ABSTRACT

Electronic banking have long been recognized to play an important role in economic development on the basis of their ability to create liquidity in the economy through financial intermediation between savers and borrowers. It also offers financial services and products that accelerate settlement of transactions and in the process reduce cash intensity in the financial system, encourage banking culture, and catalyses economic growth.

However, for the effective functioning of the financial system, the payment systems must be safe and efficient; otherwise they can be a channel for the transmission of disturbances from one part of the economy or financial system to others. This is why central bank have been active in promoting sound and efficient payments system and in seeking the means to reduce risks associated with the system.

Nigeria historically operated a cash-driven economy particularly in the consumer sector, however the system has witnessed improvements over the years, and particular in recent times has moved from its rudimentary level of the early years of banking business to the current state of sophistication comparable to other economies at the same level of development.

One important reason for financial liberalization and deregulation is the need to develop a good payment system which promotes an appropriate mechanism for efficiency in mobilizing and allocating financial resources in the economy. The payment system occupies an important place in the development of a country economy, infact the level of development of a countries payment system is a reflection of the state or condition of the countries economy.

ELECTRONIC BANKING

It is a fact that today a good number of banks cannot use their IT (information technology) infrastructure to adequately deal with their immediate information requirements. Do such banks qualify to be called e-banks?

E-banking is about using the infrastructure of the digital age to create opportunities both local and global. E-banking enables the dramatic covering of transaction cost and the creation of new types of banking opportunities that address the barriers of time and distance. Banking opportunities are local global and immediate in E-banking

The benefit of electronic banking comprises a broad range of functions which includes;

Electronic mail (email) improves communication between individuals, external  parties and between banks. The availability of online information provides bankers and customers with a powerful vehicle for research, banks can provide information and services on line,  which customer can pay for and receive. Banking processes are made more efficient and cost effective by integrating other aspects of banking operations such as treasure management and financial control.

If banking functions does not require physical interaction it may drive the benefits of electronic banking.