An Evaluation of the effects of electronic banking on customer satisfaction in Cameroon, with particular reference to the customers of United Bank for Africa
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In light of the recent financial crisis and global economic recession, leaders of financial institutions are under additional pressure not only to maintain customer satisfaction but also to maintain market leadership. Consequently, the objective of this study was to evaluate the effects of electronic banking on customer satisfaction in Cameroon.
Today’s banking situation demands continuous innovation to meet the yearnings and aspirations of the ever-demanding customers. Hence, banks need to roll out new products and services quickly and effectively, using the latest cutting-edge technology.
One of the benefits banks derive from electronic banking products and service delivery is improved efficiency and effectiveness of their operations so that more transactions can be processed faster and more conveniently, which will undoubtedly impact significantly on the overall performance of the banks.
The customers, on the other hand, stand to enjoy the benefits of quick service delivery, reduced frequency of going to banks physically and reduced cash handling. However, these developments in the Cameroonian banking industry seem not to have achieved their aims.
Queues are still seen in the banking halls; bank customers still have many problems with the e-banking products that are available in Cameroon. The problem here is: are customers really enjoying these services? The empirical analysis shows that the level of satisfaction of customers with the e-banking facilities of UBA is quite high and can be explained by factors such as the level of affordability, trust, security, convenience, confidence, time-efficiency and flexibility in the management of finances.
This study looks at all the above among 400 properly filled and returned questionnaires of e-banking customers of UBA, Limbe. The study employed descriptive statistical tools such as tables, pie charts, and frequency charts and percentages as well as inferential tools, especially the chi-square test of association.
The results of the study implied that majority of the customers are young, educated, salaried, and businessmen and women actively using the service of e-banking. The findings reveal that majority of the customers of UBA have a generally good perception of the bank’s e-banking services, especially from the perspective of its being secure, convenient, effective, time-saving, making flexible and effective transactions and management of finances trustworthy.
Furthermore, the results of the study showed that most UBA customers make use of the bank’s e-banking products for three major reasons: ease of use, ability to reduce transaction time and security and accessibility.
More so, it was found that the e-banking service with the highest level of customer satisfaction is SMS alert, followed by ATMs, with the least being point of sale (POS) but also that there is a higher level of customer satisfaction when the e-banking products are combined than when used in isolation.
1.1 Background of the Study
The revolution of information technology has influenced almost every facet of life, and the banking sector a lot more so. The financial service industry has recently been open to historical transformation. Electronic development (e-development) is emerging and advancing rapidly in all areas of financial intermediation and financial markets.
Today we have quite a several e-development models that include e-finance, e-money, e-banking, e-brokering, e-insurance, e-exchange and even e-supervision (Lustsik, 2003). The rapid changes in business operations in contemporary times in the form of technological improvement require banks in Cameroon to serve their customers electronically.
Traditionally, banks have been at the forefront of harnessing technology to improve their products and service delivery. The banking industry and its environment in the 21stcentury are highly complex and competitive, hence the need for information and communication technology to take centre stage in the operations of banks (Steven, 2002).
The 21st century has witnessed dramatic transformations in the financial sector as advances in information technology have created new ways of handling financial transactions through various e-banking platforms.
In recent times, electronic banking has spread rapidly all over the globe. According to Onay(2008), the increased adoption and penetration of the internet has recently redefined the playground for retail banks.
In Cameroon, all banks are making greater use of e-banking facilities to provide better services to excel in the competitive Cameroonian banking industry. The spread of e-banking has also greatly benefited ordinary customer in general and the corporate world in particular.
Consequently, electronic banking (e-banking) has been the greatest challenge to the banking industry going by the sophistication and volume of fraudulent practices associated with this form of banking. In the past few years, banking activities in Cameroon has increasingly depended on the deployment of information and communications technology. Customers’ insatiable appetite for efficient services has compelled financial institutions to fast-track to a more radical transformation of their business systems and models for embracing e-banking.
E-banking appeal as well as its product development is rapidly growing, and global acceptance has strongly encouraged its penetration. The success of e-banking is contingent upon reliable and adequate data communication infrastructure. Therefore, it is efficient for banks to invest in online transactions through the creation of networks.
However, there has been a mix-up between electronic banking and internet banking. The fact is that internet banking is subsumed in electronic banking. Banking has come a long way from the time of ledger cards and other manual filing systems.
Most banks today have electronic systems to handle their daily voluminous tasks of information retrieval, storage and processing. Irrespective of whether they are automated or not, banks by their nature are continually involved in all forms of information management continuously.
The computer is of course an established tool for achieving a competitive edge and optimal resource allocation. The most obvious application of computers in the banking industry is in the area of customer services, information management and control.
Computerized banks respond to requests from customers for a statement of accounts, balance and account activity enquiries. With signature and image verification systems, the time taken to offer typical cashier services like receiving and paying out of cash is minimized.
Also, with the advent of automated teller machines (ATM), banks can serve customers outside the banking hall all round the clock. All the banks considered observed that cost reduction and enhanced ability to deal with customers were drivers of extreme importance. The desire to reduce both operational and administrative costs has driven banks to the electronic world.
However, cost reduction is only realizable with an increase in consumer adoption. E-banking is the use of internet and telecommunication networks to deliver a wide range of value-added products and services to bank customers. The Internet has changed the dimensions of competition in the retail banking sector. Following the introduction of personal computer banking,
Automated Teller Machines and telephone banking which are the initial cornerstones of electronic finance, the increased adoption and penetration of the Internet has added a new distribution channel to retail banking: Internet/Online-banking. E-banking has gained worldwide acceptance as a new delivery channel for performing various banking transactions.
It provides the opportunity to the customers to conduct banking transactions at their convenience. Generally, the automation of banks makes transaction and data processing very easily accessible for quick management decision making. This has led to another level of benefit which has ushered in what is today referred to as electronic banking.
Electronic banking helps the banks to speed up their retail and wholesale banking services. The banking industry believes that by adopting the new technology, e-banking, the banks will be able to improve customer service level and tie their customers closer to the bank.
According to Chang,(2003) e-banking contributes significantly to the distribution channels of banks such as automated teller machine (ATM), Phone –banking, Tele-banking, PC-banking and now internet banking (Chang, 2003).
Also, transfer of funds, viewing and checking account balances, paying mortgages, paying bills and purchasing financial instruments and certificates of deposits processes have improved significantly as a result of internet banking ( Mohammed, 2009).
This implies that e-banking has resulted in inefficiency in service delivery in the banking sector because customers can transact business from one side of the country to another and from both long and short distances.
E-banking is critical in the transformation drive of banks in areas such as products and services and the level of satisfaction customers derive in using this product and services. Thus, it is seen as a valuable and powerful tool in the development, growth, promotion of innovation and enhancing the competitiveness of banks (Kamel, 2005).
Given the significant role of e-banking in the developmental drive of banks, information technology has been found to lead to an improvement in business efficiency and service quality and hence to attract customers and retain them (Kannabira and Narayan, 2005). This shows that the delivery of an efficient and quality service is facilitated by information technology.
Similarly, Christopher(2006)indicated that e-banking provides an important channel to sell products and services of banks and is perceived to be a necessity for banks to be successful. Therefore, service quality and efficiency in the banking industry has increased tremendously in Cameroon due to the integration of information technology into banking operation. The present study seeks to investigate the extent to which the e-banking concept has influenced customer satisfaction in Cameroon.
1.2 Problem statement
Cameroon has experienced stable economic growth over much of the past decade. Before the independence of the country in 1960, the banking system in Cameroon was dominated by foreign banks. After independence, foreign financial institutions were French banks, which were there to finance French investments in the country.
Subsequently, the government started to involve itself in foreign banks and acquired partial ownership of BICIC, BIAO, SGBC and Credit Lyonnais. This continued until 1987 when a financial crisis occurred in the country. The crisis resulted in rising prices in Cameroon, trade deficits, and loss of government revenue.
It changed the evolution and health of each bank, depending on whether it was a foreign or domestically owned institution. Many financial institutions closed while others changed ownership. Several other banks have been established in the country since then, thus an increase in the number of banks in Cameroon.
With the emergence of new technology, all sectors are introducing a variety of innovative services; this is also the case with the banking sector which is now offering customers a wide range of electronic services. This has eventually increased the level of competition between banks.
In Cameroon, until 1997 banks were only offering services through the physical branch. Now, with the changes in the banking environment, they are also offering electronic banking services. The country now has electronic products and services such as Automated Teller Machines (ATMs), SMS banking, Internet banking, Point of Sales (POS) machines, and telephone banking.
In many banks throughout the world, e-banking is now the focal area of bankers because it reduces the cost of doing transactions, attracts new customers, makes transactions faster than before, creates new markets, and enhances service quality.
In Cameroon, e-banking is a new industry and consumer acceptance and use of e-banking is still limited. There is only a vague understanding of the effect of electronic banking on customer satisfaction.
A study conducted by Philipos L about customer satisfaction and electronic banking service on some selected banks of Ethiopia listed that current, ly some factors affect customer satisfaction in electronic banking services in selected banks (commercial banks of Ethiopia, Wegagen bank, and Zemen bank) of Ethiopia.
Those are machines out of order, machines out of cash, cards blocked, frequent breakdown of ATM services, the unreliability of ATM services, lack of technicians to attend to breakdowns of ATMs, lack of alternative systems to ATM services when problems occur, lack of mobile banking services, lack of reliable telebanking networks, lack of credit card services, under-development of technological infrastructure, low level of knowledge creation and innovation, interruption of networks, lack of suitable and regulatory frameworks for e-commerce, resistance to change in technology among customers and service providers as a result of fear of risk, and lack of fair distribution of E-banking services all over Ethiopia during his pretest of this study.
In his study result, he found that customer satisfaction in e-banking has significant relationships with convenience, reasonable and fees (charges) during the transaction, efficient service of e-banking, privacy, security, reliability and responsiveness of employees to solve e-banking service failure and these variables determined 84% of customer satisfaction in e-banking and he also recommended for future researcher to investigate the impact of e-banking on customer satisfaction, customer loyalty and customer retention.
As aforementioned, the research is therefore structured to provide answers to the following questions:
- To what extent does e-banking service affect customer satisfaction?
- To what extent is the level of awareness of e-banking services among customer?
- How has the introduction of internet banking, ATM, SMS- alert, E-statement and POSservices affected customer satisfaction?
1.3 Research Objectives
The main objective of this study is to evaluate the effect of electronic banking on customer satisfaction in Cameroon. The specific objective of the study includes:
- Assessing customers’ awareness of e-banking services.
- Examining the relationship between internet banking, point of sales (POS), SMS- alert E-statement and ATM services on customer satisfaction
- Identifying the problems associated with e-banking customer satisfaction
- Providing recommendations.