Abstract

The study was aimed objectively to analyze the effect of e-banking on customer satisfaction on customers of UBA Bank located in Buea municipality. With this regard some specific objectives were developed by the researcher which includes the following:  to determine how transaction processing time of e-banking affects customers’ satisfaction, to investigate how the security of e-banking affects customers’ satisfaction, to analyze how the accessibility of e-banking affects customers’ satisfaction and to find out how the cost of e-banking affects customers’ satisfaction.

This study was based on a descriptive research design, with the use of a systematic sampling strategy, a sample size of was 40 customers adopted. Questionnaire was used as the principal tool for the data collection.

With the aid of the SPSS software, the data were analyzed using basic statistical tools such as frequencies and percentages. The study brought to the fore that customers prefer to transact business via e-banking methods than the hall or counter services due to the fact that queues are long for them to be attended to, the level of e-banking security in UBA was found to be better for customers, with the accessibility of e-banking services, it was discovered that customers prefer to use e-banking to the counter service because the services are accessible easily.

And the cost of using e-banking customers was satisfactory in relation to the benefit archived. The data analysis also showed that customers of the selected bank were highly aware of the various e-banking platforms available at their bank. The study revealed that in spite of the difficulties associated with the use of e-banking products, the majority of the respondents highly patronize these services. However, ignorance on the part of the customers regarding the use of e-banking services was a huge challenge.

The study, based on the findings recommended among other things that mass public (customer) education regarding the usage/ advantages of e-banking products and services should be embarked by the banks. Also, the researcher suggested that there should be a widespread citing of ATM machines to more localities.

CHAPTER ONE

INTRODUCTION

1.1 Background of the Study

Electronic banking has become an integral part of the operations of any commercial banking

institution in Cameroon as well as globally. The emergence of information and communication technologies over the past three decades has facilitated banking operations as well as the provision of banking services in order to suit the ever-changing needs of customers.

Electronic banking (e-banking) has many definitions varying with different researchers, in simple terms, electronic banking can be referred to in terms of services like internet banking (online banking), telephone banking, TV-based banking, mobile phone banking, ATM services and offline banking (Mahdi and Mehrdad 2012).

The Basel Committee on Banking Supervision defined electronic banking as the provision of retail and small value banking products and services through electronic channels as well as large value electronic payments and other wholesale banking services delivered electronically (BCBS, 1998).

Furthermore, from a global perspective the evolution of Electronic banking took off in the early 1980’s simultaneous with some of the major commercial banks around the world notably, The Bank of Scotland offering Nottingham Building Society (NBS) customers the first internet banking service in the UK and calls it “Home link” aiding them in sending transfers and paying bills, which later on formed the basis of electronic banking services today (Pilcher, 2012).

Whilst in 1981 in the United States in New York four of the city’s major banks (Citibank, Chase Manhattan, Chemical and Manufacturers Hanover) were also introducing the concept of electronic banking to their customers (Gobankingrates, 2016) which paved the way for electronic banking operations in commercial banks worldwide.

According to statistics conducted by Bain & Company in 2012 on the usage of electronic and mobile banking as measured by the percentage of people in a particular country South Korea was ranked first at the first with 47% followed by China 42% while the USA and UK are at the seventh and eleventh position with 32% and 26% respectively of its population.

undertaking electronic banking transactions. Globalization has also played an important role in the proliferation of electronic banking around the world since one of the main factors of globalization in the banking sector is increased competition, thus in order for commercial banks around the world to stay ahead of the competition and meet up to international standards, they have to be innovative in terms of integrating electronic banking in their operations.

Moreover, in the United States of America, the widespread adoption of electronic banking took hold in the early 2000s with 80% of US offering electronic banking services, even though customer usage was growing at a very slow pace. The online medium of e-banking in the US actually started to develop in 1995, when the Maryland Presidential Bank, an American bank, allowed bank accounts to be opened online an in mid-2004, over 17% of Americans were already using online electronic banking services (Driga, 2014).

However, in 2001, institutions like the Bank of America, Citigroup, and JP Morgan had an average of 20% of their customer base on online transactions (Online banking – Wikipedia, 2017). According to a statistic conducted by Pew Research Center in 2013 on digital banking 51% of US adults use digital banking to conduct their transactions while 35% of cell phone users bank using their mobile phones (Pew Research Center survey, 20002013).

Statistically, the total number of digital banking users in the US is expected to reach 152.7 million users by 2018 (Statista, 2017). Electronic banking operations in the US most recently has been transformed by the internet which serves as a new delivery channel for banking services that benefit both the banks and customers due to its convenience and round-the-clock availability.

Nevertheless, electronic banking in Cameroon is in its infancy and rapidly growing. 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. It was only in 1997 that the first e-banking products were introduced.

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 digitizing their operations in order to meet up international standards and also to gain domestic competitiveness.

Top banks in Cameroon like BICEC, Afriland First Bank, SGBC, and Ecobank are paving the way in digitizing their operations and providing and providing electronic services to their customers. The most widely used e-banking medium in terms of service delivery to commercial bank customers in Cameroon is the ATM service through which customers are issued bank cards to redraw money from their account at their convenience without necessarily going to the teller.

Other forms of e-banking like Online banking/Internet banking are still on a slow pace in terms of adoption by commercial banks in Cameroon as compared to other developed countries or developing nations.

The proliferation of electronic bank cards and the mushrooming of automatic Teller Machines (ATM) in every nook and cranny of cities is testament to the electronic craze that grips Cameroon (Agnes F, 2007).

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).

Before the integration of electronic banking into banking operations used to take a far longer time

to conduct not forgetting the extensive of manpower that has to be put in to perform a task that a

computer can do in seconds. Likewise, the provision of banking services where customers will have to deal with the brick-and-mortar of the commercial banking institution each time they need its services. Thus, commercial banks in Cameroon are investing in digital technologies that improve their efficiency and effectiveness in daily operations as well as their service provisions to customers.

Thus, this study is simply looking at the impact of electronic banking technologies on customers’ satisfaction of commercial banks and also bringing in the aspects of cost and profitability, security, and fast transaction in adopting e-banking in the institution.

1.2 Statement of the Problem

Today’s bank customers seek more than price bargains. They want useful and dependable and reliable technologies. Many banks in Cameroon have exponentially embraced the use of information and communication technologies in their service provision causing huge competition in the banking industries.

In response, many financial institutions are directing their strategies towards increasing customer satisfaction and loyalty through improved service quality as it gives a competitive advantage for banks by reducing operational costs and providing the best satisfaction of customer needs. It is normal that banks that don’t offer electronic banking services may lose their clients to their competitors. They are providing internet banking to their customers to increase customers‟ satisfaction in banking service.

Customers in Cameroon are late adopters of the Internet and its applications with regard to internet baking. However, issues like a machine out of order, lack of sufficient alternative system which substitutes ATM service when the temporary problems happen in the machine, and innovation, resistance to changes in technology among customers and service providers as a result of fear of risk creates doubts in the minds of customers thereby affecting their level of satisfaction. Because of these existing problems, this study intends to fill in the gaps by examining the effects of e-banking on customer‟ satisfaction in the major banks on Cameroon’s economy.

The application of e-banking in bank transactions is now a measure that is being adopted by almost all commercial banks in Cameroon. One of the main phenomenons this study focused on was to address the aspect of e-banking adoption on the cost and profitability of banking institutions.

It is certain that the primary goal of private commercial banks in Cameroon is to maximize shareholder’s wealth, and in order to achieve this objective, bank management must be efficient and effective in their operations in terms of consolidating between profitability and cost.

It has been proven that integrating e-banking in banking operations leads to increase efficiency and speed in terms of how transactions are conducted and service delivered thus leading to increase profitability in the long run. But at the same time significant investment will have to be put in order to achieve a fully integrated e-banking sector, therefore the aspect of cost also comes in here.

Cameroonian private banks such as Afriland First Bank and Commercial Bank of Cameroon are now expanding their business to other countries around the world. 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 are still limited. There is only a vague understanding of factors influencing consumers’ adoption of e-banking.

Very little research has been undertaken in Cameroon on factors influencing the consumer’s adoption of e-banking (Dobdinga, 2012), hence the need for a study of this nature. The following question can therefore be asked: What are the factors that influence the adoption of e-banking in Cameroon? An understanding of how demographic characteristics, social influences, consumer perceptions, and attitudes toward e-banking influence the adoption of e-banking will enable banks to develop solutions and plans to attract consumers and gain a bigger market share.

Lastly, this study will evaluate the level of application of e-banking services in bank transactions by the commercial banking institution while also looking at the transition from traditional banking services to digital banking and what are the recommendations and requirements that have to be put in place to ensure a smooth transition from traditional banking to e-banking.

1.3 Research Questions

This is based on the following research questions

1.3.1 Main Question

What are the effects of e-banking services on customer satisfaction?

1.3.2 Sub Questions

1. To what extent does the transaction affects customers’ satisfaction?
2. To what extent does the security affects customers’ satisfaction?
3. To what extent does accessibility affects customers’ satisfaction?
4. To what extent does the cost affects customers’ satisfaction?