The Impact of Electronic Banking on Customer Satisfaction
Chapter One
Objectives of the Study
The specific objectives of the study are to:
- Determine the impact of e-banking on customer’s
- Identify the challenges of e-banking in WEMA Bank
- Assess the effectiveness of e-banking as a tool for enhancing customer’s satisfaction.
CHAPTER TWO
LITERATURE REVIEW
Introduction
There are several definitions of banks given by authorities, scholars and in some cases law or regulations. Thus, there’s no accepted definition. George, (2000) sees banking business as a service which involves intermediation of finances through the mobilization of services from the units generating surplus funds for lending, to promote growth and development which in turn maximizes profit for the organisation.
Sec.16 of Banks and other financial institutions Decree 1991 (as amended) defines banking business as “The Business of receiving deposits of current account paying or collecting of finance or such other business as the Governor (CBN) made by order, published by gazette.” Therefore, any organization or entity that carries out the above- mentioned Business is referred to as BANK.
Concept of E-banking and Customer Satisfaction
Electronic banking is defined as the automated delivery of new and traditional banking products and services directly to customers through electronic, interactive communication channels. E-banking includes the systems that financial institution customers, individuals or businesses, to access accounts, transact business, or obtain information on financial products and services through a public or private network, including the internet. E-banking is also called Internet banking, on-line banking or PC banking. E-Banking may include ATMs, wire transfers, telephone banking, electronic funds transfers and debit cards. Nowadays, internet banking sites process customer service inquiries, allow transactions from one account to another, take loan applications, open new accounts etc. Some provide commercial services and others are full service banks rushing to get there. In addition to the rapid deployment of electronic bank „branches‟ an entire financial community has suddenly appeared, offering most and financial service a customer could want. New forms of money are being coined to pay for transactions, and untraceable payment protocols are being tested and marketed. As fewer and fewer bank customers visit banks, more and more are using ATMs, home banking terminals and the internet to do their financial business. This „charge‟ to the internet is an offensive, aggressive strategy to capture a large share of the financial services market. It is supported by speed of light, telecommunications, powerful, inexpensive computers and secure encryption. This charge to the internet is increasing the number of competitors in the market. Technology has introduced new ways of delivering banking to the customer, such as ATMs and internet banking. Hence, banks have found themselves at the forefront of technology adoption for the past three decades. Banks began at to look at e-banking as a means to replace some of their traditional bank functions, e-banking products/services like ATM and electronic funds transfer were a source of differentiation of banks that utilized them. The evolution of the e-banking industry can be traced to the early 1970s. Banks began to look at e-banking as a means to replace some of their traditional bank functions, for 2 reasons. Firstly, branches were very expensive to set up and maintain due to the large overheads associated with them. Secondly e-banking product/services like ATM and electronic fund transfer were a source of differentiation for banks that utilized them. Being in a fiercely competitive industry, the ability of banks to differentiate themselves on the basis of price is limited.
Technology has introduced new ways of delivering banking to the customer, such as ATMs and Internet banking. Hence, it is imperative for banks to align their strategies in response to changing customers’ needs and developments in technology.
Customers are not entirely satisfied with the quality of service provided by commercial banks in Nigeria. Queuing time is considered reasonable at ATMs but too long in banking halls. Part of the dissatisfaction of customers‟ stems from the fact that customers are not aware and knowledgeable about the full range of e-banking services provided by banks. The decline in the quality of banking services maybe attributed to the fact that there has been an increase in the volume of banking transactions. It is often reported that the grievance redressed machinery in the banks are not adequate enough to address the issues to the full satisfaction of the customers. Therefore, this is a clear-cut indication that commercial banks have to put in more effort into e-banking services to improve the satisfaction of their customers. The problem presented is to identify where the delivery channels are lacking in providing satisfaction to customers and what can be done to resolve this problem
CHAPTER THREE
RESEARCH METHODOLOGY
Introduction
This chapter deals with the methodology to be adopted carrying out the research. It discusses sources of data, population, sampling procedure, method of data analysis, and structured questionnaires.
Research Design
This is the plan or framework which guide the research methodology phase of this research project in fact it is the framework which specifies the type of information to be collected, the source from which the data is to be collected, the procedure through which the data is collected, the research sample and section techniques.
This means that designing a research requires a mental plan or scheme of attack for solving research problems in a systematic manner within the circumstances of the researcher. However, the design of this research will be based on the field survey method. The survey will concentrate on the study and any other relevant respondents.
According to Asika (1991) research design means the structuring of investigation aimed at identifying variables and their relationship to one another. Akuezuilo (1990) sees research design is essentially the plan, structure and strategy of investigation conceived so as to obtain answers to research questions. It constitutes guidelines which direct the researcher towards solving the research problem. Hence research design constitutes the blue print for collection, measurement and analysis of data. For this study, the research design is survey type of research.
Population of the Study
For the purpose of this study, the population constitutes the totality of the staff of the selected organisation under study (i.e. WEMA Bank Staff and Customers). The population sizes of this research are the staff and customers of the selected banks in Kaduna. The population of the study is over 1500 staff for both managerial staff, senior staff and junior staff of the branches of WEMA Bank plc and over 250,000 customers from the branches of WEMA Bank in Kaduna metropolis which include five branches of WEMA Bank around Kaduna Metropolis.
CHAPTER FOUR
DATA PRESENTATION AND ANALYSIS
Introduction
This chapter is concerned with the presentation, analysis, interpretation as well as test of data collected so as to draw inferences. The questionnaires method as described earlier is the primary source of data employed for this research work.
Data Presentation and Analysis
320 questionnaires were administered to staff and 400 customers of WEMA Bank Nig Plc. A background of these figures indicate that three hundred and thirteen (313) questionnaires were administered to staff and three hundred and ninety one (391) questionnaires to customers further breakdown reveals that only seven hundred and four (704) questionnaires were duly completed and returned while the remainder of sixteen
(16) were not received for unknown reasons. Out of this figure, three hundred and thirteen (313) of those questionnaires represent those returned by staff of the above mentioned bank while three hundred and ninety (391) represent those received from customers.
CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATIONS
Summary
Financial services offered through the Internet are more frequently described as “virtual banking”. This is simply because there is no physical contact between the customer and banks‟ personnel. In fact, some market watchers are beginning to argue that such transactions are real indeed and can no longer be described as “virtual”. Given the overwhelming success of e-banking, banks in Nigeria are gradually embracing Internet banking and radical changes are beginning to take place in Nigerian financial landscape.
Chapter one of this study begun with the introduction of the study which set out to assess the impact of e-transaction as it affects customer satisfaction in WEMA Bank. Two hypotheses (a null – which states that e-transaction has not made any impact on customer satisfaction in WEMA Bank and an alternative – that e-transaction has impacted positively on customer satisfaction in WEMA Bank) were formulated.
Chapter two focuses on existing literature (the work of others) in respect of this study area. Under this chapter, the definition of concepts, the historical development of bank in Nigeria, Commercial Banking perspective in Nigeria, Structure of the Nigerian Banking System, . Similarly, the Financial Services in the Nigerian banking system, origin and operations of e-transactions, the concept of e-banking, the evolution of e-banking in the Nigerian banking system, e-banking products/services in the Nigerian banking system, benefits of e-banking to bank and customer, merits and demerits of e-banking in Nigeria, impediment to e-banking in Nigeria, elements of customer satisfaction in bank and relationship of e-banking to customer satisfaction.
In chapter three, the research methodology used for this research work was discussed. The research design was highlighted while the population of the study, the sample size and sample technique which was based on random sampling – where 350 customers and 150 bank staff were selected, was discussed. Sources of data, method of data collection and analysis techniques were areas of focus for this chapter.
In chapter four, the data collected from the field were presented and analyzed with appropriate interpretation given. The questionnaires were further analyzed and the hypothesis tested using Chi-square method. Chapter five summarizes all the succeeding chapters. Here the study was summarize and conclusion is drawn and made while recommendations were proffered.
Conclusions
Expectations have a central role in influencing satisfaction with services, and these in turn are determined by a very wide range of factors – lower expectations will result in higher satisfaction ratings for any given level of service quality. This would seem sensible; for example, poor previous experience with the service or other similar services is likely to result in it being easier to pleasantly surprise customers. However, there are clear circumstances where negative preconceptions of a service provider will lead to lower expectations, but will also make it harder to achieve high satisfaction ratings – and where positive preconceptions and high expectations make positive ratings more likely.
Technology is undoubtedly a very important tool of every bank’s competitive strategy. It could draw the line between success and failure. Internet banking, which has resulted from the blossoming Internet technology, obviously has many benefits for the financial system. Unfortunately, Nigerian banks cannot immediately reap the digital dividend because of poor telecommunications infrastructure.
Since Internet banking is targeted, in most cases, at the public by way of mass marketing, users must have access to cheap, fast and easy telecommunication tools. The poor in Nigeria are financially forbidden from participating. The roll-out of GSM cannot solve telecommunications problem given the high cost of tariff.
In the test of hypothesis for this research it is seen that the null hypothesis which states that there are no effective marketing strategies of banks retail products is being rejected and the alternative hypothesis which states that there are no effective marketing strategies of banks retail products is being accepted. This concludes that the marketing strategies of banks in retailing their products are effective.
Other finding is that the bank has enough good retail products for the needs of customers. The study also reveals that banks nowadays, because of competitive nature of their service they come up with fantastic and effective marketing strategies that will position them at an advantage over other banks. In a bid to operationalize all these marketing strategies, the marketing department in banks have been highly consolidated and solidified by making use of the core marketer in the department and employing other field marketer through outsourcing arrangement.
Today, e-banking means developing new relationships with customers, regulatory authorities, suppliers, and banking partners with digital age tools. For example, it requires an understanding that customer/bank relationships will be more personalized, resulting in novel modes of transaction processing and service delivery. This in turn calls for substantial investment in IT platforms by bank.
This study has revealed that e-transaction has an overwhelming impact on customer satisfaction. In fact, it is quite important that banks should transcend from the most popular ATM window and focus more on strengthening other e-banking services like transfer of funds, payment of bills and other e-banking platforms, which shall in the near future be a critical success factor for their continued existence and success. Apart from committing more resources in upgrading those services there is also an attendant need for the banks to invest in creating customer awareness on the existence of other value added e-banking services for their utilization.
Particular importance in this drive should be the existence of round the clock complaint handling desk that should be staffed with qualified and courteous staff to provide efficient and responsive way-forwards to customers. And, given the high level of concern with internet security, banks need to emphasize the measures they have taken to ensure confidentiality of transactions and to also protect their customers from fraud and other attendant internet vices that their subscription may subject them to.
The quality of Web sites too has a direct and an indirect impact on both satisfaction and trust. Banks should redesign their Web sites with a view to enhancing usability and usefulness. Amongst the many factors that account for the perceived quality of a Website, the avoidance of downtimes seems to be extremely important to online banks. Furthermore, based on findings I recommend making the sites easy to navigate and giving them an uncluttered look. Sufficient information should be given on how to conduct transactions and, most importantly, on how to get help should unforeseen events happen.
Trust and overall satisfaction can be seen as major antecedents of e-loyalty. I would therefore recommend that trust-building actions are paid more attention in to, focusing for example on pay-back guarantees or quality certificates, which are seen as helpful steps in increasing electronic customer retention. It seems obvious that the results of many surveys suggest incorporating trust-building measures into online customer relationships. As far as this research is concerned, the pre-eminent importance of trust can be explained by both the core products of the financial industry, which can be seen as the transmission and processing of highly confidential information, and trust in the medium as such, which again stands for the bank’s capability to securely transfer and store confidential personal information. Unless customers establish personal contacts in a bank branch, users of Internet banking in many cases do not have well-known contact persons and must rely completely upon the capability and trustworthiness of the bank. Therefore, the bank must build a strong brand in order to signal competence to its customers.
Another important issue is that of continuous survey which might be an adequate instrument for online banks to learn about their customers’ attitudes. The comparatively high response rate for an online survey can be taken as an indicator that customers of WEMA Bank are actually willing to give feedback and get in touch with their supplier.
Recommendations
Electronic banking has become a necessary survival weapon and is fundamentally changing the banking industry worldwide. Today, the click of a mouse offers bank customers services at a much lower cost and also empowers them with unprecedented freedom in choosing vendors for their financial service needs. No country today has a choice-whether to implement E-banking or not given the global and competitive nature of the economy. Banks have to upgrade and constantly think of new innovative customized packages and services to remain competitive. The invasion of banking by technology has created an information age and rendered banking services more appealing.
In view of the findings of this study it is concluded that electronic banking in Nigeria is yet to create any significant impact on service delivery, which will consequently lead to improved customer satisfaction.
Based on the findings of this research, it is recommended that:
- Much need to be done in the area of creating awareness about the availability of electronic banking products and services, how they operate and their benefits. Banks should organise public exhibitions and talk shows and make products accessible to all customers. In addition, they should improve their service delivery to justify the benefits of electronic banking products and services. This way, customers‟ interest would be aroused.
- Banks should try to win customers‟ confidence by providing adequate security of transaction back up of critical data files and alternative means of processing information. They should also ensure good connectivity and power base that will enable them serve customers faster and more conveniently. The banks should ensure that at no time should service cease as a result of networkproblem
- Government should provide adequate regulatory framework that will ensure customer protection, and security of transaction. That way, bank customers‟ confidence in electronic banking would be
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