Online Banking in Nigeria: Definition, How it Works, Benefits and Drawbacks

Online banking, also called Internet banking or web banking, enables you to manage financial transactions over the Internet. It provides services like deposits, transfers, and online bill payments, situations of what that is available at physical branches. Nearly all banks offer online banking accessible through a computer or mobile app.

Online Banking System in Nigeria

Digital banking eliminates the need to visit a physical bank branch for most basic transactions. It provides convenience, allowing you to bank from anywhere—home, work, or on the go—using a web browser or mobile app.

To use online banking, you will need a computer, tablet, mobile device, internet access, and a bank or debit card. You must register for your bank’s online banking service and create a password. Once done, you can perform various banking tasks.

Services offered vary by bank but often include transfers, bill payments, and sometimes even account opening and credit card applications. Additional functions may cover check orders, stop payments, or address changes.

Some banks enable online check deposits via a mobile app using remote deposit capture. You input the check amount and snap photos of the front and back for deposit.

Certain transactions like purchasing traveler’s checks, bank drafts, or specific wire transfers usually require a person to visits the bank. Similarly, some credit applications like mortgages often involve face-to-face meetings with a bank representative.

Digital Banks

You can operate exclusively over the internet without physical branches. They often offer cost-effective or free banking, competitive savings account interest rates, and digital financial management tools.

While they may lack their own ATMs, online banks typically allow customers to use ATMs at other banks and retail locations, sometimes settle up with ATM fees. The absence of physical branches reduces overhead costs, leading to lower fees and better savings account interest rates.

Customer service is typically provided through phone, email, or online chat, rather than in-person assistance.

Well-known online banks in the United States include Ally Bank, Discover Bank, and Synchrony Bank.

What are the Types of Online banking?

  1. Account Management: This is the basic feature of online banking, allowing customers to view account balances, transaction history, and account details. Users can also set up alerts for specific account activities.
  2. Fund Transfers: Online banking enables customers to transfer funds between their own accounts, within the same bank or to other accounts at different financial institutions. This includes one-time transfers and recurring transfers for bill payments or savings.
  3. Bill Payment: Many online banking platforms offer bill payment services, allowing customers to pay bills directly from their bank accounts. Users can set up recurring payments for regular bills.
  4. Mobile Banking: This type of online banking is accessed through mobile devices, such as smartphones and tablets. Mobile banking apps provide similar features as online banking platforms and often include additional functionalities like mobile check deposits.
  5. E-statements: Online banking allows customers to access electronic statements and documents, reducing the need for paper statements. These digital documents can be downloaded or printed if required.
  6. Remote Check Deposit: Some online banking platforms offer the capability to deposit checks remotely by taking photos of the front and back of the check with a mobile device.
  7. Alerts and Notifications: Customers can set up alerts and notifications for various account activities, such as low balances, large transactions, or bill due dates. These alerts can be received via email, SMS, or mobile app notifications.
  8. Money Management Tools: Some online banking platforms include tools for budgeting, expense tracking, and financial goal setting to help customers manage their finances effectively.
  9. Investment and Trading: Many banks provide online access to investment and trading accounts, allowing customers to buy and sell stocks, bonds, and other securities.
  10. Loan Applications: Customers can apply for various types of loans, including personal loans, mortgages, and auto loans, through online banking platforms. The application process may involve document uploads and electronic signatures.
  11. Customer Support: Online banking platforms often offer customer support features, including live chat, secure messaging, and access to FAQs and educational resources.
  12. Security Features: To protect customer information, online banking includes security measures such as multi-factor authentication, encryption, and transaction monitoring.

Example of Online banking

Let’s say you’re a customer of ABC Bank, and you’ve enrolled in their online banking service. Here’s how you can use it:

  1. Logging In: You visit the ABC Bank website and click on the “Login” or “Online Banking” button. You’ll need to enter your username and password, which you created when you initially signed up for online banking.
  2. Account Overview: After logging in, you’re taken to your account dashboard. Here, you can see an overview of your accounts, including your checking, savings, and credit card balances. You can also view recent transactions.
  3. Transfers: You want to move $500 from your savings account to your checking account to cover some upcoming bills. Using the online banking platform, you select the “Transfer Funds” option, choose the accounts involved, and enter the amount and the date for the transfer.
  4. Bill Payment: You have a monthly utility bill due in a few days. Instead of writing a check or visiting a physical branch, you click on “Bill Pay.” You enter the payee’s information and the payment amount, and schedule it for payment on the due date.
  5. Viewing Statements: You receive an email notification that your monthly bank statement is ready. You log in to online banking, click on “E-statements,” and download the PDF version of your statement for your records.
  6. Mobile Banking: A few days later, you’re out shopping and want to check your account balance. You use the bank’s mobile app on your smartphone to log in and quickly view your checking account balance.
  7. Alerts: To stay on top of your finances, you’ve set up alerts. You receive a text message alert notifying you that your account balance has fallen below a certain threshold. This helps you avoid overdraft fees.
  8. Customer Support: One day, you have a question about a recent transaction. You use the secure messaging feature within online banking to send a message to the bank’s customer support team. They respond promptly, addressing your concerns.
  9. Security: You appreciate the security features of online banking, such as the option for two-factor authentication (2FA) and the bank’s use of encryption to protect your sensitive information.

Benefits of Digital Banking

  1. Convenience: Perform basic transactions like bill payments and fund transfers.
  2. Speed: Almost instant transfers, especially between accounts at the same institution.
  3. Account Variety: Open and close various accounts online, including fixed and recurring deposit accounts with competitive interest rates.
  4. Account Monitoring: Keep accounts secure with continuous access, helping to detect and prevent fraudulent activity.

Drawbacks of Online Banking

  1. Challenges for new member: Novice users may find it challenging to navigate electronic systems, preferring face-to-face transactions.
  2. Limited Cash Access: digital banking is not suitable for large cash withdrawals; you may need to visit a branch.
  3. Security Concerns: While security is improving, online accounts are still exposed to hacking. It’s advisable to use personal data plans instead of public Wi-Fi for added protection.
  4. Internet Reliance: Online banking depends on a stable internet connection, and connectivity issues can make it hard to confirm successful transactions.

What’s Required for Digital Banking

  1. An Internet connection.
  2. A device like a computer or mobile phone.
  3. Your bank card, debit card, or account number, along with the routing number.
  4. Registration of your account, including setting up a password.

Precautions while Using Online Banking in Nigeria for Transaction Safety:

  1. Strong Passwords: Create strong, unique passwords and change them regularly (e.g., every quarter). Consider using a password manager for added convenience and security.
  2. Two-Factor Authentication: If available, enable two-factor or multi-factor authentication for extra protection.
  3. Keep Details Confidential: Never share your online banking credentials with anyone, and avoid using public Wi-Fi for online banking.
  4. Regular Account Monitoring: Frequently check your accounts for any suspicious activity. Report suspected fraud promptly to your bank.

Can you use online banking to pay bills each month?

Yes, digital banking allows you to pay bills conveniently each month. You can set up recurring payments for regular bills, such as utilities, rent or mortgage, credit card payments, and more. You can also make one-time payments for various expenses. Online banking typically provides options to schedule payments in advance, helping you manage your bills efficiently.

Full List of Banks in Nigeria

  1. Central Bank of Nigeria (CBN) – The country’s central bank responsible for regulating and supervising the banking industry.
  2. First Bank of Nigeria Limited – One of Nigeria’s oldest and largest banks, offering a wide range of financial services.
  3. Zenith Bank Plc – A leading commercial bank with a strong presence in Nigeria and other African countries.
  4. Guaranty Trust Bank (GTBank) – Known for its innovative banking solutions and excellent customer service.
  5. Access Bank Plc – A multinational commercial bank with operations in several countries.
  6. United Bank for Africa (UBA) – A pan-African financial institution with a significant presence in Nigeria.
  7. Union Bank of Nigeria Plc – One of the oldest banks in Nigeria, providing various banking products and services.
  8. Fidelity Bank Plc – Offers a wide range of financial services, including retail, corporate, and digital banking.
  9. Ecobank Nigeria – A subsidiary of Ecobank Transnational Incorporated, providing comprehensive banking services.
  10. Sterling Bank Plc – Known for its focus on technology-driven banking solutions and personalized service.
  11. Stanbic IBTC Bank – A member of the Standard Bank Group, offering a variety of financial services.
  12. Polaris Bank Limited – Provides banking services to individuals, businesses, and corporate clients.
  13. Keystone Bank Limited – Offers retail and corporate banking services with a focus on digital innovation.
  14. Heritage Bank Plc – Known for its commitment to agricultural financing and financial inclusion.
  15. Wema Bank Plc – Provides a range of banking and financial services to individuals and businesses.
  16. Jaiz Bank Plc – Nigeria’s first full-fledged non-interest (Islamic) bank.
  17. Unity Bank Plc – Offers a variety of banking and financial solutions to its customers.
  18. SunTrust Bank Nigeria Limited – A retail and commercial bank with a focus on personalized service.
  19. Titan Trust Bank Limited – A relatively new bank in Nigeria offering modern banking solutions.
  20. Providus Bank Limited – Provides a wide range of financial services, including digital banking.


Online banking is a quick, cost-effective, and convenient method for managing everyday financial transactions.

If you’re already with a bank, you probably have access to online banking simply register. Additionally, opting for an online-only bank can potentially increase your savings interest and reduce fees compared to traditional brick-and-mortar banks.

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