Effect of electronic banking on financial performance of deposit money banks in Nigeria

The impact of technology on commerce cannot be denied, especially in relation to trade. This study was conducted to examine the impact of electronic banking on the financial performance of Nigerian deposit money banks. The data for the study was obtained from the Central Bank of Nigeria’s Statistical Bulletin and the National Bureau of Statistics’ Statistical Bulletin for various years, as well as from published financial statements of the banks under study. An ex-post facto research design was used and a normality test was carried out to establish the goodness of the data; descriptive statistics and a multicollinearity test were conducted in which the independent variables were found good. Regression was adopted to test two hypotheses. It was found that ATM has a positive and significant association with Earning EPS and ROA; POS and NEFT significantly affect ROA only, while WEB has an insignificant impact on both EPS and ROA. It is concluded that electronic banking significantly affects financial performance of deposit money banks in Nigeria. Thus, the study recommended that deposit money banks in Nigeria should educate their customers more in the use of NEFT, WEB, and POS, and that the amount of ATM withdrawals should be increased to improve bank performance.


INTRODUCTION
Electronic banking may be described as a means by which banking products and services are provided through electronic devices such as phones, iPods, etc. The nascent advances in technology seen around the world have eliminated the traditional manual banking system and brought about a paradigm shift in banking to the extent that banks are using internet technologies to improve efficiency and scale up the provision of a wide range of value-added products and services (Oyewole et al., 2013). Consequently, Nigerian banks, especially commercial ones, now identify electronic banking as a unique means of differentiating themselves from their rivalries by investing in complicated expertise (Ovia, 2001;Ayo et al., 2007).
However, despite irresistible benefits attributable to electronic banking, there has been a serious and uncontrollable lamentation from members of the public and bankers about its shortcomings that hinder banking operations in that if nothing is done to curtail the excesses, it might hinder the progress of banks.
Besides, poor networking conditions have also posed a great threat to successful e-payments systems. Businessmen now prefer cash transactions to electronic payments owing that such payments do not reflect on their accounts instantly and therefore do not conform the business principle of cash and carry, and this has open the customers to great danger like armed robbery, etc. On the other hand, the government also loses income from a transaction that would have been accrued to them as a tax, and the bank also loses income that could have been accrued to them as a result of a fee for such a transaction.
Moreover, the lack of accessibility to rural dwellers is another challenge facing the electronic banking system. Banks in Nigeria are not located close to rural areas and thus deprive them of access to electronic banking and affect the operational performance of banks and the government, as well as encourage them to actively engage in underground economic activities.
Furthermore, incessant and unregulated charges by banks have been a source of discouragement to members of public making it difficult for them to willingly use various channels. The attendant effect has been a decline in the financial performance of banks and a decline in government revenues. A situation where a paying bank and a receiving bank charge a customer for the same transaction is very disheartening and makes the customer prefer cash transactions as one kobo today worth billions tomorrow.
The extant literature includes studies by Beg (2018), Ismail (2007) Adelisa (2017), Yadav (2016) and Kloviene and Gimzauskiene (2015); these studies are carried out in foreign countries. In Nigeria, Taiwo (2016) did not address specific organizational performance measures, but conducted an empirical analysis. Akande's (2016) did not relate the banking sector, but explored medium scale enterprises and used primary data. Despite extant literature and researchers' knowledge, there is no study of this nature in the banking industry of Nigeria's economy that has used secondary seven-year data to examine the impact of electronic banking on the financial performance of money deposit banks in Nigeria to the current date.
It is against this background that this study was designed to examine the impact of electronic banking on the financial performance of money deposit banks in Nigeria with the following specific objective to explore the impact of the National Electronic Fund Transfer (NEFT), web banking (WEB), Point of Sale (POS), Automatic Teller Machine (ATM) on Return on Assets and earnings per share of banks in Nigeria.

LITERATURE REVIEW
Information and Communication Technology (ICT) influences the decisions of managers regarding the products and services offered in the banking sector. Laudon and Laudon (1991) opine that managers cannot ignore information systems because they play a key role in the modern organization. The success of the Fortune 500 companies is traceable to their formidable information system. Suffice to say that an application of computer-based accounting systems has become a sine qua non to all banks, both locally and globally, to ensure competitiveness. ICTs affect the way corporate institutions around the world govern their innovative devices available to improve service delivery. Brewer and Lunsford (1995) asserted that the modification of the operating practices of financial service providers would be a determinant of their relevance in decades to come. In their opinion, at the center of the failures of financial institutions is management's inability to embrace technological advancement and its applications in banking operations. Woherem (2000) suggest that only banks that embrace the electronic payment channels will stand the test time. Banks in Nigeria are not let out as various changes brought about by technological advancement in IT since 2005 have necessitated the need to dive into technological advances to remain in business and retain their market share in the economy (Akesinro & Adetoso, 2016).

Benefits of ICT in the accounting system for the Nigerian banking sector
Task reduction: Before the introduction of a computer into the accounting system, records were kept manually, which was tedious and required many hands to render the necessary services. Consequently, this has led to an increase in the cost of the maintaining financial institutions. However, the devices have not only reduced these costs but drastically perform these tasks with amazing accuracy and speed.

Economy:
The cost of acquiring, installation and, of course, training staff on the use of such devices is much less compared to the revenue it generates for the banking industry.
Decision making: Obviously, computers provide details that human cannot, therefore, organizations that use information and communication technology in their accounting have access to this detailed information and make better decisions.

Business opportunities:
Better business opportunities are available to organizations that adopt information communication technology due to their ability to perform tasks with ease, accuracy, and speed.
Control: This provides management with better options for controlling its activities, since operations are processed with minimal human errors.
Competition: Again, information and communication technology provides organizations with a competitive edge over others, since it increases the quality and efficiency of the work done.
1.2. Challenges of ICT in the accounting system of the Nigerian banking sector Korpelainen (2011) as cited in Taiwo (2016) identified the following setbacks or challenges of the adoption of ICT by organizations.
Infrastructure: ICT experts needed to design, install and maintain systems, and special persons to maximize the use of such technologies and systems and even train posterity who will enable the organization to maximize such benefits is a challenge, therefore a limitation.
Training and qualification: The cost of education and continuous training of staff of these organizations is very high; hence, the inadequate training and workers' skills hinder the proper adoption of ICT in the banking industry. This factor is highly responsible for the engagement of a smaller number of staff in many bank branches.
Adaptability and responsiveness: Many employees in these organizations are unresponsive to training, despite the fact that organizations spend a lot of money on it. They are so unwilling to go along with change and are unproductive. The attendant effect has buried the introduction of ICT.
Management system: Rigidity in the management of some organizations is itself a challenge in ICT implementation. Where management shows less interest in ICT and unwilling to incentivize workers, ICT adoption will collapse.
Cost: In all managerial decisions, cost is the most important, because its misapplicationmay lead to the liquidation of the organization. This includes acquisition costs, time, intellectual, staff training, etc. Any organization that cannot afford these costs will derail in ICT adoption.

Influence of electronic banking on performance in Nigeria
Before this era, banking jobs in Nigeria ware so tiring and incompetency was the order of the day. People were not enthusiastic about securing banking jobs because of their nature. Often, everyday banking halls were flooded with an unprecedented multitude and even at that not many transactions were carried out at the end of the day. When one remembers the pains, he will have to go through, he prefers personal safe-keeping of his money Adewuyi and Akpokodje (2013). Banks on their own, in an attempt to retain their customers and meet shareholders or management goals, keep recruiting and training staff at regular intervals. This is, however, of concern to banks, government and the general public, as the profitability of banks was heavily affected by the cost of employment and staff training. Moreover, tracing individual transactions from cradle to grave was not easy. Fraud and incessant looting of funds were on the high increase, as managers and chief executives were enormously involved in practices that were very detrimental to the financial institutions they represented. The collapse of banks was even very common, so it brought unbearable intentions to depositors, since the purpose of safeguarding their financial resources was in great doubt. Paying and receiving dividends were also a matter of who will bell the cat.
Economic activities also declined due to the lack of tools for facilitating transactions. Consequently, the performance of the banks was hit hard, and government tax revenues from these banks were also affected, and complaints from all parties were the subject of the day. Addae-Korankye (2014), in a similar study in Ghana, sampled ten banks using 250 customers; it was found out that electronic banking improved the profitability of banks in Ghana and recommended that there should be twenty-four hour monitoring of the ATM to quickly address failures and to ensure that the banks' profitability does not drop.
Aliyu and Tasmin (2012), in their study in Malaysia, found that ICT also improved the financial performance and customer delivery services in the country.
Hossein (2013), in his study in Allame Tabataba, used ATMs to measure e-banking and ROE to measure profitability from 1990 to 2010. The OLS regression was used for the analysis, and the results showed that internet banking started contributing with a three-year time lag, but had a negative impact in one lag period.  It is clear from the extant literature no study in Nigeria that looked at the influence of electronic banking on financial performance of banks over the period 2005-2019 used the same variables as this study. Therefore, the above gaps have made this study relevant.

AIMS AND HYPOTHESES
The aim of the study is to examine the impact of electronic banking on the financial performance of deposit money banks in Nigeria. The specific objectives are as follows: •

DATA AND METHOD
In an attempt to vigorously pursue the objective of this study, an ex-post facto research design was used (

Model specification
For the proper analysis of the hypotheses, the following models were developed.  Table 1 shows descriptive statistics used in this study. Following the above analysis, it is necessary to pass the normality test, given the fact that this is parametric data and not up or more than twenty years, to encourage the stationarity test (Unit root), the normality test was adopted to establish the decency of the data variables using the Kolmogorov test. Table 2 shows the results of the normality test.

Test for normality
The Kolmogorov-Smirnov test was used to check customariness. Table 2 shows that Automatic Teller Machine (ATM) showed a test statistic of .133, while the p-value is 0.200 * , which is higher than the 0.05; this indicates that the data is normally distributed.
The Shapiro-Wilk test statistics with a probability value of 0.239 also confirmed the data normality.  Wilk test statistic with a probability value of .099, which is higher than 0.05.
The Kolmogorov-Smirnov test (see Table 2) shows a probability value of 0.200 * for POS, which is higher than the 0.05 meaning normality of the data. The Shapiro-Wilk test probability value of .179 corroborated the data normality. Table 2 shows that the Kolmogorov-Smirnov test probability value is 0.048 for the National Electric Fund Transfer (NEFT), although less than 0.05, which means the data normality. The Shapiro-Wilk test probability value of .012 does not nullify the data normality, since the histogram is bellshaped (see Figure 1).
Again, Table 2 shows the Kolmogorov probability value of 0.036 for EPS of banks under study and does not exclude the data normality. The Shapiro-Wilk test shows a probability value of 0.013. The histogram is relatively belled confirming the data normality (see Figure 1).
The Kolmogorov-Smirnovtest was used to test customariness. In Table 2, Return on Assets (ROA) shows a test statistic of .167, while the p-value is 0.200 * , which is higher than 0.05, indicating that the data is normally distributed.
The Shapiro-Wilk test statistic with a probability value of 0.305 also confirmed the normality of the data.

Test for outliers
Box plot was used in this study to perform a test for outliers. Figure 3 shows only one outlier for EPS, and it is very small to affect or undermine the finding. Table 3 shows that the tolerance values for the independent variables in this study are 0.935, 0.963, 0.976 and 0.959. These values are not up to 0.10, which is the benchmark; this shows that the basic was not lessened as confirmed by the (VIF) values of 1.069, 1.039, 1.024 and 1.043, which is not higher than the benchmark of 10. Table 4 shows the results of testing hypothesis one.    Table 5 shows the results of testing hypothesis two.

Discussion of results for Hypothesis two
The hypothesis test results (see Table 5) show that ATM is significant and positive, which means that ATM is a determinant of the ROA of de-posit money banks in Nigeria. The value of ATM transactions can cause noticeable changes in ROA of the banks. This conclusion contradicts the study by Aliyu and Tasmin (2012). The reason for the indifference could be based on country differences.
WEB has a coefficient of statistical value of 0.102849. This means that WEB is not significant but positive. WEB cannot influence the banks' ROA.
POS has a coefficient of the statistical value of 0.869437. This shows that POS is significant and positive and is a strong determinant of ROA of the money deposit banks in Nigeria. This implies that the value of transactions executed through POS is very high compared to the ROA of banks in this study. This finding confirms that of Aduda and Kingoo (2012). Table 5 shows that NEFT is significant but negative, as confirmed by the coefficient of regression value of -0.331248. This means that NEFT can influence the ROA assets of money deposit banks in Nigeria. The effect of NEFT is noticeable on banks' ROA. This finding is inconsistent with Hassan et al. (2013). The reason could be based on the duration of the study and the analytical tool used in both studies.

CONCLUSION
To achieve the purpose of this study, two hypotheses were formulated and tested, and from the regression results (see Table 4), the regression coefficient of the variables and their associated probability values were ATM 4.979763 (0.0071), WEB -2.431099 (0.4358), POS 1.441973 (0.3153), and NEFT -0.913926 (0.2108), indicating that only one of the electronic banking infrastructure (ATM) has a significant influence on earnings per share of deposit money banks. Table 5 shows the regression coefficient and p-values of banking infrastructures as ATM 0.931411 (0.0009), WEB 0.102849 (0.8058), POS 0.869437 (0.0009), and NEFT -0.331248 (0.0052), implying that the three of the electronic banking infrastructures significantly affect return on assets of deposit money banks in Nigeria. It has been concluded that electronic banking has a significant association with the financial performance of deposit money banks in Nigeria. This means that people are aware of and use electronic banking infrastructures, but the cost of transactions carried out through these tools is very small or microscopic, as in case of EPS. Therefore, it is suggested that money deposit banks in Nigeria educate their customers on the use of web banking and National Electronic Fund transfers, as they are used the most poorly of others, and that deposit money banks should increase the value of withdrawals that can be performed through these means.