Chapter one

1.0 Introduction

Advances in information and communication technologies and the emergence of the internet have revolutionized business activities enabling new ways of conducting business referred to as electronic commerce. The Nigerian banking industry has witnessed a lot of changes since the mid 1980s and this is reflected in the increased volume and complexity of operations, increased innovations and varieties in product and services delivery. These developments have not only been technologically driven, but have influenced more technological advances. Information technology, which is the foundation of modern electronic banking, through desktop computers and terminals, provide tools for delivery of new products and innovations characterized by Automated Teller Machines (ATM) and Credit Cards. Information technology (IT), through electronic banking, is rapidly changing how banking is done all over the world. E-service is becoming more important, not only in the area of determination of success or failure of electronic commerce (Yang, 2001:164), but also in the provision of customers with superior experience with respect to the interactive flow of information. However, technology has had remarkable influence on the growth of service delivery options Bagozzi, M. (2002:27). According to (Dabhollear, 2000:19) in his view claimed that when the customer is in direct contact with the technology, there is a greater control such as with electronic banking. However, in the absence of direct contact such as with telephone banking, it is assumed that there is less perceived control by the customer during this transaction. He suggests that direct contact with such technology gives the customer a feeling of great control. He also goes on to say that electronic banking allows customers to perform task at time and places convenient for them. (Ovia, 1997, p.2) states that the new technology has created an unparallel wired economy, transferring money from point to point using bits and bytes through satellite transponders, fibre optic cables or regular telephone lines. The installation of customer friendly technology, such as Automated Teller machines and internet banking service, as a means of delivering traditional banking service, has become common as a way of maintaining customer loyalty and increasing market shares. This technology is used by banks to meet the competitive challenges posed by online banks as well as a method of reducing the cost of producing services that were once delivered exclusively by bank personnel (Joseph, C. 2007:76). Millions of Naira is being spent on information technology by bank, making the use of electronic banking expensive, yet it is still suited in Nigeria where transport, telecommunication and energy is inefficient and ineffective, hampering the movement of goods and service. Imiefoh (2012:24) sees electronic banking as an umbrella term for the process by which a customer may perform banking transactions electronically without visiting a brick-and-mortar institution. That is, automated delivery of new and traditional banking products and services directly to customers through electronic, interactive communication channels. E banking generally implies a service that allows customers to use some form of computer to access account-specific information and possibly conduct transactions from a remote location like home or workplace, (Odulaja 2012:7). The willingness of banks to take up efficiency seeking technology depends just as much on internal factors like cost of adoption and ownership of infrastructure like telecommunication. Tony, S. (2006:82) opined that service equality impact on customer satisfaction which in turn affects the financial performance of the banks. Thus, customer access electronic banking services using an intelligent electronic devices such as a personal computer (PC), personal digital assistant (PDA), automated teller machine (ATM), kiosk or touch tone telephone Auta (2010:17). Today, based on the considerable economic benefit of electronic banking system in terms of reduction of the cost and increase of banks profitability, increasing quality of services to the customers, removing the temporal and spatial limitations and development of bank activities and marketing, in most of the advance countries, there are many experienced banks that extended their operation by electronic methods by establishing independent banks, also they continued their current activities and new banks also present their services to the customers via electronic methods. Electronic banking is one of the great results of IT communication revolution in the economic field. Electronic banking made a revolution in the past commercial method and trend the focused mostly on speed and saving time (Gudarzi2008:140). Before the emergence of modern banking system, banking operation was manually done which lead to slowdown in settlement of transactions. This manual system involves posting transaction from one lager to another which human handles. Figures or counting of money which should be done through computer or electronic machine were computed and counted manually which were not up to 100% accurate thereby resulting to human error. Most banks then use only one computer in carrying out transactions which ameliorate the sluggish nature of banking transaction. Electronic banking remains a strategic tool employed by banks to gain competitive edge both within and outside the boundaries of Nigeria. According to Kamokodi K. (2008:34), e-banking is important in six different areas:

1. Augmenting profit pool.

2. Enhancing operational efficiency.

3. Customer management.

4. Distribution and reach.

5. Product innovation.

6. Efficient payment and settlement.

The concept of e-banking differs amongst scholars. This is due to the fact that e-banking encompasses variety of services provided through electronic devices and over the internet. It is the most recent delivery channel of banking services which is used for both business-to-business and business-to-customer transactions. According to Burr O. (1996:90), electronic banking is the electronic connection between the bank and customer in order to prepare, manage and control financial transactions. E-banking also refers to the use of information and communication technology by banks to provide services and manage customer relationship more quickly and most satisfactorily (Charity-Commission, 2003). According to Salehi and Alipour (2010:145) who indicated that e-banking includes the systems that enable financial customers, individuals or businesses, to access accounts, transact business, or obtain information on financial products and services through a public or mobile phone. With e-banking, transaction costs would be low when compared to the cost of banking through conventional methods. The business environment is not only dynamic and discontinuous but also turbulent which has made the benchmark for services quality to rise. This has led to intense competition among banks to attract new customers and retain existing ones. Banks are increasing deploying IT as a means of generating insights into customer’s behavioral pattern and preferences in response to the demand for quick, efficient and reliable service. This is done through automated teller machine (ATM), card processing, bill presentment and payment, software development, call center operations and network management.

Today, we cannot think about the success of the banking industry without information and communication technology as it has enlarged the role of banking sector in the economy. Financial transaction and payment can be processed quickly and easily. Banks with the latest technology and techniques are more successful in the competitive financial market since they are able to generate more and more business resulting in the greater profitability. The Easiness of transacting economic substances as well as a safer and quicker access to funds, among other factors, has placed e-banking system on a more glorified pace than cash-based system, Obiano W. (2009:78).