Electronic Businesses, Services and Profitability of Banking Sector in Nigeria (Bank-Focused Theory, Bank-Led Theory, Non-Bank Led Theory)

Abstract

The introduction of e-banking has indeed had a positive effect on the profitability of the bank since it was introduced. It has also improved the banks customer relationship by rendering effective services. Network failure from internet connection and the break-down of ATMs, fraud and general infrastructure are major challenge facing customers using e- banking products in Africa. However, banks? profitability has been enhanced due to the streamlining of operations brought about by technology mainly driven by electronic banking platforms. This research examined between E-Banking services and Commercial Bank Profitability in Nigeria using A Cointegrationand Causality Approach. Electronic banking was proxied by value of Point-of-Sale, USSD, Internet Banking, Mobile Banking, ATM transactions while commercial banking performance was proxied by net profit from electronic banking transfer/processing. Engle-Granger cointegration model was used to analyse data for the sample period January 2008 to December 2022. The study’s findings revealed that ATM (Automated Teller Machine) and POS (Point of Sale) long-run relationship with bank performance. The result of the short-run indicates that an ATM (Automated Teller Machine), USSD services and POS (Point of Sale) have a positive significant effect on NP (Net Profit). Internet banking services (IBS) and Mobile banking Services (MBS) have a negative and positive insignificant effect on NP (Net Profit). The value of the adjusted R2 (0.508994) indicates that POS (Point of Sales), USSD services (USS), ATM (Automated Teller Machine), Internet Banking Services (IBS) and Mobile Banking Services(MBS) explain 50.89% of the variation in NP (Net Profit margin from the electronic businesses), while the remaining 49.11% is captured outside the model. The findings of the study are consistent with Amu and Nathaniel (2016); Gichungu and Oloko (2015), but inconsistent with Kiragu (2017); Obiekwe and Anyanwaokoro (2017). It is