AN ASSESSMENT OF PROBLEMS AND PROSPECT OF ELECTRONIC BANKING IN NIGERIA

CHAPTER ONE

INTRODUCTION

1.1    BACKGROUND TO THE STUDY.

The competition level in the banking industry necessitates a continuous quest for an adequate and less stressful banking system. as Automated teller machines, Electronic banking and internet banking and credit and debit cards transactions. Many banks have installed modern computer interconnectivity backbone that would enable them achieve communications of data and multimedia over internets and extranets. Currently, banks have realized that the future of banking will requires more of electronic use in banking transactions. Mark (2001) captures Electronic banking as an umbrella term for the process by which a customer may perform banking transaction electronically without visiting a bank building.

However, recent report indicates that there have been several major challenges and issues faced with the e-banking and the e-business environment in Nigeria. These include insecurity and congestion of internet; the existing business environment occasioned by an epileptic power supply; dominance of cash transactions in the economy; and low level of awareness among Nigerians. The positive prospects of electronic banking which may be eroded or marred by the emerging challenges is what encouraged this assessment aimed at highlighting problems and prospect of electronic banking.

1.2    STATEMENT OF THE PROBLEM                                    

The Nigeria banking industry has come to see the need in embracing the electronic technology of banking service as one that quickens their delivery of services while enhancing profitability.

Nigerians even with initial apathy have keyed in and embraced the electronic banking system keenly. The growth in population using electronic banking facilities is growing considerably daily.

As the prospect of the electronic banking facilities and environment in Nigeria is expanding so are the problems associated with is emerging and expanding.

Electronic banking is a driving force that is changing the landscape of the banking industry fundamentally, especially towards a more competitive industry.Electronic banking (e-banking) is still in its early days but already users are dreading.

The services offered by online banking are: account information (balance inquiry, view account statement, download, view summary of transactions), view statement (view and download transactions in past two months), bill payments (immediate or advanced payments to accredited billers or merchants), fund transfer, manage accounts (enroll or un-enroll account, assign nicknames to the account, modify functionalities of enrolled accounts as bills payment source, fund transfer, funds transfer target), customer service (feedback on inquiry with customer service associates), customer feedback (helps the bank improve and expand services), online loan application (apply for auto, business, home or personal loans, get updates via SMS or email regarding application status), and online tool (December 21, 2010,www.adwarps.comand…Nigeria) Automated Teller Machines (ATM) are certainly a convenience. But while machines are available 24and7, they do malfunction every now and then. One of the glitches an ATM user dreads is not getting the money being withdrawn although the receipt states that the cash has been dispensed also machines swallowing cards. This is more than an inconvenience as user becomes stranded and totally disappointed especially weekends.

Security is one of the most talked about issue in e-banking because basically e-banking increases security risks, risky environments and also because of the fact that security issues are the biggest concern in e-banking. Security breaches fall into two categories, first is the breaches with serious criminal intent, which are frauds, theft of commercially sensitive or financial information. The second category is the breaches by casual hackers which are disfiguration of web sites or denial of service. All of these threats mentioned above have severe implications whether it is financial, legal or by reputation.

Computer hackers to gain access to your bank account during encounter with proxy websites, which is the most common internet banking problem. These proxy websites can easily access your bank account, if they can crack your user name, password or pin number. Due to such security problems, many people are apprehensive about internet banking. This can lead to unauthorized and criminal transactions being conducted without your knowledge. By the time you get your bank statement and detect such transactions, it may be too late. Internet banking can be data consuming and tedious, as many websites take quite a long time to get started. Besides this, your internet bank account may also take considerable time to get started. You may also encounter technical difficulties and connectivity problems while conducting internet banking transactions. Of course, there is a customer care department in almost every bank to look into such matters, but often you may not be able to get the necessary assistance due to the congestion in the computer and telephone network.