Effect Of E-banking On Bank Profitability
[A STUDY OF GUARANTY TRUST BANK PLC ENUGU]

                             Review of Related Literature

2.1 Introduction

This chapter gives a perception into different studies which have been carried out by outstanding researchers, as well as explained terminologies with regards to the effect of terminologies with regards to the effect of internet banking on bank profitability. This chapter also gives a summary of the history and present state of the problem described by a short review of previous studies into closely related problems.

2.2 Conceptual Review

 In recent times, Internet Banking has spread quickly all over the world. According to Onay et al, (2008), the increased adoption and penetration of internet has recently redefined the playground for retail banks. In Nigeria, all banks are making more use of e banking facilities to provide better services in order to excel in the competitive banking industry. The spread of internet has also hugely benefited the customer in general and the corporate world in particular. As a result, e-banking has been the biggest challenge to the banking industry going by the sophistication and volume of fraudulent practices associated with this type of banking.

In the previous years, banking activities in Nigeria had hugely depended on the use of Information and Communication Technology. Customers’ insatiable want for efficient services has forced financial institutions to fast track to a more radical transformation of their business systems and models for embracing internet (Ovia, 2001).

Internet appeal as well as its product developing is speedily growing, and the universal acceptance has strongly encouraged its penetration. The success of the internet is dependent upon reliable and adequate data communication infrastructure. For this purpose, it is efficient for banks to invest in online transactions by creating networks.

Banking has come a long way from the time of ledger cards and other manual filing systems to the electronic systems which most banks have today to handle their daily bulky tasks of information retrieval, storage and processing. Regardless of whether they are automated or not, banks by their nature are continually involved in all forms of information management on an uninterrupted basis.

The computer is of course a stable tool for achieving a competitive edge and optimal resource allocation. The most obvious application of computers in the banking industry is in the area of computer services, information management and control. Computerized banks respond quickly to requests from customers for statement of accounts, balance and account activity enquires. With signature and image verification systems, the time taken to offer typical cashier services like receiving and paying out of cash is minimized Awe, (2006). Also with the coming of Automated Teller Machines (ATMs), banks are able to serve customers outside the banking hall all round the clock.