carvalcio and Siegel (2011) investigated the return in investment for
online banking services and analysis of financial account aggregation. The
return on investment of the account aggregation technology was evaluated
using the calculation of earnings before interest and taxes (EBIT) and the net
present value (NPV) for a period of five years. The sample covers three basic
bank sizes according to the number of its online accounts; medium banks
those with 2.8 to 6.0 million online accounts and large banks, those with 8.8 to
16 million online accounts. The study concluded that account aggregation is a
compelling technology that should become a commodity in the sense that most
important banks will provide it and it will represent no more a differentiated
competitive advantage.
CHAPTER THREE
METHODOLOGY
Area of study
This study will focus on the five branches Guaranty Trust Bank Plc
situated throughout the metropolitan area of the city of Ilorin, Kwara State of
Nigeria. The city of Ilorin is situated on the western region of Nigeria, in Kwara
State.

Research Design
The research design used in the study is the descriptive survey method.
The descriptive survey research design was used because it gives greater room
to study the subject matter and ensures that interferences can be made about
some characteristics, attitude, or behaviour of the population examined in the
study. The secondary data sources include journals, books, e-books, report,
etc.
The study will employed both descriptive and inferential statistics in
analyzing the data. Also, the data collected will be analyzed through the use of
descriptive statistical tools such as frequency counts, percentages and tables
while the stated hypothesis will be analyzed by the use of Chi-square.

Sources of Data
Both primary and secondary data will be used in this study. The primary
data will be collected through the administration of questionnaire to the
respondents while the secondary data will be obtained from past related works,
CBN electronic banking guideline, annual report of Guaranty Trust Bank Plc,
and CBN annual report etc.

Population of the Study

The population to be used in this study covers 120 staff Officers of
Guaranty Trust Bank Plc located at the five branches of the bank in Ilorin,
Kwara State. The population selected was designed to obtain adequate and
diverse views pertaining to the effects of electronic banking on Nigeria banking
system performance in Guaranty Trust Bank Plc.

Sample Size and Sampling Technique

20 questionnaires will be distributed to the bank and retrieved bank for
analysis. The technique is used to ensure that all the segment of the
population is include in the sample. The questionnaire will be divided into two
sections: the biographical question and the questions related to the effect of
electronic banking on Nigerian banking system performance. The questionnaire
will be distributed in such a way as to obtain adequate and diverse views
pertaining to the effect of electronic banking on Nigerian banking performance
in Guaranty Trust Bank Plc.

Research Instrument
As discussed earlier in the primary sources a questionnaire based upon the
following parameters which was designed to measure the operational
performance of e-banking.
1. Reduction of processing time
2. Minimization of cost
3. Time taken in responding to customers
4. Complexity of transaction
5. Reduction of risk
6. Increase in trust
7. Facilitate centralized data base
8. Online real-time data availability
9. Reduces inventory holdings
10. Enables paperless transaction
11. Automatic reconciliation of remittance
12. Processing and settlement on real time
13. Immediate finality of transaction.
14. To have a deeper look at the performance of banking sector, these
parameters have been analyzed and interpreted by calculating mean and
standard deviation and weighted average scores on the basis of 5-point
Likert scale

Method of Data Analysis

Both descriptive (such as frequency count, mean, percentage standard
deviation and coefficient of variation and inferential statistics will be used to
analyze the data collected using statistical software of statistical package for
the social sciences (SPSS), version 17; (SPSS, inc. New jersey, USA). Statistical
Analysis to determine the levels of significant differences (if any) among the
samples (p<0.05)
The chi-square test was employed to test the significance of the
responses from the credit officers of Guaranty Trust Bank Plc (respondent). The
chi-square test is performed by defining the numbers of categories and
observing the number of case falling into each category and knowing the
expected number of cases fully in each category to detect significant difference
(p<0.05) among the samples.

Model Specification
Based on the assumption of intermediation efficiency as stated we may
therefore specify the equation below;
COM/M2=F (ATM, POS, MOB, ISV)
The equation is modified and transposed to reflect an intermediation efficiency
model as follow:
MPE= b0+b1ATM + b2MOB+b3ISV+Ut
Where:
b0 is the constant / intercept
b1-b3 are the slope parameters / coefficient
t is the time trend
U is the random error term.
MPE = COB/M2 which represents ration of currency outside banks to broad
money supply, reflecting the impact of the use of electronic forms of payments
as well as banking habits.
ATM refers to automated teller machine service
MOB refers to mobile service value
ISV refers to internet service value.
CHAPTER FOUR

4.1 Preamble

This chapter shows the analysis of data collected in the analytical procedure
performed in the data collection. Data are collected from the questionnaire
administered. Parts of the discussions are; how the data are analyzed,
respondent characteristics, test of researcher and hypothesis decision on the
findings.

4.2 Demographic Characteristics Of respondent

The table below shows their different qualification and their responses.

Table 4.1 Qualification of Respondents

Respondents %
OND 10 14.3
HND 18 25.7
BSC 28 40
MSC/MBA 14 20
PHD 0 0
TOTAL 70 100
Source: Field Survey, 2017

Table 4.1 shows the number of respondents by qualifications. The data

collected indicated that 28 or 40% of respondents are Bask Holders, 18 or 25%
are HND holders, while 14 or 20% are master holders and non among have
PHD. Therefore, it could be inferred that majority of the credit officers are B.Sc.
Holders.

Table 4.2 Working Experience

Respondent %
1-5 years 16 22.9
6-10 years 20 28.6
11-15 years 18 25.7
16-20 years 12 17.1
21 years and above 4 5.7
TOTAL 70 100
Source: Field Survey, 2017
 Table 4.2 shows how long the respondent has been working with the bank.
From the data collected, it could be seen that 16 or 22.9% of respondents have
spent between 1-5 years working with the bank, 20 or 28.6% of respondents
have spent between 6—10 years, 18 or 25.7% of respondents have spent
between 11-15 years, 12 or 17.1% have spent between 16-20 years and 4 or
5.7% for more than 21 years. In view of this fact, it could be deduced from the
analyzed data in table 54 that is, 77.1% of the respondent have spent
appreciable period of 5 years and above working in the bank.

Table 4.3 Cadre of Respondents

Respondent %
Junior Credit Officer 28 40
Senior Credit Officer 42 60
TOTAL 70 100
Source: Field Survey, 2017

Table 4.3 shows that 42 or 60% of respondents are Senior Credit Officers
with the bank while 28 or 40% are Junior Credit Officers. Therefore, the results
showed that the majority of the respondents are experience bank officers since
the Senior Credit Officers are more than the junior officers. This made their
response a valid and even more important contribution to the validity of results
of this research work.

Table 4.4 Professional Qualification

Respondent %
Associate of Institute of Chartered Accountants 32 45.7
of Nigeria (ICAN)
Chartered Institute of Bankers of Nigeria (CIBN) 30 42.9
Certified Auditor 4 5,7
Certified Information System 4 5.7
TOTAL 70 100
Source: Field Survey, 2017

Table 4.4 shows that 32 or 45.7% respondent are members of Institute of

Chartered Accountants of Nigeria, 30 or 42.9% of the respondents are
professional bankers and 4 0r 5.7% are for both certified auditor and certified
information system respectively. Therefore, most workers in the bank are
professionals and such one would expect quality services and information’s
from them.

Table 4.5 Dependent of Respondents

 Respondent %
Human Resources 6 8.6
Clearing and cash 26 37.1
management
Business development 4 5.7
Information 2 2.9
Technology
Credit and marketing 32 45.7
TOTAL 70 100
Source: Field Survey, 2017

Table 4.5 indicate that 6 or 8.6% of the respondents are in the human
resource department, 26 or 37.1% clearing and cash management, 4 or 5.7%
business development, while 2 or 2.7% of the respondent are Information
Technology department and 32 or 45.7% of the remaining are in credit and
marketing. Therefore, it could be deduced from the data analyzed above that
the credit and marketing department has the higher number of staff as such
the bank will always strive to gain the larger share of market share.

Table 4.6 Threat of Information Technology (e-banking)

Respondents %
Adequate security 0 0
Legal threat 0 0
ATM found 0 0
Poor communication 0 0
All of the above 70 100
TOTAL 70 100
Source: Field Survey, 2017

Table 4.6, shows that all respondent (i.e. 70 or 100% of the respondents)
were of the agreed opinion that the bank place more emphasis on Information
Technology threat to determine its effectiveness. They are all of the opinion that
the level of threat and risked of using e-banking is higher than the former
manual banking operations. E-banking creates new threat and problems in
virtually all banking operations.

Table 4.7 Threat Assessment

Respondents %
To a high extent 0 0
To a moderate extent 54 77.1
To a lower extent 12 17.1
No response 4 57
TOTAL 70 100
Source: Field Survey, 2017

On the assessment of the Guaranty Trust Bank Information Technology

System, 54 or 77.1% of the respondents agreed to a moderate extent, while 12
or 17.1% agreed to low extent and 4 or 5.7% show no response and no
respondent with opined of high. Therefore, based on the data collected. It
shows that the bank has low incidence of threat in Banking System.

Table 4.8 Respondent Assessment of Guaranty Trust Bank Information

Technology

Respondents %
Excellent 10 14.3
Very Good 54 77.1
Good 6 8.6
Fair 0 0
Poor 0 0
TOTAL 70 100
Source: Field Survey, 2017

Table 4.8, shows the assessment of Information Technology in banking

system of Guaranty Trust Bank 77.15 of the respondents have the opinion that
they are very good, while 10 or 14.3% excellent and 6 or 8.6% considered it as
a good and none of the respondent mined that it is either fair or poor.

Table 4.9 Information Technology Training Program

Respondent %
Strongly 10 14.5
Agreed 52 74.5
Undecided 6 8.6
Disagree 2 2.9
Strongly disagree 0 0
Total 70 100
Source: field survey 2017

On the assessment of training development program for Guaranty Trust

Bank officers, the table 4.9 shows that 52 or 74.2% of the respondent
were of agree opinion, 10 or 14.3% strongly agreed 6 or 8.6% undecided
and 2 or 2.9% disagreed and none of the respondent strongly disagree.
Therefore, the bank has information training development program for its
staff because 88.5% of the respondent were of the agreed opinion.
Table 4.10 level of information technology in use

Respondent %
Strongly 22 31.4
Agreed 44 62.99
Undecided 4 5.7
Disagree 0 0
Strongly disagree 0 0
Total 70 100
Source: field survey 2017

Table 4.10 shows that 44 or 62.9% of the respondent were of agree opinion
that information technology system has make banking transaction more easier,
22 or 31.4% strongly agreed while 4 or 5.7% undecided and none of the
respondent is either disagreed or strongly disagree opinion. From the date, it
indicates that the banking transaction has been made easier with the
introduction of information technology.

Table 4.11: Customer satisfaction improvement

Respondent %
Strongly 26 37.1
Agreed 42 60
Undecided 2 2.9
Disagree 0 0
Strongly disagree 0 0
Total 70 100
Source: field survey 2017

Table 4.10 shows that 42 or 60% of the respondent were of agree opinion that
information technology have improve customer satisfaction, 26 or 37.1%
strongly agreed while 2 or 2.9% undecided and none of the respondent is either
disagreed or strongly disagree opinion. Therefore, agree opinion having higher
percentages shows that information technology has really improved customer
satisfaction.

4.3 STATISTICAL RESULT

Dependent variable; Log (COB)

Method: least squares

Variable Coefficient Std. error T. statistic Probability

C -76.20970 24.11575 -3.160163 0.0009
LOG(ATM) 20.69205 4.888665 4.232658 0.0015
LOG(WEB) 6.551414 1.029721 6.362318 0.0002
LOG(POS) 6.427984 0.849191 7.569539 0.0000
LOG(MOB) 0.1033119 0.346159 0.2978895 0.8157
Research finding 2017

Using standard error test (s (b)) to test for the reliability of the coefficient
1
estimate. Decision Rule: if s (b0) <b0 , we accept that the coefficient estimate
2
is statistically reliable. Base on the result above the following here are made.

1
S (b1) = 4.888665, b1 = 20.11575/2= 10.058
2

1
S (b2) = 1.029721, b2 = 6.551412/2= 3.276
2

1
S (b3) = 0.849191, b3 = 6.427984/2= 3.214
2

1
S (b4) = 0.346159, b4 = 0.1031192/2= 0.052
2

1 1 1
Since s (b1) <b1 , s (b2) <b2 and s (b3) <b3 , which represent the parameter
2 2 2
estimates of LOG(ATM), LOG(WEB), LOH(POS) respectively, therefore we
accepted H and conclude that the coefficient estimate of LOG(ATM), LOG(WEB),
LOH(POS) are statistically reliable. However, the coefficient estimate of LOG
1
(MOB) is not statistically reliable as s (b4)> b4
2

Research finding 2017

4.4 TEST OF HYPOTHESIS

4.4.1 hypothesis one

H0: Electronic banking does not have prospect in Guaranty Trust Bank Plc.

Table 4.12 below represents the correlation result for the electronic
banking prospect Guaranty Trust Bank. The results show that the coefficient of
ICT usage (e-banking) and its import on the overall performance of the bank
have the correct sign and are statistically signification. The implies that these
variables have a positive relationship and effects on the performance giving e-
banking prosperous outlook in the Guaranty Trust Bank future plans.

Therefore, the hypothesis that Electronic banking does not have prospect in
Guaranty Trust bank Plc is not true and will be rejected.

Table 4.12: correlation table on the project of information technology in

Guaranty Trust Bank respondent view

E-banking Overall
performance
E-Banking score Pearson 1 0.631(**)
correlation
Sig. (2 tailed) . 0.000
N 70 70
Overall Pearson 0.631(**) 1
performance correlation
Sig. (2 tailed) 0.000 .
N 70 70
**correlation is significant at the 0.01 level (2 tailed)

Source: Researcher’s computation, 2017

4.4.2 Hypothesis two

H0: Guaranty Trust Bank information technology does not improve its bank
customer relationship.

The study explored the extent to which electronic banking has improved
on customer relationship Guaranty Trust Bank. In performing the analysis,
Pearson product moment correlation was computed to establish the
relationship between uses of electronic banking service with customer
relationship by Guaranty Trust Bank. The sum of responses of participant on
the electronic banking scale represents the score on electronic and the sum of
response on the customer relationship scale represent the total score on
customer relationship. From the correlation analysis, the result revealed a
significant positive relationship between customer relationship and electronic
banking (r=0.34, n=70, p<0.05). This means that customer relationship has
improved significantly as usage of electronic banking service therefore; the null
hypothesis two is rejected. The result is presented in the table below.

E-banking Score Service Delivery

score
E-Bank score Pearson 1 0.343(**)
 correlation
Sig. (2 tailed) . 0.000
N 70 70
Customer Pearson 0.343(**) 1
relationship correlation
Sig. (2 tailed) 0.000 .
N 70 70

**correlation is significant at the 0.01 level (2 tailed)

Source: Researcher’s computation, 2017

4.4.3 Hypothesis Three

H0: Adoption of information does not enhance the fortune of Guaranty Trust
Bank Plc.

Correlation table 4.14 below shows that, the two tail p-value test the
hypothesis that each coefficient is statistically significant. The null hypothesis
is rejected at the 5% level of significant showing that e-banking has a
significant positive influence of bank performance. The finding indicates that
an increase in the usage of e-banking will lead to increase in bank‘s profit and
bank performance.

Table 4.14: correlation table on the fortune of Guaranty Trust Bank Plc.

E-banking Score Bank fortune

E-Bank score Pearson 1 0.903(**)
correlation
Sig. (2 tailed) . 0.000
N 70 70
Bank fortune Pearson 0.903(**) 1
correlation
Sig. (2 tailed) 0.000 .
N 70 70

**correlation is significant at the 0.01 level (2 tailed)

Source: Researcher’s computation, 2017

4.5 SUMMARY OF FINDING

The analysis is based on one hundred respondents and returned
questionnaire were worked on. The remaining that was not returned
maybe due to the less privileged staff working aiming who are security
office of the organization which the questionnaire were taken on.

Furthermore, the hypothesis earlier formulated to serve as guide

for research work. After the introduction of respondent data use of table
was adapted with relevant comment, also all the question of the
questionnaire will be analyze.
 CHAPTER FIVE

SUMMARY, CONCLUSOIN AND RECOMMEDATION

5.1 Summary
The bank industry which is the bank bone of every economy is
confronted with various challenges such as globalization, deregulation,
competition, significant high cost of installing electronic banking and
maintenance. The usage of electronic banking can lead to lower costs, but the
effect on profitability remains inconclusive (Aliyu, 2012), owing to the
possibility of electronic banking effects that arise as a result of consistence
high demand of skilled work force, issues of increasing demand to meet
customer’s expectation for customer service delivery, trust worthiness of the
information system and competition in financial services.

E-banking investment has had a strong influence on the structure and

the activities of the banking sector; this allows transactions to be conducted more
efficiently, technology allows banks to market their products more effectively. For
example, banks build up sophisticated database containing information about their
consumers , and through data mining they are then able to target their commercial
efforts more precisely, Knowing which range of products individual consumers might
be interested in buying. Technology also affects the very products that banks sell.
This as led to increase bank income.

Again, E- banking as produced changes in the structure of bank income.

As a result of increase competition that as lowered margin in leading operations (the
banks’ traditional business) banks have diversified their sources of income and rely
increasingly on income from fees service rather than interest rate spreads. Fees,
charge for service include typical banking activities like payment transactions, safe
custody and account administration. These activities are, in general, less volative
than fees and commissions charged on activities which are affected by economic and
cyclical developments (e.g underwriting activities, private banking, credit card
business).

This change is also reflected in the increasing size of off- balance sheet items in the
banks’ financial accounts.
5.2 CONCLUSION

Therefore, base on the major findings the following conclusions are drawn:

i. Electronic Banking also as a strong impact on the over all banking

performance.
ii. The adoption of electronic banking as enhanced the fortune of the banks. This
is achieved through electronic banking charges.
iii. The electronic banking as improved the bank- customer relationship by
rendering effective service 24 hours, 7 days. Customers can now have access
to their accounts outside working hours to make withdrawal to attend to their
needs.
iv. The electronic banking policy introduced by CBN strongly helps in effective
electronic banking system. Withdrawal can be made anywhere at any time
( using any bank ATM, mobile phones, personal computers). That, customers
cannot withdraw more than some certain amount to allow other customers
have access to cash and to help the implementation of the cashless polity. This
also makes customers to exploit the range of electronic banking products in
meeting their needs. Generally, the electronic banking as made banking
transaction to be easier by bringing services closer to their customers.

5.3 RECOMMEDATIONS

The study also reveals that there is evident that e- banking increases the
bank performance. In order to give the growing trends of Information and
Communication Technology (ICT) which involves e- banking and e- commerce in
banking a vision in the right directions, the following strategies are recommended
for further follow up and implementation;

i. The banks must be focused in terms of their needs and using the right
technology to achieve goals, rather than, acquiring technology of internet
banking because other banks have it.
ii. Government participation in ensuring focused telecommunication industry
must be visible to reduce or remove avoidable costs of implementing e-
commerce and internet banking. Regulatory authorities like central bank of
 Nigeria must stipulate standards for the banks to follow to avoid making
Nigeria Banking Sector a dumpimg ground for the technological
infrastructures.
iii. Training and Manpower development is another major problem mitigating the
growth of e- commerce in the country. Government must make right
Information Technology policy by ensuring that computer, communication
equipments and other Information Technology Infrastructures to a large
extent are manufactures in the country so that our people can acquire first
hand necessary skills.
iv. Government policy that will guide against Money laundering, fraud and
security risks posed by e- banking are inevitable. To counter the legal threat
and security posed to net banking and e- commerce, the necessary legal
codes banking the industry must be established, this will enhance the growth
of the industry.
This study was done only in the Guaranty Trust Bank plc. The study can
also be extended to other financial markets such as capital and Insurance
companies in order to understand the implication of ICT on the over all
financial markets in Nigeria.

Similary, the studies can be done for other bank industry in the country. This
study was confined to commercial banks yet the current banking innovation
such a electronic money is targeted to include the rural marginalized mostly
served by micro finance institution in the banking net. There is need,
therefore to study adoption and use of ICT by micro finance institution. There
has been drive to use ICT avail financial service to rural areas. However, the
success of this drive is not yet know. Therefore, another study can be carried
out to evaluate whether e- banking has helped to bring banking service close
to people especially in rural areas. There is need to identify and understand
the changes that ICT are causing on the banking sector and the payments
systems, in order to examine in detail how the recent ( and foreseeable)
advances in ICT are affecting the sector and can affect its future evolution.
Therefore a study on the effects of ICT on the banking sector and the
payments system is recommended.