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Chapter one


1.1 Background of the Study

The new millennium introduced new opportunities for simultaneous information access and availability, posing new issues in securing sensitive information from certain individuals while making it available to others.

Today’s business climate is incredibly dynamic, with rapid changes occurring as a result of technical advancements, increasing knowledge, and the requirement for banks to serve their customers online. Banks have long been at the forefront of using technology to better their products and services.

The banking industry of the twenty-first century operates in a complicated and competitive environment marked by changing conditions and a very uncertain economic climate.

Information and Communication Technology (ICT) is at the core of today’s worldwide transformation curve in Nigeria’s Electronic Banking System. (Stevens 2012).

The banking industry has long used electronic and telecommunication networks to deliver a wide range of value-added products and services. Managers in Nigeria’s banking industry cannot ignore information systems because they play a critical role in the current banking system. They point out that most fortune banks’ entire cash flow is linked to information systems.

The use of information and communication technology concepts, techniques, policies, and implementation strategies to banking services has become a critical topic of concern for all banks, as well as a requirement for local and worldwide competitiveness in the banking sector.

Technology advancements have had a significant impact on increasing service delivery standards in the banking business. In its most basic form, Automated Teller Machines (ATMs) and deposit machines now allow customers to conduct banking transactions outside of regular business hours.

The internet is revolutionising sales strategies and attitudes of top businesses, as well as increasing competition in all forms.

The banking sector continues to use the internet to improve client happiness; but, for this to function effectively – maximising opportunities, lowering risks, and solving issues – an E-Banking strategy is essential.

The rise of the Web and Internet as new channels, the increase in their use by customers, and the influx of new companies into the market provide a number of significant difficulties to businesses. Setting up a website is simple and inexpensive.

However, in order to create an environment in which a large proportion of your customer base may receive effective service via the Web, you must implement an E-Banking strategy.

Electronic Banking provides a variety of online services such as balance inquiries, requests for chequebooks, stop payment instructions, transfer instructions, account opening, bill payment, E-statements, and other transitional banking services.

1.2 Statement of the Research Problem

Customers in Nigeria nowadays demand more than just the protection of their assets and higher returns on their investments; they also expect efficient, rapid, and easy services.

Customers seek a bank that will provide services that match their specific demands (personalised banking) and support their company goals; for example, businesses prefer to travel without carrying cash for security reasons.

They want to be able to check their balance online, see if a cheque has cleared, move monies between accounts and even download transaction data to their own computer at work or home.

Customers expect preferential treatment and complete attention from their preferred bank. All of these are only possible with electronic banking.

Most Nigerian banks are focusing on and spending heavily in information and communication technology in order to provide quality and acceptable services. As a result, such banks’ services have improved. United Bank for Africa

(UBA), Zenith Bank, and GT Bank (to name a few) are at the forefront of using IT to provide services to their customers (The Guardian Newspaper, April 18, 2008, p 21).

It also investigates the issues associated with electronic banking and best industrial practices, as well as the approach to adopting them in Nigeria’s banking sector.

1.3 Research Objectives

The major purpose of this research effort is to analyse the impact of electronic banking on banking performance on how different channels could better the delivery of consumers and retail items, as well as how banks choose to support their electronic.

Internal banking component/services, 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 processes.

The study aims are to:

I. Evaluate the prospects of electronic banking to increase consumer satisfaction.

II. Assess the effect of electronic banking on performance in the banking sector.

I11. Investigate the impact of electronic banking on bank customer satisfaction.

1V. To what extent do banks’ e-banking platforms adhere to the CBN policy framework.

V. What are the hurdles to effective e-banking operations?

1.4 Research Questions.

One of the issues now being debated is the impact of electronic banking on traditional banking procedures; there are two dominant viewpoints in the market. The debates that the internet is a revolution that will sweep away the old practice, argument are as follows:

1. Does electronic banking give consumers additional options, and will they be less likely to remain loyal?

2. Deposits will move elsewhere as these banks strive to reclaim their customer base. Their firm would become less sustainable as their funding costs would rise.

3. Can the portal provide a significant share of banking profits?

4. Do microfinance banks struggle to evolve; will they be able to get additional capital from the stock market?

5. E-banking is an evolution rather than a revolution.

1.5 Research Hypotheses.

The following hypotheses are presented in null form to aid the investigation.

H0: Electronic banking has no influence on consumer satisfaction.

H1: Electronic banking improves customer happiness.

H0: Electronic banking has no impact on bank performance.

H1: Electronic banking positively affects bank performance.

H0: Electronic banking does not promote bank-customer relationships.

H1: Electronic banking strengthens bank-customer relationships.

H0: The Bank’s electronic banking platform does not conform with the CBN policy framework.

H1: The Bank’s electronic banking platform complies with the CBN policy framework.

1.6 Significance of the Study

Researchers have paid little attention to the upheaval brought about by electronic banking in terms of bank profitability.

Furthermore, the foregoing demonstrates unequivocally that technology is the primary driver of change. For the transformation to be positive, the usage of technology should be business-driven, with clearly defined goals.

Thus, the adoption of electronic banking in the Nigerian banking sector is not a little step. our underscores the essence of our research, which seeks to assess the influence of e-banking on the performance of Nigerian banks.

However, scholars have paid little attention to the revolution brought about by electronic banking in terms of bank profitability.

The study would help bank executives, as well as policymakers at banks and financial institutions, to understand electronic banking as a result of electronic commerce in order to make strategic decisions.

1.7 Scope of Study

In accordance with the study’s purpose, attention will be focused on electronic banking and other forms of electronic commerce deployment. To undertake an empirical examination of the adoption of electronic banking in Nigeria, as well as to investigate the nature of electronic banking activities on bank profitability performance between 2009 and 2011.

1.8 Limitations of the Study

Given the technicalities involved, it is impractical to presume that all relevant facts were acquired during the course of the study. The information acquired is limited to those that respondents access and make available, as well as those gathered from end users. However, the effects of this constraint will be kept to a minimal minimum.

1.9 A Historical Background for the Case Study

Zenith Bank is among Nigeria’s top banks. The bank currently has approximately one million shareholders and is Nigeria’s largest tier-1 bank.

Zenith Bank Plc was founded in May 1990 and began operating as a commercial bank in July of that year. The Bank went public on June 17, 2004, and was listed on the Nigerian Stock Exchange (NSE) on October 21, 2004, following a highly successful Initial Public Offering (IPO).

Zenith Bank Plc now has approximately one million shareholders and is Nigeria’s largest bank by tier-1 capital. In 2013, the Bank launched $850 million in shares at $6.80 each on the London Stock Exchange (LSE).

Zenith Bank Plc, headquartered in Lagos, Nigeria, has approximately 500 branches and business offices in important commercial locations around the country, including the Federal Capital Territory.

Zenith Bank was granted a licence by the United Kingdom’s Financial Services Authority (FSA) in March 2007 to create Zenith Bank (UK) Limited as Zenith Bank Plc’s subsidiary in the UK.

Zenith Bank’s subsidiaries include Zenith Bank (Ghana) Limited, Zenith Bank (Sierra Leone) Limited, and Zenith Bank (Gambia) Limited. The bank also maintains representative offices in South Africa and the People’s Republic of China.

Zenith’s Strong Growth

Zenith Bank has established itself as a recognised, multinational financial institution known for innovation, great customer service, and performance, all while delivering premium value for its stakeholders.

Today, the bank is easily linked with the following attributes: innovation, strong financial performance, stable and dedicated management, highly skilled personnel, ICT leadership, strategic distribution channels, and high asset quality. The primary strategies used to drive the significant growth are listed below:

– Consistently providing outstanding service experience to all consumers.

– Developing deeper and broader relationships with all clients, aiming to understand their individual and industrial idiosyncrasies in order to formulate specific solutions for each part of the consumer base.

– Optimally extending the bank’s operations by adding new distribution channels and entering new areas with potential;

– Maintaining the bank’s position as a major service provider in Nigeria, while extending its activities globally in West Africa and the world’s financial capitals.

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