THE EFFECT OF E-BANKING ON CUSTOMER’S SATISFACTION IN BICEC BUEA, SOUTH WEST REGION CAMEROON

Abstracts

The purpose of this research was find out the effects of e banking on customer’s satisfaction in Bank. The specific objectives were to investigate whether or not there is a significant relationship between internet e banking and customer’s satisfaction; and to make necessary recommendation Using, questionnaires the study obtained data from 100 workers and customers ranging from the management to the customers of the bank.  Data was analyzed using descriptive and regression analysis based on the result of this study, the researcher found out that e banking services affects customer’s satisfaction. From our research we can say e-banking has a positive impact on the image, goodwill and growth of BICEC. Customer satisfaction is of a paramount importance to the achievement of organizational goals. It has geometrically increased the rate of patronage as a result of the supply of redefined products and services to meet the needs and demand of the public. E-banking has also helped to reduce the rate of fraud in the-banking system. Present day banking activities are computerized and not manual, making it difficult to make any alterations; such actions can easily be traced and corrective measure taken. E-banking has also provided better and well-grounded infrastructure to speed up transaction, increase consistency and enhance banks operation. The study recommends that E-banking should be fully funded and receive unconditional support from the management. Financial constraints are part of the problems that limit the effectiveness of e-banking the-banking industry.

CHAPTER ONE

INTRODUCTION

1.1 Background Of The Study

Computer has eased human life. Every day new dimensions of its utility are emerging. E-Banking is one of the gifts to human beings by computer technology. Use of computers have automated banking process and thus has given birth to e-banking.  E-Banking is a fast spreading service that allows customers to use computer to access account-specific information and possibly conduct transactions from a remote location – such as at home or at the workplace. Use of internet has made everything available at your finger tip. Lot of websites are ready to serve you, just at your mouse click. ATM cards, credit cards, debit cards, smart cards, all these have eased human life up to such an extent that today life without these seems to be hard, full of misery. Internet banking (e-banking) is a remote service, where access to account information and any transactions is granted at any time from any computer with an Internet connection.

Electronic banking started after Second World War with the use of proprietary software and private networks. But the whole credit of making e-banking big hit goes to Internet. Internet made e-banking trustworthy and useful. International trade has increased significantly in post-world war period and with it monetary transactions between different countries have increased. E-Banking has facilitated trading between distant corners of the world without worrying about monetary transactions. E-commerce has grown exponentially over last 30 years. Electronic Data Interchange (EDI) and Electronic Funds Transfer (EFT) were introduced in the late 1970s, to send commercial documents like purchase orders or invoices electronically. In 1980’s e-banking got a new dimension by the use of credit cards, Automated Teller Machines (ATM) and telephone banking. The evolution of e-banking started in the developed countries before spreading to developing countries.

The affection of technology in business the past left as an uncompleted puzzle. The lack of its consideration evolved to a deeper impact in nowadays. Developments in technology touched also the bank department, giving birth to a new product called online banking or e-banking. What an online banking offers is an opportunity to perform different bank operations, where a customer can access his or her bank account via the Internet. Such operations can be performed at a variety of usage from personal computer to a mobile phone. Customers can check current account, saving account, transfer money and make their payments. Online banking usage is becoming very common due to the increase of usage of computers and mobiles which avail the transfers. Despite doubts at its first introduction, customers took time to adjust their activities to this technology. On the other hand, there were some uncertain thoughts whether online banking is seen more as a supplement rather than a substitute product. Nevertheless, the majority of banks nowadays are offering it and costumers most importantly find it useful. Online banking was initiated as a different way of banking and less expensive. In the customers’ perspective, it meant less time to spend. The majority of customers at the beginning were confronted with some difficulties but after a period it was very productive; whereas from the banks point of view at the beginning they had some expense and feared for a big loss. According to some studies, results for adoption of online banking generally would come after two or three years. In the literature review we will present the studies that provide theoretical and empirical analysis relating our study.

The Banking Industry is one of the areas of business that has been influenced the most by technology. Banking operations have evolved from the mere exchange of cash, cheques and other negotiable instruments to the application of Information and Communications Technology (ICT) to banking transactions. Through technology, banks are now able to offer convenience services to their customers. According to Molla (2005), Information and Communications Technologies (ICTs) have changed the way of conducting business transactions and meeting the growing demands of customers for most organizations. The promise of ICTs in the banking sector has been seen in terms of its potential to increase customer base, reduce transaction costs, improve the quality and timeliness of response, enhance opportunities for advertising and branding, facilitate self-service and service customization, and improve customer communication and relationship.

Business via the internet or electronic commerce is providing a competitive advantage for banks by lowering operational cost and providing best satisfaction of customer needs. A strong banking industry is important in every country and can have a significant effect in supporting economic development through efficient financial services. In Ghana the role of the banking industry needs to change to keep up with the globalization movement. This change will include moving from traditional distribution channel banking to electronic distribution channel banking. Given the almost complete adoption of e-banking in developed countries, the reason for the lack of such adoption in developing countries like Ghana is an important research that needs to be addressed.

In the world of electronic commerce, it is very important that banks should provide electronic banking services in order to have the long-term survival (Burnham, 1996). Consequently, most banks in developed and some in developing parts of the world are now offering electronic banking services with various levels of sophistication. It is expected that banks that do not offer electronic banking services may lose their customers to their competitors (Orr, 1999).

Electronic banking is the automated delivery of new and traditional banking products and services directly to customers through electronic medium. This system allows customers to access their accounts, transact business, make enquiries and have prompt responses from banks (Parisa, 2006). Automated Teller Machines (ATMs), telephone banking, internet banking, mobile banking, debit cards, credit cards, online bill payment and many others are examples of how technology is changing traditional banking.

In a further development, Simpson (2002) contends that electronic banking has survived in a number of countries given its ability to increase banks market share and facilitation of business transaction. More linkage is therefore drawn on the importance of electronic banking to improve the business environment of any economy. Awareness, information, customer protection, response time, reliability, security, technology readiness all are considered to be important elements for electronic banking.

Technology has played a vital role in today’s world. In recent years, the adoption of e-banking began to occur quite extensively since it is the automated delivery of new and traditional banking products and services to customers through electronic channels due to fast advances in IT and intensive competitive banking markets (Toor et al., 2016). And also, e-banking offers several benefits to the customers such as convenient, quick, time-saving and better cash management. In the background of Sri Lanka, most of the banks in the banking industry have already introduced ATM, mobile banking, internet banking and POS to their customers. Therefore, the researcher is willing to evaluate the impact of e-banking on customer satisfaction in Sri Lanka since some other authors from different countries have already analysed the customer satisfaction based on some variables.

With the help of the internet, banks are providing benefits to their customers. From the customer’s point of view, electronic banking is providing convenient and valuable source to deal with funding because it provides convenience to access account 24/7 (Applegate etal., 1996). Customers can use these services anywhere that is homes, offices and so on and anytime without visiting the banks. The banks can use the electronic commerce technology for meeting the competitive advantage and gaining the best level of profitability while providing best services to its customers.

Developed countries found out that technology is essential in providing faster and more efficient services to customers. Technology acquisition must be based on actual needs and the proven ability to deliver customer – friendly solutions. But with globalization, developing countries banks have no choice but to adopt electronic banking services to enhance effective service delivery that transcends to customer satisfaction, if they really want to stay in the business race, let alone be profitable (Madueme, 2009). But it should be realized that electronic banking services is a brain child of Information and Communication Technology (ICT) that made it possible for service providers and their customers in developing economies to enjoy a good semblance of the services enjoyed in the developed societies.

While financial institutions took steps to implement e-banking services in the mid-1990s, many consumers were hesitant to conduct monetary transactions over the web. It took widespread adoption of electronic commerce, based on trailblazing companies such as America Online, Amazon.com and eBay, to make the idea of paying for items online widespread. By 2000, 80 percent of U.S. banks offered e-banking. Customer use grew slowly. At Bank of America, for example, it took 10 years to acquire 2 million e-banking customers. However, a significant cultural change took place after the Y2K scare ended. In 2001, Bank of America became the first bank to top 3 million online banking customers, more than 20 percent of its customer base. In comparison, larger national institutions, such as Citigroup claimed 2.2 million online relationships globally, while J.P. Morgan Chase estimated it had more than 750,000 online banking customers. Wells Fargo had 2.5 million online banking customers, including small businesses. Online customers proved more loyal and profitable than regular customers. In October 2001, Bank of America customers executed a record 3.1 million electronic bill payments, totaling more than $1 billion. In 2009, a report by Gartner Group estimated that 47 percent of U.S. adults and 30 percent in the United Kingdom bank online.

The banking system in developing countries is significantly different from that in developed countries such as the United State of America, Britain and South Africa. As with most developing countries, Ghana has been undergoing a process of financial sector restructuring and transformation as an integral part of a comprehensive strategy for some time (Acquah 2006). According to Bawumia (2007) banks in developing countries will need to reinvest themselves in this new conducive but challenging environment. This is important because electronic transactions will continue to grow and only countries that make a move towards embracing electronic business will participate in this revenue generation (Akoh, 2001).

Furthermore, e-banking was adopted by banks in developing counties so as to improve their service delivery, decongest queues in the banking hall, enable customers withdraw cash 24/7, aid international payment and remittance, track personal banking transaction, request for online statement, or even transfer deposit to a third party account. Existing literature posits that electronic commerce gives competitive advantage for banks by reducing operational cost and provides best satisfaction of customer needs. For example, Burnham (2013) recounted that in the world of electronic commerce, it is very important that banks should provide electronic banking services in order to survive.

The recent consolidation exercise in Cameroon banking sector has drawn the attention of many banks to application of various technological devices in promoting/achieving better customer service delivery that guaranteed customer satisfaction that translates into increase profitability and higher return on investment. With the advantages involved in satisfying customers, the researcher decided to carry out a study that will help other banks in Cameroon to see the need to engage in E-banking and gain more customers and profitability. Timothy (2012) posits that three or four decades ago, banking around the world was a simple business; consumers saved their money with and received their financial services from banks. When customer’s open savings account, they received passbook from the bank with which the account would be operated; and when it is a current accounts, they received cheque books for the same purpose. In addition, Timothy (2012), also states that customer’s satisfaction holds the potential for increasing an organization’s customer base, increase the use of more volatile customer mix and increase the firm’s reputation. Consequently, obtaining competitive advantage is secured through intelligent identification and satisfaction of customer’s needs better and sooner than competitors and sustenance of customer’s satisfaction through better products/services.

Electronic banking is considered as a new revolution in the digital technology and traditional banking services which implies the provision of banking products and services through electronic delivery channels such as the internet, the telephone, the cell phone etc. (Worku, Tilahun and Tafa, 2016). On the other hand, E-banking gives customers access to almost any type of banking transaction at a click of a mouse, expect of cash withdrawals (De Young,2001, cited in Nupur, 2010). Therefore, the use of Information and Communication Technology by banks provide e-banking services and manages customer relationship more quickly and most satisfactorily than traditional banking (Addai et al., 2015).

 1.2 Statement of the Problem         

Many studies have been conducted on the impact of e-banking on customer satificatin in commercial banks. Examples of such studies include Ackah (2014), Worku (2016), Toor et al. (2016), Nupur (2010) and Kumbhar (2011). This study is different from theirs because it uses a different case study that is Cameroon. In developed countries, banks engage in vigorous e-banking and this had helped these banks to stay competitive through productivity gains, transaction cost reduction and customer service improvement. Despite its benefits, however, developing countries still lag behind developed countries in the adoption of e-banking. In Cameroon, customers who use e-banking services often complain of poor internet connection and are left grumbled and unsatisfied. Bicec Cameroon is one of the first commercial banks in Cameroon that implemented e- banking in order to enhance services to her customers. It is against this backdrop that this project seeks to assess the level of e-banking services on customer satisfaction in BICEC Bank. In order to do this, the following research question will be answered. What is the effect of electronic banking services on customer satisfaction in BICEC Bank?  In order to answer the question, the following objectives will be met

1.3 Objectives of the Study

The main objective of this study is to examine the effect of E-banking on customer’s satisfaction in commercial Bank.

1.3.1 Specific objective

1) To investigate in to the effect of electronic banking services on customer satisfaction in BICEC Bank.

2) To make recommendations to a wide audience.