CHAPTER ONE

INTRODUCTION

1.1.  Background of the Study

Today’s business environment is extremely dynamic in nature. It has experienced rapid changes as a result of technological improvements, increased awareness and demands for banks 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, thus, information and communication technology (ICT) is at the centre of this global change.  Amedu (2005) asserts that banks over the time have been using electronic and telecommunication networks for delivering a wide range of value added products and services. Therefore, information systems could not be ignored because they play a critical role in current Banking system in Nigeria.

Electronic banking is known as e-banking, virtual banking or an online Banking, it is a service that allows customers to access their bank information, conduct financial transactions, make deposits, withdrawals and pay bills through the internet without having physical visit to their banks. It provides the convenience of accessing banking facilities from the comfort of their home/offices. (Awamleh & Fernandez, 2005).

The concept of electronic banking system began when the first Automated Teller Machine were instated in the 1970s. An ATM machines allowed deposits to be made from the remote locations-- a convenience for customers who otherwise would have had to withdraw cash personally from their bank. The advantages offered by ATM Machines quickly split over to encompass other areas of bank services, computerizing manual system for greater efficiency and time savings. The concept behind ATM machines gave rise to smart cards, intranets and internet banking, electronic funds transfer {EFT}, NIBSS (Nigerian interbank settlements system), POS {Point of Sales Service.}, Access mobile, and other electronic devices (Ahasanul, 2010).

The growth in the application and acceptance of internet-driven technologies means that delivering an enhanced service is more achievable than ever before, however it is also more complex and fraught with potential costs and risk. The internet introduces customers to a new perception of business time as always available and demanding an urgent and rapid response. The serves as a challenge for managers who must to reconcile their business and their own personal perceptions of time with the perceived reality of internet time, as the internet has decisively shifted the balance of power to the customer.

Presently, banks in Nigeria are adding value to their services for customer’s satisfaction. The customers have more choices in choosing their banks because the new age IT (Information Technology) is bringing about sweeping changes in the banking industry, forcing them to reengineer many of their basic processes and systems. Few of the technology-driven electronic banking services being offered are viz. Automated teller machines ATM, Electronic Clearing Service (ECS), electronic funds transfer (EFT), tele-banking, internet banking etc. New technological capabilities are now being effectively used to create value and to better manage customer relationship in Nigeria banking system. (Raji, 2010).

1.2    Statement of the problem

In Nigeria, customers of banks seek for safety of their funds and increased returns on their investment. Customers demand efficient, fast and convenient services. Many customers today want banks that offer them services that will meet their particular needs and support their business goals. For instance, a business man wants to travel without carrying cash for security reasons. The central bank of Nigeria has emphasized the need for banks to provide more efficient services to their intending and potentials customers. Therefore, the introduction of electronic banking system in the Nigerian financial industry is expected to play an important role in the delivery of efficient and effective services. Unfortunately, most Nigerian banks are still lagging behind in adopting and equipping themselves with the current and sophisticated electronic devices as a results of non availability of financial, management and human resources, which would have given them more competitive advantages and attract more customers to themselves. One is therefore inclined to wonder what could be responsible for the non adoption of the present banking gadgets. Is it that the present employees of the banks cannot make use of these advance gadgets? Or are the gadgets too costly to be acquired by the banks? These are the questions which this project intends to seek appropriate solution.

1.3  Objectives of the study

The main objective of this research is to appraise the effect of electronic payment system on customer satisfaction in Nigeria banking system. Specifically, the study will examine the following objectives:-

1. To evaluate the effects of electronic payment system on banks customers.
2. To assess the impact of electronic payment system on the bank’s service delivery.

iii. To examine the effect of electronic payments on competitive advantage of the bank.

iv. To ascertain the effect of electronic payment system on increase in market size of the banks.

1.4  Research questions

 The following research questions were developed in order to guide the study:

1. Does the electronic payment system enhance service delivery in the banking system?
2. Does the electronic payment system increase the market size of the banks?
3. Does the electronic payment system enhance the competitive advantage of the bank’s?
4. Does the electronic payment system enhance customer satisfaction of the banks?      

1.5  Research hypotheses

The following hypotheses were formulated

H01: There is no relationship between electronic payment system and banks service delivery in Nigeria banking sector

H02: There is no relationship between electronic payments system and customer     satisfaction in Nigeria banking sector.

1.6  Significance of the study

This study will be of immense benefit to the intending and present customers of the banks as it will open their eyes to the great advantages of the usage of electronic banking and also to the bank, as the introduction and selling of this product will bring about increase in the bank customers base, increase in deposit and as tools for favorable competitions in the industry. The research is equally significant because it would provide answers to factors militating against the implementation of electronic banking in the financial industry as a whole and also valuable tool for students, academician, institutions and individuals that wants to know more about electronic banking system.

1.7  Assumptions of the study

       The assumptions that will guide the procedure for the study include;

i.      Electronic banking was assumed to be important means of enhancing customer satisfaction

ii.     That the elements that will make up the case study corporate with the researcher by filling and returning the questionnaires that will be administered.

iii.    That the respondents that will be selected for the study have adequate knowledge and information about manpower planning process.

iv.    That the information that will be supplied by the respondents will be assumed to remain constant through the period of the study.

1.8  Scope and limitations of the study

In terms of coverage, this study will focus on the effect of electronic payment system on customer satisfaction in Access bank Plc.. This means that issues relating to electronic banking will be explained. 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 is limited to those accesses and made available by the respondents and also have gathered from end users.  More so, since financial industries have many forms, the study will only be limited to access bank plc of Nigeria. Some of the constraints are:-

1. Time constraints

The researcher finds it difficult to go round all the bank branches due to limited time availability, as a result of this, the data were only collected from few banks randomly.

1. Inadequate data

Electronic banking  is a recent developed system in which not all banks have embraced, those that have embraced it were able to give their information to the researcher and those that have not fully embraced it were unable to give accurate data to researcher.

1. Lack of funds

Due to the nature of this work, researcher find it difficult to raise the funds needed to carry out the research appropriately, as a result of this, few banks branches were selected based on the available finance to enable researcher get the needed information.

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