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CHAPTER
ONE
INTRODUCTION
1.1. Background of the study
Mobile
banking is an innovation that has progressively rendered itself in pervasive
ways cutting across several financial institutions and other sectors of the
economy. During the 21st century mobile banking advanced from providing mere
text messaging services to that of pseudo internet banking where customers
could not only view their balances and set up multiple types of alerts but also
transact activities such as fund transfers, redeem loyalty coupons, deposit
cheques via the mobile phone and instruct payroll based transactions(Vaidya
2011). The world has also become increasingly addicted to doing business in the
cyber space, across the internet and World Wide Web. Internet commerce in its
own respect has expanded in various innovative forms of money, and based on
digital data issued by private market actors, has in one way or another
substituted for state sanctioned bank notes and checking accounts as customary
means of payments (Cohen 2001). Technology has greatly advanced playing a major
role in improving the standards of service delivery in the financial
institution sector. Days are long gone when customers would queue in the
banking halls waiting to pay their utility bills, school fees or any other
financial transactions. They can now do this at their convenience by using
their ATM cards or over the internet from the comfort of their homes.
Additionally due to the tremendous growth of the mobile phone industry most
financial institutions have ventured into the untapped opportunity and have
partnered with mobile phone network providers to offer banking services to
their clients. ATM banking is one of the earliest and widely adopted retail
e-banking services in Nigeria (Nyangosi et al. 2009). However according to an
annual report by Central Bank of Nigeria its adoption and usage has been
surpassed by mobile banking in the last few years (CBK 2008). The suggested
reason for this is that many low income earners now have access to mobile
phones. A positive aspect of mobile phones is that mobile networks are available
in remote areas at a low cost. The poor often have greater familiarity and
trust in mobile phone companies than with normal financial institutions.
1.2. Statement of the general problem
A
fundamental assumption of most recent research in operations improvement and
operations learning has been that technological innovation has a direct bearing
on performance improvement (Upton and Kim, 1999). Strategic management in
financial institutions demand that they should have effective systems in place
to counter unpredictableevents that can sustain their operations while
minimizing the risks involved through technological innovations. Only financial
institutions that are able to adapt to their changing environment and adopt new
ideas and business methods have guaranteed survival. Some of the forces of
change which have impacted the performance of financial institutions mainly
include technological advancements such as use of mobile phones and the
internet. Since the beginning of e-banking Nigerian financial institutions have
witnessed many changes. Customers now have access to fast, efficient and
convenient banking services. Most financial institutions in Nigeria are
investing large sums on money in information and communication technology
(ICT). However while the rapid development of ICT has made some banking tasks
more efficient and cheaper, technological advancements have their fair share of
problems; for example they take a large share of bank resources, plastic card
fraud particularly on lost and stolen cards and counterfeit card fraud. Thus
there is a need to manage costs and risks associated with internet banking. It
is crucial that internet banking innovations be made through sound analysis of
risks and costs associated to avoid harm on banks performance. Bank performance
is directly dependent on efficiency and effectiveness of internet banking and
on the other hand tight controls in standards to prevent losses associated with
internet banking. In order not to impair on their prosperity, financial
institutions need to strike a balance between tight controls and standards in
efficiency of internet banking. This is only possible if the effects of
internet banking on financial institutions and its customers are well analyzed
and understood. Mobile money has emerged as a strong competition to financial
institutions in Nigeria. Initially cellular phones were developed to improve
communication from the earlier primitive forms of communications such as smoke
and drums. Financial institutions introduced ICT as an improvement to the
banking channels. This has thus enabled bank customers’ access information
relating to their accounts, (Tiwari, Buse and Herstatt, 2007.). In this regard
mobile phone service providers have taken mobile money services deeper into the
financial sector by offering a range of financial services through their
networks.
1.3. Objectives of the study
The
following would be the aims and objectives of this study
1. To
examine the impact of internet banking on organizational productivity.
2. To
examine the extent to which organizations in Nigeria make use of internet
banking.
3. To
recommend better ways of improving internet banking in Nigeria.
1.4. Research Questions
1. What
is the impact of internet banking on organizational productivity?
2. What
is the extent to which organizations in Nigeria make use of internet banking?
1.5. Research hypothesis
H0:
internet banking does not influence organizational productivity
H1:
internet banking influences organizational productivity
1.6. Significance of the study
The
study will be crucial to emerging financial institutions as it will provide
answers to the factors against the implementation of internet banking in
Nigeria, prove of the success and growth associated with the implementation of
internet banking and highlight the areas of banking operations that can be
enhanced via internet banking. It is equally significant for bank executives
and indeed the policy makers of the banks and financial institutions to be
aware of internet banking as a product of internet commerce with a view to
making strategic decisions. The study is also expected to give an insight on
the state of mobile money services as a competition to the commercial banks in
Nigeria and the factors that have greatly influenced its growth. Players in the
financial institution sector and telecommunications industry will find the
study useful as they can use the findings to strategize on how they can
mutually benefit from this development. Finally, our study adds to the existing
literature, and is a valuable tool for students, academicians, institutions,
corporate managers and individuals who want to learn more about mobile and
internet banking.
1.7. Scope and limitations of the
study
This
study is restricted to the impact of internet banking on organizational productivity.
Limitation of the study
Financial constraint– Insufficient fund tends to impede the efficiency of the
researcher in sourcing for the relevant materials, literature or information
and in the process of data collection (internet, questionnaire and interview).
Time
constraint– The
researcher will simultaneously engage in this study with other academic work.
This consequently will cut down on the time devoted for the research work.
REFERENCE
Freedman, C. (2000), Monetary Policy
Implementation: Past, Present and Future-‘’Will Electronic Money Lead to the
Eventual Demise of Central Banking?’’ International Finance, Vol.3, No.2, pp.
211-227
Freixas, X. and J.C. Rochet (1998), Microeconomics
of banking, MIT Press.
Friedman, B, (1999), the Future of Monetary
Policy: The Central Bank as an Army with Only a Signal
Corps?InternationalFinance, Vol.2, No.3, pp.321-338.
Goodhart, E. (2000). Can Central Banking Survive
the IT Revolution? InternationalFinance, Vol. 3, No.2.pp.189-209.
Juniper Research, (2009). Mobile Banking
Strategies: Applications, Opportunities and Markets 2010-2015.
Kariuki, N. (2005), Six Puzzles in Electronic
Money and Banking IMF Working Paper, IMF Institute. Vol. 19.February.
Mcmillan&Schumaker (2001); Non-enforceable
implementation of enterprise mobilization: and exploratory study of the
critical success factors, Industrial Management & Data Systems, 105 (6),
786-814.
Prinz, A. (1999), Money in, the Real and the
Virtual World; E-Money, C-Money, and the Demand for CB-Money, Netnomics, Vol.1,
pp.11-35.
Santomero, A.M, and Seater J.J, (1986).
Alternative Monies and the demand for Media of Exchange, Journal of Money,
Credit and Banking, Vol.28, pp. 942-960.
Steven A. (2002), Information Systems: The Information
of E-Business, New Jersey: Natalie Anderson, pp.11-36
Tarkka, J.(2002), The Market for Electronic Cash
Cards, Journal of Money, Credit and Banking, Vol.34, pp.299-314.
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