THE EFFECT OF ELECTRONIC BANKING ON CUSTOMER SERVICE DELIVERY IN KUMASI METROPOLIS

CHAPTER ONE

1.0 Background to the Study

Timothy (2012) posits that decades back banking was a simple business; consumers were not keeping money at home but rather saving their money and receiving their money from financial institutions (banks). When customers open savings accounts, they get an account book from the bank with which the account would be operated; and when it is a current account, they get checkbooks for comparative reasons.

Today, the banking industry has moved into a time of menu-driven ultra-generous specialized software undertakings called banking applications. These applications can do basically every single banking capacity depending intensely on data accumulation, stockpiling, transfers, and processing. The use of electronic banking products and services in banking operations has turned into a subject of key significance and concern to all banks. In any case, it ought to be understood, that electronic banking services came out of Information and Communication Technology that made it feasible for service providers and their customers in developing economies to enjoy the services that are also enjoyed in developed countries. Electronic banking services have given banks the chance to inspire clients which urges them to continue banking with them.

Today, it is hard to see a bank in the nation that does not offer one type of electronic banking service or the other, even banks in the most remote parts of the world. Information and communications technology has become a vital asset that has transformed many areas of life including business and commerce. Information systems are used in business to facilitate new products and create market opportunities. Developed and developing areas of the world are now using internet banking services as a competitive strategy as noted by Garau (Garau, 2002).

Banking has been one of the services that provide the opportunity to use the internet to enhance business transactions that engenders customer satisfaction.

The term electronic banking was defined by Allen et al (2001) to mean the procurement of data or services by a bank to its clients by means of a computer. A more sophisticated service is a particular case that furnishes clients with the opportunity to get access to their accounts and execute transactions and buy items online by means of the internet (Daniel, 1999).

The competitiveness in the banking industry has called for the need to bring on board the electronic platform into industries around the world. For example, four Thai banks chose to implement, investigate, analyze and endeavor to present Internet banking service with the intent to decrease holding up time, lapses, and costs, and enhance customer service backing 1997.

Their internet banking services permit clients to access and inquire about their own particular accounts and perform basic transactions by means of the Internet from their PCs at their workplace and home whenever the timing is the ideal time. Additionally, so as to lower costs and keep up business sector authority, bank leaders in Iran have profited from unrivaled services quality and information technology infrastructures.

In Africa, electronic banking is starting to pick up its roots over the mainland. For instance, Madueme, (2009) compose that with globalization, Nigerian banks must choose the option to embrace electronic banking services to upgrade successful service conveyance that rises above customer satisfaction, on the off chance that they truly need to stay in the business race, not to mention be beneficial and once more, the late merging activity in Nigerian banking division has drawn the consideration of numerous banks to the utilization of different mechanical gadgets in advancing/accomplishing better customer service conveyance that ensured customer satisfaction that interprets into expansion benefit and a higher rate of profitability.

In Zimbabwe, the first clear type of electronic banking was in the mid-1990s when Standard Chartered Bank and Central Africa Building Society installed Automated Teller Machines. Different types of electronic innovations that have discovered their way into Zimbabwean banks include „Electronic Funds Transfer Systems?, „Telephone banking accounts?, „Personal Computer? and „internet banking?. These have discharged banks from the trouble in time and geographical location (Kass,1994 referred to by Goi, 2005) and has permitted banks to cut expenses on transactions, enhance their service delivery, and react better to the requests of the business sector as noted by (Chang, 2003 and Sullivan and Wang, 2005). There has been an expansion of electronic banking systems throughout the years, particularly in developed countries where it is driving economies closer to a cashless society as it has taken away the requirement for physical money and physical payment systems and supplanted them with cards and the internet.

In the Zimbabwean banking sector, the adoption of this innovation has stayed moderate regardless of the convenience it conveys to the customers and the banks. The segment has been held by a disabling cash crisis from November 2007 which has brought the economy very nearly to a halt.

In Ghana, banking started way back in 1894 with the establishment of the Bank of British West Africa until 1957. According to the Ghana Banking Survey currently, there are over 26 banks licensed to operate in Ghana, three of which are the banks under study.

1.1 Statement of the Problem

Existing literature posits that electronic commerce gives a competitive advantage to banks by reducing operational costs and providing the best satisfaction of customer needs. For example, Burnham (1996) recounted that in the world of electronic commerce, it is very important that banks should provide electronic banking services in order to survive.

Hence, most banks in developed and some in developing parts of the world are currently offering electronic banking services with different levels of complexity. It is normal that banks that don't offer electronic banking services may lose their clients to their competitors (Orr, 1999).

As a result of this emerging trend major national and international banks in Ghana are embracing and incorporating information and communication technology in their day-to-day operation.

In fact, banking started in Ghana in 1894 with the establishment of the Bank of British West Africa until 1957. According to the Ghana Banking Survey (GBS) as of 2012, there were 25 banks licensed to operate in Ghana. In Ghana, the deployment of ICTs in the banking industry has grown from one level of complexity to another since the government of Ghana established an ICT framework to facilitate the development of ICT in all sectors of the economy (ICT4AD, 2003). Aside from the ICT4AD project, the government collaborated with the private sector and initiated the e-switch electronic payment platform in 2008 to facilitate business, competition, and better delivery of services in the economy (Ghana Banking Survey, 2012).

In spite of all these efforts little has impacted the behaviors of many customers and consequently, long queues and congestions exist at the banking hall in Ghana and for that matter Kumasi. The question that arises from the above argument is why are customers still preferring being in queues and spending more hours in banking transactions than being in their comfort zone and banking electronically? It is against this background and other related issues that the researcher attempts to answer in this study by finding out why these problems occur and in most cases persist in the major banks in Kumasi, Ghana.

1.2 Objectives of the Study

The general objective of this study is to find out the effect of electronic banking on customer service delivery. Specifically, the study seeks to:

Examine the benefits and challenges associated with electronic banking
Determine the level of customer patronage of electronic banking services
Investigate whether or not customers are aware of the electronic service products
Assess customers? preferences between banking in the halls and e-banking.

1.3 Research Questions
- Why do customers prefer banking halls to electronic banking?
- Are customers aware of the existence of various electronic products?
- At what level do customers patronize electronic banking services?
- What are the benefits and challenges associated with electronic banking services?
1.4 Scope of the Study

The scope of the study concentrates on two major areas. This comprises the contextual and geographical scope of the study. Contextually, the research will emphasize electronic banking focusing on its potential effect on customer service delivery. There are numerous emerging types of electronic banking such as Automated teller machines (ATM), internet banking, mobile phone banking, debit cards, E-switch telephone banking, SMS banking, home banking, and network banking just to mention a few. However, four of the numerous electronic banking have been randomly selected because of the numerous electronic banking services in Ghana. In doing this all the existing electronic banking services were identified and out of which those available in Ghana were selected from which four of them were randomly selected by making a survey to know which ones were available to the banks chosen for the research. After the survey SMS service, ATM services, mobile banking, and internet banking were selected. There are a lot of banks that offer electronic banking to their customers in Ghana; hence the study will be limited to some chosen banks.

Again, the geographical scope of the study is situated within the Kumasi metropolis. However, banks within the Kumasi metropolis many and as such, it is practically impossible for the researcher to study all the customers in these banks. For this reason, the scope encompasses three selected banks where the five electronic banks were prevalent. These included Tech Junction Ghana Commercial Bank, the Atonsu branch of Fidelity Bank, and the Ahodwo branch of Barclays Bank forms the geographical scope of this study.

1.5 Significance of the Study

Literature on electronic banking is scarce in developing countries such as Ghana are scarce if not non-existing. This study, therefore, shall contribute to knowledge and serve as a source of reference in academia. For this future researchers can read the methodology as well as the findings of this study.

This study seeks to help stakeholders in the banking industry identify and formulate strategies that will promote e-banking. For example, the study will be useful for governments such as the Bank of Ghana as well as non -governments like the Consumer Protection Agency in drafting policy frameworks on electronic banking. Here they will be informed on the empirical challenges and benefits of electronic banking service delivery.

Closely related to the above-stated point is the fact that various banks that offer electronic banking can tap into the findings of this study and determine how they can improve electronic banking service delivery. This is especially so for the three individual banks being studied. They will benefit immensely from the finding of the study. They as well shall be informed of the strength and weaknesses of the service they are providing. One major benefit to them shall come from the recommendations of the study. These recommendations if implemented by them will help them to grow their businesses. Finally, having studied electronic banking in class, the study would afford the researcher an opportunity to learn firsthand what happens in the work environment and thus, bridge the gap between theory and practice.

1.6 Limitations of the Study

According to best and Khan (1989) „limitations are those conditions beyond the control of the researcher that will place restrictions on the conclusions of the study and their application to other situations. This study is, therefore, constrained by the wide area the study is supposed to have captured, the shorter period for the completion of the study, inadequate funds for this study, and bureaucratic rules in the study settings.

The study as a matter of fact should have captured all the customers of major banks in Ghana if not Africa. This is, however, impractically impossible due to many factors such as a huge research team and many other factors.

The researcher per the rule of the university is supposed to complete this study within one semester. This is a rule that ought to be complied with strongly. This condition is beyond the control of the researcher as he is expected to present the report of this study within a relatively shorter period.

One major limitation of this study is the lack of funds. The researcher as an individual student has to manage his meager income in undertaking this study. It is a known fact that there is a lack of financial support for research in Africa and Ghana is no exception. With the necessary research sponsorship, the study could have captured a wide spectrum rather than the three selected banks. This may affect the findings of this particular study especially in making general conclusions and comparing this study to similar ones with the requisite financial support.

The last limitation of this study is the bureaucratic procedures to be observed in the selected institutions of study. Corporate bodies have their own laid down rules binding workers, customers, and the general public of which the researcher is a part. These rules or protocols cannot be broken no matter how unfavorable they will be to the researcher. In institutions such as banks where staff is to be interviewed certain sensitive or vital information cannot be released to an outsider such as a researcher.

1.7 Methodology

A self-administered questionnaire was used as the main tool for primary data collection. Three same sets of questionnaires were administered – one each for the three selected banks. The choice of a self-administered questionnaire was used because the researcher anticipated that all the respondents patronizing electronic banking were literate and could, therefore, read, comprehend and write to answer questions. The data was analyzed and presented statistically using SPSS, frequency tables, pie charts, bar charts, and making inferences.

1.8 Organisation of the study

The study is divided into five chapters. Chapter One is concerned with the background to the study, statement of the problem, research question, objectives of the study, significance of the study, the organization of the study, scope, limitation of the study, and lastly how the whole study is organized. Chapter Two dealt with the literature review. This chapter examines the views of other theorists and authors about the issues under discussion as well as a review of previous studies on electronic banking and customer service delivery. Chapter Three outlines the research methods the researcher employs in carrying out the study. The chapter also deals with the study area, sample size, and sample selection as well as methods of data collection, and management among others. Chapter Four presented the analysis and presentation of data in this study. Chapter Five the final chapter of this study presented the summary, conclusion, and necessary recommendations of the study which emanated from the findings of the study....

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