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Effect of Electronic Transactions on Effective Financial Service Delivery

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Electronic commerce is now thought to hold the promise of a new commercial revolution by offering an inexpensive and direct way to exchange information and to sell or buy products and services. This revolution in the market place has set in motion a revolution in the banking sector for the provision of a payment system that is compatible with the demands of the electronic marketplace (Dogarawa, 2005). Electronic-transaction in Nigeria is in an embryonic stage. However, one area of electronic-transaction that has proven successful in Nigeria is electronic banking (Ebanking). The term “electronic banking” or “e-banking” covers both computer and telephone banking. It 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). Burr (1996) describes it as an electronic connection between the bank and the customer in order to prepare, manage and control financial transactions.

Electronic banking according to Al-Abed (2003) is an umbrella term for the process by which a customer may perform banking transactions electronically without visiting a brickand-mortar institution. Lustsik (2004) describes electronic banking as a variety of the following platforms: Internet banking, telephone banking, TV-based banking, mobile phone banking, and PC banking. For the purpose of this research, we define electronic banking as the delivery of banking services and products through the use of electronic means irrespective of place, time and distance. Such products and services can include deposit-taking, lending, account management, the provision of financial advice, electronic bill payment, and the provision of other electronic payment products and services such as electronic money. The benefits of this 21st century banking are numerous.

Its introduction would increase the potential of business to attain greater productivity and profitability, as trading and transactions, which would be carried out via communication networks, would be a lot faster and distance would no longer be barrier to effective transactions (Fagbuyi, 2003). According to Sergeant (2000), the benefits of E-banking are manifold and are to be seen from the point view of the banks themselves, customers and even the regulators. According to him, for banks, E-banking brings different and arguably lower barriers to entry; opportunities for significant cost reduction; the capacity to rapidly reengineer business processes; and greater opportunities to sell cross border. For customers, the potential benefits are: more choice; greater competition and better value for money; more information; better tools to manage and compare information; and faster service. In the past few years, Nigerian banks and generally the financial services industry embraced electronic banking, which has been made possible by the advancements in information technology (IT).

According to Sanusi (2002), the introduction of such e-payment products in Nigeria commenced in 1996 when the CBN granted Allstates Trust Bank approval to introduce a closed system electronic purse called ESCA. This was followed in February 1997, with the introduction of a similar product called “Paycard”, by Diamond Bank. The card based e-money products assumed an open platform with the authorisation in February 1998, of Smartcard Nigeria Plc, a company floated by a consortium of 19 banks to produce and manage cards called valucard and issued by the member banks. Many banks therefore launched their websites between 1998 and 2000 with a view to starting Internet banking. A consortium of more than 20 banks under the auspices of Gemcard Nigeria Limited obtained CBN approval in November 1999 to introduce the “Smartpay” scheme.

The CBN has additionally granted approval to a number of banks to introduce international money transfer products, telephone banking and on-line banking via the Internet, though on a limited scale (Abdulhakeem, 2002). Many more sophisticated electronic banking products were thereafter, introduced to improve service delivery and customer satisfaction. CBN (2003) reports that Automated Teller Machines (ATM), Cards, Telephone Banking, Personal Computer Banking and Internet Banking are now available in the banking system. Thus, Nigerian banks today are seriously into new electronic delivery channels for banking products and services with a view to delivering better services and satisfying customers the more. Banks that cannot offer these services are increasingly losing their customers. In the light of the foregoing, this study will be conducted to examine the impact of electronic transactions on effective service delivery and customer satisfaction in the Nigerian banking industry. 1.2 STATEMENT OF PROBLEMS

One of the benefits banks derive from electronic banking products and services delivery is improved efficiency and effectiveness of their operations so that more transactions can be processed faster and most conveniently, which will undoubtedly impact significantly on the overall performance of the banks. The customers on the other hand, stand to enjoy the benefit of quick service delivery, reduced frequency of going to banks physically and reduced cash handling, which will give rise to higher volume of turnover. However, these developments in the Nigerian banking industry seem not to have achieved their aims.

Queues are still seen in the banking halls, bank customers still handle too much cash, and hardly people talk about the electronic banking products that are available in Nigeria. It is observed that Nigeria banks frequently have network failures and may not have sufficient electronic banking infrastructure that could enable uninterrupted electronic banking service delivery in the country. The problem here is: are customers really enjoying these services? Related to this problem, empirical evidence implies that customers’ patronage for and reaction to a particular product depend on their level of understanding of what the product can do and what they stand to benefit. 1.3 OBJECTIVES OF THE STUDY

The main objective of the study will be to examine electronic transaction and its effect on service delivery in Nigeria. Other objectives are; i. To examine the effect of electronic banking infrastructure on timely transactions. ii. To examine the effectiveness of Automated Teller Machine (ATM) on availability cash withdrawers. iii. To assess the effect of operational efficiency of electronic transaction on customer satisfaction. iv. To identify the influence of quality electronic products on customer patronage. 1.4 RESEARCH QUESTION

In order to get information from respondents, the following questions where formulated: i. What are the effects of electronic banking infrastructure on timely transactions? ii. In what way effectiveness of Automated Teller Machine (ATM) affects availability of cash withdrawers? iii. How does operational efficiency of electronic transaction affect customer satisfaction? iv. To identify the influence of quality electronic products on customer patronage. 1.5 RESEARCH HYPOTHESES

H0: Electronic banking infrastructure does not have significant effect on timely transactions. H1: Electronic banking infrastructure does not have significant effect on timely transactions. H0: Automated Teller Machine (ATM) does not have significant effect on availability of cash withdrawers H1: Automated Teller Machine (ATM) has significant effect on availability of cash withdrawers H0: Operational efficiency of electronic transaction does not affect customer satisfaction H1: Operational efficiency of electronic transaction affects customer satisfaction 1.6 SIGNIFICANCE OF THE STUDY

Electronic banking in our economy today is a welcome development and its impacts in the society are over-whelming, so this research is significant in so many ways. It will expose the strength and weakness of electronic banking. It will motivate banks and other economic agents to computerize their services. Knowledge in the area of electronic banking will be advanced. Apart from contributing to the knowledge of electronic banking, it forms a reference for future research in this area. 1.6 SCOPE OF STUDY

The scope of the study is covers electronic banking system in Nigeria. The study will cover the various forms of payment and electronic systems used by banks and how such system affects effective service delivery and customer satisfaction. 1.7 LIMITATION OF STUDY

Time is a major factor to the researcher as research of this kind requires enough time in gathering data hence; the researcher encountered some challenges in the distribution, collection and analysis of questionnaire. Also, some banks make it difficult for student researcher to gather information from their employees as they considered such act as a violation of the terms of their employment contract. Finally, finance was the most limited factor as the researcher has to visit the organization of study several times in the process of data collection. Also, the amount used in typesetting and sourcing materials for the study was another set of limitation to the study. RESEARCH METHOD

The study shall adopt survey research method. Data collection shall be done through primary and secondary sources. The primary data will be collected through the use of questionnaire and personal interview. The population of study shall comprise of staff and customers of GTB, UBA and Access Bank Plc. Samples shall be draw from the population by applying stratified random sampling technique, attempt shall be made to extract a sample size of about 100 respondents from the population of study. Data analysis shall be carried out in the study by adopting statistical tools such as frequency distribution, tables, percentages and chi-square analysis shall be adopted to test the formulated hypotheses.

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