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Internet Banking In Nigeria – How It all Works

What is Internet Banking in Nigeria ?

The world (and money) is increasingly becoming electronic. We still use cash for small daily purchases, but internet banking has evolved and is becoming more popular.

Internet banking used to be limited to banks that operated exclusively online, but now, even banks that operate offline now offer services online.

In this article you’ll come to know:

  • What exactly is internet banking
  • How it works and how to register for internet banking (50 secs video)
  • Benefits of internet/mobile banking
  • Few tips to ensure complete security of your account while using internet banking

What Exactly Is Internet Banking?

Internet banking, also known as online banking, e-banking or virtual 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.

The online banking system will typically connect to or be part of the core banking system operated by a bank and is in contrast to branch banking which was the traditional way customers accessed banking services.

How Does Internet Banking Work?

Today, advancement of mobile technologies has provided an opportunity for financial service providers in Nigeria to serve their customers much better through internet banking.

But how does it work?

To bank online, you’ll need to use your computer or an application (app) on your mobile device. Getting started is easy and once you’re set up with a username or login ID and password, everything gets easier.

Watch this 80 seconds video

[youtube https://www.youtube.com/watch?v=b5cUA4NUkC4?feature=oembed&w=696&h=392]

Origin of Internet Banking In Nigeria

The Nigerian banking sector has witnessed tremendous changes linked with the
development in information system over the years.

The quest for survival, global relevance, maintenance of existing market share and sustainable development have made the exploitation of many advantages of information technology through the use of automated devices imperative in the industry.

The Structural Adjustment Programme (SAP) initiated in 1986 by the Babangida Administration brought to an end the kind of banking services rendered by the first generation of banks, which have been described as “Arm Chair Banking”.

The SAP changed not only the structure but also the content of banking business. Just as the number of banks grew tremendously from 40 in 1985 to 125 in 1991, the SAP made possible the licensing of more banks and which posed more threat to existing ones and the more aggressive the marketing techniques adopted by them.

In the process of the intense competition, adoption of electronic banking was seen as a necessity to maintaining a good competitive position, whereas, e- banking stormed
the British Banking scene in the late sixties.

Nigeria started the long and tortuous journey in November, 1990 when Societe Generate bank launched their first Automated Teller Machine.

ICT Systems Were Deployed

Information communication technology systems were deployed to emulate leading technologies of foreign countries like the United states.

The areas in which in automation manifests in banking are as follows:

Automated Teller Machine

One major system is the Automated Teller Machine. The introduction of this machine serves as genesis and bedrock of electronic banking in Nigeria. It has been a common feature of every Nigerian bank today.

Societe Generale Bank blazed the trail in November 1990 and popularly referred to as “cash
point 24” at their Broad Street and Apapa Braches.

An ATM allows a customer to withdraw cash from his or bank account by entering a Personal Identification Number (PIN) after the insertion of a card into the machine and having the amount of the withdrawal immediately debit to the account of the customer

Electronic Cards

Credit cards: These are plastic cards encoded with electromagnetic identification. The card is incorporated with circuit on which value is loaded.

Customers can use the card to carry out transactions on the ATMs deployed by the issuing banks at strategic locations as well as point of sale terminals with designated signs of the producer of such card.

Among the companies that are offering this service to banks are Visa International, which is the leading payment solution system with presence in about 120 countries globally,
the Master Card Inc. which is also the second largest credit card brand.

Also Read: How to Make Payment online With Your Credit Card

Debit card: This is an electronic card with very advanced feature including the use of microchip, whereby transaction is validated against the chip rather than a magnetic stripe.

Among the companies that are offering this service to banks are also Visa international, Master card incorporated and an indigenous company called smart switch Nigeria Ltd.



Among banks in Nigeria operating this service are Diamond Bank, United Bank for
Africa, Eco bank and Skye Bank (Skye card debit) and GTB cash plus.

And of course other delivery channels include home link/television banking, internet banking, telephone banking, etc.

E-banking online banking in nigeria

Importance of Electronic Banking In Nigeria

Personally, I can’t remember what life was like without online banking. There are several benefits which make it totally worth it for me, including:

24-hour Access to Your Account

You can get the account information you need whenever you need it in the privacy of your own home. Better yet, if you travel a lot like I do, you can access your account anytime, anywhere.

Real-Time Information

You’ll stay up-to-date on the status of your account, including your current balance, pending items, most recent transactions. You can also transfer money between accounts and download monthly statements etc.

Help Prevent or Minimize Fraud

With online banking, you can check your account regularly and notify your bank immediately when you see a transaction that isn’t familiar to you.

Automatic Savings Plan

You can make account transfers any time you want. Many banks will also allow you to set up an automatic savings plan to transfer money from your checking account to your savings account each month.

Challenges of Internet Banking In Nigeria - e-banking

Challenges of Internet Banking In Nigeria

Yes, internet banking, e-banking or online banking today poses some threats which include:

1. Money Laundering

Development in Information Technology particularly the growing use of the internet has now made it possible to transact business electronically. The growth of electronic commerce has increased the concern about the use of electronic medium to launder money.

Money laundering is defined as derivation of washy money from illicit activities especially drugs trafficking, advance fee fraud and other forms illegal activities.

2. Fraud

The high exposure of the system to fraudsters, hackers and other criminally minded persons who could access, retrieve and utilize confidential information from the system if security measures are weak; to checkmate unauthorized intrusion is another challenge to the authorities.

3. Consumer Protection

Another major challenge of adoption of ICT is the absence of statutory or regulatory provisions to protect the consumer of the products/services.

4. Job Cut

Evidence in all IT deployments in developing economies point out the fact that it always comes with massive job cut. Technology has been taking the jobs of some people.

In fact, there is no good record that all those who lost their job were gainfully retrained and resettled in their new jobs.

5. Systems Operational Risks

Bank IT rests on computers and telecommunications which could be susceptible to system failure, internal manipulations and inconsistent regulatory policies.

Few Tips to Ensure Complete Security of Your Account

2 Methods of Making Your Online Banking Even More Secure

Internet banking to make your account more secure

1) Never disclose your password to others…

2) Password should be random… not something which can be easily guessed by others, like your date of birth etc…

3) Change your password regularly…

4) Do not write your password on pieces of paper, which anybody can lay their hands on…

5) While logging in, use virtual keyboard option…this is an option where there is image of keyboard on your computer screen & you need to press appropriate keys on that virtual keyboard using your mouse.

The order of characters in the virtual keyboard changes every time…this is to eliminate the risk of a hacker accessing your system remotely, recording your keyboard strokes & guessing your password.

6) Once you have finished your task, log-out properly from your account…if you do not, anybody who uses your system or phone after you can perform unauthorized transactions.

Internet Banking In Nigeria (Summary)

Many people are afraid to use online banking simply because they are not familiar with it, but if the necessary precautions are taken it is safe to use.

Also Read: Remita Payment Systems – What You Need To Know Few tips for secure online banking



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