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Today’s financial system is the product of centuries of innovation. It started as a barter economy and has moved through various incarnations in response to limitations inherent in the evolving systems (Ajayi&Ojo,2006). Changes will definitely continue to occur in response to social and technological advancements. This has led to a shift from the old cash handling system to cashless society, which is in vogue worldwide. The introduction of the cashless policy demands for e-banking. To this end,the world has witnessed an upsurge of electronic payment instruments meant to facilitate trade and simplify payments.

According to Burr (1996), e-banking is described as an electronic connection between the bank and their customer in order to prepare, manage and control financial transactions. It can also mean the delivery of banking services and products through the use of electronic means irrespective of place, time and distance. Such products and services can include deposit-taking, lending, account management, the provision of financial advice, electronic bill payment, and the provision of other electronic payment products and services such as electronic money. As a business tool, e-banking is rapidly transforming the world of commerce and banking, making banks faster and more efficient and allowing them to provide more personalized services to the user customer.


In the past few years, Nigerian banks and generally the financial services industry embraced electronic banking, which has been made possible by the advancements in information technology (IT).The Central Bank of Nigeria (CBN) has in recent times engaged in series of reformations aimed at both making the Nigerian financial system formidable and enhancing the overall economic performance of Nigeria so as to place it on the right path in tune with global trends (Ajayi&Ojo, 2006).

According to Sanusi (2002), the introduction of such e-payment products in Nigeria commenced in 1996 when the CBN granted Allstates Trust Bank approval to introduce a closed system electronic purse called ‘ESCA’. Many banks therefore launched their websites between 1998 and 2000 with a view to starting Internet banking.Recently, e-banking has become the way for the development of banking system and the role of e-banking is increasing in many countries.

A number of factors have been identified as the tonic that has driven the uptake of e-transactions in the country. One is the liberalization of the telecoms industry that brought about the GSM revolution. The spread of the technology with the benefits which has led to the nation witnessing an increased subscriber base from a million to over 60 million has driven the spread of electronic banking(Black,Lockett,Winklhofer&Ennew, 2001).

Another factor is the consolidation in the banking industry, which has renewed confidence in the sector and put more money in the hands of the banks that survived the consolidation. With more money to invest, banks now looked for creative ways through which their customers could conveniently have access to their funds 24 hours, 7 days a week, for a small fee. Competition brought about by consolidation also renewed the urge of banks to deploy the platform of technology to satisfy their customers and make things easy for them. There is currently no bank in Nigeria that does not offer electronic banking services. It has become aviable way of doing business in the country and despite some challenges; it is a platform that has come to stay. For example, the card business according to Fust (2002), contributes as much as 30% to the bottom lines of banking institutions in developed economies. Nigerian banks have redefined themselves and now offer value added services geared at ensuring ease and convenience for their customers, reducing overheads, increasing profitability by redirecting the energy of their members of staff via moving small cash and noncash transactions to channels outside the banking halls. There are currently 4500 ATM’s as opposed to 1060 available a year ago on the Interswitchplatform while POS terminals have increased from 3300 to over 8000 (Black, Lockett, Winklhofer&Ennew, 2001).

Apart from being driven by the need for electronic services, the rise in the adoption of the electronic mode has been driven by the love of Nigerians for new things and for technology. The surprising part of this is that the uptake of technology in the nation cuts across all classes of people. Okada riders, market women and artisans make as much use of this e-payment platform as well as the upwardly mobile professionals. With the mass market in Nigeria constituting about 70% of the nation’s Gross Domestic Product (Floh & Treblmaier, 2006), the impact of deploying cards and other electronic mode of banking in the country has led to increased reach as customers can now access their accounts even at locations where their banks are not located through the electronic banking model. The key to driving relationships between a bank andits customer lies in offering superior, consistent and convenient services driven by technology that will ensure that Nigerians become a reference point as a digitally aware and knowledgeable people in Africa.

However, consumer trust is one of the key factors and key elements of success in e-banking. One of the key factors to develop e-banking service is to attract customers’ trust and satisfaction(Khaksar&Giahi,2009). This study therefore examinede-banking and determined the factors that influence customers’ trust in its product and services.


The number of internet users in Nigeria has increased drastically in recent years (Perumal&Shanmugam,2004). However, many are still reluctant to leverage on e-banking in their banking transactions. The developments in the Nigerian banking industry seem not to have achieved their aims. Almost every Nigerian bank encounters similar problems in meeting customers’ expectation of customer satisfaction in their service delivery. Trust has been identified as one of the critical factor that influenced the adoption of e-banking (Suh& Han, 2002). Generally, bank customers would feel insecure to provide their personal and financial information to the internet banking or on banks’website, as they do not trust the site is secured enough to perform banking transactions. Related to this problem, empirical evidence implies that customers’ patronage for and reaction to a particular product depends on their level of understanding of what the product can do and what they stand to benefit therefrom (Balachandher, 2001). In this connection, this study tried to find out the factors that influence customers’ trust in e-banking service.


The following research questions were raised for the purpose of this study:

  1. What relationship exists between the perceived usefulnessof and customers’ trust in

e-banking services?

  1. What relationship exists between the perceived securityof and customers’ trust in

e-banking services?

  • What relationship exists between the perceived privacy of and customers’ trust in

e-banking services?

  1. What extent does customers’ trust depend on perceived usefulness, perceived security and perceived privacy?


E-banking in the Nigerian economy today is a welcome development and its impacts on the society are also over-whelming. The result of this study is of value to the management of banks,establishing more effective and efficient security and control policies that would improve customers’ trust in e-banking services. This is because if customers’ trust in e-banking services increases, there will be increase in the number of e-banking customers. Investment in information technology (IT) infrastructure is huge to achieve e-banking. Thus, increase in number of e-banking customers will justify investments in IT by banks.


The general objective is to assess the factors that influence customers’ trust in e-banking services. The specific objectives are to:

  1. examine the relationship between the perceived usefulness of and customers’ trust in

e-banking services.

  1. evaluate the relationship between the perceived security of and customers’ trust in

e-banking services.

  • establish the relationship between the perceived privacy of and customers’ trust in

e-banking services.

  1. assess the dependence of customers’ trust in e-banking services on the perceived usefulness, perceived security and perceived privacy.


This study tested the following null hypotheses:

H01:There is no significant relationship between the perceived usefulnessof and customers’ trust in e-banking services.

H02:There is no significant relationship between the perceived securityof and customers’ trust in e-banking services.

H03:There is no significant relationship between the perceived privacy of and customers’ trust in e-banking services.

H04:Customers’ trust in e-banking services does not depend on perceived usefulness, perceived security and perceived privacy.


The study considered how perceived usefulness, perceived security and perceived privacy specifically affect bank customers’ trust. This is because customers’ trust is of importance especially where new technology is involved. The bank customers comprise the customers of commercial banks in Ilorin, Kwara State. The study was carried outin 2014 and the findings based solely on the data collected at the time of administering the research instrument.



Using electronic devices like internet, wireless connection networks, ATM and cell phone in banking services.


A measure of how products supplied and services rendered by a company meet or surpass customer expectation. It is seen as a key performance indicator within business.


Allows a bank customer to withdraw cash from his account via a cash dispenser machine, and the account is debited immediately.



A machine used to accept cards for payment of goods and services. It allows a card holder to have a real-time online access to funds and information in his/her bank account through debit or cash cards.


The confidence or reliance on some person or entity.


A financial institution that accepts deposits and channels the money into lending activities.


GSM(Global System for Mobile Communication) is an open, digital cellular technology used for transmitting mobile voice and data services.


A private limitedcompany owned by Nigeria’s mega banks that provides on-line, real time electronic payment systems to support automated customer transactions from different customer touch points and transaction channels.


            In order to ensure comprehensive and sequential orderliness in the presentation of the findings on this study, this research report is divided into five chapters.Chapter one focuses on the general introduction to the research topic and contains the background to the study, statement of the problem, research questions, justification for the study, objectives of the study, hypotheses of the study, scope, definition of terms and plan of the study.Chapter two looks into the review of related literature by observing the view of different scholars and researchers who had previously conducted a research on this area of study. This chapter considered the conceptual framework, the theoretical background and the empirical evidence. Chapter three focuseson the research methodologyused for this study. It covers aspect such as the research design, population for the study, sampling techniques, method of data collection and the method of data analysis. Chapter four is for data presentation, analysis of data and discussion of results while chapter five contains the summary of findings, conclusions and recommendations for further studies.


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