THE IMPACT OF ELECTRONIC BANKING IN NIGERIA BANKING SYSTEM

Adopting Electronic Banking policy in Nigeria raises many questions like these; are we capable of embarking on technological advancement? Or should we adopt it because other advanced countries have adopted it? As global financial systems become more connected, economies around the world gradually shift to electronic system of payments to quicken the delivery of their financial services. This is prominent in developed economies in the world like European and Asian continents where the use of technology has become ubiquitous. The Central Bank of Nigeria’s (CBN’s) electronic banking system initiative simply means an arrangement where the volume of cash used in transactions are being reduced to minimal and electronic payment or electronic commerce system of business transaction are encouraged in the country. Several countries have continued to make giant strides in this direction which had boosted trade and other economic activities. Nigeria and indeed several African countries have lagged as most of the businesses are conducted with as transactions. In its efforts to reposition the nation’s economy and make it relevant to the global financial environment, the central Bank of Nigeria (CBN) has continued the reform of the financial sector which is aimed at encouraging electronic payments and electronic commerce (e- payments and e-commerce). In order to achieve these goals, the apex bank recently introduced a new programme called cashless policy. The cashless policy of CBN is an initiative of the Bankers’ committee. The Bankers’ committee comprising the Central Bank of Nigeria, Nigeria Deposit Insurance Corporation (NDIC), Discount Houses and 24 deposit money banks in Nigeria was charged to move towards electronic-based transactions and reduce the amount of physical cash circulating in the economy. Electronic banking is a new retail cash policy which commenced in Lagos as a pilot state on January 1, 2012. The policy stated that over-the-counter cash N500,000 and N3,000,000 for individuals and corporate organizations respectively will attract a penalty fee of N100 and N1,000 imposed on individuals and corporate defaulters respectively. With the date set for the penalty fees to take effect on April 1, 2013. The policy implementation is expected to be in phases covering Port-Harcourt, Kano, Aba, Anambra and Federal Capital Territory (FCT) Abuja. In the CBN document released in 2011, the bank clearly posted out the major objectives of the policy to include driving the development and modernization of payment systems in Nigeria; reducing the cost of banking services (which include the cost of credit); delivering financial services and improving the effectiveness of monetary policy; managing inflation, and encouraging economic growth. Available reports had it that CBN in 2009, spent N114.5billion on cash management services alone and projected that the cost would rise to about N192billion by 2012 if Nigeria did not move away from cash transactions. Central Bank of Nigeria maintained that the cost of lending would reduce significantly if CBN by adopting e-payment platforms, saves the N192billion that would be used to manage cash. The CBN pointed out that 99 percent of current banking activities were cash based rather than electronic transactions as obtained in other economies. As laudable as the prospects of this initiative may appear, stakeholders have continued to express divergent opinions over the practical implementation of this new policy, given the country’s level of economic development. While those who endorsed the initiative see it as part of CBN’s strategy to achieve Nigeria’s goals of vision 20:2020, others criticize the policy as premature and hasty.

Electronic Banking was introduced by the Central Bank of Nigeria to reduce the volume of cash in circulation and reduce the cost of cash production and transportation by encouraging the use of electronic payment systems. This policy was introduced by then governor of CBN. Alhaji, Sanusi Lamido sanusi in the year 2009. The policy was designed within 2010 and 2011 for the whole states in the country by Central Bank of Nigeria. The implementation stage started with the pilot phase in Lagos on January 1, 2012. First Bank of Nigeria plc were used in Lagos to test- run the workability of the policy from 2012 till middle of 2013, before the project kicked off in other states in the country namely Abia, Anambra, Kano, Lagos and Abuja the (FCT). In the year 2014, the policy was launched in all the states in the country. Sanusi Lamido Sanusi adopted the policy to accelerate the use of electronic channels and reduced the use of cash. It means a society in which purchases of goods or services are made by credit cards or electronic funds transfer rather than cash based transaction. The whole idea of the new policy is to limit the volume of cash and to encourage other banking services to check fraud and inflation in the system. Also, cashless economy will encourage the use of cheques. CBN has introduced the policy on cash-based transactions which stipulates a cash handling charges on daily cash withdrawals or cash deposits that exceed N500,000 for individuals and N3,000,000 for corporate bodies. The new policy on cash- based transactions (withdrawals and deposits) in banks, aims at reducing the amount of physical cash (coins and notes) circulating in the economy and encouraging more electronic-based transactions. Cashless initiatives in Nigeria economy has impacted both positively and negatively but positive influence are more numerous.

TOPIC: THE IMPACT OF ELECTRONIC BANKING IN NIGERIA BANKING SYSTEM

(A CASE STUDY OF UNITY BANK)

Format: MS Word

Chapters: 1 - 5, Abstract, References, Questionnaire
Delivery: Email

Number of Pages: 62

Price: 3000 NGN

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