Abstract

This study assessed “the effect of Technology on Organisational Performance of Banks in Buea. The specific objectives were; to assess the effect of Automated teller machines on organisational performance of banks in Buea, to determine the effect of mobile banking on organisational performance of banks in Buea and to investigate the effect of internet banking on organisational performance of banks in Buea.

To achieve the study’s objectives, cross-sectional survey research design was adopted. Data used for the study were collected through questionnaires from fifty employees of banks. The study has used both descriptive and inferential statistics using simple regression analysis.

Findings show Automated teller machines, have a negative but significant impact on organisational performance of Banks in Buea. Findings further show that Mobile banking has a positive and significant effect on organisational performance of Banks in Buea; Also, Internet banking has a positive and significant effect on organisational performance of Banks in Buea. The study concluded that technology has a significant positive effect on organisational performance of Banks in Buea.

The study therefore recommends that Banks in Buea should implement the different types of technology but should focus more on mobile banking and internet banking because they have a high positive and significant effect on organisational performance while though Automated teller machines is negative its effect on their effect on organisational performance still remind significant so, they need to be reviewed.

CHAPTER ONE

INTRODUCTION

1.1 Background to the Study

Organisational performance is a multifaceted concept that reflects how well an organisation meets its goals and objectives. According to Richard et al. (2009), organisational performance encompasses various dimensions, including financial performance, operational efficiency, customer satisfaction, and employee engagement. Financial performance can be measured through indicators such as return on assets (ROA) and return on equity (ROE), while operational efficiency may be assessed using metrics like productivity ratios and service delivery times. Customer satisfaction is often gauged through surveys and net promoter scores, and employee engagement can be evaluated through retention rates and employee satisfaction surveys. The increasing integration of technology in banking operations has emerged as a significant determinant affecting organisational performance. As banks in Buea adopt innovative technological solutions, understanding how these technologies influence their performance becomes crucial. (Kumar & Gupta, 2016).

Technology, as defined by the International Organisation for Standardisation (ISO), refers to the application of scientific knowledge for practical purposes, especially in industry. It encompasses a wide range of tools, systems, and processes that enhance productivity and efficiency. Key dimensions of technology include information technology (IT), automation, communication systems, and digital platforms. The importance of technology in banking cannot be overstated; it not only facilitates faster transactions but also enhances customer experience, reduces operational costs, and improves data management. For instance, the introduction of Automated Teller Machines (ATMs) revolutionised banking by providing customers with 24/7 access to their funds, thereby improving service delivery and customer satisfaction. (Bharadwaj et al., 2013).

The relationship between technology and organisational performance has been widely studied, with evidence suggesting that effective technology adoption can lead to improved operational efficiency, enhanced customer experiences, and increased profitability (Shu et al., 2006). In a study by Bock et al. (2017), it was found that the implementation of digital banking services significantly improved customer satisfaction and reduced operational costs, leading to a 15% increase in overall profitability. A study by Ojo (2019) highlighted that the adoption of mobile banking services resulted in a 20% increase in customer base and enhanced service delivery, contributing to improved organisational performance. Research by Ndongo (2020) indicated that the integration of technology in service delivery led to a 30% increase in customer retention and satisfaction levels, thereby enhancing overall performance. A study by Chen et al. (2019) established a direct correlation between the bank’s investment in AI-driven customer service tools and a significant reduction in operational costs, alongside improved customer satisfaction ratings. A study by Fokam (2023) found that the bank’s integration of mobile payment solutions resulted in a notable increase in transaction volume and customer engagement, reinforcing the link between technology adoption and organisational performance

Historically, the evolution of technology in banking has been marked by significant milestones that have transformed organisational performance globally. Technological-based products provide significant advantages to the banks (Shang et al., 2018). For instance, there can be cost advantages for the bank, profitability can be increased, and the risks can be minimised in comparison with the traditional banking products (Tunay et al., 2015; Sengin &Yüksel, 2016). In addition, studies have shown that the return times of investments by banks in this area are considerably shorter when there are enough customers to demand technology-based products. Findings of applied studies on various countries reveal that electronic banking services increase the performance of banks.

In developed countries, the adoption of online banking in the late 1990s led to increased customer engagement and operational efficiencies (Bharadwaj et al., 2013). For instance, in developed economies, banks have leveraged technology to streamline operations and enhance customer experiences.  In Barclay’s banks, the introduction of online banking services led to a significant reduction in branch visits and operational costs (Jones, 2018).  The implementation of robo-advisors Deutsche Banks improved investment management services in resulting in increased client satisfaction (Davis, 2019). The use of big data analytics for risk assessment enhanced decision-making processes and reduced loan defaults (Lee, 2020). In developed countries, the introduction of Automated Teller Machines (ATMs) in the late 1960s revolutionized banking operations by providing customers with 24/7 access to their accounts, leading to increased customer satisfaction and operational efficiency (Bharadwaj et al., 2013). The proliferation of mobile banking and internet banking in the 21st century further enhanced service delivery and customer engagement, with studies indicating that banks leveraging these technologies experienced up to a 20% increase in operational efficiency (KPMG, 2019).

Conversely, developing countries have experienced a slower technological uptake due to infrastructure challenges and varying levels of digital literacy. Developing countries have also witnessed the transformative effects of technology on banking performance. Today, Africa is home to more digital financial service deployments than any other region in the world. Ten years after the breakthrough of digital financial services in Sub-Saharan Africa, there is evidence of this, with about half of nearly 700 million individual users worldwide (LeHouerou, 2018). In the African continent, the digital financial service impacts on the financial sector can easily be linked to the amount of people using internet banking for settling their bills because it is the main factor for the average people in the banking errands (Pohjola, 2015). In contrast, developing countries like Cameroon have been slower to adopt these technologies due to infrastructural challenges, limited financial literacy, and regulatory hurdles. However, recent advancements have begun to bridge this gap. For instance, the introduction of mobile banking in Africa has been a game-changer, with over 300 million people using mobile money services as of 2020 (GSMA, 2021). This shift has not only improved access to financial services but has also enhanced organisational performance by streamlining operations and reducing transaction costs.

Nevertheless, electronic banking in Cameroon is rapidly growing. In Cameroon, until 1997, banks were only offering services through the physical branch. The country now has electronic services such as Automated Teller Machines (ATMs), SMS banking, Internet banking, Point of Sales (POS) machines, and telephone banking (Talla, 2013). The major banks in Cameroon are also investing a significant sum of their capital towards digital banking and digitising their operations in order to meet up with international standards and also to gain domestic competitiveness. Nevertheless, Banks in Cameroon also face fierce competition from mobile telecommunication networks like MTN and Orange Cameroon offering Mobile Money services and also Microfinance institutions which take a large percentage of the unbanked economy, leading to a financial inclusion rate of 47% and the banking sector contributing to 15% while 32% constitutes the Mobile Money services and Microfinance institutions according to the United Nations Capital Development Fund (UNCDF, 2014).

In Buea, the banking sector is gradually embracing technology to improve performance. For instance, in Ecobank Cameroon, the bank’s digital initiatives have led to increased transaction volumes and improved customer satisfaction (Tchouamou, 2021). The introduction of mobile banking services significantly enhanced service delivery (Nguemo, 2022). Buea serves as an interesting case study due to its unique socio-economic dynamics. Research in Buea Community bank indicates that the bank’s adoption of mobile banking solutions has increased its customer base by over 50% within one year (Njeuma, 2023). Several microfinance institutions have adopted digital platforms for loan processing, leading to faster service delivery and increased borrower satisfaction (Ngwa, 2023).

Despite the acknowledged benefits of technology in enhancing organisational performance, challenges remain. Studies conducted globally indicate that while technology can lead to improved performance metrics, it can also introduce complexities that may hinder operational efficiency (Gupta, 2016). In the context of Buea, banks face unique challenges related to technological infrastructure, regulatory compliance, and customer adaptation to new banking methods. Understanding these challenges is essential for identifying gaps in existing literature and practice.

1.2 Statement of the Problem

Organisational performance has been hindered by certain factors due to the adoption of digital banking in banking operations. Some these problems are; customer perception, cost involved in shifting from traditional banking to digital banking, security aspects since e-banking encompasses large sums of money and sensitive customer information, competing factors like Microfinance institutions and Mobile Money and other cost related problems thus leading to decreases in profitability in the long run. The rapid advancement of technology presents both opportunities and challenges for banks in Buea regarding their organisational performance. While technologies such as ATMs, mobile banking, and internet banking have the potential to enhance service delivery and operational efficiency, there are notable challenges that hinder optimal performance.

The rapid advancement of technology has transformed various sectors globally, yet its impact on organizational performance remains a subject of considerable debate. While technological innovations such as Automated Teller Machines (ATMs), mobile banking, and internet banking have been lauded for enhancing operational efficiency, they also pose significant challenges that can undermine organizational performance. In developed countries, the integration of technology in financial services has led to increased customer expectations for seamless and efficient transactions. However, this has resulted in a growing disparity between institutions that can adapt to technological changes and those that cannot. For instance, banks that fail to invest in advanced technologies may experience declining customer satisfaction and loyalty, leading to reduced market share (Bharadwaj et al., 2013). Issues such as high implementation costs, resistance to change among employees, and cybersecurity threats have hindered performance improvements. The disparity in technological adoption rates has also led to uneven competitive advantages among banks globally.

In developed economies, banks have leveraged technology to streamline operations and enhance customer experiences. However, this transition has not been without its challenges. Issues such as regulatory compliance, data privacy concerns, and the need for continuous investment in technology infrastructure have posed significant barriers. Additionally, the rapid pace of technological advancement often leads to skills gaps among employees, resulting in inefficiencies that can negatively impact organisational performance.

In developing countries, the adoption of technology in banking is often met with unique challenges that can adversely affect organisational performance. Limited technological infrastructure, inadequate digital literacy among customers, and regulatory constraints are prevalent issues. Furthermore, many banks struggle to balance the need for innovation with the realities of operating in environments with high levels of economic instability and low internet penetration rates. These factors can lead to underutilisation of technological investments and poor customer engagement. Despite the potential benefits of technology in enhancing organisational performance, banks in developing countries face numerous challenges that hinder their effectiveness. The ideal situation would see banks fully leveraging technology to streamline operations, enhance customer service, and increase profitability. However, the actual situation reveals a stark contrast; many banks struggle with outdated systems, insufficient technological infrastructure, and a lack of skilled personnel. According to a report by the World Bank (2020), only 35% of adults in Cameroon have access to formal financial services, indicating a significant gap in service delivery.

In Cameroon, the situation is compounded by limited access to reliable internet services and a lack of digital literacy among customers (Nkuembe et al., 2020). The lack of robust technological infrastructure, coupled with limited access to financial services in rural areas, hampers the effectiveness of technology adoption. Additionally, there are concerns regarding cybersecurity and data protection that affect customer trust and engagement. The gap between urban and rural banking services exacerbates existing inequalities and limits overall organisational performance.

In Buea specifically, the adoption of mobile banking has been met with scepticism due to concerns over security and privacy. Furthermore, while technology promises efficiency gains, it also raises questions about job displacement and the need for reskilling employees (Gupta, 2016). Banks in Buea face specific challenges including limited access to advanced technological solutions, resistance from traditional banking practices, and a lack of skilled personnel to manage new technologies effectively. Furthermore, customer awareness and acceptance of digital banking services remain low, leading to underutilisation of available technological platforms. These factors collectively hinder the potential benefits that technology could bring to organisational performance.

The gap in understanding how these technological advancements affect organisational performance in Buea’s banking sector remains significant. Existing literature lacks a focused examination of the interplay between specific technologies and performance indicators within this unique context. Despite the growing body of literature on technology adoption and its impact on organisational performance, significant research gaps remain: By addressing these issues through targeted research, this study aims to contribute to a deeper understanding of how technology can be effectively leveraged to enhance performance in the banking sector within this specific context by answering the following research questions;

1.3 Research Questions

1.3.1 Main Research Question

What is the effect of technology on organisational performance of banks in Buea?

1.3.2 Specific Questions

1. What is the effect of Automated teller machines on organisational performance of banks in Buea?
2. To what extent does mobile banking affect organisational performance in banks in Buea?
3. What is the effect of internet banking on organisational performance in banks in Buea?

Check out: Management Project Topics with Materials