Electronic Banking and Performance of Banks in Nigeria
The study examined the effect of electronic banking on performance of banks in Nigeria for the period of 2005–2014. It also analysed the problems and challenges associated with e-banking and determined the degree of adoption of e-banking in Nigeria. These were with the view of helping the financial statement users to make informed and balanced economic decisions. Data were collected from both primary and secondary sources for this study. The choice of the period (2005-2014) is hinged on the fact that there was no meaningful recognition of e-banking services in our financial system until 2015. The population for the study comprised members of staff of the 15 Deposit Money Banks (DMBs) in Nigeria that were purposively selected for the study based on availability of complete data covering the sample period as at 2014. Two key personnel (operation manager and e-banking officer) directly involved in e-banking operations were purposively selected from each of the 15 DMBs. Data on problems and challenges associated with e-banking in Nigeria were obtained through the administration of structured questionnaire. Secondary data on bank investment in Information Technology, sales growth attributable to IT investment, total assets, total equity, returns on equity and age were sourced from annual financial reports of Deposit Money Banks. Descriptive statistics such as the mean, median, standard deviation and inferential statistics such as pool ordinary least squared with fixed effect and random effect were used. The result showed that Deposit Money Banks are posed with problems and challenges associated with electronic banking such as the capital intensiveness of electronic banking, e-banking entails technical expertise, knowledge gap affecting the patronage/usage of electronic banking, the users of e-banking prone to fraud, electronic banking carry heightened legal risks, incessant service failure discourages the continuous use of electronic banking products. Also, there is relative increase in the degree of adoption of electronic banking based on the years that were reviewed. The effects of electronic banking on performance of banks in Nigerian in terms of profitability indicated a negative result. The study concluded that electronic banking does not have effect on profitability of banks in Nigeria. The justification could be as a result of huge amount of money incurred on electronic banking, capacity planning to address increasing transaction volumes and provision of critical infrastructure.