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1.1       Background to the Study

Electronic Banking is defined as the automated delivery of new and traditional banking products and services directly to customers through electronic, interactive communication channels. The definition of Electronic Banking varies amongst researchers partly because electronic banking refers to several types of services through which bank customers can request information and carry out most retail banking services via computer, television or mobile phone (Daniel, 1999; Sathye, 1999 cited in Wadie 2011).

According to Auta (2010) cited in Auta (2010) the concept of Electronic Banking is a delivery channel for banking services. Banks have used electronic channels for years to communicate and transact business with both domestic and international corporate customers. With the development of the Internet and the World Wide Web (WWW) in the latter half of the 1990s, banks are increasingly using electronic channels for receiving instructions and delivering their products and services to their customers. This form of banking is generally referred to as Electronic Banking or Internet banking, although the range of products and services provided by banks over the electronic channel vary widely in content, capability and sophistication.

Salehi and Zhila, cited in Auta (2010), describes Electronic Banking as an electronic connection between bank and customer in order to prepare, manage and control financial transactions. Electronic banking can also be defined as a variety of following platforms: Internet banking (or online banking), telephone banking, TV-based banking, (iv) mobile phone banking, and Electronic Banking (or offline banking). Electronic Banking includes the systems that enable financial institution customers, individuals or businesses, to access accounts, transact business, or obtain information on financial products and services through a public or private network, including the Internet or mobile phone.

Customers access Electronic Banking services using an intelligent electronic device, such as a personal computer (PC), personal digital assistant (PDA), automated teller machine (ATM), kiosk, or Touch Tone telephone. While some literature restricts the use of the term to internet banking (Daniel 1999 cited in Auta 2010), elsewhere the term is limited to retail banking (Aladwani, 2001 cited in Auta 2010) or both retail and corporate banking (Simpson 2002 cited in Auta 2010).

According to Basel Committee Report on Banking Supervision, Electronic Banking refers to the provision of retail and small value banking products and services through electronic channels. 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. Isaca (2007) cited in Adewuyi, (2011 ) cited in Adesuyi (2013) highlighted that the key to controlling transaction risk lies in adapting impactful policies, procedures, and controls to meet the new risk exposures introduced by Electronic Banking. Basic internal controls including segregation of duties, dual controls, and reconcilements remain important.

Imiefoh (2012) in Imiefoh (2012) also added in the same manner that banking in Nigeria has come a long way from the time of ledger cards and other manual filling systems. Most banks today have electronic systems to handle their daily voluminous tasks of information retrieval, storage and processing. Irrespective of whether they are automated or not, banks in Nigeria by their nature are continually involved in all forms of information management.

He went further and described electronic banking (Electronic Banking) as an umbrella term for the process by which a customer may perform banking transactions electronically without visiting a brick-and-mortar institution. That is, automated delivery of new and traditional banking products and services directly to customers through electronic, interactive communication channels. Thus, the following terms refer to one form or another of electronic banking: personal computer (PC) banking; internet banking; virtual banking; online banking; home banking; remote Electronic Banking and phone banking. Personal computer (PC) banking and Internet or online banking are the most frequently used designations. It should be noted, however, that the terms used to describe the various types of electronic banking are often used interchangeably.


1.2       Statement of the Problem

There is no contradiction to the fact that the Nigeria today experiences a problematic Electronic Banking service. Also, over the years, the underlying issues have not been adequately addressed for the attainment of the objectives of Electronic Banking. This has seriously affected and is still affecting the process of Electronic Banking particularly in developing countries like Nigeria.


As it was evidenced in Wada & Odulaja (2012) in Tunmibi and Falayi (2013)  ICT has also brought unintended consequences such as criminal activities, spamming, credit card frauds, ATM frauds, phishing, identity theft and other related cybercrimes.  Consequently, the above-listed problems lead to:

  • Low level of usage of Electronic Banking services by Nigerian banks’ customers.
  • Low level of awareness of different types of Electronic Banking service by the majority of banks customers, mostly, in rural areas.
  • Inimpactful service quality by banks as a result of low level of usage of Electronic Banking services by the customers.
  • Perception of risks such as ATM, credit card fraud and others type of fraud which have negative impact on Electronic Banking in Nigeria.

The above statements has led to the failure of Electronic Banking in Nigeria thereby making this study a necessity.


1.3       Objectives of the Study 

The general objective of the study is to examine impact of electronic banking on service quality of bank in Lagos. The specific objectives of the study are to;

  1. Examine the types of Electronic Banking used by customers.
  2. Examine how well customers have been using Electronic Banking facilities.
  3. Identify the impact of electronic banking on service quality of banks.
  4. Find out the problems of Electronic Banking to customers.


1.4       Relevant Research Questions

The following relevant questions where formulated:

  1. What are the types of Electronic Banking services used by customers?
  2. How well have customers been using Electronic Banking facilities?
  3. What are the positive impacts of Electronic Banking on service quality to customers?
  4. What are the problems of Electronic Banking to customers?


1.5       Relevant Research Hypotheses

Here are the relevant research hypotheses:


Hypothesis 1

H0:      There is no significant relationship between types of Electronic Banking facilities used by customers and how well customers have been using the Electronic Banking facilities.


Hypothesis 2

H0: Electronic Banking does not have positive impact on service quality to bank customers.


1.6       Significance of the Study

This study is very important because it assess the impact of electronic banking on service quality of bank in Lagos as case study.

Electronic banking in Nigeria today is a welcome development and also its impact on the banking industry is expected to be positive and yielding fruit to our economy, so this research is significant in so many ways as: It will expose the factors that are preventing Nigerian banks in putting impactful and sustained Electronic Banking in place.


Using Electronic Banking as a strategic tool will make a provision on how a bank can embrace of opportunities and reduce threats in Nigerian business environment. This will provide a means through which banks can improve their performance, increase profitability and also increase their chances of survival. It will motivate banks and other economic agents to computerize their services. It will provide advanced Knowledge in the area of electronic banking in Nigeria.


Furthermore, to sustain impactful Electronic Banking in Nigeria, certain strategic measures will be revealed in order to reduce negative impacts of the problems identified as obstacles to the smooth functioning of the system.


1.7       Scope of the Study

This research work examines the effect Of Electronic Banking On the Banking Operations with a view to explore EcoBank Plc, Lagos-Island, Lagos. The study also intend to examine the implication of electronic banking in Nigerian banks and also the various forms of payment and electronic systems used by Nigerian banks, the impactfulness of Electronic Banking on service quality, the extent of usage of Electronic Banking services by customers and the impact of the risks perceived by the customers on Electronic Banking.


1.8  Definition of Terms

Automated Teller Machine:  This is computerized machine that enables the customers to perform several banking operations without the help of a teller, such as to withdraw cash, make deposits, pay bills, obtain bank statements, impact cash transfers etc.


Automation: This is the use of control systems and IT to reduce the need for human work in the production of goods and services.

Bank: An organization offering financial services, especially, the safe keeping and lending of money.

Customer: A person or company that regularly patronizes a particular bank.

CyberCrime: This describes the dangers facing computer users on internet some of which are: online banking dangers, the dangers of dating online, bad online medicine, child pornography, spam, fake IDs.

Electronic Banking; the use of computers to carry out banking transactions such as withdrawals through cash dispensers or transfer of funds at point of sale.

Electronic Money Transfer: Moving funds between different accounts in the same or different banks, through the use of wire transfer, automatic teller machines, or computers.

Information Technology (IT):  This represents set of tools, processes, and methodologies and associated equipment employed to collect, process, and present information.

Service quality: This is the act of providing the needs of customers or clients.

Smart Cards:  plastic card with embedded microprocessor chip, electronic memory, and a battery. Used for information storage and management and authentication.

Spamming: This is the use of electronic messaging systems (including most broadcast media, digital delivery systems) to send unsolicited bulk messages indiscriminately.

Telephone Banking:  this means provision of certain banking services (such as account balance inquiry, funds transfer, and payment of bills) through telephone.


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