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The Impact of Internet Banking System on Nigerian’s Banking Environment A Case Study Of Diamond Bank of Nigeria Uyo Capital

The Impact of Internet Banking System on Nigerian’s Banking Environment, A Case Study Of Diamond Bank of Nigeria, Uyo Capital

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This study aimed at investigating the impact of internet banking system on Nigerian’s banking environment, a case study of Diamond Bank of Nigeria, Uyo Capital, Akwa Ibom State.

The study used survey research design. A structure questionnaire such as interview and personal interview was used to collect data from a sample population of thirty five (35) staff in the selected bank, while sample size of twenty (20) was used. Three research questions and two research hypotheses were formulated to guide the study.

A statistical tool of Pearson Product Moment Correlation Co-Efficient (PPMCC) was used to test the hypotheses. The result showed that independence variable, internet banking system has a significant role in the Nigerian banking environment.

Consequently, findings observe that the impact of internet banking system has a significant role in the growth and development of the Nigerian banking industry.

The study therefore recommended that, banks’ customers should be educated in how to use internet product effectively and the Nigeria government should also enact laws that will govern the internet banking which will not allow unfair and descriptive trade practices by the supplier and unauthorized access by hackers. 



1.1   Background to the study

In Nigeria, banking industries have witnessed a lots of challenges due to the increase in the awareness and utilization of banking service, this makes the staff to strengthen and branches of most Nigerian banks in spite of the adjustments, these banks cannot satisfy the demands, some transactions become on manual and physical presence of their customers.

On the other hand, banking system now brought a relief to the increase volume and complexity of banking operations and services delivering. With the experimentation of internet technology, the banking system with electronic fund arrangement were made with banks using micro-computer to pay some bills that is owned by big departmental stores, and this make various companies to become computerized, with the practice of internet services to delivering the mechanism to their customers  to embrace with it.

Consequently, this point makes Sabi (2014) to state that, the advent of internet technology in our banking environment has revolutionized the way business and services are provided by companies, and banking industry all over the world. Internet banking also provides innumerable service innovation for their customers.

The technological change has brought the rapid transaction of information…with and easy way for banking products that which also enhances the customers’ access, and awareness (George and Gireeshkumar, 2012).  In the same vein, the impact of internet banking has advantages for the growth of banking industry in Nigeria and all over the world.

The Impact of Internet Banking System on Nigerian’s Banking Environment A Case Study Of Diamond Bank of Nigeria Uyo Capital

Internet banking system has become one of the premier channels for institutions in the financial sector I conducting business. On the other hand, the speed of conduction personal and commercial activities with their customers’ increased. The financial activities can replicate the traditional activities, which take place in a bank over the internet.

This shift to online transitions, lower the operational overhead cost for the financial institutions. The reason for this cost savings is the automation of processing customers, and financial institution, banking environment will consequently take advantage of this, and that is the reasons why people now are adopting the internet banking for their safety of funds.

For instance, studies have shown that, Nigeria is one of the countries that are believed to be largest internet users as at the year, 2000. The estimated to have risen to 350,000… meanwhile, information technology through banking system is radically changing how banking industry is dine all over the world, and Nigeria is not an exception.

1.2   Statement of the problem

Banks since the inception of the use of internet banking system in the late 1980’s, these banks have not made their presence felt much. Consequently, here are the results of the problems associated with the use of internet banking system.

It includes the following; poor infrastructures in the Nigeria banking industry, lack of security in the Nigeria banking environment, lost of ownership and adaptation, and poor orientation (illiteracy)

Poor Infrastructure in the Nigeria Banking Environment

Poor infrastructure is one of the major challenges facing the Nigeria banking industry today. For instance, World Bank data indicated that, there are only six (6) computers and four (4) mainline telephone lines per thousand people, while electricity supply is sporadic and inefficient.

Most importantly, Nigeria has a very low internet penetration, with not less than one internet services…provided for thousands of people.

Lack of Security in the Nigeria Banking Environment

The second challenges facing by the Nigeria banking industry is lack of security. For instance, research carried out in Africa shows that, companies considered the biggest obstacle of used by internet for financial transaction due to lack of security.

No doubt, many companies are concerned about the integrity of financial information that travels over the internet…and would rather accept the efficiencies and income of a manual system that economy and issue of trust in such a way that even cheques are dare.

Recently, the Nigeria marketers has witnessed the development internet purse products such as; value and the smart pay cards designed to move the economy…although, it is hoped that they will eventually help the importance of cash in the society.

Based o this, it is therefore clear that, such an environment consumers will be skeptical on a chick in computer screen will result in a computer financial transaction.

Cost of Ownership and Adaptation

Internet banking is very expensive because, is entails the acquisition of computers, telecommunication, and gadgets. In the same vein, banks spend lots on these products because of the exchange rate between the naira and dollar.

Poor Orientation (Illiteracy)

In spite the digital world today, so many people are still ignorant of services and benefits available to them with the use of internet banking products. For instance, the benefits are that, it is fast, safe and reliable services.

 1.3 Objectives of the study

The study seeks to achieve the following objectives;

  • To analyze the reasons for opening bank account
  • To examine the importance of internet banking services.
  • To investigate the impact of internet banking system on the Nigeria banking environment.

1.4   Research Questions

This study seeks to answer the following research questions drawn from the study. These include:

  • How many financial products or services are computerized?
  • Are banks fully or partially computerized?
  • Has the use of internet banking system helped to improve bank operation?
1.5   Research Hypotheses

H1: Internet Banking increases banks profitability

H0: Internet Banking does not increase banks profitability

1.6   Significance of the study

This research work will be of immense significance to Nigerian banking industries in the following ways:

  • Improving customers’ services
  • Reliability of transaction
  • Redundancy of storage

Improving of customers’ services

With the help of internet banking system, banks will be able to provide faster and better products, service to its customers.

Reliability of Transaction and safety

Internet banking technology ensures safety of banks dealing with its customers. Under these circumstances, bank must developed security feature for their internet site, which adequately address their customers’ concern and must educate their customers.

Redundancy of storage  

Internet banking system helps to reduce the use of files which are achieve thereby reducing storage space, using of files could lead to loss of vital information about banks customers through mutilation, easy and authorized access to files and misplacement of important documents. This can be presented through storage of information in hard disk and up of important information.

1.7   Scope of the study

The scope of the research work will be limited to Nigerian deposit money banks using Diamond Bank Plc, Uyo, Akwa Ibom State as a case study.

1.8   Limitation of the study   

This research work will be limited to Diamond Bank Plc as a case study. During the period of this research work, the researcher had the following challenges;

(i)     Lack of co-operation from the respondents in responding promptly to the questions asked.

(ii)    Lack of finance in providing material required for the research work.

(iii)    The time given for the completion of the study could not enable the researcher to conduct an in-dept study into the problem situation.

1.9   Definition of Terms

Internet Banking: A quick and easy way to access your account through internet.

Information Technology: This is an acronym for information technology which involves the use of electronic process and equipment to store of all kinds including words, numbers and pictures.

1.10   Organization of the study 

This research work comprises five chapters. Chapter one deals with the introduction and background to the study, statement of the problem, objectives of the study, significance of the study, scope of the study, limitation of the study, research questions, research hypotheses, definition of terms and organization of the study.

The chapter two will examine the literature review which will present the study by different scholars on the impact of internet banking system on Nigerian’s banking environment.

The chapter will also comprises of the theoretical and conceptual framework, theoretical background to the study, empirical literature, concept of internet banking, important of internet banking product and summary of the literature review. Chapter three captures the research methodology, which includes research design, population of the study,

sample and sampling technique, nature of data-primary and secondary, method of data collection/instrument, modes specification, statistical tools for data analysis and validity/reliability of the instrument. The chapter four consists of data analysis, discussion of findings, while the chapter five presents the study findings, summary, conclusions and recommendations and references and appendices.

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