THE EFFECT OF E-BANKING ON THE PERFORMANCE OF NIGERIAN BANKING INDUSTRY

ABSTRACT This study examined the effect of E-banking on the performance of Nigerian banking industry which focused mainly on the banks that adopted the use of Computer Networking enabled technologies from 2012-2021. E-banking possess the potential to improve the banking sector by reducing operational and transactional costs for the banks in Nigeria. Despite E-banking having significant impact on the Nigerian banking industry, the rapid adoption of E-banking raises concerns about cyber security vulnerabilities and data privacy risks. As banks increasingly rely on interconnected networks to facilitate transactions and communication, the susceptibility to cyber threats poses significant threats to financial stability and consumer trust. The main objective of the study is to assess the effect of E-banking on Nigerian bank’s earnings in relation to their return on asset, return on equity and net interest margin. The study used secondary data from 2012 to 2021 which were sourced from the World Bank database, Central bank of Nigeria statistical bulletin and Nigeria inter banks settlement system plc database. The data were analyzed using, normality test and descriptive statistics test as well as regression techniques. The results showed that E-banking had negative and no significant effect on the return on asset and return on equity of Nigerian banks, but had significant effect on the net interest margin of Nigerian banks. The study concludes that E-banking has a lesser impact on the bank’s return on assets, return on equity but has a greater impact on the bank’s net interest margin. The study recommends that the banks should reassess their electronic banking technologies like mobile banking to ensure that its features are aligned with customer needs, such as advanced financial management tools which could increase usage and engagement leading to improved return on asset and equity of Nigerian banks. Also, banks should focus on leveraging mobile banking to enhance lending, attract deposits, and optimize interest based revenue.