THE IMPACT OF ELECTRONIC BANKING IN NIGERIA
(CRITICAL APPRAISAL OF UNITY BANK PLC)
ABSTRACT
Electronic banking system has become an important practice among commercial banks in Nigeria. The introduction of this electronic banking has improve banking efficiency in rendering services to customer, It was in line with this that the study aim at examine the impact of electronic banking system in Nigeria. Through the cluster sampling technique, data was collected by means of questionnaires from 40 Unity Bank officers and the result shows that Unity Bank electronic banking guidelines are in line with the CBN electronic banking guideline. The bank has an effective electronic banking system which has improve its customer’s relationship and satisfaction. To this end, It is recommended that the bank information technology training programme should be encourage among the staff of Unity Bank, necessary legal codes banking should be established in order to enhanced growth of the industry.
TABLE OF CONTENTS
CHAPTER ONE: INTRODUCTION
1.1     Background of the Study                    
1.2     Statement of the Problem                    
1.3     Objectives of the Study                        
1.4     Statement of Research Questions                
1.5    Research Hypothesis                        
1.6     Significance of the Study                    
1.7     Scope of the Study                        
1.8     Limitation of the Study                    
1.9     Definition of Terms                        
1.10     Brief Profile of Unity Bank PLC                
    Reference                                 
CHAPTER TWO: LITERATURE REVIEW
2.1     Introduction                            
2.2     The View on Electronic Banking                
2.3     Electronic Banking and the Common Banking
Products                                
2.3.1     Telephone and PC Banking Products            
2.3.2     The Card System                        
2.3.3     The Automated Teller Machine (ATM)            
2.4     The Entry of Nigerian Banks Electronic Banking    
2.4.1 Threats of Cyber Crimes on the Nigerian Banking Premises                        
2.4.2    The Regulatory Challenges                    
2.4.3     Electronic Banking Profitability and Efficiency        
2.4.4     Bank Customers Relationship                
2.4.5    Operations of Financial Institution                
    References                             
CHAPTER THREE: RESEARCH METHODOLOGY
3.1     Introduction                            
3.2     Population of Study                        
3.3     Sampling Techniques                        
3.4     Sample Size                            
3.5     Sources of Data                            
3.6     Method of Data Analysis                    
3.6.1     Test of Hypothesis and Inference                
3.6.2     Decision Rule and Justification                
    References                             
CHAPTER FOUR: DATA ANALYSIS AND DISCUSSION OF FINDINGS
4.1     Introduction                        
4.2     Presentation and Analysis of Data                
4.3     Test of Hypothesis                         
4.4    Discussion of Findings                        
CHAPTER FIVE: SUMMARY, CONCLUSION AND RECOMMEDATIONS
5.1     Summary of the Study                        
5.2     Conclusion                                
5.3     Recommendations                        
Bibliography                            
Appendix                                 
CHAPTER ONE
INTRODUCTION
1.1.     BACKGROUND OF THE STUDY
The new millennium brought with it new possibilities in terms of information access and availability simultaneously, introducing new challenges in protecting sensitive information from some eyes while making it available to others. Today’s business environment is extremely dynamic and experience rapid changes as a result of technological improvement, increased awareness and demands Banks to serve their customers electronically. Banks have traditionally been in the forefront of harnessing technology to improve their products and services.
The Banking industry of the 21st century operates in a complex and competitive environment characterized by these changing conditions and highly unpredictable economic climate. Information and Communication Technology (ICT) is at the centre of this global change curve of Electronic Banking System in Nigeria today. (Stevens 2002). Assert that they have over the time, been using electronic and telecommunication networks for delivering a wide range of value added products and services, managers in Banking industry in Nigeria cannot ignore Information Systems because they play a critical impact in current Banking system, they point out that the entire cash flow of most fortune Banks are linked to Information System.
The application of information and communication technology concepts, techniques, policies and implementation strategies to banking services has become a subject of fundamental importance and concerns to all Banks and indeed a prerequisite for local and global competitiveness Banking.
The advancement in Technology has played an important role in improving service delivery standards in the Banking industry. In its simplest form, Automated Teller Machines (ATMs) and deposit machines now allow consumers carry out banking transactions beyond banking hours.
With online banking, individuals can check their account balances and make payments without having to go to the bank hall. This is gradually creating a cashless society where consumers no longer have to pay for all their purchases with hard cash. For example: bank customers can pay for airline tickets and subscribe 1to initial public offerings by transferring the money directly from their accounts, or pay for various gods and services by electronic transfers of credit to the sellers account. As most people now own mobile phones, banks have also introduced mobile banking to cater for customers who are always on the move. Mobile banking allows individuals to check their account balances and make fund transfers using their mobile phones. This was popularized by First Atlantic Bank (now First Inland Bank) through its “Flash me cash” product Customers can also recharge their mobile phones via SMS. E-Banking has made banking transactions easier around the World and it is fast gaining acceptance in Nigeria.
The delivery channels today in Nigeria electronic Banking are quite numerous has it is mentioned here Automatic Teller Machine (ATM), Point of Sales (POS), Telephone Banking, Smart Cards, Internet Banking etc Personal computers in the Banking industry was first introduced into Nigeria by Society Generale Bank as the popular PC easy access to the internet and World Wide Web (www) and internet is increasingly used by Bank’s as a channel of delivering the products and services to the numerous customers. Virtually almost all Banks in Nigeria have a web presence; this form of Banking is referred to as Internet Banking which is generally part of Electronic Banking. The delivery of products by banks on public domain is an indication of advertisement which is known has E-Commerce. Electronic commerce on the other hand is a general term for any type of business or commercial transaction it involves the transfer of information across the internet. E-Commerce involves individuals and business organization exchanging business information and instructions over electronic media using computers, telephones and other communication equipments. This covers a range of different types of business from consumers to retails products. However, Electronic banking as it is; is a product of E-Commerce in the field of banking and financial services. It’s offers different online services like balance enquiry, request for cheque books, recording stop payment instructions, balance transfer instructions, account opening and other form of traditional banking services. The Internet allows businesses to use information more effectively, by allowing customers, suppliers, employees, and partners to get access to the business information they need, when they need it. These Internet enabled services all translate to reduced cost: there are less overhead, greater economies of scale, and increased efficiency. E-Banking’ greatest promise is timelier, more valuable information accessible to more people, at reduced cost of information access. With the changes in business operations as a result of the Internet era, security concerns move from computer labs to the front page of newspapers. The promise of E-Banking is offset by the security challenges associated with the disintermediation of data access. One security challenge results from “cutting out the middleman,” that too often cuts out the information security the middleman provides. Another is the expansion of the user community from a small group of known, vetted users accessing data from the intranet, to thousands of users accessing data from the Internet. Application service providers (ASP) and exchanges offer especially stringent — and sometimes contradictory — requirements of per user and per customer security, while allowing secure data sharing among communities of interest. E Banking depends on providing customers, partners, and employees with access to information, in a way that is controlled and secure. Technology must provide security to meet the challenges encountered by E-Banking. Virtually all software and hardware vendors claim to build secure products, but what assurance does an E-Banking have of a product’s security? E-Banking want a clear answer to the conflicting security claims they hear from vendors. How can you be confident about the security built into a product? Independent security evaluations against internationally-established security criteria provide assurance of vendors’ security claims.
Customer expectation, in terms of service delivery and other key factors have increased dramatically in recent years, as a result of the promise and delivery of the internet. Even after the “dot –com crash” these raised expectations linger. The growth in the application and acceptance of internet-driven technologies means that delivering an enhanced service is more achievable than ever before, however it is also more complex and fraught with potential costs and risk. The internet introduces customers to a new perception of business time as always “on available 24/7, and demanding an urgent and rapid response. The challenge for managers is to reconcile their business and their own personal perceptions of time with the perceived reality of internet time. The internet has decisively shifted the balance of power to the customer. The internet is revolutionizing sales techniques and perceptions of leading brands, and the internet is intensifying competition in all its forms. Banking are continuing to use the internet to add value for their customers; but in order for this to work effectively - maximizing opportunities, reducing risks and overcoming problems– an E-Banking strategy is required as an impact.
The growth of the Web and Internet as new channels, the growth in their use by customers, the growth in their use by customers, and the floor of companies entering the market, presents a series of key challenges to companies. It is easy and cheap to put up a website. But to create an environment delivering effective service on the Web to a significant proportion of your customer base requires an E-Banking strategy. Electronic Banking offers different online services like balance enquiry, request for cheque books, recording stop payment instructions, balance transfer instructions, account opening and other form of transitional Banking services.
1.2.     STATEMENT OF THE PROBLEM
In Nigeria, customers of banks today are no longer about safety of their funds and increase returns on their investments only. Customers demand efficient, fast and convenient services. Customers want a Bank that will offer them services that will meet their particular needs (personalized Banking) and support their Business goals for instance; businessmen want to travel without carryout cash for security reasons. They want to be able to check their balance online, find out if a cheque is cleared, transfer funds among accounts and even want to download transaction records into their own computer at work or home. Customers want a preferential treatment and full attention by their choice Bank. All these are only achievable through electronic Banking.
In line with rendering qualities and acceptable services that most Banks in Nigeria are gearing toward and investing large sum of money in information and communication Technology, expectedly such Banks services have been improved. United Bank for Africa (UBA), Zenith Bank, GT Bank (to mention few) are in the forefront in the use of IT in rendering services to their Customers (The Guardian Newspaper April 18, 2008p 21). It also seeks the challenges involved in Electronic Banking and Best industrial practice and the approach of implementing them in Nigeria Banking system.
1.3. OBJECTIVES OF THE STUDY
The main objective of this research work is to examine impact of electronic Banking in Nigeria banking system on how difference channels could enhance the delivery of consumers and retails products, and also how Banks choose to support their Electronic Banking component/services internally, such as internet services provider, Internet banking software, Core banking vendor, Managed security service provider, Bill payment provider, Credit Business and Credit scoring company, E-Banking systems rely on a number of common components or process Specifically the study objectives are;
I.     To evaluate the prospects of electronic Banking in Unity bank PLC
II.     To evaluate the impact of electronic Banking in Unity Bank PLC
III.     To examine whether electronic banking has improve the fortune of the Bank.
IV.     To examine the effect of electronic banking has it improve the fortune of the bank.
V.     To examine whether the Bank electronic Banking guideline comply with the CBN electronic Banking guideline policy.
1.4.     STATEMENT OF RESEARCH QUESTIONS
Since the release by CBN, August 2003 and the subsequent policy on the guideline of Electronic Banking system in Nigeria, One of the question that currently being addressed is the impact of electronic Banking on the traditional banking players; there are two views that are prevalent in the Market. The controversies that the internet is a revolution that will sweep away the old order, argument in are as follow;
• Electronic Banking transactions are much cheaper than branch transactions. Banks are easy to set up with lots of new entrants. ‘Old world’ systems, cultures and structures will not encumber these new entrants; instead they will be adaptable and responsive. Electronic Banking gives consumers much more choice and consumers will be less inclined to remain loyal.
•     Deposits will go elsewhere because these banks will have to fight to regain their customer base. There would be increase in their cost of funds, making their businesses less viable.
•     Portal providers are likely to attract the most significant share of banking profits.
•     Traditional banks will find it difficult to evolve; they will be unable to obtain additional capital from stock market. E-Banking as an Evolution than a revolution;
1.5.     RESEARCH HYPOTHESIS
The following hypotheses are formulated in null form to guild the study.
1.     Hο: Electronic banking does have prospect in Unity Bank Plc.
Hμ: Electronic banking does not have prospect in Unity Bank Plc.
2.     Ho: Electronic banking does impact in Unity Bank Plc.
Hμ: Electronic banking does not impact in Unity Bank Plc.
3.     Ho: Adoption of Electronic banking does enhance the fortune of Unity Bank Plc.
Hμ: Adoption of Electronic banking does not enhance the fortune of Unity Bank Plc.
4.     Ho: Electronic banking does improve Bank Customer relationship
Hμ: Electronic banking does not improve Bank Customer relationship.
5.     Ho: The Bank electronic banking guideline does comply with the CBN electronic banking guideline.
Hμ: The Bank electronic banking guideline does not comply with the CBN electronic banking guideline.
1.6.     SIGNIFICANCE OF THE STUDY
The study would enable the banks executives and indeed the policy makers of the banks and financial institutions to be aware of electronic banking as a product of electronic commerce with a view to making strategic decisions. The research is equally significant because it would provide answers to factors militating against the implementation of electronic banking in Unity Bank Plc; prove the success and growth associated with implementation of electronic banking highlight the areas of banking operations that can be enhanced via electronic banking and also be an invaluable tool for Students, Academician, institutions, Corporate managers and individuals that want to know more about electronic banking trends especially in Nigeria.
1.7.     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 and will also examine the nature of electronic banking operations in Unity Bank Plc from 2007 to 2009.
1.8    LIMITATION OF THE STUDY
In view of the technicalities involved, it would be unrealistic to assume that all necessary facts have been gathered in the process of the study. Information gathered is limited to those accesses and made available by the respondents and also those gathered from end users. However, the impacts of this limitation will be reduced to the barest minimum.
1.9     DEFINITION OF RELATED TERMS
Access Products – Products that allow consumers to access traditional payment instrument electronically, generally from remote locations.
ATM Card - UB Debit Card is a Chip device consisting of circuit element on single silicon chip. The Card a complex circuits that process microprocessors with a single chips that contain the complete arithmetic and logic unit of computers. It provided for Unity Bank customers to perform balance inquiry, mini statement and cash withdrawal as well as transfers through the use of Automated Teller Machines. This green card can also be used for Internet/Online and POS transactions.
Chip Card – Also known as an integrated circuit (IC) Card. A card containing one or more computers chips or integrated circuits for identification, data storage or special purpose processing used to validate personal identification numbers, authorize purchases, verify account balances and store personal records.
Electronic Data Interchange (EDI) – The transfer of information between organizations in machine readable form.
Electronic Money – Monetary value measured in currency units stored in electronic form on an electronic device in the consumer’s possession. This electronic value can be purchased and held on the device until reduced through purchase or transfer.
Electronic Recruitment –This is an online recruitment services to all kinds and categories of clients such as (Army, navy, police and the Paramilitary) through customizable web portals and the use of scratch cards/PINs for a Prospective applicants simply buy the scratch cards, visit portal and fill relevant information.
Information collected about applicants could then be analyzed appropriately using ‘what if’ capabilities and filtered according to several criteria to be set by client. Short listed applicants could then be contacted automatically via email or SMS or both.
Electronic Web Collection - This enables the Bank partner with Universities and higher institutions of learning to handle Admission, Registration, Examination Managements and Fees Collection needs.
Electronic Admission by Prospective Candidates, Electronic School Fees Payment, Automated Registration, Examination and Results Publication/Management.
Internet Banking- This is a product that enables the Bank leverage on the Internet Banking System Module in-built on the new Banking Application (BANKS) implemented by the Bank to serve the Internet Banking needs of the Bank’s customers.
Mobile Banking - This is a product that offers Customers of a Bank to access services as you go. Customer can make their transactions anywhere such as account balance, transaction enquiries, stop checks, and other customer’s service instructions, Balance Inquiry, Account Verification, Bill Payment, Electronic fund transfer, Account Balances, updates and history, Customer service via mobile, Transfer between accounts etc.
Payment System – A financial system that establishes that means for transferring money between suppliers and of fund, usually by exchanging debits or Credits between financial institutions.
Point Of Sale (POS) Machine - A Point-of-Sale machine is the payment device that allows credit/debit cardholders make payments at sales/purchase outlets. It allowed customers to perform the following services Retail Payments, Cashless Payments, Cash Back Balance Inquiry, Airtime Vending, Loyalty Redemption, Printing mini statement etc.
Smart Card – A Card with a computer chip embedded, on which financial health, educational, and security information can be stored and processed.
Transaction Alert - Our customers carry out debit/credit transactions on their accounts and the need to keep track of these transactions prompted the creation of the alert system by the Bank to notify customers of those transactions. The alert system also serves as notification system to reach out to customers when necessary information need to be communicated.
Western Union Money Transfer (WUMT) - Western union Money transfer is a product that allowed people with relatives in Diaspora who may be remitting money home for family up-keep, Project financing, School fees etc. Nigerian Communities known for having their siblings gainfully employed in other parts of the world are idle markets for Western Union Money Transfer.
1.10     BRIEF PROFILE OF UNITY BANK PLC
Unity Bank PLC is one of the leading retail banks in Nigeria which emerged from the largest merger and consolidation in Nigeria's banking industry. Following the merger and consolidation of Nine Banks Intercity Bank, First Interstate, Tropical Commercial, Pacific, Centre Point, NNB, Bank of the North and New Africa Bank limited and spearheaded by the Central Bank of Nigeria, (CBN). The financial institutions with competences in investment banking, corporate and retail banking came together in January 2006 to form Unity Bank Plc. It has 242 business offices spread across the country. The Central Bank of Nigeria (CBN) has already given the approval to open another additional twelve five (25) that will number to 267. Unity Bank is the seventh largest bank in Nigeria today by business locations. The Head Office is located at Plot 785, Herbert Macaulay Way, Central Business District, Abuja, while the Head Office Annex is at No. 290A, Akin Olugbade Street, Victoria Island, Lagos. Unity Bank is one of the largest employer of labour in Nigeria and a major contribution to its Gross Domestic Product (GDP) a bank and its associate company employed over 5000 people as at December 2010, our shareholders funds stand at N44.153 billion.
The Mission of the Bank is to create superior wealth for our stakeholders and;
 The Vision is to be one of the top twelve five percent bank in Nigeria by 2012.
Vision Driven Strategic Objectives
a) Financial
• Attain a set minimum balance sheet size with respect to Asset size and profitability by the year 2016.
• Achieve Industry Top 5 positions in rate of “Return on Equity”
• Achieve Industry Top 5 ratio of Income to cost
b) Customer
• Build a superior customer service environment within Unity Bank
c) Technology
• Significantly improve Technology leverage within the Bank
d) Human Capital
• Build a winning human capacity and spirit
e) Retail Focus
• Build the nation’s number 1 retail Bank
Business Values: Teamwork – The Bank has all levels of staff within the bank work together to ensure that the commitments to stakeholders are delivered; Passion – The Bank is driven by the desire to exceed the qualitative and quantitative expectations of his customers; Resourcefulness – The Personnel’s are ingenious and imaginative in seeking solutions to issues; Integrity – The Personnel’s are forthright in all their dealings with internal and external customers and partners; Dependability – The Customers of the Bank's can always count on its reliability and loyalty; Empathy – Unity Bank holds itself to the enduring principle of showing respect and compassion to all;
Excellence – While the Bank seeks to create and raise standards in the dealings for Business.
ADOPTION OF NEW NOMENCLATURE
Following the impressive performance of the subsidiaries, a Management retreat was held in February, 2009 where it was agreed that Unity Bank and its compendium of subsidiaries be adopt an Integrated Group Structure. Therefore, Unity Bank Plc and its subsidiaries will adopt a new nomenclature that includes “Group”. This is now ‘UNITY
BANK GROUP’. The members of this Group include:
SUBSIDIARIES
1)     Unity Capital & Trust Limited
2)     Caranda Management Services LTD
3)     Unity Registrars LTD
4)     Northlink Insurance Brokers LTD
5)     Newdevco Investments & Securities LTD
6)     UnityKapital Assurance PLC
7)     Pelican Prints LTD
8)     Unity Bank BDC
9)     Hexali Properties Limited
ASSOCIATE COMPANIES:
1.     FUG Pension LTD
2.     Kakawa Discount House LTD
3.     First Securites Discount House LTD
4.     Banque Internationale Du Benin, Cotonou, Benin Republic
5.     African Export-Import Bank,Cairo-Egypt
6.     ICHL Nig LTD
OPERATIONAL STRUCTURE
The Bank’s operation is divided into five zones, namely: Lagos & West, North West, Central, North East and South South Zone. Each of the Zones is headed by a Group Executive Director or a Zonal Head. The Zones are further broken for operational efficiency into eighteen (21) Regional Offices across the country. This helps in maintaining one of the fastest decision making processes in the industry today.
Service Efficiency- Unity Bank Plc service efficiency is more practical, meaning the business values are embedded with new thinking on the minds of our employees. The Personnel believe is that the behaviour of the people at the point of service will define the reputation. This will impact on the success of the business. The acculturation process was conceived to communicate the new brand values across board, establish clear line-of sight between our daily operations and the vision of the entire business. It
aims to create verifiable monitoring processes and platforms for continuous training of our employees to ensure long-term sustainability. We have created a quality assurance system to ensure consistency in the application of our corporate brand assets bankwide.
We are confident that teamwork can be further enhanced when the fidelity of such assets are maintained without compromise in all the locations where we have established business. To us, such discipline is the surest way to sustain the desired blend of physical assets with the intangible attributes and brand values that our new assets are designed to communicate without words. Unity Bank’s rebranding is a product of an innate desire to build a distinct banking service identity by redefining what we stand for, what we can do and what we can achieve through team work and continuous talent development geared at exceeding customer satisfaction.
Products: Complimenting the time-tested fare of banking products (Consumer and Corporate) Unity Bank offer Products & Channels Division is strongly positioned with a bouquet of electronic products and solutions to help drive the retail banking initiatives.
To enhance service delivery we deployed 144 active and functioning ATM machines across the 6 geopolitical zones of the nation. Unity Bank Plc has a functional, fully equipped and staffed customer contact/call centre. This has satisfactorily handled and provided solutions to customer inquiries, prompt response and resolutions to customers’ complaints, after service follow-up calls, hence achieving and giving customers the ‘personal banking feel.
Technology: The Banking application known as BANKS’ runs on the latest oracle 11g platform with capability for multiple sequences and responses. The application is highly integrated embedded with straight-Through-Processing (STP) features deployed in web-enabled architecture. The application is sitting on the state-of-the-art Real Application Cluster (RAC) servers. This has made it possible for all our 242 branches to provide services 24/7 online real-time as they are linked via a robust network platform comprising fiber optic, high speed RADIO and VSAT. There are other applications deployed which are equally functioning effectively and are assisting the Bank in providing efficient customer-focused services to the growing clientele pan-Nigeria.
Rebranding: Recently, Unity Bank Plc rebranded, the Bank has modified the corporate signature and changed colour schemes to capture the essence of the distinctive attributes and values that will define the way the Bank run their business in the medium and long-term. The objective is to create a refreshing and reinvigorating “look and feel” through our new corporate brand assets. Our strategy is to drive our reputational capital by building a corporate perception of meaningful partnership with our stakeholders and
embedding a new culture that is driven by competent talent and characterized by quality service and improved systems and processes expected of a 21st century bank.
The Re-branding of Unity Bank has equally resulted in significant changes to the architecture of the business premises nation-wide. The aim is to create natural warmth to dilute the rigid seriousness that is peculiar to most business environments.
 REFERENCES
Central Bank of Nigeria (2003), Guidelines on Electronic
        Banking in Nigeria, August.
Connel F. and Saleh M. N. (2004), Six Puzzles in Electronic
Money and Banking IMF Working Paper, IMF Institute. Vol. 19. February.
Helleiner, E. (1998), Electronic Money: A Challenge to the
Sovereign State? Journal of International Affairs, Vol. 51, 387-409.
Kobrin, Stephen J., (1 997), Electronic Cash and the End of
National Markets” Foreign Policy, No. 107 (Summer), pp. 65—77.
Unugbro A.O. (2007). Bank Management. Mindix Press  
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