THE EFFECTS OF REGULATING INTERNET BANKING IN NIGERIA
ABSTRACT
    The emerging trend in internet banking in Nigeria is of global concern. For one thing, the Nigerian economy is a strong force in Africa. The country also has a high reputation for inter-related frauds in the world, having been regarded as the headquarters of Advance Free Fraud (149). The code “419” is named after section “419” of the Nigerian Criminal Code that deals with “obtaining property by false pretences, cheating on the home front, bank frauds, forgeries, money laundry. Insider abuse and erosion of public conference constitute a set of disturbing issues in the present day Nigerian banking system.
    This explains why regulation has become of paramount importance in the entire banking development process. This paper examines the current regulatory efforts of the control bank of Nigeria to ensure successful practice of internet banking in Nigeria. It identified lapses in the existing regulations an internet banking regulation improved access to information infrastructure, it might be difficult meaningful advances to be made in this field of banking.
    TABLE OF CONTENT
CHAPTER ONE: INTRODUCTION
Background of the study                
The Statement of the Problem            
The Objective of the Study                
1.4    The Significance of the Study            
1.5    Research Hypothesis                    
1.6    Formulated Hypothesis                
1.7    Scope and Limitation                         
1.8    Definition of Terms                         
CHAPTER TWO: LITERATURE REVIEW
2.1    Introduction                         
2.2    Features of the Verve Card                
2.3    Requirement for Obtaining Verve Card         
2.4    Standard Credit Card                     
2.5    The Regulatory Challenges of Internet Banking    
2.6    Local Initiatives against Internet Fraud        
2.7    Global Against Nigeria Internet Fraud            
2.8    The Way Forward                    
CHAPTER THREE: RESEARCH METHODOLOGY
3.1    Introduction                        
3.2    Research Design                         
3.3    Population and Sampling Techniques        
3.4    Instrument for Data Collection            
3.5    Instrument for Data Analysis            
CHAPTER FOUR: DATA PRESENTATION AND ANALYSIS
4.1    Introduction                        
4.2    Data Presentation, Analysis and Interpretation
4.3    Hypothesis Testing                
4.4    Conclusion                            
CHAPTER FIVE: SUMMARY CONCLUSION AND RECOMMENDATION
5.1    Summary                             
5.2    Conclusion                            
5.3    Recommendations                         
References                                
CHAPTER ONE
INTRODUCTION
1.1    BACKGROUND OF THE STUDY
    Conventional banking started in Nigeria in 1952. Since then, the industry has witnessed a lot of regulatory and institutional advances. The industry was being controlled by at most 5 out of 89 in existence. (CBN, September, 2002) before the commencement of the banking industry reformation in the country. Multiple branch system is also one of the notable features of Nigerian bank branches nationwide as of 2004 (CBN report 2002).
    As well, the industry is faced with heavy challenges  including the over bearing impact of fraud and corruptions,  erosion in public confidence, a poor capital base, persistence cases of distress and failures, poor asset quality and so on. Part of the moves to resolve these lingering problems include banking reforms initiated by the Central Bank of Nigeria  (CBN) in June, 2004, which is largely targeted at reducing the number of banks in the country and making the emerging bank stronger and reliable.
    The ability of Nigeria banks to satisfy and retain their customers in the present post- consolidation era will no doubt depend largely on the development of their information technology (IT) infrastructure. In the bid to catch up with global developments and improve the quality of their service delivery, Nigeria banks have invested much on technology and have widely adopted electronic and telecommunication networks for delivery a wide range of value added products and sources. They have in the last few years transformed from manual to automated systems. Unlike before when ledger-cards were used, today banking has being connected to computer networks known as “internet banking systems”, also known as electronic (e-banking) and online banking system to facilitate the practice of inter-bank and intra branch banking transactions.
    The introduction of mobile phones in 2001 and improved access to personal computer and internet services facilities have also added to the growth of electronic banking in the country. However, whereas most local banks commonly practice real time online internet banking, the integration of customers into the process is far from being realized. Many of the reasons are attributed to the high prevalence of internet fraud and lack of adequate regulatory framework to protect the banks from the vitality of risks associated with internet banking, especially at the levels of communication and transaction. In the main time, Nigeria is regarded as the headquarters of Advance Fee Fraud (419), which is perpetrated mostly via the internet, usually through the ATM.     Donell (2003) viewed internet electronic banking services that consumers can access by using network system or internet connection a banks computer center, in order to perform banking means 24 hour access to cash through an Automated Feller Machine (ATM) or paychecks deposited directly into checking or savings Account (Hilter, 2002).
1.2    THE STATEMENT OF THE PROBLEM
    For internet banking to assume developmental dimension in Nigeria and for the country to be fully integrated in the global financial environment the prevalent level of frauds in Nigeria (and among Nigerians) must firstly be addressed it suggest that the ways to do this are:
To get the relevant local laws in place and in consonance with international laws and conventions.
Set the citizens well educated on the intricacies of internet usage and frauds, as well as the regulatory implications of wrong fraudulent uses of the internet.
Ensure that all the major background problems such as corruption and bad governance and poverty are addressed.
Ensure adequate interface and collaborations between Nigerian local law and enforcement agents and the various international agencies that are presently pursuing the course for safe internet community.
The problem of this research is to examine the current regulatory efforts of the Central Bank of Nigeria (CBN) to ensure successful practice of internet banking in Nigeria and identify the lapses in the existing regulations on internet banking which argues that without a comprehensive regulation and improved access to information infrastructural, it might be difficult for meaningful advances to be made in this field of banking.
1.3    THE OBJECTIVE OF THE STUDY
    Researcher conducted by a researcher in any field of study are meant to accomplish certain objectives, either to add to what has been done in the field of aimed at discovering a new ground. The aim of this study is no deviation from the above facet this objectives of the study in particular.
To examines the concept and effects of the emerging issue in internal banking in Nigeria.
To look at the threats of cyber crimes on the Nigeria banking premises through the Automated Teller Machines (ATM).
To observe the regulatory challenges in internet banking, online/electronic banking in the country and make recommendations.
1.4    THE SIGNIFICANCE OF THE STUDY
    In the survey on the extent of internet electronic/online banking adoption by Nigeria banks, the CBN, in September 2002 found out that of the eighty nine licensed banks in the country, seventeen were offering internet banking, twenty four were offering basic telephone banking seven had ATM services. While thirteen of the banks were offering other forms of e-banking. This implies that as at then, only nineteen, i.e I percent of the banks were offering internet banking.
    At present, internet banking has shown a very significant improvement. About 90 percent of banks today offer electronic banking services but internet banking is yet to take centre stage, this is so despite the widely acclaimed benefits of internet banking against the traditional branch banking practice, part of the reasons identified for the inability of banks in Nigeria to take full advantage of this mode of banking include, lack of adequate operational infrastructure like telecommunication and power, upon which electronic banking generally relies on.
1.5    RESEARCH HYPOTHESIS
    Hypothesis is tentative statement whose validity remains to be tested in order to make the study clearer and findings of the assertion easier.
    This however note worthy that it is the research focus of findings that determine the formation of the research hypothesis such findings are:
How are users of internet banking system perpetrated by fraudsters and security threats associated with the use of electronic banking systems.
Does internet banking have an impact in the existing banking structure in the country since banks has not being?
Since internet usage in the country has being abused by Cyber Criminals, making it a widow unattractive for domestic banking operations and legitimate international operations, does it bring about an inherent fear to patronize internet banking services in Nigeria?
1.6    FORMULATED HYPOTHESIS
    The hypothesis of the study are stated below hypothesis.
Ho:    Internet banking in Nigeria does not have a significant effect on attaining effective and efficient banking operations in Nigeria.  
Hi:    Alternative hypothesis internet banking in Nigeria play a significant role in attaining efficient banking operations in Nigeria.
Hypothesis Two
Ho:    Regulation of internet banking in Nigeria is not an indicator of the electronic banking growth in the country.
Hi:    Regulation of internet banking in Nigeria is an indicator of the electronic banking growth in the country.
1.7    SCOPE AND LIMITATION
This research work tends to cover or consider the effects of regulating internet banking in Nigeria using intercontinental bank plc as a case study (Edo branch). It is being chosen as the scope and limitation of the study considering the proximity of this location to the researcher.
The choice of the scope helps to maximize the cost involved in the research work, if the researchers where to visit all banks all over Nigeria for detailed information for this work.
1.8    DEFINITION OF TERMS
Internet: It is an international information networking computers in the banking system to enhance effective electronic banking system in Nigeria.
Fraud: It is a criminal deception to gain money and valuable through the internet from the banks or other financial institution.
Computer: It is an electronic device used for storing and processing data to information. It facilitates human efforts effort in the banking sector to render effective services to their customers.
Cyber: It is an internet information technology used to connect banks to each other, to enhance intra-Bank and inter-branch banking system networks in Nigeria.
Bank: It is a financial institution which receives monies from outside sources as deposits irrespective of payments of interests or purchase of bills and cheque or the purchase and sales of securities for the account of those or endeavouring of the obligation to acquire claims in respect of loans prior to their maturities for others of the effecting of transfers and clearing and such other transactions as the commissioner man on the recommendation of the CBN by order published in the federal government designate practice of banking business (Mr. Oyo E.O. practice of banking part 1).

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