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The advent of Information and Communication Technology (ICT) has brought about changes in bank operations. Nowadays, customers of banks are not only after safety of their funds, they are also interested in the ability of the bank to offer fast, efficient and effective mode of performing transaction. In view of this, e-payment was introduced. Hence, this study therefore examined e-payment and profitability of deposit money banks in Nigeria. The study focused primarily on four e-payment services: Automated Teller Machine (ATM), Point of Sale (POS) terminal, Electronic Mobile Banking (EMB) and internet banking (WEB) transaction. The study was guided by four objectives, research questions and hypotheses. The survey design was adopted. The population comprised of 428 people (28 staff and 406 customers) of Ecobank Plc, Ikot Ekpene road, Uyo. A sample of 60 respondents was selected using simple random sampling technique. The instrument used in data collection was: “E-payment and Profitability of Deposit Money Banks Questionnaire” (EPPDMBQ). The instrument was validated by experts and the reliability of the instrument established using Cronbach Alpa method which yielded reliability coefficient of 0.85 and 0.92. Data obtained were analyzed using frequency, percentages and multiple linear regression. All hypotheses were tested at the 0.05 level of significance. Finding showed that there was a significant impact of e-payment on profitability of deposit money banks. Result also revealed that among the four e-payment platforms considered, Automated Teller Machine (ATM), electronic mobile banking, internet banking transaction all had significant positive impact profitability of deposit money banks while result obtained for POS though also positive but was not significant. The study therefore concluded that e-payment has significant impact on the profitability of deposit money banks. It was recommended among others that banks should design long-term strategic planning for better implementation and elimination of obstacles confronting e-payment system.
TABLE OF CONTENTS
CHAPTER ONE: INTRODUCTION
1.1 Background to the Study
1.2 Statement of the Problem
1.3 Objectives of the Study
1.4 Research Questions
1.5 Hypotheses of the Study
1.6 Significance of the Study
1.8 Scope of the Study
1.9 Limitations of the Study
1.10 Operational Definition of Terms
CHAPTER TWO: LITERATURE REVIEW
2.1 Conceptual Review
2.1.2 Profitability of Deposit Money Banks
2.1.3 Concept of Electronic Payment System
2.2 Theoretical Framework
2.2.1 Supply Leading Theory by Patrick (1996)
2.3 Empirical Review
2.4 Summary of Empirical Literature Review
CHAPTER THREE: METHODOLOGY
3.1 Research Design
3.2 Population of the Study
3.3 Sample Size and Sampling Technique
3.4 Sources of Data
3.5 Method of Data Collection
3.6 Validation of the Instrument
3.7 Reliability of the Instrument
3.8 Model Specification
3.9 Method of Data Analysis
3.10 Decision Rule
CHAPTER FOUR: DATA PRESENTATION, ANALYSIS AND DISCUSSION OF FINDINGS
4.2 Data Presentation
4.2.1 Demographics of the Respondents
4.2.3 Test of Hypotheses
220.127.116.11 Hypothesis 1
18.104.22.168 Hypothesis 2
22.214.171.124 Hypothesis 3
126.96.36.199 Hypothesis 4
4.3 Discussion of the Finding
CHAPTER FIVE: SUMMARY, CONCLUSION AND RECOMMENDATIONS
5.2 Summary of the Findings
LIST OF TABLE
Table 4.1: Distribution of the Respondents by Age
Table 4.2: Distribution of the Respondents by marital status
Table 4.3: Distribution of the Respondents by educational status
4.2.2: Model Evaluation (Multiple regressions)
Table 4.4: Multiple regression summary showing the impact of ATM, POS, EMB and WEB on the profitability of deposit money bank.
Table 4.5: ANOVA result summary for the joint impact of ATM, POS, EMB and WEB on profitability of deposit money
Table 4.6: Parameters estimates of the regression result showing the impact of ATM, POS, EMB and WEB on profitability of deposit money banks.
1.2 Background to the Study
E-payment systems are the instruments, organizations operating procedures, information and communication systems employed to initiate and transmit payment from a payer to a payee and for settling payments that is, transfer money (Imafidian, 2013). E-payment is defined as the automated delivery of new and traditional banking products and services directly to customers through electronic, interactive communication channels. The E-payment channels are the apparatus used to safely and efficiently transfer monetary value in exchange for goods and services as well as financial assets (Oloruntoyin and Olanloye, 2012). According to Atteh (2012), payment systems are related collection of structure of instruments for settling payments and transactions or part thereof.
Today’s banking environment is very dynamic and undergoes rapid changes as a result of innovations Information and Communication Technology (ICT), increased awareness and demand from customers in a complex and competitive environment characterized by these changing conditions and highly unpredictable economic climate. ICT is at the centre of this global change curve. ICT has changed the dimension of competition in the retail banking sector. The automated teller machine (ATM), point of sale (POS) terminals and internet services are the major instruments used by customers of the deposit money banks in Nigeria. Following the introduction of electronic banking and internet automated teller machines (ATMs) which are the initial cornerstones of electronic finance, the increased adoption and penetration of mobile banking and internet banking has added a new distribution channel to retail banking: internet/online-banking.
The quest for banks in Nigeria to have efficient customer service delivery and maintain global relevance in the system has led to the exploitation of the many advantages of ICT through the use of automated devices imperative in the industry. Another motivation for the numerous studies on e-banking is customers satisfaction. Customer satisfaction holds the potential for increasing an organisation customer base, increase the use of more volatile customer base, increase the use of more volatile customer mix and increase the firm’s reputation. Consequently, obtaining competitive advantage is secured through intelligent identification and satisfaction of customers’ needs better and sooner than competitions and sustenance of customer’s satisfaction through better products/services. A satisfied customer will definitely continue his patronage but unsatisfied customer will withdraw his patronage.
There is need to provide evidence on the extent to which ICT operations have impacted on customer service deliver in Nigeria deposit banks. The concept of e-payment 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 internet and of e-payment 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 e-payment or internet banking although electronic channel vary widely in content, capability and sophistication. Most of, if not all, the studies carried out in Nigeria on e-payment and money banks’ profitability adopted the descriptive research design (Yunus and Wgidi, 2011; Nnolim, 2013; Olasope, 2013; Adewoye, 2013).
An Automated Terminal Machine (ATM) is a computerized telecommunication device that provides the customer of a financial institution with access to financial transactions in a public space without the need for a human casher, clerk or bank teller (Cronin and Mary, 1997). Queues are bad news for customers. Automated Teller Machines (ATM) and profitability of money bank was conducted in their paper under a period from 2010 to 2016 with the aim of assessing the use of ATM and its contribution to the profitability in bank of Nigeria.
Most challenging factor to the efficient use of POS is network failure, frequent store where they are available, security of communication over the network and unavailability of the POS at all merchant stores. The relevance of efficient payment systems is a subject of interest to all stakeholders. This study analysed the challenges to the efficient use of Point of Sale (POS) terminals in Nigeria. Socio economic characteristics of users and non users were also examined.
The world has witnessed and upsurge of electronic mobile Banking (EMB) instruments meant to facilitate trade and simplify payments.
1.2 Statement of the Problem
The Nigerian financial system is dominated by the money market which is defined as a means of liquidity adjustment and also a potential path for economic growth and development. A corollary, the efficiency of payment system, and of course, the ease with which transactions are perfected in the system is very vital its proper functioning and profitability. Electronic banking averaged to enable the banking system achieve the required vibrancy that is expected. It is expected that with the embrace of electronic banking by the Nigerian banking system, the performance and profitability of deposit money bank will be enhanced over the years, the banks have introduced different shade of electronic banking channels, all with a view to achieving enhance efficiency, effectiveness, and economy. This does not, however, mean that the Nigerian banking system is not efficient, it goes along way to explain that there is serious need to evaluate its performance and profitability introduced into the system.
It is obvious the system is not deep and broad enough to be able to absorb large volumes of transactions with attendant cost saving benefit (Okafor, 2012). Over the years, the Nigerian commercial banks have been associated with weak domestic payment systems which have also hindered efficient liquidity management and have obstructed the development of the banking system. T here is the need to investigate various e-banking channels in order to assess their individual as well as combined contributions to the financial performance and profitability of deposit money bank.
In Nigeria customers of bank today are no longer interested about safety of funds and increase returns on their investment only, customers demand efficient, fast and convenient services. Customers want a bank that will offer then services that will meet them particle need (personalized banking) and support their business goods. For instance, business men want to travel without carrying cash for security reasons. They want to be able to check their balance online, find out if their cheque is cleared, transfer funds among accounts and even want to show local transaction records into their own computer at work or at home. Given the scenario, therefore, this study focuses on finding how e-banking has been able to enhance the profitability of deposit money banks in Nigeria, so as to fill the research gap.
1.4 Objectives of the Study
The main objective of this study is to examine the relationship between e-banking and the profitability of deposit money banks in Nigeria. More specifically, the study seeks to achieve the following objectives to:
i. determine the impact of automated teller machine (ATM) transaction on profitability of deposit money banks in Nigeria.
ii. ascertain the influence of point of sale (POS) terminal transactions on the profitability of deposit money banks in Nigeria.
iii. investigate the contribution of electronic mobile banking (EMB) to the profitability of deposit money banks in Nigeria.
iv. evaluate the impact of internet (WEB) banking transaction on the profitability of deposit money banks in Nigeria
1.4 Research Questions
The following research questions will be answered
i. what is the impact of automated teller machine (ATM) transaction on the profitability of deposit money banks in Nigeria?
ii. what is the influence of point of sale (POS) terminal transaction on the profitability of deposit money banks in Nigeria.
iii. what is the contribution of electronic mobile banking (EMB) to the profitability of deposit money banks in Nigeria?
iv. what is the impact of internet (WEB) banking transaction on the profitability of deposit money banks in Nigeria.
1.5 Hypotheses of the Study
The following hypotheses will be tested:
i. there is no significant impact of automated teller machine (ATM) transaction on the profitability of deposit money banks in Nigeria.
ii. there is no significance influence of point of sales (POS) terminal transaction on the profitability of deposit money banks in Nigeria.
iii. there is no significance contribution of electronic mobile banking (EMB) to the profitability of deposit money banks in Nigeria.
iv. there is no significant impact of internet (WEB) banking transaction on the profitability of deposit money banks in Nigeria.
1.6 Significance of the Study
This research work will be immense benefit to the researcher as it will serve as a wealth of knowledge on the e-payment system and profitability of deposit money banks in Nigeria. it will also serves as a reference material to future researchers on the subject matters. Banks will benefit from the study as it will make them realize the relationship between e-payment systems and profitability of commercial banks achieve their stated objectives and in the long run increase shareholders wealth.
The findings of this study will provide policy makers, especially regulatory bodies some inputs in articulating and implementing policies that will influence the e-payment systems in the drive toward a cashless society.
1.7 Scope of the Study
The scope of this stand is limited to such e-payment system as automated teller machine (ATM), point of sales (POS) mobile banking and internet banking, and profitability of commercial banks in Nigeria.
1.8 Limitations of the Study
The major limitations encountered when undergoing this research are numerous. For instance, distance and its attendant cost of travel in order to obtain information for this study was a big challenge. Another limitation was short time factor which did not give time for thorough research work, hence gathering adequate information becomes very difficult.
Inability to issues and returned some copies of questionnaires on the subject matter also centered a challenge. Inadequate finance in carrying out a thorough research was a major limitation. However, the scope would have been extended but for the constraints imposed by the time available for the researcher to do a more detailed work was limited.
1.9 Operational Definition of Terms
This terms are defined as used in the context of this study.
Deposit money Bank: These are financial institutions licensed by the regulatory authority to mobilize deposits from the surplus unit and channel the funds through loans to the deficit unit and perform other financial services activities.
Automated Teller Machine (ATM): This is a type of an e-payment system that provides the customers of a financial institution with access to financial transaction in a public space without need for a human clerk or bank teller.
Point of Sales (POS): This is an e-payment system that enables the operators to administer payments by the customer in a simple way and subsequently to record the payments for clear accounting pruposes.
Electronic Mobile Banking (EMB): This is an alternative payment method employed by deposit money banks to enhance profitability. Instead of paying with cash, cheque or credit cards, a consumer can use a mobile phone to pay for a wide range of services and digital or hand goods.
Internet (WEB) Banking: This is an electronic payment system that enables customers of a bank or other financial institution to conduct a range of financial transactions through the financial institution’s website.
Profitability: This refers to the degree to which an e-payment system practiced by deposit money banks yields profit or financial gain.
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