INTERNET BANKING AND PROFITABILITY OF DEPOSIT MONEY BANKS

ABSTRACT

This study examined the impact of internet banking and the profitability of deposit money banks in Nigeria. Autoregressive Distributive Lag (ARDL) framework to examine the relationship between point of sales services (VLPOS), Banking Transactions made through unstructured supplementary service data (VLUSSD), mobile banking (VLMOBILE BANKING) and Return on Assets (ROA) of deposit money banks in Nigeria(using zenith bank plc as a case study). The data were obtained from the statistical bulletins of the Central Bank of Nigeria (CBN) and annual reports of Nigeria Deposit Insurance Corporation (NDIC) as well as annual financial statements of zenith bank plc. The results indicate that in the long-run, unstructured supplementary service data (VLUSSD) as a positive insignificant impact on the profitability of deposit money bank in Nigeria while point of sales (VLPOS) and mobile banking (VLMOBILE BANKING) indicates a negative insignificant effect on profitability of deposit money banks in Nigeria. In addition unstructured supplementary service data (VLUSSD) impacts positively on the profitability of deposit money banks in Nigeria in the short-run and point of sales (VLPOS) and mobile banking (VLMOBILE BANKING) had a negative and significant impact on the profitability of deposit money banks in Nigeria. The result of the analysis implies that there is need for a reasonable stable network: In other to reduce number of failed transactions, banks are hereby encouraged to collaborate with network providers and their engineers to establish a standardized network platform exclusively for each of the internet banking channels. Also, to counteract the detrimental impact of mobile payment on deposit money banks' financial performance in Nigeria, deposit money banks should work with Telecommunication network providers and security personnel to stop hackers and other internet fraud offenders and bring them to justice. Furthermore, Stakeholders of deposit money banks should focus on short run strategies considering the short run period of point of sales and mobile banking as they have negative and significant effect on the profitability of deposit money banks in the short run.