E-banking system has become an important practice among commercial banks in Nigeria. The introduction of this electronic banking has improve banking efficiency in rendering services to customer, This Study aim at the  impact of electronic banking on performance in banking sector. Through the cluster sampling technique, data was collected by means of questionnaires from 80 Zenith Bank officers and the result shows that Zenith Bank electronic banking guidelines are in line with the CBN electronic banking guideline. The bank has an effective electronic banking system which has improve its customer’s relationship and satisfaction. To this end, It is recommended that the bank information technology training programme should be encourage among the staff of Zenith Bank, necessary legal codes banking should be established in order to enhanced growth of the industry.



Title Page                                         i

Certificate                                         ii

Dedication                                        iii

Acknowledgement                                    iv

Abstract                                        v

Table of content                                     vi-vii


1.1    Background of the study                            1

1.2    Statement of Research Problem                        3

1.3    Research Objectives                                4

1.4    Research Questions                                6

1.5     Research Hypotheses                                6

1.6     Significance of the Study                            7

1.7    Scope of the Study                                8

1.8    Limitation of the Study                            8

1.9    Historical Background of the Case Study                     9

1.10    Definition of Related Terms                            12


2.1.     Introduction                                    14

2.2.     Conceptual Framework                            17

2.2.1     Concept of Electronic Banking                        17

2.3.     Delivery Channels of E-banking                        21

2.3.1     Automated Teller Machine (ATM)                        21  

2.3.2    Internet Banking                                22

2.3.3    Mobile Banking                                 22

2.3.4    Point of Sale Machine (POS)                        23

2.3.5    Electronic Transfer of Funds                        23

2.4     The Entry of Nigerian Banks into Electronic Banking                23

2.5     Challenges of E-banking in Nigeria                         26

2.5.1 Money Laundering                                 26

2.5.2 Fraud                                        27

2.5.3 Electronically Generated Evidence                        27

2.5.4 Consumer Protection                                 28

2.5.5 Possibility of Core Business Being Swallowed                    28

2.5.6 Systems Operational Risks                            28

2.5.7 The Regulatory Challenges                            28

2.6     Electronic Banking Profitability and Efficiency                29

2.7     Bank Customer Relationship                            30

2.8    Electronic Banking Performance                    31


3.1     Introduction                                    35

3.2    Research Design                                 35

3.3    Re-statement of Research Questions                    36

3.4    Re-statement of Research Hypotheses                    36

3.5     Population of Study                                37

3.6     Sampling Techniques                                37

3.7     Sample Size                                    37

3.8     Sources of Data                                38

3.9     Method of Data Analysis                            38

3.9.1 Test of Hypotheses and Inference                        38

3.9.2 Decision Rule and Justification                            39


4.1.     Introduction                                    40

4.2.     Presentation and Analysis of Data                        40

4.2.1. Qualification of Respondent                            40

4.2.2     Working Experience                                41

4.2.3: Cadre of Respondents                                43

4.2.4     Professional Qualification                            43

4.2.5: Department of Respondents                            45

4.2.6 Threat to Electronic Bank                            46

4.2.7: Threat Assessment                                46

4.2.8: Respondent assessment of overall performance in                47

Zenith Bank’s E-Banking System

4.3 Test of Hypothesis                                    61

4.3.1 Hypothesis One                                    61

4.3.2 Hypothesis two                                    63

4.3.3 Hypothesis Three                                64

4.3.4 Hypothesis Four                                    65

4.4     Discussion of Findings                                66


5.1     Summary                                    67

5.2     Conclusion                                    67

5.3     Recommendations                                69

References                                    71

Questionnaire                                    73



1.1    Background of the study

The new millennium brought with it new possibilities in terms of information access and availability simultaneously, introducing new challenges in protecting sensitive information from some individuals while making it available to others. Today’s business environment is extremely dynamic and experience rapid changes as a result of technological improvement, increased awareness and these demand Banks to serve their customers electronically. Banks have always been in the forefront of harnessing technology to improve their products and services.

The Banking industry of the 21st century operates in a complex and competitive environment characterized by these changing conditions and highly unpredictable economic climate. Information and Communication Technology (ICT) is at the centre of this global change curve of Electronic Banking System in Nigeria today. (Stevens 2012).

The Banking industry has over the time, been using electronic and telecommunication networks for delivering a wide range of value added products and services, managers in Banking industry in Nigeria cannot ignore Information Systems because they play a critical impact in current Banking system, they point out that the entire cash flow of most fortune Banks are linked to Information System.

The application of information and communication technology concepts, techniques, policies and implementation strategies to banking services have become a subject of fundamental importance and concerns to all Banks and indeed a prerequisite for local and global competitiveness in the Banking sector.

The advancement in technology has played an important role in improving service delivery standards in the Banking industry. In its simplest form, Automated Teller Machines (ATMs) and deposit machines now allow consumers carry out banking transactions beyond banking hours.

The internet is revolutionizing sales techniques and perceptions of leading brands, and the internet is intensifying competition in all its forms.

Banking sector continues to use the internet to add value to their customers’ satisfaction; but in order for this to work effectively - maximizing opportunities, reducing risks and overcoming problems – an E-Banking strategy is required.

The growth of the Web and Internet as new channels, the growth in their use by customers and the floor of companies entering the market, presents a series of key challenges to companies. It is easy and cheap to put up a website.

But to create an environment delivering effective service on the Web to a significant proportion of your customer base requires an E-Banking strategy.

Electronic Banking offers different online services like balance enquiry, request for cheque books, stop payment instructions, transfer instructions, account opening, payment of bills, E-statement and other form of transitional Banking services.

1.2    Statement of Research Problem

In Nigeria, customers of banks today are no longerabout safety of their funds and increase returns on their investments only; Customers demand efficient, fast and convenient services.

Customers want a Bank that will offer them services that will meet their particular needs (personalized Banking) and support their Business goals for instance; businessmen want to travel without carryout cash for security reasons. They want to be able to check their balance online, find out if a cheque is cleared, transfer funds among accounts and even want to download transaction records into their own computer at work or home. Customers want a preferential treatment and full attention by their choice Bank. All these are only achievable through electronic Banking.

In line with rendering qualities and acceptable services that most Banks in Nigeria are gearing toward and investing large sum of money in information and communication Technology, expectedly such Banks services have been improved. United Bank for Africa

(UBA), Zenith Bank, GT Bank (to mention few) are in the forefront in the use of IT in rendering services to their Customers (The Guardian Newspaper April 18, 2008p 21). It also seeks the challenges involved in Electronic Banking and Best industrial practice and the approach of implementing them in Nigeria Banking system.

1.3    Research Objectives

The main objective of this research work is to examine impact of electronic Banking in Banking Performance on how difference channels could enhance the delivery of consumers and retail products, and also how Banks choose to support their Electronic

Banking component/services internally, 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 process

Specifically the study objectives are to;

I. Evaluate the prospects of electronic banking to enhance customer’s satisfaction

II. Evaluate the impact of electronic banking on performance in banking sector

I11. Examine the effects of electronic banking on Bank customer satisfaction.

1V.  To what extent do banks E-banking platform comply with the CBN policy frame work.

V.     what are the challenges to effective E-banking operations.

1.4    Research Questions

One of the questions currently being addressed is the impact of electronic Banking on traditional banking practices; there are two views that are prevalent in the Market. The controversies that the internet is a revolution that will sweep away the old practice, argument in are as follow;

1.    Does Electronic Banking give consumers much more choices and will consumers be less inclined to remain loyal.

2.    Deposits will go elsewhere because these banks will have to fight to regain their customer base. There would be increase in their cost of funds, making their businesses less viable.

3.     Can the portal provide momentous share of banking profits.

4.    Do micro-finance banks find it difficult to evolve; would they be able to obtain additional capital from stock market?

5.    E-Banking as an Evolution than a revolution.

1.5 Research Hypotheses

The following hypotheses are formulated in null form to guide the study.

H0: Electronic banking does not have effect on customer satisfaction

H1: Electronic banking has effect on customer satisfaction

H0: Electronic banking does not impact on bank performance

H1: Electronic banking has positive effecton bank performance

H0: Electronic banking does not improve Bank Customer relationship

H1:     Electronic banking improves Bank Customer relationship

H0: The Banks electronic banking platform does not comply with the CBN policy frame work.

H1: The Banks electronic banking platform complies with the CBN policy frame work.

1.6 Significance of the Study

Researchers have not given much attention to the revolution occasioned by electronicbanking with regard to profitability performance of banks.

Also, from the foregoing, it is crystal clear that technology is the key driver of change. For the change to be beneficial, the use of technology should be business driven to meet clearly defined goals. Thus, the choice of electronic banking in Nigerian banking system is not a mean stride. This underpins the essence of this research work, which aims at evaluating the impact of e-banking on the performance of Nigerian Banks.

However, researchers have not given much attention to this revolution occasioned by electronic banking with regard to profitability performance of banks.

The study would enable the banks executives and indeed the policy makers of the banks and financial institutions to be aware of electronic banking as a product of electronic commerce with a view to making strategic decisions.

1.7    Scope of the Study

In pursuance of the objective of the study; attention shall be focused on electronic banking among other electronic commerce implementation. In order to conduct an empirical investigation into the adoption of Electronic banking in Nigeria and will also examine the nature of electronic banking operations onprofitability performance of banks from 2009 to 2011.

1.8    Limitation of the Study

In view of the technicalities involved, it would be unrealistic to assume that all necessary facts have been gathered in the process of the study. Information gathered is limited to those accesses and made available by the respondents and also those gathered from end users. However, the impacts of this limitation will be reduced to the barest minimum.

1.9    Historical Background of the Case Study

Zenith Bank is one of Nigeria's largest banks. The bank currently has a shareholder base of about one million and is the biggest tier-1 bank in Nigeria.

Zenith Bank Plc was established in May 1990, and commenced operations in July of the same year as a commercial bank. The Bank became a public limited company 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 currently has a shareholder base of about one million and is Nigeria’s biggest bank by tier-1 capital. In 2013, the Bank listed $850 million worth of its shares at $6.80 each on the London Stock Exchange (LSE)..

Headquartered in Lagos, Nigeria, Zenith Bank Plc has over 500 branches and business offices in prime commercial centres in all states of the federation and the Federal Capital Territory (FCT). In March 2007, Zenith Bank was licensed by the Financial Services Authority (FSA) of the United Kingdom to establish Zenith Bank (UK) Limited as the United Kingdom subsidiary of Zenith Bank Plc. Zenith Bank also has subsidiaries in: Ghana, Zenith Bank (Ghana) Limited; Sierra Leone, Zenith Bank (Sierra Leone) Limited; Gambia, Zenith Bank (Gambia) Limited. The bank also has representative offices in South Africa and The People’s Republic of China.

Zenith’s Strong Growth

Zenith Bank has built a brand as a reputable, international, financial institution, recognised for innovation, superior customer service and performance while creating premium value for all stakeholders. Today, the bank is easily associated with the following attributes: Innovation, solid financial performance, stable and dedicated management, highly-skilled personnel, leadership in the use of ICT, strategic distribution channels and good asset quality. The key strategies used to drive the robust growth are as follows:

⦁    Always delivering superior service experience to all customers;

⦁    Developing deeper and broader relationship with all clients and  striving to understand their individual and industry peculiarities with a view to formulating specific solutions for each segment of the customer base;

⦁    Optimally expanding the bank’s operations by adding new distribution channels and entering into new markets where opportunities exist;

⦁    Maintaining the bank’s position as a leading service provider in Nigeria, while expanding its operations internationally in West Africa and the financial capitals of the world;

Ratings and Corporate Governance

Zenith Bank has consistently recorded good ratings from both the international (Fitch Ratings, Standard & Poor’s) and local (Agusto & Co.) rating agencies. The ratings on Zenith Bank Plc are supported by its leading market position in all key performance indices.

Zenith Bank has consistently put in place a robust system of corporate governance, bearing in mind the key elements of honesty, trust, integrity, openness and accountability as well as commitment to the organisation’s goals. To uphold strong corporate governance and transparency, the bank adopts a robust public disclosure policy. This is to forestall incidences of abuse, such as insider trading.

All financial information, as well as exceptional and extraordinary events capable of influencing the public decision concerning the bank, are approved for dissemination by the board and then related through authorised means to the public at the same time. The release of such information is done speedily and as often as stipulated by the regulatory bodies.

1.10    Definition of Related Terms

Access Products – Products that allow consumers to access traditional payment instrument electronically, generally from remote locations.

ATM Card - The Card is a complex circuits that process microprocessors with a single chips that contain the complete arithmetic and logic unit of computers.

Chip Card – Is a card containing one or more computers chips or integrated circuits for identification, data storage or special purpose processing used to validate personal identification numbers, authorize purchases, verify account balances and store personal records.

Electronic Data Interchange (EDI) – The transfer of information between organizations in machine readable form.

Electronic Money – Monetary value measured in currency units stored in electronic form on an electronic device in the consumer’s possession.

Electronic Recruitment –This is an online recruitment services to all kinds and categories of clients such as (Army, navy, police and the Paramilitary) through customizable web portals.

Electronic Web Collection - This enables the Bank partner with Universities and higher institutions of learning to handle Admission, Registration, Examination Managements and Fees Collection needs.

Internet Banking- This is a product that enables the Bank leverage on the Internet Banking System Module in-built on the new Banking Application

Mobile Banking - This is a product that offers Customers of a Bank to access services as you go. Customer can make their transactions anywhere such as account balance, transaction enquiries, stop checks and other customer’s service instructions, Balance Inquiry, Account Verification, Bill Payment, Electronic fund transfer, updates and history, Customer service via mobile, Transfer between accounts etc.

Smart Card – A Card with a computer chip embedded, on which financial health, educational, and security information can be stored and processed.

Transaction Alert - The alert system also serves as notification system to reach out to customers when necessary information need to be communicated.

Western Union Money Transfer (WUMT) - Western union Money transfer is a product that allowed people with relatives in Diaspora who may be remitting money home for family up-keep, Project financing, School fees etc.




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