ELECTRONIC BANKING AND ITS ROLE IN THE DEVELOPMENT OF THE NIGERIA BANKING SYSTEM

ABSTRACT
This study reviewed the concept of electronic banking (e¬-banking), examined its prospects for Nigerian banks and discussed associated risks. The study also went further to state the guidelines for e-banking as provided by the Central Bank of Nigeria, it made known its legal and regulatory measures and lastly discussed about electronic payment in Nigeria. It’s discovered that the increased application of e-banking worldwide is a function of improvement in information and communication technology (ICT). E-banking, it also observed, holds enormous potentials for the banking industry in Nigeria. To achieve these potentials, the paper advocated endangering confidence in the e-banking mechanism by addressing security concern and providing necessary infrastructure like steady electric power supply.
Despite the fact that these problem of inadequate security and inadequate power supply persist, the adoption of e-banking has improved customer services, facilitated accurate records, provides for home and office banking services, ensure convenient business hour, prompt and fair attention, and enhances faster services, From the perspective of banks, ICT improves the banks image and leads to a wider, faster and more efficient market.
The questionnaire method was used in gathering the primary data, the respondents here were bank customers while secondary data was sourced from; the internet, journals and library. The hypotheses were tested using Chi-square. Based on the study conducted, findings were made of which recommendations and conclusions were also given.

BACKGROUUD OF THE STUDY
Nigeria’s first bank, the African banking corporation was established in 1892. Banking legislation did not exist then, until 1952 when conventional banking system started with the industry witnessing a lot of regulatory and institutional advances. The industry was being controlled by at most five out of the 89 banks in existence. Before the commencement of the ongoing banking industry reformation in the country multiple branch system was one of the notable futures of Nigerian banks, with a total of 8% of banks accounting for about 3017 bank branches nationwide as at 2004 (Ezeoha, 2005). The industry was also faced with heavy challenges, including the over bearing impact of fraud and corruption, erosion in public confidence a poor capital bases, persistent cases of distress and failure, poor asset quality and so on .part of the moves to resolve these ongoing problem include the banking reform initiated by the central bank of Nigeria in June, 2006, which is largely targeted at reducing the number of banks in the country and making the emerging banks much stronger and reliable (Ezeoha, 2005).
The ability of Nigerian banks to satisfy and retain their customers in the present post-consolidation era will no doubt depend largely on the development of their information technology (IT) infrastructure. In the bid to catch up with global developments and improve the quality of their service delivery, Nigerian banks have invested much on technology and have widely adopted electronic and telecommunication networks for delivering a wide range of value-added products and services.

Revolution started in Nigeria banking system in 2003, with the introduction of guideline for electronic banking by the central bank of Nigeria. This was accompanied by bank reformation exercise in June 2004. The reformation exercise left Nigeria with (25) strong and reliable banks against 89 banks previously in existence. The surviving banks of the recapitalization exercise have enormously engaged the use of ICT as a platform for effective and efficient delivery of banking service (AYO et al, 2007). The banks huge investment in telecommunication network and various e-banking services delivery could be seen as an effort towards measuring up with global standard. This is among other reason such as increased customers demand, increased competition among banks themselves; derive minimized cost, new entrants, and better service delivery (Munirdden, 2007).

Banking has in the last few years, transformed from manual to automated systems. The numerous advances in internet technology have made considerable impact in business environment and have in particular brought about a shift in banking operations. This has necessitated the adoption of internet banking by banks with the application of the internet to banking, banks are able to work effectively and make high profits. The chief driving forces of internet banking among customers include better access to the services, better prices and higher privacy. Through internet banking customers can transact banking operations at the comfort of their homes and office. Ovia (2003) posited that the type of e-commerce, e-banking and e-every thing is gradually being embraced by Nigerian financial institutions that are poised to be in the vanguard of narrowing the digital divide.

In its survey on the extent of e-banking adoption by Nigerian banks, the Central Bank of Nigeria (CBN), in September 2002, found out that out of the 89 licensed banks in Nigeria, only 17 were offering, internet banking, 24 were offering basic telephone, 7 had ATM (Automated teller machine) services while 13 of the banks were offering other forms of e-banking. This implies that as of then, 19.1percent of the banks were offering internet banking, signifying that internet banking was yet to takes central stage despite its widely acclaimed benefits against the traditional branch banking practice (Ezeoha, 2005). Part of the reasons identified by Ezeoha (2005) why internet banking was having a moderate economic impact in the country includes a lack of adequate operational infrastructure like proper telecommunications and power. In addition cyber- criminals have made the window unattractive.
This study examines the concept of e-banking, the current level of e- banking in Nigeria and how it has developed Nigeria banks. It identifies the major inhibiting factors to e-banking in Nigeria and makes recommendations on how Nigeria can narrow the digital divide.