THE RELATIONSHIP BETWEEN E-NAIRA AND E-BANKING

THE RELATIONSHIP BETWEEN E-NAIRA AND E-BANKING

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Background of the study

The notion of electronic banking was born as a result of technological improvement in the banking system. Customers no longer need to visit a physical financial institution to complete a transaction; instead, they can do it from the comfort of their own home using internet and mobile technologies. E-banking is a contemporary, completely automated service that delivers traditional banking products to consumers using information technology platforms and interactive communication channels, according to Amadeh H, Jafarpour M; (2009). Other academic works define e-banking as the automated delivery of innovative and conventional banking goods and services to consumers via interactive electronic communication channels.

E-banking refers to systems that allow clients, whether people or businesses, to access accounts, conclude agreements, or acquire product and service information over a public or private network, such as the Internet. Customers can use e-banking services to get access to their accounts, shift money between accounts, and make payments via e-channels. The benefits that these services provide have resulted in a rapid growth of this business across the world (Yang J, Whitefield M, Boehme K 2007). To meet its promises of 24-hour availability, low mistake rates, and faster delivery of financial services, e-banking significantly relies on information and communication technology (ICT). Although E-banking is beneficial in alleviating the problems associated with traditional banking, the spread of online banking has coincided with the spread of high-speed broadband connections and the maturation of the internet user population, resulting in a gap among the unbanked population who wish to conduct financial transactions but do not have a bank account, giving rise to a new innovation known as digital currency.

The usage of digital currencies is typically regarded as a complement to traditional financial transactions rather than as a required or beneficial replacement. Digital currencies, according to Gilbert, Scott, and Loi, Hio. (2018), have qualities comparable to traditional currencies but, unlike currencies with printed banknotes or minted coins, do not typically have a physical form. The lack of a tangible form enables for near-instantaneous transactions through the internet and eliminates the costs of transmitting notes and coins. As a result, digital currencies will continue to be helpful for inter-party transactions as long as both parties acknowledge the currency's legitimacy, as they offer the benefit of quick settlement, particularly in online communities. Although cryptocurrency is the most popular form of digital currency, there are thousands of them in the modern world, each of which operates and enjoys security thanks to the respective encryption codes mutually adopted by the parties in such transactions, especially since most governments around the world have shied away from conferring any form of endorsement and legitimacy on transactions conducted through such channels.

However, despite the fact that digital currency has the potential to prosper with ICT, few individuals have embraced its usage, which is what makes e-banking safer because the bank is responsible for the account owner's money. As a result, according to Ezuwore-O., Eyisi A., Emengini S., and Alio F. (2014), digital currencies must overcome some headwinds and form partnerships with important players in order to break into the global payment business. Mobile payment platforms (Alipay, WeChat Pay, Apple Pay, Google Pay), card issuers, and international businesses might be among them (Alibaba, Amazon, Walmart). As a result, they believe that if digital currencies get government backing, become stable, and consumers and merchants can obtain greater value by using these new currencies, adoption rates would rise faster, similar to how e-banking grew in popularity.

1.2 Statement of the problem

Sequel to the introduction of the electronic naira, the paper naira in Nigeria had a severe foreign currency crisis, and the naira's pace of depreciation aroused widespread worry among citizens, necessitating the need to test an alternate legal tender. Taking advantage of fast technical advancement and financial market growth, international economies have begun to transition from paper to digital money, with Nigeria not far behind. In his study, Emmanuel O. (2021) stated that approximately central banks around the world are delicately working on their digital currency by gradually weaning themselves off rapidly-declining cash payments, which is why the Central Bank of Nigeria joined the fray so that Nigeria is not left in the lurch, which led to the launch of her e-Naira.

According to Kalu Aja (2021), citing a CBN study, e-Naira aims to assist the apex bank in achieving its monetary policy and financial inclusion goals. It will make currency conversion and cross-border commerce more affordable, especially as more nations introduce their own digital currencies. Although most financial institutions were concerned about how the introduction of e-Naira would affect their customer base, the Central Bank of Nigeria (CBN) assured banks in a report published in the Premuim Times(2021) that eNaira is not a covert scheme to steal bank customers, but rather a way to bring more financially excluded people into the banking system. Furthermore, e-Naira will provide financial institutions with a whole new market of digital currency users, allowing them to expand their client base and offer value to existing account holders. The need to generate greater synergy with financial institutions that are pioneers of e-banking is therefore critical to the formation of eNaira. This greater consumer engagement may aid in the adoption of more effective customer service methods. e-Naira, according to Ayodeji A. (2021), will allow financial institutions access to a database of clients with bank-owned wallets. Given the promising nature of eNaira, one could assume that it has some close ties to e-banking. While this is debatable, it is on this assumption that this study tries to investigate the eNaira-e-banking relationship.

1.3 Objective of the Study

The broad objective of this study is to examine  the relationship between eNaira and e-banking. Specifically, the study seeks to:

1. Investigate the promising benefits of the eNaira invention in Nigeria.
2. Determine if eNaira will create a new market for financial institutions to increase their customer base and add value to their account owners.
3. Ascertain if there is any significant relationship between eNaira and e-banking.

1.4 Research Hypothesis

HO1: eNaira will not create a new market for financial institutions to increase their customer base or add value to their account owners.

HO2: There is no significant relationship between eNaira and e-banking.

1.5 Significance of the Study

Findings from the study will be of great significance to policy makers, development experts, financial institutions, SMEs and the general public. The study based on its findings will be useful to the professional bodies regulating the eNaira platform, hence it will keep them informed about public perception of the newly launched platforms. Additionally, the study will serve as a source of information to researchers, students and other academic inclined individuals who may be carrying out research on a related topic.

1.6 Scope of the Study

The scope of this study borders on the relationship between eNaira and e-banking. The study will determine if eNaira will create a new market for financial institutions to increase their customer base and add value to their account owners. The study will be limited to Gurantee Trust Bank in the Benin Metropolis of Edo State.

1.7 Limitation of the Study

Like in every human endeavour, the researchers encountered slight constraints while carrying out the study. Insufficient funds tend to impede the efficiency of the researcher in sourcing for the relevant materials, literature, or information and in the process of data collection, which is why the researcher resorted to a limited choice of sample size. More so, the researcher will simultaneously engage in this study with other academic work. As a result, the amount of time spent on research will be reduced.

1.8 Definition of Terms

E-banking:  Electronic banking, also known as internet banking, web banking or home banking, is an electronic payment system that enables customers of a bank or other financial institution to conduct a range of financial transactions through the financial institution's website.

Digital Currency: Digital currencies are money that exist not in physical form but only as electronic data, but perform the basic functions of money, being a unit of account, store of value, and means of exchange.

eNaira: eNaira is the name given to the CBN's first proposed digital currency. eNaira is a central bank digital currency (CBDC) issued by the Central Bank of Nigeria as a legal tender. It is the digital form of the Naira and will be used just like cash.

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