TABLE
OF CONTENTS
Pages
Title Page i
Approval Page ii
Acknowledgement iii
Dedication iv
Abstract v
Table of Contents
CHAPTER
ONE
1.1
Introduction 1
1.2
History of Internet 3
1.3
Background of study
1.4
Statement of Problem
1.5
Purpose of study
1.6
Research Questions
1.7
Statement of Hypothesis
1.8
Scope of study
1.9
Significance of study
1.10
Definition of Terms
References
CHAPTER TWO
2.1
Literature Review
2.2
Brief History of the
First Bank to practice
Internet Banking in Nigeria
2.3
Banks currently operating
Internet Banking
2.4
The Nature and System I.
E. the Internet
2.5
Client side purchase
2.6
Server’s side (I.E.
Banks)
2.7
Software Base security
2.8
Hardware integrated
Security
2.9
User Level Security
2.10
Objective of Internet
Banking
2.11
How to open an Account on
the Internet
2.12
How cashier can fund
their Accounts
2.13
How withdrawals can be
made
2.14
Expected Bank’s Benefits
2.15
Benefits of Internet
Banking to Users,
Customers (Diagramatic Representations)
2.16
Benefit to Others
2.17
Challenges and Problems
Associated with Internet Banking
2.18
Prospects and Solution to
Faced Problems
2.19
The Intranet
References
CHAPTER THREE
3.1
Research Methodology and
Design
3.2
Research
Design/Description
3.3
Data collection method
3.4
Development of research
instrument
3.5
Processing of Data
3.6
Questionnaire Assumptions
3.7
Pre-Reliability Test
3.8
Validity Test
References
CHAPTER FOUR
4.0
Data Analysis and
Discussion
4.1 Distribution of Respondents
4.2 Analysis of Questionnaires
4.3 Discussions – The Responses
4.4 Testing of Hypothesis
4.5 Interpretation of Analysed Data
References
CHAPTER
FIVE
5.0
Summary of Results
Conclusions, Limitations
and Recommendations
5.1
Introduction
5.2
Discussions of Results
5.3
Conclusions
5.4
Limitations
5.5
Recommendations
References
Bibliography
Questionnaires
CHAPTER
ONE
1.1 INTRODUCTION
In
the past few years, Banking activities in Nigeria were increasingly dependent
on the development of Information Technology (IT). It is the exchange of information between
parties. The promise of IT especially
the Internet is to turn the world into a global village. This promise is gradually becoming a reality
in the industrial and economically advanced parts of the world, people who are
thousands of kilometers apart being able to engage in formal and informal
relationships, which would have required them to engage in travels that may
take a number of long hours.
In
all societies, people need to interact with one another for the purpose of
trading, employment, leisure and even for family related issues. Such interaction will usually involve the
movement of physical goods, services and
information but the percentage of information exchanged in these
interactions is high. It can be imagined
the number of proposals and revisions that are exchanged between a supplier and
a customer before a purchase order is issued.
These activities are just mere exchanges of information. After then the
sales person will have to travel to prevent and discuss his proposals, the
purpose of the travel is just to gain physical assess to his customers so that
they can begin to exchange information.
Today’s
Information Technology can enable people exchange information easily. Information without physically traveling to
deliver it, the most rational thing to do is the uses of technology, which can
be through the Internet. The primary
elements of this technology are the telecommunications infrastructure and
terminal equipment. It is common
knowledge that Nigerian banks have invested billions of Naira in IT. The IT budget for the banking industry is by
far larger than that of other industries in the country.
In
service organizations such as banks, it is information that flows more than
physical items. Even in the most
advanced societies today, money is carried more is information storage
medium. Such as cheques, credit cards
and electronic means rather than in pure cash form. Less cash is used within a society. It is therefore more viable to conduct
business and banking electronically.
By
conducting business electronically or through the internet, especially banking,
has its challenges, the most common
being the risk of fraud due to computer network, security that can be abused by
fraudsters and hackers. Conducting
financial transactions through the Internet, means that a computer system for
such transaction has to be on the Internet and as such subject to some of the
risks of the Internet. However, new
technology such as encryption of financial transaction data maturing and hence
the security of financial transaction on the Internet will continue to be more
acceptable to bankers and customers.
Customer’s
insatiable appetite for efficient services has compelled financial Institution
to move fast to a more radical transformation of their business systems and
models by embracing Internet banking.
The huge investment in IT is justifiable, as bank managers have become
IT savvy.
Due
to this fact, many banks in Nigeria
have been busy creating interfaces and building portals and it has become more
of a competition and egoism rather than offering customer’s value added service
thus making transactions very easy for them.
A
portal is an entry point to the World Wide Web (www) combining a mixture
of content and services including search engines, directing users towards the
information they desire and enabling them to analyse the information and
ultimately to execute transactions.
1.2 HISTORY OF INTERNET
The
Internet has been called “the mother of all networks”. It connects several million computers and
reaches virtually every nation on earth.
It provides reference achieves, electronic mail, news, advice, opinions
and gossips to all comers and most of the material is free.
The
history of the Internet goes back to the late 1960s when the U.S. Department of
Defence Advance Research Projects Agency (ARPA) funded an experimental Wide
Area Network (WAN) connecting University Computer Science departments across
the country. ARPA net was the test-bed
for most of today’s defence Network technologies.
Today’s
Internet backbone consists of various federal, regional, educational, campus,
foreign and commercial network service provisions, which are IP-based. All of these systems, cooperate to form a
seamless Network for collective users.
1.2.1 THE
NIGERIAN EXPERIENCE
The world has become a
virtual global village with the array of developments going in the information
superhigh way, of course, Nigeria
represents a part of this development.
Assisted by the deregulation measures introduced in the 1980s, there was
an astronomical increase in the number of merchant and commercial banks. By 1989, the number of banks had increased
from 32 to 81 (47 commercial and 34 merchant) together with today, there are 82
approved commercial and merchant banking Institutions in Nigeria by the Central
Bank of Nigeria (CBN) even after the distress syndrome that swept the industry
in the mid 1990s leading to the collapse of many banks and finance houses.
The situation in Nigeria
produced a some what interesting scenario.
The global phenomenon in the IT development was accentuated by keen
competition at home in view of the unprecedented upsurge in the number of banks
and bank branches. There was need not
only to innovate and become modern, there was a complete need to acquire a
comprehensive edge to stay afloat in the market. In the face of increased market pressure to
innovate customers demand for more sophisticated products and increased
convenience in service delivery; the adoption of Internet and electronic
banking products therefore become and imperative.
Computerisation in Nigeria banking
industry was first introduced in the 1970s by Societe Generale Bank (Nigeria)
Limited, until the mid 1990s, few banks that were computerized adopted the
Local Area Network (LAN) within the bank
branches. The sophisticated ones among
them implemented the WAN by linking branches within cities while one or two
implemented intercity connectivity using leased lines.
Today, the scenario is
different not only have banks adopted computerization from one level to
another, it has affected all aspects of the banking business from the very
simple and basic retail operations of deposit and each withdrawal, as well as
the cheque processing, to the delivery of sophisticated products such as
foreign exchange and Internet rate swaps which can be through the Internet.
1.3 BACKGROUND
OF STUDY
In the world in general
and Nigeria
today, vocabulariers in business finance and economics are e-commerce,
e-banking, globalisation and deregulation.
While some parts of the world have started talking about mobile banking,
microwave banking, e-banking, etc.
Definitely, this is a new era of information dissemination and at the
root of all these is computerization which is the bedrock of Internet.
Internet can be said to
be a network of networks that are
interconnected physically, capable of communicating and sharing data with one
another and also able to act as a single network, while banking is defined by
Oxford Learners Dictionary as a process by which the business of a Bank is
being conducted.
In a narrow sense,
Internet Banking can be said to be the dissemination of banking information,
products services, etc. from bank to
users via the Internet from any part of the globe at any time of the day. In other words, Internet banking stems from
IT and telecommunication systems.
These are the utilization
of the combination of computer gadgets and communication equipment like
telephone lease lines, radiophone, VSAT (Very Small Terminals), etc. in facilitating communication of information
rendition. This implies the gathering,
processing, dissemination and storing of information. It is thus a process that can be of immense
value to the bankers because a lot of relationships between bankers and their
customers involve information exchange.
The exchange of
information electrically using the Internet or its technology can take some of
the following methods.
·
Public
e-mail;
·
Corporate
e-mail
·
Electronic
Data Internet (E.D.I.);
·
Customized message enables application,
·
Public
websites on Internet;
·
Private
websites; and
·
Public
and private collaboration systems.
From a business
enterprise perspective, information exchange can be either intra enterprise or
inter enterprise or a combination of both.
Customers can be reached today without the banks’ marketing staff having
to commute to the office of the customers (telemarketing), customers can stay
in their homes or offices and order for goods and services without having to
visit the shop (on-line shopping and telemarketing) with the banks playing the
role of facilitating the payment for transactions. Orders by organization can be placed
electronically (E.D.I.). Customers can
make request for transactions such as the issue of bank drafts electronically,
then pass them along with e-mail attachments to those to process them (mail
enabled applications) in the bank.
In achieving the above
forms of exchange of information, the cost of using the Internet requires only
a local telephone call to an Internet service provider. However, some large banks may require leased
telephone lines to connect to the Internet.
Internet banking is an
aspect of e-commerce derived from the successes recorded in IT. E-commerce is a process that deals with the
utilization of Internets, Intranets, Extranets or communication supranet and
e-mail to conduct business transactions.
But the scope of this research is only limited to the Internet.
From research conducted
so far, it has been observed that Internet banking can engender the customer
loyalty most organization dream of attaining it has shown that Internet banking
built-up customer’s loyalty and improves relationships. Much more than these, it saves customer’s
money and speeds transaction process not to talk of cost reduction.
Internet banking also
involves the speeding up process of payment mechanism. However, it is not just the posting of
transactions using the modern computer systems or simply doing away with manual
recording of transactions and business ledgers, books and all sorts of registers
including paper documentation. It
includes the totality of the deployment of the application of modern IT and
communication systems to record transactions and deliver financial services to
customers. Internet banking is thus
beyond on-line real time banking operation.
It encompasses a whole gamut of PC banking. Electronics Funds Transfer (EFT), ATMs,
etc. In effect, it involves the mechanism
of settling financial transactions and payment obligations other than by cash
and cheque.
Interestingly, there is a
constant and increasing demand on banks to offer advanced services. At the inception of banking, a bank was no
more than a deposit taker and later an intermediary between savers and
investors of funds. This seemingly
single role have today been driven to high levels of sophistications and
complexities.
This position is further
accentuated by the fact that banks are service providers. Today bank instruments have gone beyond the
use of cash. They have veered into
Internet banking, Electronic Fund Transfer, on-line real-time banking, ATMs
cards, etc. This is so because the
payment mechanism has had to respond to the opportunities offered by IT and
globalisation.
Furthermore, the
continuous improvement in IT has led to greater adaptability and swift
responsiveness to customers demand for better services. This accounts for the introduction of various
forms of products and service that are near money. (e.g. cheques, credit cards, etc.)
1.4
STATEMENT OF PROBLEM
With the advent of
the Internet, radical changes are beginning to take place in Nigeria’s
financial landscape. In more developed
and matured financial markets, the Internet banking excitement is growing
rapidly and global acceptance has reinforced the speed of penetration. On-line, real time banking systems have now
become common place as customers are offered the flexibility of operating an account in any branch
irrespective of which branch of the bank the account is domiciled. The online services, enables customers to
transact a variety, of banking activities in any location of a particular
bank. These include inter alia deposit,
withdrawals and draft issuance.
Given the
overwhelming benefits of on line real time services, banks in Nigeria have
gradually embraced Internet banking as evidenced by the rate of which they
launch their websites.
The problem of this study
is that many banks make the mistake of believing that having a website and
domain name equals full-fledged Internet banking or bank. A website is a tool that enables a user to
experience all the products that an individual or enterprise has to offer on
the Internet e.g. pictures, videos, graphics, sound, etc. It always starts with www which is World Wide
Web.
A domain name is a
way of identifying and locating computers connected to the Internet. No two organization can have the same domain
name e.g. CitizensBank.com. Their website is www:/citizensbank.com. At present, this bank is not Internet
banking.
1.5
PURPOSE OF STUDY
Specifically, this
study is designed to investigate or research on thy most banks in Nigeria are
connected with how to position themselves effectively and maximize the wonders
of Internet based opportunities in the not too distant future and the current
stable (or stagnant) exchange and interest rates in the market, how to create
awareness of their different products and services that can be rendered to
customers at a reduced cost an on time.
1.6
RESEARCH QUESTIONS
For the purpose of
this study some of the research question that will be relevant to this research
topics are as follows:
·
Does the amount spent by
banks, on cost of installing, equipment help in quick transformation of data
information justify on online project?
·
Is the banking industry,
doing enough to coordinate technology through Internet Banking in anticipation
of future needs?
·
With regard to cash
movements, are there substitute products non bank financial Institutions like
credit cards and electronic funds transfer; be preferred to Internet banking?
·
The Federal Government,
are they encouraging technological innovation in the banking sector?
·
Banks practicing Internet
banking should they be encouraged by the public in technological innovations?
1.7
STATEMENT OF HYPOTHESIS
Hypothesis is a
declarative haunch that gives every event a fair and equal change of
occurring. For the purpose of this
research, two types of hypothesis will be used.
These are, the alternative hypothesis and the null hypothesis.
A null hypothesis
is one which does not provide a direction of difference and in this research H0
will denote it.
An alternative
hypothesis is one which provides a direction of difference and in this research
it will be denoted as HA.
This hypothesis
will be comparing two variables, which are the independent variables and
dependent variables. The independent
variables will be the customers who are interested in the products and services
being rendered by banks practicing Internet Banking while the dependent
variables will be the banks rendering these services, products and information
to various customers through the Internet.
1.8
SCOPE OF STUDY
Before Nigerian
banks can fully participate in the digital and Internet age, the epileptic
telecommunications system, power shortage, risk of fraud due to computer
network security, huge capital outlay to source the equipment and software, the
literacy level, must be addressed.
This explains why
there are only 200,000 Internet users in Nigeria (Chartered Institute of
Bankers’ Library), This figure is in sympathy with Nigeria tele-density of 250 people
to one telephone line.
The scope of study
of this research, therefore, encompasses these problems and many other and
possible solutions suggested.
1.9
SIGNIFICANCE OF STUDY
Through Internet banking,
customers from the residence would enjoy sitting in the comfort of their homes
and their offices with a PC locked into their banks servers and then transact
limited banking activities. As for
banking, the number of their customers would increase if they deliver products
and services as promised.
These are clear
indications that banks in Nigeria
are extremely excited about Internet banking.
Undoubtedly, Nigeria Financial Institutions that are poised to be in the
vanguard of narrowing the digital wonder have eventually embraced the type of
e-banking, e-business and e-everything.
1.10
DEFINITION OF ITEMS
·
Information technology: Technology,
which enables the exchange of information.
·
Portal:
is an entry point to the World Wide Web (www) combining a mixture of contest
and services including search engines, directing users towards the information they desire and
enabling them to analyse the information and ultimately to execute
transactions.
·
Information Rendition: Is
the gathering, processing, dissemination and storing of information.
·
Telemarketing:
is a process whereby customers can be reached without the bank’s staff having
to communicate to the office of the customer or seeing him personally.
·
E-Commerce: This
means on-line buying and selling of goods and services. The sale and purchase of items including but
not limited to flowers, books, magazines, newspapers, up to more sophisticated
products and services such a buying and selling of shares of public quoted
companies.
·
Intranets:
Are communication networks that use Internet technology to allow employees to
access at random the full information and data resource available within the
organization.
·
On-line Real Time
Banking: Is
a process that allows a customer to transact business in any branch of his bank
irrespective of the branch their account is domiciled.
·
Webfile:
Is tool that enables a user to experience all the product that an individual or
enterprise has to offer on the net.
·
Domain Name:
Is a way of identifying and locating computer connected to the Internet e.g.
platinum bank.com.
·
Universal Banking:-
This is a process that refers to all aspects of banking including the
traditional and modern forms of banking.
The traditional form of banking involves manual counting of cash, posting
to and from accounting ledgers, storing of information in files, etc. While the modern mode of banking entails
dissemination of information via computers, electronic funds transfer, all
aspects of Internet, intranet and extranet banking, etc.
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