E-Banking in Developing Economy: Empirical Evidence from Nigeria

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Applications of Quantitative Methods to e-Commerce

E-BANKING IN DEVELOPING ECONOMY: EMPIRICAL EVIDENCE FROM NIGERIA Elisha Menson AUTA
PhD Candidate, Centre for Policy and Economic Research, University of Abuja, Abuja, Nigeria

E-mail: donelly2007@yahoo.com

Abstract: This paper empirically examines the impact of e-banking in Nigeria’s economy using Kaiser-Meyar-Olkin (KMO) approach and Barlett’s Test of Sphericity which support the use of factor analysis in order to extract independent variables associated with e-banking. The paper explores the major factors responsible for internet banking based on respondents’ perception on various e-banking applications. It also provides a framework of the factors which are taken to assess the e-banking perception. Due to emergence of global economy, ebusiness has increasingly become a necessary component of business strategy and a strong catalyst for economic development. E-banking has become popular because of its convenience and flexibility, and also transaction related benefits like speed, efficiency, accessibility, etc. The results of this study shows that e-banking serves several advantages to Nigerian banking sector. The customers (respondents) perception is that e-banking provides convenience and flexible advantages. It also provides transaction related benefits like easy transfer, speedy transaction, less cost and time saving. However, the study shows that the Nigerian customers have security, access, and no enough knowledge regarding e-banking services rendering by banking sector in Nigeria. The study suggest that critical infrastructure like power and telecommunication should be provided and with high level of stability to ensure the application of e-banking in Nigeria. Also, the relative skewed nature of banks location mostly in urban area should be addressed to ensure spread and accessibility by rural dwellers. Key words: E-banking, Developing Economy, Empirical Evidence, Nigeria

1. Introduction
Financial services industry over time has opened to historic transformation that can be termed as e-developments which is advancing rapidly in all areas of financial intermediation and financial markets such as e-finance, e-money, electronic banking (ebanking), e-brokering, e-insurance, e-exchanges, and even e-supervision. The new information technology (IT) is turning into the most important factor in the future development of banking, influencing banks’ marketing and business strategies. In recent years, the adoption of e-banking began to occur quite extensively as a channel of distribution for financial services due to rapid advances in IT and intensive competitive banking markets (Mahdi and Mehrdad, 2010; Dube, et. al., 2009). The driving forces behind the rapid transformation of banks are influential changes in the economic environment include among others innovations in information technology, innovations in financial products, liberalization and consolidation of financial markets, deregulation of financial inter-mediation. These factors make it complicated to design a bank’s strategy, which

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Applications of Quantitative Methods to e-Commerce

process is threatened by unforeseen developments and changes in the economic environment and therefore, strategies must be flexible to adjust to these changes. The e-banking is transforming the banking and financial industry in terms of the nature of core products /services and the way these are packaged, proposed, delivered and consumed. It is an invaluable and powerful tool driving development, supporting growth, promoting innovation and enhancing competitiveness (Gupta, 2008; Kamel, 2005). Banks and other businesses alike are turning to IT to improve business efficiency, service quality and attract new customers (Kannabiran and Narayan, 2005). Technological innovations have been identified to contribute to the distribution channels of banks and these electronic delivery channels are collectively referred to as...
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