ABSTRACT

The study is determined to examine the effect of electronic card utilization on Bank performance in Nigeria in First Bank PLC. The study used the descriptive research design. The secondary data sources were used for the collection of vital information regarding the subject matter under consideration. the data for the study was collected from the annual reports and statement of accounts of First Bank Plc. from 2010 to 2016. The data collected was on number of cards, volume of transactions and profit before tax. In the course of this study the ordinary least square (OLS) regression statistical techniques was employed in determining the functional relationships existing between the variables in the model. The result of the data analysis carried out indicates that the electronic card utilization determines only16.16% of changes in the dependent variable, PBT. The t-values of -0.582 and 0.287 also indicate that NEC has negative relationship with PBT while VCT has a positive relationship, but none of them significantly affects PBT. On the other hand, the F-value of 0.385 reveals that they variable have joint insignificant impact on PBT. Based on the findings of the study summary, conclusion and recommendations were made that the CBN should take urgent steps in addressing the challenges of e-payments, given the increased adoption of e-payment instruments; while vigorously providing enlightenment to the public, a greater percentage of which is yet to embrace the e-payment ideology and Bank products should be weighed against anticipated satisfaction to customers rather than against profitability since the customers remains the ultimate focus of banking business.

CHAPTER ONE   9

INTRODUCTION                9

1.1 BACKGROUND OF THE STUDY             9

1.2 STATEMENT OF PROBLEM     11

1.3 OBJECTIVES OF THE STUDY   12

1.4 RESEARCH QUESTIONS           13

1.5 RESEARCH HYPOTHESES         13

1.6 SIGNIFICANCE OF THE STUDY              13

1.7          SCOPE AND LIMITATIONS OF THE STUDY              14

1.8          ORGANIZATION OF THE STUDY 14

1.9          DEFINITION OF TERMS 15

REFERENCES       16

CHAPTER TWO  17

LITERATURE REVIEW       17

2.1 INTRODUCTION         17

2.2          THEORETICAL FRAMEWORK        17

2.2.1 TRANSACTION COST THEORIES       17

2.2.2 THE EFFICIENCY THEORY     18

2.2.3 AGENCY THEORY   19

2.2.4 PRODUCT QUALITY THEORY:            20

2.3          CONCEPTUAL FRAMEWORK       21

2.3.1 DEFINITION OF ELECTRONIC CARD                21

2.3.2 EVOLUTION OF ELECTRONIC CARDS IN NIGERIA      21

2.3.3 FEATURE OF ELECTRONIC CARD      22

2.3.4 ELECTRONIC CARD UTILIZATION IN NIGERIA.            23

2.3.5 ELECTRONIC CARD UTILIZATION AND BANK PERFORMANCE IN NIGERIA.    25

2.3.6 BENEFIT OF ELECTRONIC CARD IN NIGERIA                26

2.3.7 CHALLENGES OF ELECTRONIC CARD UTILIZATION IN NIGERIA           28

2.4          EMPIRICAL REVIEW        30

REFERENCES       33

CHAPTER THREE                34

RESEARCH METHODOLOGY         34

3.1          INTRODUCTION                34

3.2          RESEARCH DESIGN         34

3.3          SOURCES OF DATA         34

3.4          DATA ANALYSIS TECHNIQUE      35

3.5 MODEL SPECIFICATION          35

REFERENCES       37

CHAPTER FOUR 38

DATA PRESENTATION AND ANALYSIS     38

4.1          INTRODUCTION                38

4.2 DATA PRESENTATION             38

4.3          DATA ANALYSIS               39

4.4          INTERPRETATION OF RESULT     40

4.5          DISCUSSION OF FINDINGS          40

CHAPTER FIVE   42

SUMMARY OF FINDINGS, CONCLUSION AND RECOMMENDATIONS        42

5.1 SUMMARY OF FINDINGS       42

5.2 CONCLUSION             42

5.3 RECOMMENDATIONS             43

BIBLIOGRAPHY  45

APPENDIX           47

CHAPTER ONE

INTRODUCTION

1.1 BACKGROUND OF THE STUDY

The recent consolidation exercise in Nigerian banking sector has drawn the attention of many banks to application of various technological devices in promoting better customer service delivery that guarantee customer satisfaction, and which translates into increased profitability and higher returns on investment. Timothy (2012) buttressed that customer’s satisfaction holds the potential for increasing an organization’s 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 customer’s needs better and sooner than competitors and sustenance of customer’s satisfaction through better products/services. Technology is then essential in providing faster and more efficient services to customers. This has led to more sophisticated products, such as Automated Teller Machines (ATMs), Point-of-Sale (POS) as well as internet and mobile banking offerings.

The changing environment of bank management in Nigeria has impacted much on the number of services and risk which Nigerian banks face. Electronic banking, which is the use of electronic and telecommunication networks to deliver a wide range of value added products and services to bank customers (Steven, 2002).The dynamism of the present day business environment brings with it rapid changes as a result of innovations, technological changes, increased awareness and demands from customers. Thus, business organizations, especially the banking industry of 21st century, operate in a complex and competitive environment characterized by these changing conditions and highly unpredictable economic climate, with ICT at the center of this global change curve.

Nowadays, banking operations have metamorphosed from manual-basedto high automated services, largely driven by ICT.Timothy (2012) posits that three or four decades ago, banking was a simple business; consumers saved their money with and received their financial services from banks. When customers open savings account, they received passbook from the bank with which the account would be operated; and when it is a currentaccounts, they received cheque books for the same purpose.  The banking industry has moved into an era of menu-driven ultra-robust specialized software programmes called banking applications. These applications can carry out virtually all banking functions relying heavily on information collection, storage, transfer and processing The application of electronic banking products/services to banking operations has become a subject of fundamental importance and concerns to all banks operating within Nigeria and indeed a condition for local and global competiveness (Ezeoha, 2006; Ikechukwu, 2000).

As a result of globalization and the quest for international competitiveness, Nigerian banks have had to adopt electronic banking services to enhance effective service delivery that transcends to customer satisfaction, if they really want to stay in the business race, let alone be profitable (Madueme, 2009).  Electronic banking services have afforded banks the opportunities to impress customers which encourage them to keep coming back. Thus, this study investigates the effect of electronic card utilization on banks’ performance in Nigeria.

1.2STATEMENT OF PROBLEM

Over the years, banks in Nigeria had engaged in the traditional cash withdrawal at the counter in the baking hall, which has created untold delay, disappointment, ineffectiveness and/or inefficiency on the part of the bankers. The early stages of banking in Nigeria encountered limitations as regards meeting the changing needs of their customer. Innovation seemed to elude the fact that customers to the banks had no easy access to their accounts statements. Time wasted in banks as people line in queue waiting for service, errors as a result of manual work and fraud related cases was common.

Today, there has been marked improvement in the service offerings of banks, owing to emerging innovations and breakthroughs in ICT. However, most of the electronic-based services such as the use of ATMs, POS as well as internet banking transactions depend on electronic cards, which are mainly debit and credit cards. With the consolidation of the banking industry, there has been increasing use of electronic cards as well as increase in the use of card-based services. But the extent to which the utilization of electronic cards has enhanced banks’ performance is still very uncertain. Whether the use of electronic card has necessitated effective and efficient delivery of service in banks or not is not yet clear.

More so, most literatures have focused on electronic banking offerings, such as ATMs, POS, etc., but little or none seem to examine the effect of card utilization on banks’ performance. It is in the light of this that a study which focuses on the examination of card utilization becomes very necessary. This study is therefore poised to explore the relationship between the utilization of electronic cards and the performance of banks in Nigeria, with a focus on First Bank of Nigeria Plc.

1.3 OBJECTIVES OF THE STUDY

The purpose of this research was to examine impact of electronic card utilization on banks’ performance in Nigeria. However, the specific objectives of the study includes:

1.) To examine the effect of number of electronic card issuedon banks’ profitability.

2.) To examine the effect of electronic card transactions on banks’ profitability.

3.) To identify possible areas of weaknesses of the electronic card utilization in Nigeria.

1.4 RESEARCH QUESTIONS

For this research work, the questions raised includes:

1.) To examine the effect of number of electronic card issuedon banks’ profitability.

2.)  T examine the effect of electronic card transactions on banks’ profitability.

3.) To identify possible areas of weaknesses of the electronic card utilization in Nigeria.

1.5RESEARCH HYPOTHESES

The following hypotheses were formulated in this study.

H01:       There is no significant relationship between electronic card issued and banks’ profitability.

H02:       There is no significant relationship between electronic card transactions and banks’ profitability.

1.6 SIGNIFICANCE OF THE STUDY

This work is of practical and academic significant. The practical significance is the fact that the findings will-enable banks to improve their service delivery to customers to improve banking requirements of Central Bank of Nigeria, an electronic significance is that this research will educate and sharpen the intellect of scholars.

1.7 SCOPE AND LIMITATIONS OF THE STUDY

The scope of this study is strictly on the card utilization in First Bank PLC in Nigeria. For the purpose of this Thesis, the research will be Limited to five chapters.

The unwillingness and un-cooperative attitude of bankers to discuss freely and fairly as well as respond objectively to questionnaire constituted another problem in this research. Financial constraints also posed a limit to fully gather information related to this study. There were hardly enough time to properly execute the tedious responsibility.

1.8 ORGANIZATION OF THE STUDY

Chapter one examines the research problem, purpose of the study objectives and limitation of the study and anticipated contribution.

Chapter two provides intensive review of literature on effect of electronic card utilization on banks performance in Nigeria.

Chapter three attempt to describe the research design, source of data, data analyses technique and model specification.

Chapter four deal data analyses and presentation of findings

Chapter five is about summary, conclusion and recommendation.

1.9 DEFINITION OF TERMS

Bank: A bank as any person licensed under the decree for the purpose of carrying on banking business.

Cheque: This can be defined as an unconditional order in writing, signed by the drawer, requiring the drawee bank to pay on demands a stated sum or the order.

Electronic Card: This is an electronic card entitling its holder to buy goods and services based on the holders promise to pay for those goods and services.

Performance: This is simply an evaluation of employees strengths and weaknesses.