CHAPTER ONE

INTRODUCTION
1.1 Background of the Study

Information technology (IT) has become part of necessity for human endeavors, more

specifically on economic development, business transactions, quality of delivery, and

productivity. IT refers to the use of software, hardware, services, and the supporting

infrastructures to manage and deliver information via a voice, data, and video (Safeena et al,

2010).

The use of IT applications has changed the entire business environment in an

unprecedented manner (Uduji, 2013). Banking sector, for instance, has benefited tremendously

from online business (e-business) strategy. E-business is one of the subsets of IT applications and

is commonly used for developing, innovating, and strengthening the competitiveness of banking

industry (Oluwatolani, et al, 2011).

IT and online banking (Internet Banking) have become a key element of strengthening

the competitiveness of the nation’s economy and productivity, and efficiency of private and

government banks (Oluwatolani et al., 2011) including in the developing countries like Nigeria.

The evolution of IT has driven numerous changes in the banking industry starting from the

distribution channels as evidenced by automated teller machine (ATM), mobile-banking, tele-

banking, PC-banking, and the most recent technology, internet-banking (Gallup, 2008). These

technologies have replaced the cascading labour-intensive transaction system and paper-based

payment instruments. Safeena et al, (2010) asserted that underestimating the importance of

internet banking may ultimately increase the gap with industrialized countries as most banks are

looking for opportunities that arise from the new market environment. Nigerian banks are

1
expected to benefit from this persistent and enduring effect of e-banking on improving the

efficiency and service delivery electronically.

Internet-Banking has different definitions from various scholars. According to

Arunachalam et al, (2007), Internet banking is where a customer can access his or her bank

account via the Internet using personal computer (PC) or mobile phone and web-browser. In

addition, Ongkasuwan et al, (2002) further defines Internet banking service as banking service

that allows customers to access and perform financial transactions on their bank accounts from

their web enabled computers with Internet connection to banks' web sites any time they wish.

Internet banking service also enables bank customers to perform transactions such as transfer and

payments, access of latest balance, statement viewing, account detail viewing, customization, on

the other hand, an online perspective of internet-banking provides the capability of buying and

selling product and services on the internet. Online services essentially involve a range of

information an internet access packaged by a company through the use of an Online Analytical

Processor (OLAP). However, from a business point of view internet-banking is the application of

technology toward the automation of business transactions and workflow of the internet.

These views are vividly understood. However, one can simply say that internet-banking

is the execution of business transactions through banks on various networks. A transaction

involves exchange in which one economic entity sales a product or service to another entity.

When buying and selling transactions occur in an electronic form/information is assessed,

absorbed and arranged to the point where customers make electronic payments and funds

transfers, or are sold in different ways. At this point internet-banking would be said to have taken

palace.

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 Obara (1995) stated that every business to an extent embarks on e-commerce to some

degree and in the process embark on internet-banking. He further defined internet-banking as the

use of electronic network as a means of making transactions.

1.2 Statement of the Problems

Internet or Internet - Banking is very important in any banking industry. The success of

any banking industry depends on electronic machine (i.e. Computers, ATMs) with a view of

satisfying customers.

If banking industry fails to use electronic machine then, there will be discouragement to

the customers. The problems such as the following form the basis for this study: Lack of

customers’ awareness on how internet-banking is been used, many electronic machines

especially (ATM) are not working properly, customers are not well satisfied when they need

money in time due to the unavailability of network, electricity, etc.

1.3 Aim of the study

The aim of this research was centered on the impact of internet banking on the

development of the Nigerian banking industry. (A case study of Zenith Bank Plc., Monday

Market Branch Maiduguri).

1.4 Objectives of the Study

The objectives of the study are;

i. To determine how to improve on bank operating efficiency through the inter banking to
satisfy customer and reduce cost of operations.
ii. To examine operational efficiency of internet-banking, thereby building customer
confidence and creating a customer friendly internet-banking atmosphere.
iii. To assess the efficiency of banking service to customers through the use of internet-

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 banking facilities
1.5 Research Questions

In order to carry out the research successfully, we came up with the following research
questions;

i. How can bank operating efficiency improved through the internet - banking to satisfy
customer and reduce cost of operations be improved.
ii. How can customers be educated about internet-banking, thereby building customer
confidence and creating a customer friendly internet-banking atmosphere?
iii. What is the efficiency of banking service to customers through the use of internet-
banking facilities?
1.6 Significance of the Study

The relevance of the study is that it brings about the true nature of internet-banking,

which can be used by banks to achieve competitive advantage.

Through the knowledge of internet-banking provided by this study, competitive can be

used to enhance a firms’ ability to deal with customers and new entrance into the market. As

most banks are gearing up their information technology capacity to enhance competitive

advantage, through computer backed service delivery.

The study will also be of significance to customers, the government and the general

public because:

i. Computer based internet-banking enable customers to conduct business from anywhere

they want.
ii. There is easy in opening of new documents.
iii. Withdrawal of cash doesn't take as long as it used to be.
iv. Customer services are taster due to technology and better trained employees.
v. Transfer of funds is faster through network electronic transfer etc.
vi. Production innovation such as e-money, internet-banking, e-commerce and credit cards.

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 vii. Rapid response to number of growing business needs due to increase in customer request
and reduction in the cost doing business.

1.7 Scope and Limitation of the Study

This study focuses on “The Impact of Internet Banking on the Development of Nigerian

Banking Industry, with special reference to Zenith Bank Plc., Monday Market Branch,

Maiduguri.

The major limitations of this research work are the constraints I encountered in the use of

questionnaires for generating data information. Bank customers often find the efficiency of the

operational system of the bank in different ways or perspectives; hence, it is not possible to

determine the exact level of differences between belief and practice in the banking operation.

The bank staffers are not ready to give out information in any form particularly in writing

as it may be required in the case of questionnaires due to secrecy. To get information or data

from these groups of people, we had to exercise a lot of patience.

1.8 Definitions of Terms

Impact: one thing crashing into or having an effect on another.

Development: an event constituting a new stage in a changing situation.

Internet: is a global system of interconnected computer network that use the standard internet

protocol (TCP/IP) to link several billion devices worldwide.

Internet Banking: is an electronic payment system that enables the customer of a bank or a

financial institution to make financial or non-financial transactions online via the internet

Banking Industry: Banks collectively

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 CHAPTER TWO

LITERATURE REVIEW

2.1 Introduction

The banking industry has changed the way it offers its services and records keeping long

queues for which the banks where known have almost disappeared. Transfer of funds between

branches and banks have become faster because clearing days have reduced.

All these changes were brought about by information technology, which is the use of

computers and other telecommunication media. This technology has also brought about

innovations in banking sector such as Automated Teller Machine (ATM), credit cards, electronic

fund transfer, point of sale, smart cards, home banking, internet banking and universal banking.

In an industry where products are similar because there is no patient or copyright on

services, competition is usually stiff. Individual banks adopt positions that will give them an

edge over their competitors. The intention is that customers will perceive these positions as they

make their choice. Esangbedo (1993) highlighted the following five most important determinants

of customer’s bank selection decision:

1. Reputation

2. Quick cash withdrawal

3. Friendly cashiers

4. Availability of computer facilities

5. Case of opening account

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 Obaro (2007), identified other watersheds of this magnitude but nut many during the span

of business history and these include:

a. The invention of writing.

b. The appearance of metal currency

c. Double entry book keeping

The historical background of internet-banking can be traced to the increasing demand

with a business and government to make better use of computing and to better apply computer to

improve customer interaction and business payments.

During the 1970's the Electronic Fund Transfer (EFT) was introduced over secured

private networks and changed financial markets. EFT is being carried out in various ways today

including debit card that are becoming widely used at the Point of Sales (POS) and retail outlets.

This is still developing in third world countries.

The 1980’s brought a completely different form of online business technology in the

form, of online services that provided a form of social interaction e.g. Inter-Relay Chat (IRC),

and, knowledge sharing (such as new file transfer programs), or chat rooms. This helped to give

rise to the concept of "global village". The only missing thing, in spite of all these, was utility

and ease of use.

The emergence of worldwide web in the 1990s greatly facilitated banking. The web is “a

portion of the internet through which information is exchanged via text graphic, audio and video

that can be accessed with the use of a browser”.

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2.2 Conceptual Framework on Internet Banking

Anyanwuocha (2004) defined bank as a financial institution that provides banking and

other financial services. Bank is generally understood as an institution that holds a banking

license. The banking license is granted by financial supervisor authorities to conduct the most

fundamental banking services such as accepting deposits and making loans available to their

numerous customers.

Internet banking is a kind of banking that involves electronic form of money transaction.

Here banking services are fully automated such that transactions are concluded in a jiffy. It

involves the use of computer network in dispensing cash and transfers of fund. The primary

objectives are to replace intensive labour operation and thus help reduce the waiting time of

customers. For now, in Nigeria, internet banking is limited to the automated teller machine and

electronic funds transfer. It also includes electronic devices such as SQL and MICR. The

emergence of e-banking products brings to an end the era of mechanical and laborious banking.

Internet banking means not only electronic production, like, for instance, opening a letter

of credit, but also the customer requests the services by electronic means and that the bank

supplies it the very same way. In banking operations, technical change encompasses the

marketing and distribution function in addition to production. Having defined e-banking, we

now in the next section consider various ebanking products existing within and outside the

Nigerian's Financial System.

Like many other sectors, banking has been suffering changes due to development and

improvements in ICT (Onodugo, 2015), which has been a useful tool to follow market demands

and practices. This development of new technologies has been causing a huge impact on

organizations in terms of management and control, marketing and research, operations and

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decision making (Onodugo, 2015). Banking technology is not a new topic. It has been a

constant presence in the literature since the late 1980s and early 1990s.

Internet banking can be defined as a set of activities conducted from home instead of a

physical bank location (Obiri et al, 2013). It is an “umbrella term for the process by which a

customer may perform banking transactions electronically without visiting a bricks-and mortar

institution. Internet banking can be also referred to as online banking, cyber banking, virtual

banking and net banking (Obiri et al, 2013). Moreover, there are three types of internet banking;

phone banking and mobile banking, that differ in terms of distribution channel, internet, phone

and mobile phone, respectively.

According to Onodugo (2015), Internet-banking is not something totally new. It started

some time ago in the form of ATMs and telephone transactions. This first generation of

solutions typically only allowed customers to view their statements online, conduct transfers

between accounts and pay bills (Obiri et al, 2013). Nowadays, the amount of operations that can

be carried out using e-banking services is far greater. Customers can use e-banking to: pay

utility bills and insurance premiums; fund transferences; consult current account and savings

balances; carryout mortgage payments; options subscriptions; book orders online; book flights

and railway tickets; and, purchase products online.

2.2.1 The Internet Banking

Banking is the process in which banks collect deposits from customers for saving,

transfer or other purposes and provide a host of other services (New Standard Encyclopaedia

1985).

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 According to Crede (1996), internet is acknowledged as the ultimate global system of

computer networks based on figures provided by NSF net, as of January 1995 the internet linked

more than 4.85 million computers and over 36.4 million users in 85 countries.

Banking on the internet is already most commercial banks have adopted one form of

information technology or another. Information technology is a general expression loving

computer telecommunication and electronics. It is the acquisition, processing storage and

dissemination of vocal, pictorial textual and numeric information by a micro-electronic based

combination of computing and telecommunication (Lucey, 1990). The communication facilities

which are being offered are rapidly becoming integrated as business tools. There are currently

more than 25,000 books, which are using the internet to conduct business, The emphasis to date

has been on the use of the internet for communications with customers and other companies

operating on collaborative ventures through the worldwide web i.e. “a portion of the internet

through which information is exchanged via text, graphics or video that can be accessed with the

use of a browser or search engine software (McCool, 1997).

Internet Banking is the type of self-service banking. In this customer can access his

account with the help of internet through intelligent communication gadgets. Customer finds it

time saving and convenient, and for bankers it is cost saving. Customer can access their account

through their personal PC, laptops, Tablets etc. Internet has reduced the geographical distance

between the cities, states and countries. So, there is no requirement to open the branches in each

area of the city as now long distant place are connected through internet. Customer perceives

Internet banking as usefulness and ease to use than traditional banking service.

Various banks provide their customers the internet banking facility. The bank issues a

security code or personal identification number to the customers to access their account through

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their website. First step of internet banking is to verify the user through its PIN. After the

verification user get permission to access their wide range of financial product and services. E-

Banking has also led to the emergence of new banks, which operates only through the internet

and do not exist physically. Such banks are called Virtual banks or internet only banks.

There are three basic kinds of Internet banking in the marketplace are as following:

Informational- This is the basic level of Internet banking. In this the banks has marketing

information about the bank's products and services on a stand-alone server. In this the risk is very

low, as informational systems typically have no path between the server and the bank's internal

network. This level of Internet banking can be provided by the bank or outsourced. The risk

factor is too low as the bank site is informative only. Appropriate controls therefore must be in

place to prevent unauthorized alterations to the bank's server or Web site.

Communicative-In this the Internet banking system allows some interaction between the bank's

systems and the customer. Initially the interaction system was limited to information-based

services such as seeking product and services information, enquiring loan information,

downloading loan form, check balance online etc because these servers may have a path to

access the internal network of the bank which is information based. There is also some other

application like fund transaction which are riskier for the bank and customers too.

Transactional-This is a level of Internet banking in which customer are allowed to execute

transactions. Since a path typically exists between the server and the bank's or outsourcer's

internal network, this is the highest risk architecture and must have the strongest controls.

Customer transactions can include accessing accounts, paying bills, transferring funds, etc. Many

innovative banks provide this type of banking service.

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 In today’s scenario technology is changing very frequently. Information

communication technology has entered into every sector which makes the persons very much

techno-savy. Now customer looks or accepts the more convenient path for every work. Banks are

adopting advent ways to approach customers as through Web sites, electronic mail, and

electronic bill presentment and payment. Age, gender and technology readiness are considered

important factors for maintaining a relationship between customer and banks and to evaluate the

behavior intention to utilize internet banking. Trust in the bank is also one of the key factors in

driving customer’s intention. Developing a trust on bank will take several years. The adoption of

online banking is not an issue for the customers who have full knowledge about online security

issues but in India there are many or majority of peoples are not techno-sav and have very less

knowledge about these issues. Apart for this in U.S the consumers are highly concern about

sharing sensitive personal information such as social security, health, medical and financial data.

2.2.2 Brief History of Banking on the Internet

The Net had not come too been until 1994, a commerce free zone. It was created by the

defence department of the United States of America to keep its network of computers

communicating in case of nuclear attack. When the system developed into a network in the

1960's over which university and government researchers in the US could exchange messages,

the government decided to get out of the internet business companies such as IBM, Digital

equipment and Apple were major users of the internet.

By 1994 commercial activities picked up on the internet. The early talks who believed in

internet were Jeff Bezos of Amazon, Pierre Omidgyer of e-bay and the founder of yahoo. These

businesses (Amazon.com, e-bay and Yahoo) by any ordinary abroad dominating nearly every

market they have entered and are among the world’s best-known brands.

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2.2.3 Internet-Banking Boom in Nigeria

Soon, Nigerians will have a better understanding to how internet-banking can bring about

economic development. This level of awareness is surprisingly high and there is general or

widespread use internet-banking facilities nationwide. The result of an Anderson consulting

survey of 186 top executive conducted in Nigeria showed that although there is hardly any e-

commerce activity in the economy today almost all the respondents, about 96 percent, agree that

commerce has the potential to transform the way they conduct business.

According to the consumer survey index, 84 percent say their banks are ready to exploit

internet-banking as a source of competitive advantage and that it could guarantee long term

successes. As the development of e-commence is taking shape, the first Atlantic Bank announced

in 2001, the introduction and prompt commencement of internet shopping in its virtual shopping

mail in the country. The project is the first fully operational online shopping mail in Nigeria. Its

commencement now allows Nigerians to buy their goods and services locally and internationally

on the internet. There are about 15 shops in Ikeja area of Lagos that have their shops integrated

with the bank’s website.

2.3 I-Banking Internet Capabilities

The internet is connecting marketers to consumers as well as banks to customers.

According to Okike and Ibezimoh (2006), internet capabilities included the following:

i. Transact banking business

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ii. Business use

iii. Publicize a business

iv. Check out company financial analysis

v. Shopping through the internet

vi. Make international phone calls or take part in video conference at local refers.

From the capabilities listed above, business on the internet can be classified into:

a. Online shopping i.e. policing orders or advertising of goods

b. Online banking i.e. making payments

2.3.1 Online Banking (Payment Procedure)

Online banking, as earlier stated is the second stage of online business i.e. the payment

procedure involved in financial activities.

Aladesulu (2001) is of the opinion that banking and financial services are critical for e-

commerce to flourish Crede (1996), also opined that online banking result to a decrease in cost

of banking system which is particularly significant for small and medium sized enterprises

exploiting the opportunities of electronic commerce since they would require a reliable and low

cost electronic payment system. He further pointed out that the acceptance and legal status of

electronic payment systems will have a major impact on confidence and trust in e-commerce.

2.3.2 What Online Banking Entails

According to McCool (1999), online banking is the ability of bank customers through

information technology to review their account balances, pay bilk, transfer funds between

accounts while at home or work, electronic means.

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 Banks take in deposits from their customers and pay certain percentage called interest by

dialling into a banks system using proprietary system. They may withdraw part (but rarely) all of

the deposit and may transfer funds from their account within the same branch. The bank may

lend money to credit worthy customers who are charged a certain interest and are expected to

repay the capital amount and interest rate at a state date. More recently, customers have been

able to access their banks accounts from computers in their homes or work place by connecting

to on-line banking systems.

After connecting to an online banking system, a customer generally enters a personal

identification number and a password, customers must go through this step to identify

themselves every time they sign onto the online are banking system. Once customers have

confirmed that they are legitimate holders, they can process to use their computers to initiate the

desired transactions, and the online system processes and routes the transaction data as needed to

carry it out.

2.3.3 Online Banking Delivery Channels

In order to fully understand the study of online banking, it is necessary to look at the

types of delivery channels utilized by local commercial banks.

There are however, three main delivery channels namely Tel internet-banking,

Automated Teller Machine and PC banking.

i. Tel internet-banking can be considered as a form remote virtual banking which is

essential the delivery of branch financial services via telecommunication devices. “Since

the adoption of information technology, the paper-based communication in banks have

been replaced by electronic communication. The waiting time of customers have reduced

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 because of concept of real time and online banking which allow quick processing,

updating of transaction and data transmission, removing the need to physically transport

security document or to even by physically present to affect the transaction (Ogedebe et

al, 2001). The above services can be rendered to customers by dialling a touch-tone

telephone or mobile communication unit, which is connected to an Automated voice

response (AYR) Technology.

ii. Automated Teller-Machines: - The Automated Teller Machine (ATM) make deposits

and withdraws of cash convenient for the customer. They are note dispensing machine

that pay bills and print out statement exchange foreign currencies count and dispense

coins and information.

iii. PC Banking: Through this, customers can use their personal accounts for transaction by

subscribing to and dialling into the bank's internet preparatory software by use of a

password.

2.4 Computer Based Online Banking

The internet would free both bankers and customers of the need for proprietary software

to carry on with their online banking transactions. To provide details of a credit card number and

transmit it through a telephone, e-mail or tax. Using digitized forms of electronic money or e-

cash. Payment takes the form of encoded messages representing equivalents of digitized money.

Smart card can also use as user are being linked to computers.

Online banking needs to be differentiated from universal banking. It is the use of

computer based electronic devices to conduct banking transactions.

Universal banking (internet-banking) on the other hand, involves banks carrying out their

traditional services in addition to capital market services such as issuing house activities,

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underwriting of securities, stock-broking/trading, insurance brokerage among others (RAM,

1999).

According to Nonlin (1985) commercial bank product which the Nigeria customer wants

are:

a. Deposit facilities

b. Credit facilities and

c. Payment facilities

The role of Bank in facilitating e-commerce is basically in providing the necessary

electronic payment system which is certainly a precondition for the success of internet-banking

transactions is still in its implemental stage. ATM outlets are however more predominant.

It is worthy to note that the computer warehouse group in its 2001 exhibition introduced

some internet-banking solution. Among then was installing a completely web enabled software

that offers the lick access to routing products and services including cash management, bill

payment and online shopping. McCool was of the opinion that all this software will enable

customer transact business from any branch.

2.5 The Impacts of Internet-Banking

1. Contributions of Internet-Banking

The importance of internet-banking to the Nigeria industry cannot be overemphasized. It

has contributed tremendously to the decreased efficiency of the system. Some of the

contributions to internet-banking have been summarized as follows:-

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 a. Internet-banking lessens the time taken to pay in withdraw or cash a cheque by

customer.

b. Internet-banking enable the bank accounting personnel to provide fast and efficient

confidence in banking transaction.

c. There is high reliability of information and data storage.

d. Internet-banking enables banks to provide cheap transactions.

e. Its facilities efficient funds transfer services to customers, i.e. network of branches. It

has increased customers confidence and goodwill.

The two terms i.e. and e-commerce are often used young mousy because internet-banking

emanated from the need for e-commerce. Therefore, it is safe to conclude that problems

associated with e-commerce will automatically affect internet-banking.

According to Ogunneye (2001) the main problem of commerce in Nigeria is security.

According to her, statistics show that Nigeria has been to have a fair share in the estimated $400

billion global computer fraud.

Other problems include low computer penetration and with the Federal Inland Revenue

Service (FIRS) on how to track and tax business done on the internet.

2.5.1 Advantages of Internet-banking

The transition to internet banking, as opined in Chemtai (2016) offers major

opportunities in terms of competitive advantage. Specifically, it provides banks with the

opportunity to develop a stronger and more durable business relationship with their customers.

For instance, it makes access to finance from banks attractive with funds appearing to be much

18
more available (Salehi and Alipour, 2010), and customers are given the opportunity to conduct

banking transactions with great peace of mind and at their convenience (Offei and Nuamah-

Gyambrah, 2016).

Before the introduction of internet banking, transactions took a lot of time to execute and

this was tiring. Now, services are rendered quicker with transactions much more accurate

hereby saving time, as well as reducing human errors and clerical overhead cost. Some other

benefits derived from e-banking are increased customer satisfaction, expanded product offerings

and extended geographic reach. These have helped to attract more customers since the level of

satisfaction is high and also helped to conserve the energy of employees therefore giving them

the opportunity to put in their best into the roles they have to play in the bank. The advantages

of e-banking can thus be summarized into increased bank development (Chemtai, 2016),

increased comfort and timesaving, quick and continuous access to information, better cash

management (Salehi and Alipour, 2010) and improved customer experience (Onodugo, 2015).

2.5.2 The Challenges and Limitations of Internet banking

Automation is very expensive venture more so in Nigeria where infrastructure and

support facilities (like dedicated line called "lease lines" from NITEL) are virtually non-existent.

It must be remembered that hardware cost represents only a fraction of the overall cost of an

automation project. On the other hand, potential benefits of automation are usually very

subjective and not easily verified. Any recommendation therefore to automate must be very well

thought out and the true impact of all expenditures involved in the automation plan must be

clearly communicated to users. Management in the feasibility or other report presented for

consideration. Automation also involves a lot of expenditures to retailer and customers who

want to install personal computers. The cost consideration must include the following:

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 • Hardware -generators, air conditioning, communication equipment

• Software - operation system and application programs – Stationery

• Conversion

• Training - data processing staff, implementation staff and user staff

• Maintenance of both hardware and software’s

And again, there is tendency to dorge the cost of keeping the system riming at all times and

in an up to date fashion. Another challenges or limitation to e-banking in Nigeria is the official

red-tapism in the banking system of operation. For instance, quite numbers of banks that render

on-line-real-time services still maintain anachronistic policies such as not allowing cashiers to

dispense across the counter, cash beyond a certain sum. In some banks a cashier cannot honour

a cheque that is above S500 or S1, 000 without getting authorization or over-lapping of a

supervisor. Consequently, long queues still thrive in such banks, rendering meaningless the

computerization effort.

Furthermore, banks should be selective in the choice of candidates for ATM because fraud

can easily be perpetrated through it. Such restriction is also 46 whatever you feed into the

computer is what it rolls out (Garbage in, Garbage out) Though some errors are inadvertent,

there are cases of wrong programming by operators with the intent to defraud. This again leads

to the legal implications of electronic form of banking. Although customers are warned on the

need to keep safe their ATM card and personal identification numbers, this is likely to be

abused in future.

What therefore is the bank's legal position when a customer's account is debited in error and

when a fraud is perpetrated on the account using ATM? In the first instance, when a customers'

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account is debited in error, the bank is at fault and it must take appropriate action to mitigate

injuries that could be suffered by the customer. The other hand if a fraud is perpetrated without

the knowledge of the customer this may involve the bank in unnecessary and avoidable

litigation since such debits are difficult to prove.

2.6 Government Regulations on Internet-Banking

Since the World www as its name implies, World Wide Web, business can potentially

reach billions of customers in every country of the World.

It also raises questions about customers’ protections. How safe is to transmit credit

information overseas via the internet? New guidelines are helping to answer this and other

questions. The United State and 28 other countries, working together as members of the

Organization for Economic Cooperation and Development (OECZD), have signed on to new

guidelines. The guidelines include:

Set out principles for voluntary "codes of conduct" for business involved in e-commerce.

Some of these codes of conduct include:

i. Use fair banking advertising and marketing services

ii. Disclose full information about the terms, conditions and costs of the transaction

provide on easy to use and secure method for online payment protect customer

privacy during e-ecommerce transactions.

iii. Adopt fair, effective and easy to understand self-regulatory policies and

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 procedures.

iv. Give customers advice about what to expect and what to look for when banking

online.

Delegates from the United Nations 189 member nations met recently with representative

from the United State high technology industry to devise new strategies for dealing with internet

crime and global e-commerce requirements.

The forum was used to draw a coherent global strategy and locate world leaders on the

need for global security standard and the threat that cybercrime poses to the global economy.

2.7 Competition in the Banking Industry

Competition is a situation in which an organization tries to be super successful than

another. In the banking industry, patent rights or trademarks, so products are copied very easily.

Also, competition in the banking industry is quite stiff, because more banks have come into the

industry and each is fighting for its share of the market. Furthermore, non-bank financial

institutions are also providing banking services for their customers. When all banks begin to

advertise, become friendlier, segment and innovate, they begin to look alike.

According to Kotler (1996) "the banks forced to find a new basis for competition. They

begin to realize that no bank can offer all products and be the best bank for all customers, a bank

must examine its opportunities and take a position in the market. Positioning is an attempt to

distinguish the bank from its competitors along real dimensions in order to be the preferred bank

for certain market segments.

Competitiveness in the banking industry can be measured by the number of companies in

the industry especially where it is not regulated. Competition in an industry may affect the

22
 industrial structure. Going down the history lane, by 1973, the top three banks controlled about

70% of the aggregate deposit in the banking system. In the report compiled by this day

newspaper, by 1998, the top ten banks held 73.4% of the total, deposits (Agu 1988).

According to Sesebo and Alasa (2000), "using the underlying benchmarks for measuring

performance (Le total assets, profit before taxation, return on equity, return on assets and overall

performance), banks like United Bank for Africa, Union Bank of Nigeria, first Bank of Nigeria

and Africa bank have retained their traditional positions". The big banks, for instance, have to

come to the realization that they are not in with which compact size, speed, technology have and

practice attitude towards business.

To stay effect in these circumstances, most organizations in the banking industry have

tried improving their operations thereby making banking more convenient and less time wasting

through improved customer service thereby increasing customer loyalty.

2.8 Ways of Securing Competitive Advantages

Competitive advantage is achieved by enhancing the firm’s ability to deal with

customers, suppliers, substitute product and services and new entrants into its market.

Some of the strategies adopted by banks to withstand competition or complete favourably

according to Easign wood and Mahajan (1989), are:

i. Offering a tangible representation of the intangible benefit for example a credit and.
ii. Service augmentation: providing extra service to go with the product such as home banking,
electronic funds transfer and point of sale service.
iii. Better accessibility: such as free calls to three bank and better branch network.
iv. Customization, that is designing the service to match the users need e.g. arranging standing
orders and payment of phone, rent, electricity, bills and overdraft facilities in the month they

23
 are required etc.
v. Offering a complete product line-this avoids having the customer to go to the competitor to
have their order needs met, and;
vi. Superior product through technology

24
 CHAPTER THREE

RESEARCHMETHODOLOGY

3.1 Introduction

This chapter deals with various methods of data collection that is use to source and gather

the information needed by the researcher in order to give a clear presentation of the study to

those interested in the study.

3.2 Research Design

Research design provides guidelines which direct the researcher towards solving the

research problem and it may vary depending on the nature of the problems being study. It

considers the limitation posed by time and availability of data. Research design helps the

researcher to decide whether the population needed for the study every members of the

population. The study used two sources of data i.e. the primary and secondary sources of data in

order to have a meaningful research work. The primary data is obtained through personal

interview, observation and the use of questionnaire while the secondary data is obtained through

the use of already existing information and it consist of textbooks, magazines etc.

3.3 Population of the Study

The population of this research study/work is represented by both staff and customers of

Zenith Bank Plc. Maiduguri Monday Market Branch.

25
3.4 Sample Size and Sampling Techniques

The sampling technique adopted in this research work is Simple Random Sampling.

Random sampling is a method or technique of selecting a sample from a population to be

studied; this means that not everybody in the bank will be administered with questionnaire.

The sample selected for this study is fifty (50) and this comprises of both staff and

customers of the.

3.5 Instruments of Data Collection

The researcher used the following instruments in order to collection useful data for use in

the research work, the instruments used is the questionnaire. Questionnaire will be employed in

collecting the primary data to be used in this study. The questionnaire has the advantage of

saving time and efforts, since large population is used, but it has the disadvantage of lack of

understanding the questions especially when it is given to respondents who are not conversant

with the nature of the study at hand, or may even be filled by someone else other than the

original respondent

The analytical tools used in the project include percentage table and other statistic which

helped to reveal some facts, trends especially helpful to the analysis and interpretation of raw

data.

3.6 Method of Data Analysis

26
 The statistical techniques used by the researcher for data analysis is the simple percentage

method. The response to each item was tabulated. To obtain a score from an item obtained score

was divided by the maximum possible score multiplied by hundred.

3.7 Methodological Difficulties

The research encountered a lot of difficulties in gathering the information required from

the respondents i.e. the staff and customers of Zenith bank Plc Monday Market Branch

Maiduguri, as most of them are saying they don't have time answering the questionnaire

distributed to them in a day and even the personal interview was restricted by some of the

respondents, only few of the staff and customer of the bank administered questionnaire and

accept to be interviewed.

Research is simply the process of arriving at dependable solution to problem and

systematic collection, analysis and interpretation of data. In this chapter, the whole method

adopted in solving the problem of this research -work and means of arriving at the purpose or

objective of this research work was determined.

27
 QUESTIONNAIRE

SECTION A - BIO-DATA

Please tick the appropriate answer

1. Gender
a. Male [ ]
b. Female [ ]
2. Age
a. 20-25 [ ]
b. 26-30 [ ]
c. 31-35 [ ]
d. 36 and above [ ]
3. Marital Status
a. Single [ ]
b. Married [ ]
c. Divorced [ ]
4. Official status
a. Senior staff [ ]
b. Junior staff [ ]
5. Educational Status
a. GCE/SSCE/WASCE [ ]
b. ND/NCE [ ]
c. BS.C/HND [ ]
d. MSC/MBA [ ]
6. Years of Experience
a. 1-5 years [ ]
b. 10-14 years [ ]
c. 14 year and above [ ]

28
 SECTION B: MAIN RESEARCH DATA

1. Does the implementation of banking legislative aid in the performance of banking system in
Nigeria?
a. Yes ( )
b. No ( )
2. Do bank regulatory activities affect the business of banking in Nigeria?
a. Yes ( )
b. No ( )
3. Do bank regulatory policies increase the activities of banks in Nigeria?
a. Yes ( )
b. No ( )
4. Do you conduct banking business through any electronic means?
a. Yes ( )
b. No ( )
5. Does your bank sue Automated Teller Machine (ATMs) in transactions with customers?
a. Yes ( )
b. No ( )
6. Does your bank use PC Networks in transacting business with customers?
a. Yes ( )
b. No ( )
7. Do you use the electronic means of internet-banking above to conduct business within the
organization as well as extends it to transaction with customer?
a. Yes ( )
b. No ( )
8. Would you attribute your rationale for the answer above to the increased profitability of the
bank?
a. Yes ( )
b. No ( )
9. Has the operational performance of the bank change with the introduction of internet-
banking?
a. Yes ( )

29
 b. No ( )
10. Faster and efficient services to customers?
a. Yes ( )
b. No ( )
11. Better information and data storage?
a. Yes ( )
b. No ( )
12. Reduced cost of service?
a. Yes ( )
b. No ( )
13. Customer confidence and goodwill?
a. Yes ( )
b. No ( )
14. Network of branches (fund transfer)?
a. Yes ( )
b. No ( )
Rating of customer service before and during the use of online banking facilities?

15. Has the operational efficiency of the bank low before the introduction of internet-banking?
a. Yes ( )
b. No ( )
16. Has the operating efficiency of the bank high during the use of internet-banking?
a. Yes ( )
b. No ( )

30
 CHAPTER FOUR
DATA PRESENTATION AND ANALYSIS

4.1 Introduction

This chapter is devoted to the presentation. Analysis and interpretation of the data

gathered in the course of study. The data are based on the number of copies of the questionnaire

completed and returned by the respondents. The data are presented in tables and the analysis is

done using the ch-square test.

4.2 Data Presentation

The responses of the respondents to the questionnaires admitted are presented and

analysis below. Fifty questionnaires were distributed to the respondents who responded as

required and forty questionnaires were returned.

Table 4.3 Gender distribution of respondents

Responses Frequency Percentage

Male 26 65
Female 14 35
Total 40 100
Source: Field Survey, 2021

The table above showing that 65% of the sample population are male i.e. 26 respondents

are male while 14 respondents representing 35% are female.

31
 Fig. 4.1 Gender distribution of respondents

Female
35%

Male
65%

Male Female

Table 4.4 Age distribution of respondents

Frequency Percentage
20-25 2 5
20-30 9 22
31-35 19 48
36-above 10 25
Total 40 100
Source: Field Survey, 2021
The table above shows that 5% of the population or 2 respondents are between the ages

of 20-25, 9 or 22.5% of the respondents representing 47.5% are between the ages of 31-35 while

10 respondents’ range between the ages of 36 and above i.e. 25%.

32
 Fig. 4.2 Age Distribution of Respondents
31-35; 19
20
18
16
14
12 36-above; 10
20-30; 9
10
8
6
4 20-25; 2
2
0
20-25 20-30 31-35 36-above

Table 4.5: Marital Status Distribution

Responses Frequency Percentages%
Single 5 12.5
Married 30 75
Divorce 5 12.5
Total 40 100
Source: Field Survey, 2021
The table above shows that 75% of the respondents are married i.e. 5 (12.5%) employees

are single while 5 (12.5%) are divorced

Fig. 4.3 Marital Status Distribution

Married; 30

30
25
20
15
10 Single; 5 Divorce ; 5

5
0
Single Married Divorce

33
Table 4.6 Official status of respondents

Responses Frequency Percentages%

Senior 16 40
Junior 24 60

Total 40 100

Source; Field Survey, 2021

This table shows 16 respondents representing 40% are senior staff, while 24 respondents

(60%) are junior staff.

fi g . 4 . 4 O ffi c i al s t at u s o f r e s p o n de n t s

Junior Staff; 24
25 Senior Staff;
16
20
15
10
5
0
Senior Staff Junior Staff

Table 4.7 Employees qualification status

Responses Frequency Percentages

GCE/SSCE 4 10

ND/NCE 20 50

BSC/HND 12 30

MSC/MBA 4 10

Total 40 100

34
Source: Field Survey, 2021

The above table shows that 13 respondents (32.5%) have worked with the bank a period

of 1-5 years. 19 employees or respondents (47.5%) have been employed by the bank for between

6-14 years, while 8 respondents (20%) have been with the bank for 15 years and above.

Fig. 4.5 Employees Qualification Status

ND/NCE; 20

BSC/HND; 12

GCE/SSCE; 4 MSC/MBA; 4

GCE/SSCE ND/NCE BSC/HND MSC/MBA

Table 4.8: Banking business through electronic means

Responses Frequency Percentages

Yes 25 62
No 15 38
Total 40 100
Source: riled survey 2021

From the table above 25 out of the bank employees representing 62.5% were of the

opinion that the bank uses electronic means of banking transaction in providing services to their

customers, while 15 respondents (37.5%) did not agree.

35
Table 4.9: Use of networks in business transaction

Responses Frequency Percentages

Yes 26 65
No 14 35
Total 40 100

Source: Field Survey, 2021

From the table, 26 respondents representing 65% indicted that the bank use PC networks

in providing quality service to customers. The remaining 14 respondents (35%) formed on

entirely different opinion.

Table 4.10: Respondent Use Automated Teller Machine in transaction

Responses Frequency Percentages

Yes 30 75
No 10 25
Total 40 100
Source: Field Survey, 2021

From the table, 30 respondent representing 75% responded affirmatively to the question

Le the bank conducts business using Automated Teller Machine (ATMs) to improve the

operating efficiency of the bank, while 10 of the (25%) responded negatively.

Table 4.11: Use electronic means for business organization

Responses Frequency Percentage

Yes 28 70
No 12 30
Total 40 100
Source: Field Survey, 2021

36
 From the table, 28 respondents (70%) agreed that the bank extends such electronic

services to customers. However, 12 employees representing 30% disagreed.

Table 4.12: Use electronic means for business organization increase profitability of the

bank

Responses Frequency Percentage

Yes 33 83

No 7 : 17

Total 40 100

Source: Field Survey, 2021

From the table above, 33 respondents representing 83% responded affirmatively that the

increased profitability of the bank can be attributed to the extension of electronic services to

customers. 7 respondents represent 17%

Table 4.13: Change in operational performance of the bank with introduction of internet-
banking
Responses Frequency Percentage

Yes 37 93
No 3 7
Total 40 100
Source: Field Survey, 2021

From the table, 37 bank employees i.e. (93%) were of the opinion that the introduction of

internet-banking has changed the performance of the bank. On the other hand, 3 respondents

representing 7% disagreed to the changes being due to the introduction of internet-banking.

37
 From the set of data below, the opinion of employees will be outlined on the means

through which service, which are considered competitive advantages over other banks are

achieved. The means of providing service to customers could either be internet-banking or

skilled personnel.

Table 4.14: I-Banking provides faster and efficient services to customers

Responses Frequency Percentage
Yes 28 70
No 12 30
Total 40 100
Source: Field Survey, 2021
From the table above, 28 respondents (70%) indicated that the bank uses internet-banking
to provide fast and efficient service to customers. However, 12 employees representing 30% did
not agree.
Table 4.15: Better introduction and data storage
Responses Frequency Percentage
Yes 24 60
No 16 40
Total 40 100
Source: Field Survey, 2021
In the table above, 24 bank employees representing 60% attributed information and data

storage to internet-banking. On the other hand, 16 employees (i.e. 40%) did not attribute it to

internet-banking.

Table 4.16 Reduced cost of services

Responses Frequency Percentage

Yes 32 80

No 8 20

38
 Total 40 100
Source: Field Survey, 2021

From the table above, 32 respondents representing 80% indicated that reduced cost of

services was due to internet-banking while 8 employees (20%) responded negatively to the

question.

Table 4.17: customers’ confidence and good will

Responses Frequency Percentage

Yes 35 88

No 5 12

Total 40 100

Source: Field Survey, 2021

From the table, 35 employees representing 88% of the population indicated that increased

customer confidence and good will was due to internet-banking. The remaining 5 respondents

(12%) responded negatively to the question i.e. it was due to internet-banking.

Table 4.18: Network of branches (fund transfer)

Responses Frequency Percentage

Yes 26 65

No 14 35

Total 40 100

Source: Field Survey, 2021

39
 From the table above, 26 respondents representing 65% of the sample population

attributed fund transfer services being carried out by the bank to internet-banking. However 14

employees (35%) did not agree to fund transfer services being as a result of internet-banking.

Table 4.19: Operational efficiency with the introduction of online banking

Responses Frequency Percentage

Yes 31 78

No 9 22

Total 40 100

Source: Field Survey, 2021

According to the responses in the table, the efficiency of banking operations as low

before the introduction of internet-banking opinion shared by 31 bank employee i.e. (78%).

However, 9 employees representing 22% formed an entirely different.

Table 4.20: High Operational efficiency of the bank during the use of internet-banking

Responses Frequency Percentages%

Yes 23 58
No 17 42
Total 40 100

Source: Field Survey, 2021

From the table above, 23 of the employees representing 58% were of the opinion that the

operating efficiency of the bank was high during the use of internet-banking. However, 17

respondents (42) responded negatively to the question.

40
4.3 Findings

The objective of the study was to know the impact of internet banking on the

development of Nigerian banking industry.

Findings from the study revealed that internet banking has tremendously imparted the

development of the banking sectors. Table 4.3 shows that 65% of the sample population are male

i.e. 26 respondents are male while 14 respondents representing 35% are female. Table 4.4 shows

that 5% of the population or 2 respondents are between the ages of 20-25, 9 or 22.5% of the

respondents representing 47.5% are between the ages of 31-35 while 10 respondents’ range

between the ages of 36 and above i.e. 25%.

Table 4.5 shows that 75% of the respondents are married i.e. 5 (12.5%) employees are

single while 5 (12.5%) are divorced. Table 4.6 shows 16 respondents representing 40% are

senior staff, while 24 respondents (60%) are junior staff. Table 4.7 shows that 13 respondents

(32.5%) have worked with the bank a period of 1-5 years. 19 employees or respondents (47.5%)

have been employed by the bank for between 6-14 years, while 8 respondents (20%) have been

with the bank for 15 years and above.

From Table 4.8 shows that 62.5% of the respondent are of the opinion that the bank use

electronic means to provide service to their customers. While findings from Table 4.9 shows that

respondent indicated that the bank use network in providing quality service to their customers.

Table 4.10 shows that 75% responded affirmatively that bank use automated teller machine

(ATMs) to improve the operating efficiency of the bank. Table 4.11 28 respondents (70%)

agreed that the bank extends such electronic services to customers. However, 12 employees

representing 30% disagreed. Table 4.12 showed that 33 respondents representing 83% responded

41
affirmatively that the increased profitability of the bank can be attributed to the extension of

electronic services to customers. 7 respondents represent 17%.

From Table 4.13 37 bank employees i.e. (93%) were of the opinion that the introduction

of internet-banking has changed the performance of the bank. On the other hand, 3 respondents

representing 7% disagreed to the changes being due to the introduction of internet-banking.

Table 4.14 indicates that 70% responds came that the bank use internet to provide fast and

efficient service to customers.

Table 4.15 shows 24 bank employees representing 60% attributed information and data

storage to internet-banking. On the other hand, 16 employees (i.e. 40%) did not attribute it to

internet-banking. Table 4.16 32 respondents representing 80% indicated that reduced cost of

services was due to internet-banking while 8 employees (20%) responded negatively to the

question. Table 4.17 shows that 35 employees representing 88% of the population indicated that

increased customer confidence and good will was due to internet-banking. The remaining 5

respondents (12%) responded negatively to the question i.e. it was due to internet-banking. Table

4.18 shows 26 respondents representing 65% of the sample population attributed fund transfer

services being carried out by the bank to internet-banking. However 14 employees (35%) did not

agree to fund transfer services being as a result of internet-banking.

From Table 4.19 the efficiency of banking operations as low before the introduction of

internet-banking opinion shared by 31 bank employee i.e. (78%). However, 9 employees

representing 22% formed an entirely different. Table 4.20 shows that 23 of the employees

representing 58% were of the opinion that the operating efficiency of the bank was high during

the use of internet-banking. However, 17 respondents (42) responded negatively to the question.

42
 CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATION

5.1 Summary

The forgoing discussion were focused on our attempt to find the implication and

contribution of e-banking to the development of the Nigerian banking industry. The study

however had abroad focus and so emphasis was placed on Zenith Bank Nigerian Plc.

The purpose of this is to educate people about e-banking present a discussion on the

progressive development of e-banking and establish how bank improve on their operating

efficiency and customer’s satisfaction through internet banking

5.2 Conclusions

An attempt has been made to attain the main objective of this research work from the

study, the following conclusions were drawn. The knowledge of computer-based e-commerce

is increasingly strong. Online banking however is rapidly growing and bank customers have

experienced it.

The study has also showed that banking service to customers is more efficiently

achieved through the use of computerized internet-banking (online banking), than more bricks

and mortals. The study has also shown that banks can invest as in internet-banking facilities

43
 as a strategy for competitive advantage. The study concluded by stressing on the fact that as

customer needs increases, researchers should improve on this study to meet the increasing

needs of customers.

5.3 Recommendations

Best on the results or findings of the study, the researcher made the following

recommendations:

1. As banks focus more on online banking (internet-banking), they should understand that

computers cannot operate themselves. Banks should train their staffs to enable them acquire

the necessary skills for internet-banking, encouraging them to attend workshops, seminars and

symposium where the operations and applications of customer or internet-banking are

discussed.

2. The advert of internet-banking has improved the nature of business transaction globally and

nationally. Therefore, banks should invest in internet-banking facilities which will give

customers access to their accounts and other information relating to their accounts from their

own personal computers (PCs).

3. The recommendation above cannot be drive at if there is high level of computer illiteracy, in

the country. Therefore, the government should encourage people to become computer

literate. Bank can also help in achieving this by investing in customer friendly software to be

used in transacting business with customers.

44
4. The cost of computers is another deterrent to the development of online banking in the

country. It is there by recommended that government should encourage local manufacturers

of computers. This will aid in price reduction statistic have shown that the number of

Nigerians involved in computer fraud is enormous. This, however, is a major threat to

internet-banking in the country.

5. The government, in collaboration with the banking sector should put more effort in battling

computer fraud the effort in battling failed banks. This is because computer fraud will be the

biggest problem facing the banking sector in years to come.

6. Banks should embark on more research and development because customer needs keep

changing by the day and information technology keeps improving by the hour is well. Bank

should therefore not just try to attain competitive advantages but also to operate profitably

with in their competitive environment of contain and unpredictable changes in customer

performance market condition and business opportunities.

45
 APPENDIX – QUESTIONNAIRE

University of Maiduguri,
Consultancy Unit,
Department of Computer Science,
Maiduguri,
P. M. B. 1469,
Borno State.
Dear respondents,
We are final year students of the above-mentioned department.
We are writing a project on “The Impact of Internet Banking on The Development of
Nigerian Banking Industry (Case Study of Zenith Bank Plc Maiduguri Main Branch).
Attached to this letter is a questionnaire that requires your response for the research. We
therefore solicit your maximum co-operation by assisting us in filling the research questionnaire.
All data given shall be used for academic purposely.
Thanks for your anticipated cooperation.

Yours faithfully

Researchers

46
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47