Electronic Banking As a Tool For Financial Inclusion in Nigeria

Nigeria is a greatly endowed country in both human and natural resources, with an estimated population in 2018 of over 196 million people. while the (world population review) 2018; The national bureau of statistics, 2016) have placed the current figure of Nigeria’s population at 193,392,517. As at (2016) this population of people are the one who are  largely engaged in the informal sector. this sector is primarily dominated by micro, small and medium-scale enterprises (MSMEs) and peasant farmers who require financial services to grow their businesses and improve their livelihood. The advancement in software tools, computer hardware and telecommunication has moved the focus of the banks towards computerization which has transformed the concept of branch banking to anytime anywhere banking. Cashless economy through e-banking platforms has been on course since 2012 but its impact on the banking public especially the unbanked is not yet clear.

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Digital technologies and innovation have spread across different areas of the banking sector with potential to significantly improve efficiencies, reduce costs and increase access to financial services. This study examined the impact of electronic banking as a tool for financial inclusion in Nigeria as cashless policies unfold in the Nigerian financial system AWA. (2017)

The main objective of this article is to determine the extent to which transactions using automated teller machine (ATM) and internet banking has impacted the banking adult in Nigeria. With and significant relationship with the banking adult, transactions through internet channels has a negative and significant relationships with adult in Nigeria. Therefore it is recommended that banks and other financial institutions should intensify efforts in mounting e-payment channels in financially excluded areas with a view to improving financial inclusion in Nigeria. Furthermore, the central bank of Nigeria (CBN) should educate people adequately on the importance of e-banking through intensive campaign as it would promote trade and commerce through the electronic channels and facilitate the success of CBN financial inclusion policy Lawal(2019).

Financial Inclusion has been professed, preached and propagated in Nigeria by CBN, the apex financial regulatory body since 2010 but to what extent has it been impacted by e- banking platforms is currently not quite clear. Therefore the unresolved issue we seek to resolve is that irrespective of the efforts towards improving the level of financial inclusion the psychology of the people to hold cash and conduct most of their transactions in cash still manifest in Nigeria. Financial exclusion seems to still display its head and manifest prominently in spite of the emergence of e-banking in Nigeria. The peculiarities and characteristics of the target population for financial inclusion has shown over the years that the structures and platforms of the conventional and specialized banks are inappropriate and inadequate to successfully capture the financial needs of the financially excluded low- income and rural groups who prefer to patronize the informal sector. These scenarios call for assessment of the impact of e- banking services as tools for financial inclusion in Nigeria.

Electronic banking is the use of electronic and telecommunication networks to deliver a variety of value added products and services to bank customers. It involves the act of carrying out the business transaction of a bank with electronic devices. Such devices include; computer systems, smart cards, optical character recognition(OCR), internet facilities, GSM phones, (ATM), and (POS). With e-banking banking opportunities are local, global and immediate.

E-banking is believed to have a great effect on banks performance as it has opened new scenarios and frontiers for retail banking. The advent of e-banking has brought the automation of repetitive processes leading to greater efficiency and effectiveness and better time management. This however, has lead to better control of operating costs and overheads with the tendency for more profits. Since it has also helped to reduce the institutions paperwork and has led to general efficiency in documentation. Banks have continued to take advantage of ICT templates with the attendant reduction in the numbers of employees to handle the increasing number of customers, thereby reducing payroll cost.

E-banking has also impacted the economy. it has created a better enabling environment that supports productivity, growth and prosperity. it operates in an electronically controlled and well monitored environment, it can mitigate illegal and illegitimate practices linked with banking like money laundering, fraud, and embezzlement whose occurrences can have a huge negative impact on the institution’s financial performance.

Financial Inclusion

Financial inclusion is a process or situation which allows for ease of access to, or availability of usage of formal financial systems by members of the economy. To put it in a simpler terms; It is a process where all members of the economy do not have difficulty in opening bank account; and can afford to access credit; and can conveniently, easily and consistently use financial system products and facilities without difficulty.

The vision for financial inclusion is access to a full suite of financial services including credit, savings, insurance, and payments provided with quality(convenient, affordable, suitable, provided with dignity and client protection); to everyone who can use financial services with financial capability(clients are informed and able to make good money management decisions) through a diverse and competitive market place.

Models of E-banking

e-banking as a tool for inclusion nigeriantech.com.ng

There are various models of e-banking these are namely;

  • The cognitive model
  • The expectation confirmation model(ECM)
  • Technology Acceptance Model (TAM)
  • Technology continuance theory (TCT).


We now know that transactions using ATM had positive and significant impact on the banking adult in Nigeria while use of internet channel had a negative and non-significant impact. The Central bank of Nigeria should embark on Incentive campaign for complete adoption of e-payment products especially at the grass roots in collaboration with network providers. Banks and other financial institutions should intensify efforts in Mounting e- payment channels in financially excluded areas with a view to improving financial inclusion in Nigeria.

A critical constraint to achieving a high level of financial inclusions in Nigeria is infrastructure and technology. Incase of positive returns, commercial banks should invest in both agency and electronic banking as a multichannel strategy since these channels were complimentary to each other as this would impact positively on financial inclusion.

Chinedu Okeke

Chinedu is the founder of Nigerian Tech. He is a tech enthusiast who has the passion for emerging trends in the tech industry. He is also a professional web content developer.

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