INTERNET BANKING IN NIGERIA: DEVELOPMENT, EVALUATION AND PERSPECTIVES
Undergraduate
ABSTRACT
Revolutionary developments in marketing, information and communications technology continue to transform the banking and financial industry. Distribution of banking services through the Internet is an important part of this transformation. The objectives of this thesis are mainly to examine the role, which Internet banking can play as a new distribution channel of banking services for the benefit of both financial institutions and customers. The study explores the growth in on-line banking services and the ways in which financial institutions can take advantage of Internet technology to offer successful and cost-effective banking solutions. Moreover, this thesis addresses the key issues of concern to the banks regarding their strategic positioning and the products/services they offer or could offer on the Internet. Technology can help banks build an integrated delivery strategy for effective multi-channel management. Results identify the reasons why Nigeria banks use Internet banking and their effect and place an emphasis on the strategic impact of Internet technology as a core element of financial services. Nigeria banks want to expand their existing distribution channels using the Internet as another alternative channel. Internet banking in Nigeria is on its way to become the centerpiece of direct banking strategies.
INTRODUCTION The
global credit system has undergone a process of reformation and reorientation,
both at structural and organizational levels. The banking sector has been at
the heart of this procedure. Phenomena of mergers and acquisitions,
globalization and internationalization of services and products, changes in
organizational structures, innovation policies and practices, are just some
examples of the worldwide changes in the banking industry. Banks
perform intermediation functions that are vital to a country’s economic growth
and development. Banking services have evolved from an early emphasis on
deposit taking (primarily demand deposits and savings accounts) and short-term
loans into a much wider range of deposits and loans. Operating in a dynamic
environment, banks need to intensify their approach towards service quality in
an attempt to increase sales volume, market share and ultimately their profit.
One of the strategies that have been offered for success in such a business is
the delivery of high service quality. As banking clientele has become more
financially sophisticated, so have bank operations that have expanded from
traditional commercial banking services to investment services, fund management
services, insurance brokerage and other financial services. Moreover,
technological developments such as the use of computers and especially the
Internet and the World Wide Web can facilitate these bank operations. Given
the wealth of opportunities that the Internet creates for financial
institutions, having a strong on-line presence is becoming a strategic
necessity for most of them and raises the importance of the Internet as a
strategic distribution channel for providing banking services. According to
Mols (2001), there has been a considerable growth in the segment of consumers
preferring Internet banking due to the increase in computer literacy, the
availability of computers and the reduction in the costs of PCs and Internet
access. This fact will change the optimal distribution structure for most banks
and financial institutes. Due
to changes in the Africa banking sector and expansion plans in the region,
Nigeria banks are trying to strengthen their position in the market and improve
their efficiency. Nigeria banks are trying to find new distribution channels
and methods of providing their services in order to maintain and increase their
share in the market. An appealing method of doing that is through the Internet
because it can offer banking services at cheaper prices to more potential
clients and the transactions can be carried out from anywhere in the world at
any time of day or night. This means that by using Internet technology,
financial institutions can establish a direct link to customers and improve
their market shares while increasing their profits, without paying the high
cost of building new branches. Especially
in Nigeria, although the use of Internet is not the expected one, Internet
banking continues to increase because of Internet’s easiness in use, its low
cost and the requirement from some public authorities to only receive online
payments.