CHAPTER ONE

INTRODUCTION

1.1 BACKGROUND OF THE STUDY

          The advent of financial innovation
such as smart card, credit card, electronic transfers in the payment system and
recently the lunching of internet banking have transformed the world into a
global village linked with electronic impulses. The concept of electronic money
in Nigeria was introduced in 1990 when the Central Bank of Nigeria (CBN) gave
approval to them. All state Trust Bank limited to offer a financial product
known as smart card. Subsequently, Diamond Bank play card. However, the smart
card scheme received uplift in February, 1998 when a consortium of a licensed
bank surfaces a smart card company in Nigeria which is known as Smart card
Nigeria plc with a mandate to producers and manages cards issued by the member
bank of the consortium. Another consortium of more than 20 bank under the
patronage of Gen card became operational in year 2000. 

           
These innovations, which are still at a relatively early state of
development have postnatal to challenge the predominate role of cash for making
small value payments and make retail transactions easier and cheaper for
consumers and merchants who are account holders.

          However, they also raised a number of
policy issues because of the possible implication for Central Bank monetary
policy consumer system etc.

          In responses to implication technology
development in the domestic financial sector, the Central Bank of Nigeria
commissioned and information technology strategy study in 1991 with the
objective of promoting efficient performance of its statutory duties. The
product is being implemented in phase and both the licensed banks and the
regulatory authority here demonstrated their appreciation of benefit derivable form
the application and use of the information technology.

          In view of foregoing, the Central Bank
Governors of the group of ten (G-10) country commission a series of studies on
specific issues related to electronic banking in Nigeria. Therefore, the objectives
of the research are to ascertain the role of electronic banking in Nigeria by
using Guaranty Trust Bank (GTB) Plc, Ogui Road, Enugu as the case study.

1.2     STATEMENT OF PROBLEM

          The problems facing electronic banking
in Nigeria are lack of adequate information and communication technological
awareness campaign about electronic banking. In Nigeria, communication over the
internet are insecure and often congested, the financial institution would also
have to contend with other internet challenges including security, quality of
service and some abbreviations in electronic 
fiancé (Guardian newspaper 2001). Besides the existing business environment
also poses some challenges to the smooth operations of electronic banking in
Nigeria, some of these operational challenges include epileptic power supply,
dominance to cash transaction in the economy, low level of awareness among
Nigeria etc (Agbada, 2008). The thrust of this research work shall be to
examine the trend of electronic banking in Nigeria and critically examination
of the challenge.

          Conclusively, on my own opinion, below
are the problems which electronic banking in Nigeria is facing.

a.     There
was no adequate public education on how to use E-banking product in Nigeria
before the banks stated rolling them out.

b.     Poor
service from the providers.

c.      A
lot of people are averse to using E- products, they prefer cash transaction and
your cant blame them because of No. 2 above. If your money gets stocked on the
ATM you are on your own.

d.      Many of the banks can’t do what they are
claiming to offer it terms of E-         banking.

1.3 OBJECTIVE OF THE STUDY

          The major objective of study is to
appraise the role of electronic banking (E-banking) in Nigeria, the development
of banking industries in Nigeria. The following are the specific objectives of
the study.

1.     To
determine how inadequate information and communication technology   (ICT) awareness distorts the development of
electronic banking in Nigeria.

2.     To
appraise how inactive regulatory bodies prevent the development of needed logistics
technical supports.

3.     To
ascertain the extent to which lack of sufficient skilled manpower distorts the
development of electronic banking in Nigeria.

4.     To
find out how inadequate funding by government and its agencies affects the
development of electronic banking in Nigeria.

1.4      RESEARCH QUESTIONS

          The following research questions have
been formulated in the course of this study.

1.     To
what extent does inadequate information and communication technology awareness
distort the development of electronic banking in Nigeria?

2.     How
do inactive regulatory bodies prevent the provision of needed logistics and
technical support?

3.     To
what extent does lack of sufficient skilled manpower distorts the development
of electronic banking in Nigeria?

4. How does inadequate
funding by government and agencies affect the development of electronic banking
in Nigeria?

1.5    HYPOTHESIS

          In order to carryout this study
properly and successfully, the following hypothesis would be empirically
tested:

Ho:    Inadequate information and communication
technology distort the development of electronic banking in Nigeria.

Hi:     Inadequate information and communication
technology does not distort the development of electronic banking in Nigeria

Ho:    Inactive
regulatory bodies prevent the provision of needed logistics.

Hi:     Inactive
regulatory bodies do not prevent the provision of needed logistics.

Ho:    Lack of
sufficient skilled manpower distort electronic banking development in
Nigeria.   

Hi:     Lack of
sufficient skilled manpower does not 
distort electronic banking development in Nigeria.   

1.6     DELIMITATIONS/ SCOPE OF
THE STUDY

In pursuance of
the objective of the study, attention shall be focused on electronic banking
among other electronic commerce implementation. In order to conduct an
empirical investigation into the adoption of electronic banking in Nigeria.
This study shall examine the nature of electronic banking operation in guaranty
trust bank plc.

1.7     SIGNIFICANCE
OF THE STUDY

This study is
significant because it would help to enlighten operators in the banking sector
and other concerned individuals and organization on the adoption of electronic
banking. The research shall basically identify the challenge facing electronic
banking in Nigeria business environment and suggest ways by which they could be
tackled.

1.8 DEFINITION OF TERMS

1.     Teller: This is sheet but an important
sheet of paper being used in banking environment to paying money and withdraws
in case of a bank that uses it for withdrawals too.

2.     Loan: Loan is a form of money borrowed
from the banks to aid capital and cash level in an organization or firm. They
can be long term or short term to aid capital expenditures respect.

3.     Guarantors: This is a person that
stands in for one in case of opening an accounts opting for loads and many
other services rendered by banks. Guarantor tends to carry the risk of paying
back defaultment incase of any default.

4.    
Electronic
banking:

This is the main study of the
project, Banking services tends to be getting more interesting and electronic
Banking is a step taking to render services electronically to aid faster
services to customers.

5.     Automated Teller Machines (ATM): This
is a physical assets being used by banks, built and erected concretely to give
out cash, aid recharges (Phones), aid transfers, e.t.c. and it is utmost trend
in the banking industry.

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