1.1 Introduction
E-banking encompasses the systems which enable customers to use banking services at three levels information, communication and transaction (Ding et al., 2011). The fact that SMEs have not made the desired impact on the Nigerian economy in spite of all the efforts and support of succeeding administrations and governments gives a cause for concern. The most important e-banking services which are provided throughout the world include information about customer accounts, transfer funds between accounts, buying and selling stocks, buying and selling currencies, credit services and create a safe path for the relationship between banks and customers (Gorilas et al., 2003).
As a prelude to other parts of this study, this chapter will discuss the background upon which this study was initiated, the statement of problems that led to this study, the Aim and Objectives of the study. Others are Significance of the study, Scope of work, Research hypothesis and questions, Limitations of the Study and Definition of technical terms.
1.2 Background of Study
Today, banks using e-banking can give information to the customers regarding their needs, and cause increasing loyalty and reducing costs, and also can provide new opportunities to supply suitable good and services for customers (Marianne et al., 2004). It is also estimated that SMEs constitute over 90 percent of total enterprises in most economies with a high rate of employment growth. SMEs have become more important in the economic matrixes as seen in recent years across the globe through increased deliberate government policies and legislation aimed at nurturing SMEs as engines of economic growth and employment creation.
Most countries at all levels of development, small and medium scale enterprises (Small medium enterprises) have an important role to play in achieving the sustainable development goals, by promoting inclusive and sustainable economic growth, providing employment and decent work for all, promoting sustainable industrialization, fostering innovation, creating values and reducing income inequalities (OECD, 2017). For developing nations, sustainable economic growth is real poverty reduction. Thus, the interest in Small medium enterprises should be greater in developing countries due to high level of poverty and flexibility of Small medium enterprises as compared to other ventures.
In Nigeria, a developing nation with over 160 million people and over 65% of their populace being below 35 years (SMEDAN/NBS MSME Survey, 2013), it has become imperative for policy makers to seek development of national economy through Small medium enterprises rather than rely on the oil sector. This change in Nigeria’s economic policy direction is not limited to the depleting state of oil reserve but also because of the abundant potentials; availability of land, cheap labor, etc. of Small medium enterprises. Though the change of economic policies in favor of the Small medium enterprises has seen a considerable increase in the number of available Small medium enterprises, the contribution of this sector to the Gross domestic product (GDP) of Nigeria is low. The Education, wholesale/trade and manufacturing sectors which have the highest distribution of Small medium enterprises do not account for up to 50 % of independent contribution to the national GDP of Nigeria (SMEDAN/NBS MSME Survey, 2013).
Banks are one of the earliest and greatest facilitators of the use of internet technology (Kondabagil, 2007). As leaders of industries in which e-commerce has been developed , they apply internet technology in electronic banking (e-banking) services like online transfer, electronic bill payment and opening of deposit accounts to customers (Sumra, Manzoor, Sumra, & Abbas, 2011). These services are offered through various initiatives such as phone banking, mobile banking, internet payment systems and electronic banking (Kurnia, Peng, & Liu, 2010). E-banking could improve process excellence, speed of delivery and value of service to customers. Though the success of e-banking services depends on the rate at which the technology is adopted by customers, small and medium scale enterprises.
Policymakers and development practitioners acknowledge the leading role of information and communication technologies (ICTs) for development (Dutta and Mia, 2009; UNCTAD, 2009). For instance, Millennium Development Goal (MDG) 8 aims at making available the potential benefits of new technologies (ICTs in particular) to poor regions of the world. In Nigeria, limited access by small and medium enterprises (Small medium enterprises) to ICTs is regarded as a key obstacle for business growth (Dutta and Mia, 2010), and information and communication technologies are therefore seen as helping Small medium enterprises strengthen their operations and grow their businesses. Nonetheless, the impact of ICTs on development depends on how accessible these technologies are to firms, particularly Small medium enterprises ( Monge-González et al., 2007).
Small and medium scale enterprises are a fundamental part of the economic fabric in most developing countries, and they play a very important role in furthering growth, innovation and prosperity (Dalberg, 2011). Small and Medium Enterprises are critical to the development of any economy has they possess great potentials for employment generation, improvement of local technology, output diversification, development of indigenous entrepreneurship and forward integration with large scale industries.
Therefore, in Nigeria where the research was carried out, the activities that was conducted is to know the Impact of Electronic Banking on Small and Medium Scale Enterprises (SMES).
1.3 Statement of Problems
Investigation revealed that electronic banking is expected to affect the operations and performance of small and medium scale enterprises in a form of transactional convenience, saving of time, quick transaction alert and cost saving (Aliyu, 2012). Despite the acclaimed benefits of electronic banking, the issues of online theft and fraud, non-availability of financial service, payment of hidden cost of electronic banking like Short Message Services (SMS) for sending alert, non-acceptability of Nigerian cards for international transaction, malfunctioning Automated Teller Machines (ATMs) and network downtime has been raised by many users, especially small and medium scale enterprises in Nigeria.
In the light of these complaints and to enlarge the body of knowledge on e-banking in Nigeria context, this study aims to prove the relationship between e-banking and SME performance in Nigeria. This research work is significant to policy makers in making policies that would encourage the growth of the number of Small medium enterprises especially from the large number of informal business in Nigeria.
Policies generated from the results of this research would also encourage expansion of existing Small medium enterprises to provide raw materials and certain input services to lager enterprises/ventures. These would create more jobs, reduce the poverty rate and increase the GDP of Nigeria. The problem of electronic banking on small and medium scale enterprises in Nigeria. Specifically, emphasis will be placed on: determining if electronic banking has in any way enhanced the growth of small and medium scale businesses in the study area.
1.4 Aim and Objectives of Study
The aim of the study is to assess the Impact of Electronic Banking on Small and Medium Scale Enterprises (SMES). In achieving this aim, the following specific objectives were laid out as follows:
- To evaluate the impact of mobile banking services on the performance of Small medium enterprises.
- To ascertain the influence of point of sale service on the performance of Small medium enterprises.
- To determine the relationship between automated teller machine services and performance of Small medium enterprises.
1.5 Research Questions
The study came up with research questions so as to be able to ascertain the above stated objectives. The specific research questions for the study are stated below as follows:
- What is the impact of mobile banking services on the performance of Small medium enterprises?
- What is the influence of point of sale service on the performance of Small medium enterprises?
- What is the relationship between automated teller machine services and performance of Small medium enterprises?
1.6 Research Hypothesis
In order to pursue the objective of this study, the following generalized statements have been designed to guide and aids in obtaining the result for the experiment to be conducted. For this work, the null hypothesis will be represented with H0 while the alternative hypothesis will be represented with hypothesis H1.
Hypothesis One
- H0: Automated teller machine services have no significant relationship with performance of Small medium enterprises in Nigeria.
- H1: Automated teller machine services have a significant relationship with performance of Small medium enterprises in Nigeria.
Hypothesis Two
- H0: Mobile banking services has no significant relationship with performance of Small medium enterprises in Nigeria
- H1: Mobile banking services have a significant relationship with performance of Small medium enterprises in Nigeria
Hypothesis Three
- H0: Point of sale service has no significant relationship with performance of Small medium enterprises in Nigeria.
- H1: Point of sale service has a significant relationship with performance of Small medium enterprises in Nigeria.
1.7 Significance of Study
The significance of the study is stated as follows:
Government: The findings of this work will be beneficial to local, state and federal government in and that they will see the extent to which the electronic banking impacts small medium enterprises performance and for them devise a means in promoting and standardizing it in every banking sectors in Nigeria.
Managers of Small Medium Enterprises: The finding of the study will be of great importance to managers of small medium enterprises in Nigeria as they will understand the effect of electronic banking on performance of commercial banks in Nigeria, this will assist them in making decision on whether to adopt electronic banking or not and the expected results of electronic banking adoption to their banks profitability.
Policy Makers in Banking Industry: The study finding will enlighten the policy makers in the banking industry on the expected effect of electronic banking on banks profitability; this will assist them in designing appropriate policy for electronic banking adoption by commercial banking in Nigeria.
Researchers: This work will serve as a reference material to other researchers who will further research on this work, as well as research on related topic and work.
The study will be of great importance to future scholars and academicians as it will form basis for future research as well as providing literature for future studies on electronic banking.
1.8 Scope of the Study
The scope of this research focuses on the assessment of the impact of electronic banking on Small and Medium Scale Enterprises (SMES) in Nigeria.
1.9 Limitations of the Study
During the course of this study, many things militated against its completion, some of which are:
- Time Constraint: The time frame given to accomplish this project was very short due to school academic calendar and it was carried out under pressure which made the researcher not to implement some necessary features.
- Research material: availability of research material is a major setback to the scope of the study.
- Frequent power failure: This made the researcher append more money on fuel to ensure sustainable power.
- Financial Constraint: Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview).
1.10 Definition of Terms
- E-banking: Defined as the provision of retail and small value banking products and services through electronic channels. Such products and services can include deposit taking, lending, account management, the provision of financial advice, electronic bill payment, and the provision of other electronic payment products and services such as electronic money.
- Accounting: The bookkeeping methods involved in making a financial record of business transactions and in the preparation of statements concerning the assets, liabilities, and operating results of a business.
- SME: Small and medium enterprises are businesses whose personnel numbers fall below certain limits.
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