TITLE: ELECTRONIC BANKING OPERATION IN RURAL ECONOMY IN NIGERIA:

ISSUES AND CHALLENGES

*1
O. O. ADEUYI, 2M. A. WAHEED, 3S. O. ISMAILA, 4A. T. AKINWALE

1,2,3: Department of Mechanical Engineering, Federal University of Agriculture, Abeokuta

4: Department of Computer Science, Federal University of Agriculture, Abeokuta

*Corresponding author: tobi.adeuyi@gmail.com

This work examined the e-banking application and development in Nigeria with focus on service quality
alongside emerging issues and challenges that affects the development of Electronic banking in Nigeria. To
achieve this objective 51 research questions addressing six parameters of service quality i.e. Reliability,
Accessibility, User-friendliness, Security & Privacy, Efficiency & Responsiveness, Fulfilment; were
administered to 1000 electronic banking users of different commercial banks in Nigeria. Also, we
conducted interview managers of banks in rural area to ascertain their level of adoption of internet banking
and how they have attempted to catch up with their counterparts in the cities. The feedback from
respondents were analysed and the challenges of authentication and responsiveness were identified. We
developed a Service Oriented Architecture for electronic banking which includes a biometric authentication
subsystem and Knowledge Based Enquiry Module. We employed a rule-based fuzzy experts system in
developing the enquiry module and a multimodal biometric enrolment technique was adopted in the
authentication module to address the security and privacy concerns. This work identified the the identified
the security challenges and poor service quality in the existing electronic banking framework and developed
a service oriented architecture to address these identified concerns. It was also found out that the potential
of electronic banking in Microfinance is significant, as it helps reduce the cost of service delivery and help
them reach remote areas where the most marginalised poorer populations in Nigeria live. This work showed
that a properly designed and implemented Service oriented Architecture improves customer satisfaction;
addresses the security concerns on electronic banking transactions and is a veritable tool in achieving
financial inclusion of rural dwellers. It is concluded that a Service Oriented Architecture improves the
service quality, reduces fraudulent transactions on the electronic banking platform to the minimum and
contributes to the achievement of financial inclusion and poverty reduction, which in turn improves rural
economy.

Keywords: Electronic Banking, Service Quality, Experts Systems, Biometric, Service Oriented

Architecture
INTRODUCTION

E-banking describes the provision of information about a bank and its services via a home page on the

World Wide Web (WWW). It includes the provision customer’s access to their accounts, the ability to move

their money between different accounts, and making payments or applying for loans via electronic Channels

such as the internet. it is basically the provision of banking services by a financial institution or organization

to its customers through electronic platform(Shah & Clarke 2009).

It gives consumers another medium for conducting their banking interaction, and experience so far shows

that the future of banking is a mixture of “clicks (e-banking) and mortar (branches)”(Rayport & Sviokla

1994; 1995)

With recent advancement in information and communication technology, Banks are not just financial

institutions, they are Technological platforms enabled by ICT to discharge financial intermediatory roles.

Customers now have a wide choice of financial service providers and they would opt for only the best service providers in terms

of quality and reliability. The quality of service plays an important role and is a key factor in ensuring that financial institutions

compete favourably in the global market.

Service quality describes the comparison of perceived expectations of a service with perceived

performance. It differentiates sought quality and perceived quality. Sought quality is the level of quality

customers explicitly or implicitly demand and expect from service providers. The sought quality (customer

expectations) is created due to several factors – primarily, the expectations are formed during a previous

personal experience of a customer with a service, and the customer is influenced by the experiences of the

other users and by the image of an organisation. Perceived quality means the overall impression a customer

has and experiences about the level of quality after service realisation (Mohammed & Siba, 2009)

E-banking is seen by many banks as a key tool to address some challenges:

• Satisfying customers’ requirements that is complex and ever changing.

• Dealing with increased competition from old as well as new entrants coming into the market.
 • Addressing the pressures on the supply chain to deliver their services quickly.

• The need to continually develop new and innovative services to differentiate themselves from the

competition, as having a large branch network is no longer seen as a main source of competitive

advantage (Jayawardhena & Foley, 2000)

Electronic Banking in Rural Areas

The banks leading the current wave of e-banking application are those large (or super larger) national banks

with most of their headquarters are located in larger cities and urban areas (Harris, 2000).

Microfinance Banks has often been credited as contributing to financial inclusion and poverty alleviation

in developing countries (Ivatury,2009; Wiezorek-Zeul, 2009).

A major challenge is to understand how the adoption of electronic banking contributes to service offering

of Microfinance Banks in terms of reaching to a large population of financially excluded persons and in

providing efficient and effective services (Firpo, 2009).

Matthaus-Maier and von Pischke (2009) explore new partnerships for innovation in microfinance and find

that the potential of ICTs is significant. It is suggested that ICTs can contribute to the dual microfinance

objectives simultaneously: reducing transaction costs in the service delivery of microfinance (which leads

to contributing towards financial sustainability) while, at the same time, ICTs can help microfinance

institutions to reach remote areas where most of the financial exlcuded and poorer populations in Nigeria

live (which contributes towards the goal of social inclusion and poverty reduction).

The issues of e-banking applications for those smaller and Microfinance banks located in rural and remote

areas have not been fully explored in the published research. Especially there are special or unique

challenges facing those local smaller and Microfinance banks in terms of the adoption of e-banking

applications – how to provide easy and accessible e-banking services to their local customers while having

adequate operational funding to provide those services. In summary, the lack of finance resource and weak

technical expertise have been cited currently as two major obstacles in developing and maintaining e-

banking services for many microfinance banks located in remote and rural cities or counties. As such,
research effort focusing on the development of e-banking application for those local microfinance banks is

apparently in need.

Facing extremely intensive competition from non-banking sector, the banking industry needs to adopt a

more aggressive approach in the development of new e-banking services. For instance, the Fintech

companies are creating platforms that facilitate cashless payments, loan disbursement and collections.

According to a 2016 report by the Enhancing financial Inclusion and access group (EFInA) only 36.9million

Nigerians – about 38% of the adult population- have access to bank service. Over 40 million Adults in the

country, predominantly rural dwellers have no access to any form of financial service. Hence the need to

reach these unbanked people with innovative technologically based financial services.

Larger banks located in a centralized urban area tend to have the greatest incentive to adopt e-banking

services, while in comparison, smaller microfinance banks tend to have a high initial technological cost in

developing e-banking services (Treadwell, 2001).

Looking forward, most small banks are motivated to develop e-banking services for potential future cost

savings and gaining a competitive edge in the competition (Timmons, 2000). In summary, the effort of

developing and maintaining e-banking

Services for many local smaller Microfinance banks located in remote and rural areas is currently lag behind

their counterparts in larger city and urban areas. As such, the need to investigate the recent trend of e-

banking application and develop a architecture for its adoption by those local smaller microfinance banks.

Problems of Electronic Banking in Nigeria

Continuing technological innovation and competition among existing banking organisations and new

entrants have allowed for a much wider array of banking products and services to become accessible and

delivered to retail and wholesale customers through an electronic distribution channel collectively referred

to as e-banking. However, the rapid development of e-banking capabilities carries risks as well as benefits

(Hedberg & Taylor 2001). At present, about 90 percent of the banks in the country offer different forms of

electronic banking services like telephone banking, ATM and electronic fund transfer, but Internet banking
is yet to take centre stage. This aspect of banking is still at the basic informative stage (Ovia 2001). Part of

the reasons identified for the inability of banks in Nigeria to take full advantage of this mode of banking

includes lack of adequate operational infrastructure like telecommunication and power, upon which

electronic banking generally relies, due to the inability of the banks to integrate their operations into the

internet development process, Internet banking has not being fully incorporated in the existing banking

structure in the country. The poor telecommunication

infrastructure in the country poses a major challenge in the adoption of internet banking in Nigeria. In

addition, the fact that internet usage in the country has been abused by cybercriminals makes its window

unattractive for domestic banking operations and legitimate international operations. The inherent fear

associated with patronizing internet banking services in Nigeria is evidenced by the growing claim that

fraudsters use fake websites to scoop funds from unsuspecting victims (Ovia 2001).

Banking industry in Nigeria recorded about 82% increase in the reported fraud cases in 2016 when

compared to 2015 and over 1200% when compared to 2014. Despite the 82% increase in reported fraud

cases, the estimated amount loss to fraud was NGN2.19 billion. (NIBBS report 2016).

The main aim of this research is to develop an enhanced experts system model that proffers solution to the

security challenges and improves the service quality on electronic banking platform.

The main aim of this research is to examine the service quality of electronic banking platform in Nigeria;

propose a model that addresses the identified challenges and improve service quality on electronic banking

platforms.

MATERIALS AND METHODS

We employed a two-fold systematic approach in this work, in our attempt to find solutions to the research

problem.
In this case the system of methods used comprise case studies of electronic banking application from

different banks in Nigeria (the case studies was selected based on system types and across problem

complexities),We developed a questionnaire with 51 research questions addressing six parameters of

service quality i.e. Reliability, Accessibility, User-friendliness, Security & Privacy, Efficiency &

Responsiveness, Fulfilment; were administered to a number of electronic banking users, 600 electronic

banking users, across different commercial banks Nigeria, discussion and consultation with electronic

banking experts across banks, the feedback from the questionnaire distributed to electronic banking users

were analyzed, and a postulate of the outcome was examined for theoretical correctness and practical

soundness.

The second component of the methodology involves the conceptual design of a robust electronic banking

platform that addresses the concerns identified based on the feedback of the aforementioned

questionnaire. We developed a Service Oriented Architecture for electronic banking which includes a

knowledge based experts system enquiry module and Biometric authentication module to address the

security and privacy concerns.

RESULTS AND DISCUSSION

Socio-economic Characteristics of Respondents

This section presents the frequency distribution of the Socio-economic characteristics of the respondents.

Table 1: Frequency Distribution of Respondent’s Sex

Variable Measurement Frequency Percentage (%)

Sex Male 381 63.5

Female 219 36.5

 Total 600 100.0

Source of table: Field Survey (2016)

The result in table 1 shows frequency distribution of respondent’s Sex. Majority of the respondents 63.5%

were male while 36.5% were female.

Table 2: Frequency Distribution of Respondent’s Age

Variable Measurement Frequency Percentage (%)

Age Less than 30 367 61.2

31-40 122 20.3

41-50 60 10.0

51and above 51 8.5

Total 600 100.0

Source of table: Field Survey (2016)

The result in table 2 shows frequency distribution of respondent’s age. Majority of the (61.2%) were less

than 30 years, 20.3% of the respondents are of 31-40years, while 10.0% of the respondents are of 41-50

years and only 8.5% were with 51and above years.

Table 3: Frequency Distribution of Respondent’s Educational Status

Variable Measurement Frequency Percentage (%)

No formal education 37 6.2

 Respondent’s Primary 76 12.7

Educational Status
Secondary 105 17.5

Tertiary 382 63.7

Total 600 100.0

Source of table: Field Survey (2016)

The result in table 3 shows frequency distribution of respondent’s educational status. Majority of

the respondents (63.7%) has tertiary education, while 17.5% of the respondents had secondary education,

12.7% of the respondents had primary education and only 6.2% had no formal education.

Table 4: Frequency Distribution of Respondent’s Parental Status

Variable Measurement Frequency Percentage (%)

Have you ever been a victim of Yes 147 24.5

fraud on any electronic banking

No 453 75.5
platform
Total 600 100.0

Source of table: Field Survey (2016)

The result in table 4 shows that 24.5% of the respondents said that they have been a victim of fraud on any

electronic banking platform while 75.5% have not been a victim of fraud on any electronic banking platform

Table 5:

Variable Measurement Frequency Percentage (%)

Less than N100,000 119 81.0

 What is the N100,000-500,000 28 19.0

amount involved
Total 147 100.0

The result further showed that out of the 147 respondents that had been victims of fraud on any electronic

banking platform 81.0% had less than N100, 000 involved in the fraud while 19.0% had between N100,

000-500,000 involved. Majority of the respondents 75.5% claimed that they have their funds recovered by

the bank while others claimed otherwise. Most of the respondents 56.5% claimed their bank managed the

issue satisfactorily while 43.5% claimed otherwise.

Table 6

Variable Measurement Frequency Percentage (%)

Was the fund recovered by your Yes 111 75.5

bank
No 36 24.5

Total 147 100.0

Source of table: Field Survey (2016)

Table 7:

Variable Measurement Frequency Percentage (%)

Do you think that your bank Yes 83 56.5

managed the issue satisfactorily

No 64 43.5

Total 147 100.0

Research question one

Is electronic banking in Nigeria reliable?

Reliability in service quality can be described as the ability to carry out the promised service dependably

and accurately, it focuses on the ability of the e-banking platform to carry out correct technical functions.

Twelve research questions were administered in this category to respondents. Table 8 shows the result of

the survey carried out on reliability of electronic banking platforms in Nigeria. Majority 46.8% of

respondents believe that data is not protected on the bank site 40.8% disagreed while 12.4% were neutral.

Majority of the respondents 57.2% disagreed that there’s data integrity authentication on the electronic

banking platform, 32.2% agree, while 10.6% of the respondents were neutral. Also 40.2% of the

respondents believe that Identity verification system on the platform is poor 25% were neutral, 34.8%

disagreed. Majority 76.8% of the respondents believe that the electronic platform is convenient, 73.2% also

agree E-banking webpage is always active. 62% agreed that transaction on the platform can be asserted to

be genuine with high assurance (Non-repudiation). Majority 82.8% agreed that information provided on

electronic platform is accurate.

Table 8: Reliability of electronic banking in Nigeria

S/No Statement Mean % % %

Agreeing Neutral Disagreeing

1 Data is not protected on the bank site 2.8833 46.8 12.3 40.8

2 There is internal control against security 3.7833 76.2 12 11.8

breaches on the bank’s e-banking platform

3 Identity verification system is poor 3.9450 40.2 25 34.8

4 There is data integrity authentication 2.7567 32.2 10.6 57.2

 5 Convenience (bank’s e-channels can be 3.9250 76.8 8 15.2

accessed from anywhere within short period)

6 Integrated Value added service available on 3.5150 59.4 20.8 19.8

the site

7 E-banking webpage is always active 3.6767 73.2 8.5 18.3

8 Non-repudiation(transaction on the platform 3.6133 62 24.8 13.2

can be asserted to be genuine with high
assurance)

9 Provided information on the platform is 3.9650 82.8 10.8 6.3

accurate

10 The technology on the platform is regularly 3.8483 79.67 7.17 13.16

updated

11 The bank’s E-channel platform is functioning 3.8183 79 9.2 11.8

properly

12 The information content and text are easy to 3.4183 62.7 3.5 33.8

understand

Research question two

Is electronic banking in Nigeria accessible?

Accessibility can be described as how easy it is to access services on electronic banking platform. Table 9

shows the outcome of the survey carried out on accessibility of electronic banking services in Nigeria.

54.2% of the respondents believe that the commands on the electronic platform are complex; 66.8%

disagreed that there is an unlimited means to access electronic banking services in Nigeria; Majority 88.8%
of the respondents believe that the services are sometimes unavailable; 68.3% agreed that data network

frustrate accessibility. Majority of the respondents agreed that: Links are problem free, accurate and pages

download quickly; there is unrestricted access to all financial information; And the webpage do not freeze

after you have input all your information with a mean of 3.2100, 3.3167 & 3.6383 respectively which all

implies agreed on Likert scale.

Table 9: Accessibility of electronic banking in Nigeria

S/No Statement Mean % % %

Agreeing Neutral Disagreeing

1 The commands are complex 3.2883 54.2 10.3 35.5

2 There is an unlimited access 2.5067 26.7 6.5 66.8

3 The services are sometimes unavailable 4.1250 88.8 3.2 8.0

4 Data network frustrate accessibility 3.7100 68.3 7.8 23.8

5 The services are restricted to some location 3.3517 50.5 26.8 22.7

6 Links are problem free, accurate and pages 3.2100 48.0 21.2 30.8

download quickly

7 There is unrestricted access to all financial 3.3167 54.2 18.0 27.8

information

8 The webpage do not freeze after you have 3.6383 67.2 15.3 17.5

input all your information

Research question three

Is electronic banking in Nigeria user-friendly?

A user friendly electronic banking service/platform is one that is easy to use and easy to learn. For instance

a platform can be regarded as easy to use if the time required by the average user to understand and use this

system is relatively short. This may also include the simplicity of its services and functions and the visual

attractiveness of the platform. Table 10 displays the result of the survey pertaining to the user-friendliness

of electronic banking in Nigeria. 7 research questions in this category were administered to respondents.

Majority of the respondent agreed that the electronic banking platform is friendly. The mean for each of the

research questions is greater than 3, which indicates an overall agreement.

Table 10: User-friendliness of electronic banking in Nigeria

S/No Statement Mean %Agreeing % %

Neutral Disagreeing

1 Mobile functionality 3.8300 77.7 9.7 12.7

2 Online account opening 3.6067 63.2 19.7 17.2

3 Timely and relevant information about 4.0167 82.7 6.5 10.8

transactions and products

4 Personal financial management 3.7483 75.5 8.7 15.8

5 The bank is easy to approach and 3.8350 76.3 5.5 18.2

contact
 6 The webpage is available in the 3.8017 72.3 9.8 17.8

language you can understand

7 Personalization of bank’s site for 3.6900 66.5 17.2 16.3

customers requirement

Research question four

Is electronic banking in Nigeria secure and does it ensure privacy?

This dimension addresses how safe the users feel while carrying out transactions on electronic banking

platform and the feeling that personal information inputted on the platform cannot be misused. Security

dimension can be defined as "Freedom from Danger, Risk or doubt during the service process" (Santos,

2003). Security and privacy of electronic banking platforms in Nigeria is a major interest of this research.

Eight research questions were administered to respondents on this dimension; the result of the survey is

shown in Table 11. Majority 52% of the respondents disagreed that electronic banking platform provides

security and confidentiality and 49.4% of disagreed that only authorized persons can access their e-banking

account. 48.2% of the respondents believe that electronic banking platform does not ensure privacy of their

accounts. There is an overall disagreement (with mean value of less than 3) for: i) security and

confidentiality on electronic banking platform; ii) Only authorized person can access own account; iii)

Banks website is secure for fund transfer; iv) E-banking is secured for debit card information. While there

is an overall agreement(with Mean value greater than 3) for: i) Internet banking does not ensure privacy of

my account; ii) Banks will never misuse my financial information; iii) Online banking provides simple

operational procedure; iv) You can rely on the personal information remaining in the register.

Security is one of the main barriers to users carrying out transactions on electronic banking platforms. Cyber

attackers identify vulnerabilities and are always developing capabilities to disrupt or threaten delivery of

essential services. Banks should go an extra mile to ensure security of their electronic platforms in a bid to
guarantee safety of users’ funds and privacy of their personal data. This will in turn give users peace of

mind knowing that all transactions will be dealt with in a safe and secure manner (Zhilin, et al, 2003).

Table 11: Security and privacy of electronic banking in Nigeria

S/No Statement Mean % % %

Agreeing Neutral Disagreeing

1 Banks websites provides me financial 2.6817 28.4 19.6 52

security and confidentiality

2 Only authorized person can access own 2.3700 40.8 9.8 49.4

account

3 Internet banking does not ensure privacy of 3.1317 48.2 16.5 35.3

my account.

4 Banks will never misuse my financial 3.9783 80.8 11.0 8.2

information.

5 Online banking provides simple operational 3.9733 83.5 7.3 9.2

procedure

6 Banks website is secure for fund transfer 2.7733 36.2 17.2 46.6

7 You can rely on the personal information 3.6467 68.7 16.5 14.8

remaining in the register

8 E-banking is secured for debit card 2.7050 32.3 14.3 53.4

information

Research question five

Is electronic banking in Nigeria efficient and responsive?

This service quality dimension describes the Banks’ willingness to help customer and provide prompt

service i.e. speed of response to users’ requirements or needs on the electronic banking platform. Online

customers expect the response to be quick and efficient when a problem occurs while they are online or

even thereafter. There is an overall disagreement with mean value of less than 3 on the likert scale, for the

following research questions: i) is ebanking secured for Debit card ii) Quick problem resolution and

compensation for problems create iii) Good knowledge and skill of the contact personnel iv) You are able

to talk to a customer service representative over the telephone at all times. The respondents reiterated their

skepticism about the security of Debit card usage on electronic banking platform, hence the need for us to

make the platform more secured. Also the concerns about the quick resolution of problems created on e-

banking platform and the knowledge and skill of the contact person is addressed with the deployment of

Experts System.

Table 12: Efficiency and Responsiveness of electronic banking in Nigeria

S/No Statement Mean % % %

Agreeing Neutral Disagreeing

1 The bank’s site is easy to navigate and 3.7917 76.2 10.3 13.5

simple to use

2 The speed of login to account is fast 3.5367 63.8 9.0 27.2

 3 The speed of logout of account is low 3.0267 45.5 12.8 41.7

4 E-banking is secured for debit card 2.8450 40.3 5.7 54

information

5 Quick problem resolution and 2.4350 28.0 13.8 58.2

compensation for problems create

6 It saves time spend in the banking hall 4.0433 86.2 4.3 9.5

7 Prompt service delivery 3.8367 73.0 16.8 10.2

8 It saves cost 3.8050 77.5 5.0 17.5

9 Good knowledge and skill of the contact 2.7050 38.3 11.0 50.7

personnel

10 You able to talk to a customer service 2.6217 36.2 19.5 44.3

representative over the telephone at all

times

11 The bank’s site perform the services right at 3.7367 72.7 11.8 15.5

the first time

12 Prompt confirmation of services ordered 3.5617 63.7 10.8 25.5

Research question six

Does electronic banking in Nigeria give fulfilment to those who use it?

Fulfilment relates to the perceived usefulness and completeness of services rendered on electronic banking

platforms. There is an overall agreement (with a mean value above 3) for three out of the four research
questions raised under the fulfillment dimension. Respondents disagreed that all issues are resolved online,

this concern is also addressed in the development of our experts system. It is also worthy of note that 71%

of the respondents agreed that Banks charges more online transaction compared to traditional banking. We

believe that this should not be so as customers carrying out online transaction are easing the stress on the

bank facilities/resources as compared to traditional banking users who are overstressing the bank resources.

Table 13: Fulfilment of electronic banking in Nigeria

S/No Statement Mean % % %

Agreeing Neutral Disagreeing

1 You able to carry out desire transaction on 3.4550 67.5 4.7 27.8

the bank site

2 All issues are resolved online 2.1150 28.3 16.8 54.8

3 Bank charges more on online transaction 3.6983 71.0 11.7 17.3

compared to the traditional banking

4 I have more confidence using e-banking 3.2633 50.8 27.8 21.3

Components of Secured E-Banking with Enquiry Expert System

The conceptual designs for the enquiry expect system is displayed in Figure 1 and its components are

analyzed as follow:

Customer: This is someone who has registered to use the e-banking platform to carry out some or all of

his/her banking services.

E-banking terminals/Access Devices: These are devices (light/thin or heavy) that provide users of e-

banking platform interface to interact or carryout operations on the platform. Examples are ATM, Kiosk,

Smart Phone, PC or even basic phone.

Authentication, Authorization and Accounting System (AAA System): This is the security module of

the proposed system. Authentication provides a way of identifying a user, typically by having the user enter

a valid user name and valid password or capturing the user’s biometric feature before access is granted. The

process of authentication is based on each user having a unique set of criteria for gaining access. The AAA

system compares a user's authentication credentials (username/password or fingerprint, e.t.c) with other

user credentials stored in a database. If the credentials match, the user is granted access to the platform. If

the credentials are at variance, authentication fails and access is denied. Authorization grants specific rights

and privileges to individual user. For instance, a user may want to transfer fund from Account A to Account

B, the authorization process determines whether the user has the authority to issue to carry out such transfer.

Simply put, authorization is the process of enforcing policies: determining what types or qualities of

activities, resources, or services a user is permitted. Usually, authorization occurs within the context of

authentication. Once a user is authenticated, it is authorized for different types of access or activity on the

platform. Authorization allows us to ensure Quality Control for different services in the system by making

sure users a granted access only to the services they have right and not below certain quality threshold.

Accounting, measures the resources used by each user and log users’ activity in the database. The data

generated by the accounting module is fed into Planning of the Quality Assurance Phase.

Biometric Subsystem: This sub-module manages the users’ biometric data for biometric verification

during authentication.

E-Banking System: This is the system that provides access for users to banking services over the internet

or other communication networks. It usually has multiple interfaces across different platforms e.g GTBank

has web access at (https://www.gtbank.com), USSD service *737#,ATM, e.t.c

Core banking: This is the traditional banking system that is only available at the branches of a typical

bank. It houses the customer data and transaction records. It is usually a Server-Client system or intranet

based system. The Server resides in the datacenter of the bank or dedicated remote infrastructure. It can

only be accessed by the authorized users or applications of the bank.

Customer Support/Enquiry System: This is the innovation we are bringing to add intelligence to

conventional e-banking system available today. The level of Service Quality offered by the current e-

banking systems is impaired by lack of integrated customer support/enquiry system into their platform

hence our urge to include an enquiry system using a fuzzy-based experts system in the proposed electronic

banking model.
 AAA System

Client Access (Authentication,

Authorization, Biometric Subsystem
Device/Terminal
Accounting
System)
Customer

Biometric Features

E-banking System Core banking

Administrator/

Bank Personnel Customer

Expert System Transactional
Enquiry/Support
Interface Database
System

Inference Engine

Knowledge base

Figure 1: Proposed Architecture of Secured E-banking with Enquiry System

The activity diagram and sequence diagram for the proposed model are shown in the figures below. The

model is sectionalised into six modules:

CUSTOMER INTERFACE

The interface allows the customer/user to interact with the electronic banking platform. The user input their

enquiries into the system, the system processes the enquiries based on the information stored in the

knowledge base and the rules in the inference engine to draw conclusion and give advice. The knowledge

base contains highly specialized knowledge on the problem area as provided by the expert. It includes

problem facts, concepts, and relationships. The knowledge base constitutes the problem-solving rules, facts,

or intuition that a human expert might use in solving problems in a given problem domain. The knowledge

base is stored in terms of if–then rules. The inference engine is the control mechanism that organizes the

enquiry data and searches through the knowledge base for applicable rules. The inference engine is

modelled after the expert's reasoning. The system works with the information inputted by the user, coupled

with the knowledge stored in the knowledge base, to draw conclusions and/or give recommendations.

E-CHANNEL MODULE

This is the system that provides access for users to banking services over the internet or other

communication networks. It usually has multiple interfaces across different platforms – WEB, POS, USSD,

ATM, Kiosk, Smart Phones, Personal Computers, e.t.c it enables users of e-banking platform interface to

interact or carryout personalized operations(enquiries and requests) on the platform drawing relevant

information about their account from the back end of the system - core banking system after been duly

authenticated.

ENQUIRY/EXPERT SYSTEM MODULE

This module is developed to add intelligence to conventional e-banking system available today; to improve

the level of Service Quality offering on the e-banking platform. Expert system is made up of Knowledge

base and inference engine. The knowledge base contains highly specialized knowledge on electronic

banking issues, problem-solving rules, facts, or intuition that a human expert might use in solving banking

related problems. The knowledge base is stored in terms of if–then rules. The inference engine is modelled

after the expert's reasoning; it is the control mechanism that organizes the enquiry data and searches through
the knowledge base for applicable rules. The system works with the information inputted by the user,

coupled with the knowledge stored in the knowledge base and information from the core banking system,

to draw conclusions and/or give recommendations.

BIOMETRIC /AUTHENTICATION MODULE

This sub-module manages the users’ biometric data for biometric verification during authentication. It is

the security module of the proposed system; this provides a way of identifying a user. The system is

designed such that the level of authentication carried out on the customer determines the type of service

that such customer/user can access. Typically, there are three level of authentication: use of PIN/Password,

Token and Biometric authentication. Users accessing the platform with the use of Password only are

restricted to skeletal services. The Biometric/Authentication module compares a user's authentication

credentials (username/password or fingerprint, e.t.c) with other user credentials stored in a database. If the

credentials match, the user is granted access to the platform. If the credentials are at variance, authentication

fails and access is denied.

CORE BANKING INTERFACE

The Core Banking Interface describes the interface between the Electronic Banking System and the Core

Banking System. The Electronic Banking System interfaces with the Back-end system, through the Core

Banking Interface, to draw information on authorized users’ requests and enquiries. The Core Banking

Interface provides transactions briefs to be utilized by the Electronic Banking System to produce

personalized information/responses to the inquirer.

CORE-BANKING SYSTEM

This describes the traditional banking system that is only made available at the branches of a typical bank.

It warehouses the customers’ data and transaction records. It is usually a Server-Client system or intranet

based system. The Server resides in the datacenter of the bank or dedicated remote infrastructure. It can
only be accessed by the authorized users or applications of the bank. The electronic banking

platform/application relies on the information stored on the core banking system to function properly.
 Biometric Core Banking
Customer e-Channel Enquiry System Core Banking
System Interface

Start Request for

Session Authentication

Login user
and
password
Authenticate authenticate authenticate

Start
Enquiry
Failed

retry Ask
Question

More question
Answer passed
Question

conclusion/
suggestion No more question

Request
Biometric Auth

Capture Verify
FingerPrint FingerPrint

No

Choose a
yes
service
Process
Request service
Request
Service response

View
Response

Initiate
Not satisfied Support
System
satisfied
Phase

Figure 2: Activity Diagram for the proposed Electronic Banking Model

The typical transactional dynamics is such that, the user start an electronic banking session by providing

the login details using the Customer interface, the E-channel module authenticate the user by comparing

the details supplied by the user with what has been earlier stored in the core banking system. If the

authentication fails, user is restricted to the enquiry module to find out why it fail and make general

enquiries on other bank products and services. If the authentication is successful user is allowed to view

and make specific enquiries about their account. For payment and other transactional purposes users are

required to be authenticated with their biometric details if successful, the system accesses the core banking

module to process customer’s request, else the user is restricted to the enquiries module. The proposed

system is designed such that the system can learn from user’s experience. A support system is created in

the Experts system enquiries module that allows users to give feedback and allow the system to learn from

problems encountered in the course of user’s interaction to further improve the service quality of the

Electronic banking system.

 Enquiry Core
Expert Core Banking Banking
eChannel
System Interface (CBI) System
Customer (EES) (CBS)

Request Menu
getMenu()
Biometric
Request Login
Authentication
credentials
System
(username,
password)

authenticate()
verifyUserCredentials() verifyUserCredentials()
return
return
authentication
authentication
response
response
/SessionKey
Password
Authentication
[failed] displayError()
inquiry()
:cause of auth failre
inquiry()
loop
ask()
[parameters]
more info()
ask()
more info()
answer()
answer() return info()
return info()
conclusion/recommendation

Password Display Menu()

Authentication limited functionalities

[Succeed] show advanced menu

request biometric()
return fingerprint

validation response()
validation response()

Biomtetric
Authentication
[Failed] limited functionalities
Biometric
Authentication
displayMenu()
[Secceed] full functionalities
service request ()
choose available service
send service request and parameters service response()
and input parameters
service response()
display service response()
inquiry()

Figure 3: Sequence diagram for the proposed Electronic banking model.

CONCLUSION

The paper explores the service quality of electronic banking in Nigeria. It is observed that customers there

were concerns about the security and privacy of the services, which in turned affect the perceived service

quality.

A model for electronic banking was conceptualised to address the concerns identified based on the feedback

of the aforementioned questionnaire, a Service Oriented Architecture for electronic banking that we

developed includes a knowledge based experts system enquiry module and Biometric authentication

module.

We proposed that the model developed in this work be adopted for electronic banking transactions in

Nigeria.

We believe that the next developments in E-banking will involve new products and services that were not

practicable with the ‘brick and mortal’ banking models. This may include enabling instant international

payments using mobile devices; and tools to help people manage their multi-bank financial portfolio.

With the model proposed in this work we have shown that E-banking has the potential to be a very rich and

pleasant experience, and may provide more opportunities for banks to develop mutually satisfying services

to deepen banking relationship with customers.

This framework will reduce instances of fraudulent transactions on the electronic banking platform to the

barest minimum and help in achieving the Microfinance Banks’ objectives of financial inclusion and

poverty reduction, which in turn improves rural economy.

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