ASSOCIATED RISK WITH E-BANKING IN NIGERIA AND SWITCHING OF TRANSACTION FOR BANKS
· LIQUIDITY RISK: This risk arises when the acquiring bank does not have enough funds to pay the beneficiaries even when their account has been credited with expected value. The issuing bank will only credit the acquiring bank after the settlement and that is the time when the fund will be available to acquiring bank. The settlement cycle in Nigeria puts the acquiring bank at risk whether it is T+1 or T+2 (transaction day + additional one day or two days as the case may be).
· DEFAULT RISK: This risk arises when the issuing bank is unable to meet her obligation (out of clearing) and the acquiring banks have given values to the beneficiaries.
· INTEREST RISK: The acquiring banks suffer interest risk as a result of the time lag between payment date and settlement date. This becomes more burdensome on the acquiring banks on holidays and the weekends.
· TRANSACTION/SWITCH RISK: Host to Host switching which allows transaction to impart on the Core banking Software (CBS) directly without passing through the bank FEP. This circumvention of the FEP creates transaction risk. This is important considering the fact that there is no clear separation between naira account and foreign currency accounts on these platforms.
· LEGAL RISK: There is no legal frame work in place to deal with issues arising from e-payment especially in time of dispute or conflict between the stakeholders. The E-banking guideline of CBN does not in any way address any of the risk issues associated with e-banking in Nigeria to the extent that it can tenable in court.
· IN HOUSE ABUSE: There is also possibility that the internal staff of the body corporate and related agencies benefiting from these e-banking operations initiating unauthorized transactions which will expose all the stakeholders considering the volume that will be involved.

SUGGESTED MITIGANTS:
· All participating banks to pledge a Treasury bill to provide cover for all Switched transaction under the e-payment scheme.
· The Value date for transactions should be the same with settlement date to ensure that the acquiring bank does not give value first before settlement. Batch Cut-off must be agreed by all stakeholders to ensure that the transactions date and settlement date are the same.
· The body corporate and related agencies benefiting from e-banking should be made to provide an indemnity/guarantee for transactions being initiated by authorized staff.
· The body corporate and related agencies should provide a notification to their Bankers before initiating transactions so that the banks Treasury Department will make provision for the settlement.
· All the banks agreeing that settlement should be through RTGS as against the NIBBS currently used now. Where NIBBS will be used then, the processing of the transactions should be such that the acquiring banks get value first before the customers.
· All interested Switching companies must have an FEP in place to avoid any form of HOST-to HOST switching. This will ensure that the banks filter the transactions properly before it hits the Core Banking Software (CBS).
· CBN putting up the legal frame work to drive e-Banking in Nigeria.