Published on International Journal of Economics & Business
Publication Date: August, 2019
School of Business, Christ Apostolic University College, Kumasi
P.O. BOX 15113, Kumasi, Ghana
Banking through internet has emerged as a strategic resource for achieving higher efficiency, control of operations and reduction of cost by replacing paper based and labour intensive methods with automated processes thus leading to higher productivity and profitability. The purpose of this empirical research was to examine the impact of online banking on customer satisfaction. Electronic banking is aimed at promoting customer satisfaction and decongesting of banking halls. Despite the introduction of those facilities, the banks have not fully taken advantage of such facilities. This has led to overcrowding in the banking halls and the resultant customer dissatisfaction. These arguments have necessitated the need to examine the effects of online banking on customer satisfaction. The targeted population was the employees Banks in Adum areas of Kumasi. A sample size of 100 employees was taken from the population. The researcher used a cross sectional survey to capture the respondents responses through simple random sampling. Mixed method of data collection was adopted. The findings indicate that majority of respondents(78%) believe that there were satisfied with the internet banking services whilst 22% were dissatisfied internet banking services provided to them by their banks. The research recommends that banks should intensify awareness and creation of content on internet banking to its employees and the public in general.
Keywords: Internet Banking, customer satisfaction, crowded banking halls, content.
1.1 Background of the Study
The banking industry has been rapidly developing the use of Internet banking as an efficient and viable tool to create customer value. With the rapid development of computer technology as a commercial too, Internet banking can be used to attract more employees to perform banking transactions in related banks. However, the main problem of Internet banking faced by the providers is that a large number of the banks’ employees are not willing to use the Internet banking services offered. Customer satisfaction is an important factor to help banks to sustain competitive advantages. Takyi and Poku (2015) in a related study emphasized that internet banking involves the use of technology to communicate instructions to and receive information from a financial institution where an account is held. Global internet access exceeded 1094 million people (internet World stats 2009), offering new markets for internet-based services such as internet banking. According to Berger (2003), banking through internet has emerged as a strategic resource for achieving higher efficiency, control of operations and reduction of cost by replacing paper based and labour intensive methods with automated processes thus leading to higher productivity and profitability. However, to date researchers have produced little evidence regarding these potential changes. Nonetheless, recent empirical studies indicate that Internet banking is not having an independent effect on banking profitability, although these findings may change as the use of the Internet becomes more widespread. All banks in Ghana are now using ICT to penetrate the ‘unbanked’ sectors in the economy. Akoh (2011), Posit that electronic Banking products have turned out to be the nucleus or central issue of various technologies in banks all over the globe.
1.2 Statement of the Problem
Fox (2006) state that service delivery channel is seen as powerful because it can retain web-base employees who continue using banking services from any location. Continuing instances of the internet banking security violations and report degrades employees trust in the bank and in online banking in general .Serving employees faster is imperative and an ultimate choice of the management of a bank to its employees. However despite this campaign, the banking hall is always full with employees. Despite the introduction of those facilities, the banks have not fully taken advantage of such facilities, though they have also reduced the human resource strength. This has led to overcrowding in most of the Ghanaian banking halls and the resultant customer dissatisfaction.
1.3 Research Objectives
The general aim of the study is to explore the provision of online banking services and its impact towards customer satisfaction using banks in Adum as focal study area. The Specific Objectives of the Study are :
a. To identify online banking services provided by banks in Adum-Ghana.
b. To examine the challenges associated with online banking in Adum Banks
c. To assess the impact of online banking on customer satisfaction at Adum Banks
1.4 Research Questions
To achieve the objective of the study, the following questions would be answered:
a. What are the services provided online by banks in Adum to its employees?
b. What challenges are associated with online banking at Adum banks?
c. How does online banking impacts customer satisfaction?
1.5 Scope of the Study
The study would be centered at banks in Adum-Ghana within Kumasi Metropolis. Data was gathered from the various departments/offices from the employees of Adum banks as well as employees of the banks.
1.6 Significance of the Study
First, the study will be useful in practice for banks in order to see the impacts of e-banking on employees’ satisfaction in comparison with the ordinary mortar and brick banking system. Second, it helps in understanding what attitude employees’ have towards online banking and what actions should the banks take in order to benefits from the opportunities and how to overcome the challenges. Third, study can be used by other researcher as a reference who wants to study further in this or related areas .The study is also of significance to the customer and the business world in general as it will help policy makers to enact laws that will help the entire banking industry. The outcome of the study will provide evidence for banks to improve their service delivery and the performance of customer care units which are geared towards the satisfaction and comfort of the customer.
2. LITERATURE REVIEW
2.1 Definition and the Concept of Online/Internet Banking
Internet banking is defined as the automated delivery of new and traditional banking products and services directly to employees through electronic, interactive communication channels (Shahriari, 2014). Internet banking refers to systems that enable bank employees to get access to their accounts and general information on bank products and services through the use of bank’s website, without the intervention or inconvenience of sending letters, faxes, original signatures and telephone confirmations. The development of e-banking in each country is dependent on the speed of internet access, the features of new online banking, and the frequency of e-banking usage (Nupur, 2010). In the banking industry, e-banking is formed when there is a combination between the information technology and the functions of banks and financial institutions (Ahanger, 2011). In the banking industry, Internet banking is the industry which uses computer technology to provide better services to employees and help in the development of banking practices (Rahmath and Hema, 2010). Internet banking is particularly well-practiced in the developed countries such as Korea, Spain, and Austria, where more than 75 percent of all banks offer transactional services via the Internet ,but unfortunately, despite the importance attached or attributed to online banking in a number of ways, there seems to be fewer studies about internet banking especially in the Ghanaian context but generally online banking has become a necessary survival weapon and is fundamentally changing the banking industry worldwide.
2.2 Theoretical models of internet/Online banking
According to Takyi and Poku, 2015 the three models of internet banking general applied are:
This is the basic level of internet banking. Typically, the bank has marketing information about the bank’s products and services on stand-alone server. The risk is relatively low, as informational systems typically have no path between the server and the bank’s internal network. This level of internet banking can be provided by the bank or outsourced. While the risk to a bank is relatively low, the server or the website may be vulnerable to alteration. Appropriate control therefore must be in place to prevent unauthorized alterations to the bank’s server or website.
This type of internet banking system allows some interaction between the bank’s systems and the customer. The interaction may be limited to electronic mail account inquiry application or static file updates (name and address changes). Because, these servers may have a path to the banks internal networks, the risk is higher with the configuration than with informational systems appropriate control needs to be in place to prevent, monitor and alert management of any unauthorized attempt to access the bank’s internal networks and computer systems. Virus control also becomes much more critical in this type.
This level of internet banking allows employees to execute transaction. Since a path exists between the server and the banks or outsourcer’s internal networks, it is the highest risk architecture and must have strongest control. Customer transaction includes accessing account, paying bills, transferring funds etc.
2.3 Conceptual framework
Fig 1. Conceptual framework
2.4 Challenges confronting Online Banking services in Banks
One of the main challenges facing internet banking is that of security of data and confidentiality, both for the user and the bank. By virtue of the nature of banking, absolute confidence in the privacy and security of data is the fundamental requirement and need to be demonstrated not only to the bank’s own clients and internal auditors, but also to external auditors and regulators (Takyi and Poku, 2015). Internet banking is the latest development that has added a new dimension to banking transactions by making it more convenient and also contributes to the elimination of long wearisome queues in banking halls. Nonetheless, there are some problems which do not encourage banking through the internet and causes many employees to be physically present in the bank premises instead of taking advantage of internet banking. Low broadband internet penetration, employees’ preference for traditional branches, fear of online threats/scams, lack of basic knowledge of computers and the high cost of internet accessibility are some of the problems threatening the growth of internet banking in Ghana .
According to Fenuga, (2010). the changing financial landscape has brought with it new challenges for bank management and regulatory and supervisory authorities. The major ones stem from increased cross-border transactions resulting from drastically lower transaction costs and the greater ease of banking activities, and from the reliance on technology to provide banking services with the necessary security. The primary challenge for banks is to provide consistent service to employees irrespective of the kind of channel they use. The more a bank relies on electronic delivery channels, the greater the potential for reputation risks. There are some serious implications of international online-banking. It is a common argument that low transaction costs potentially make it much easier to conduct cross-border banking electronically. For many banks, cross-border operations offer an opportunity to reap economies of scale. But cross-border finance also needs a higher degree of cross-border supervision. Such cooperation may need to extend to similar supervisory rules and disclosure requirements (for efficiency and to avoid regulatory arbitrage) and some harmonizing of legal, accounting and taxation arrangements (Timothy, 2012). Low level of financial literacy of the public, level of readiness and capacity of financial institutions to provide service, infrastructure, insufficient cash flow in rural areas, limited potential agents, and presence of a few branches in rural areas are some of the challenges facing the country. Birutu, (2012), posit that legal and related issues, technical challenges and widening the scope of mobile banking service are also critical.
Liao and Cheung (2002) found that individual expectations regarding accuracy, security, transaction speed, user friendliness, user involvement and convenience are the most important attributes in the perceived usefulness of Internet-based banking. Employees fear that someone will have unlimited access to their personal financial information. Lack of specific laws to govern Internet banking is another important concern for both the bankers and the employees. This relates to issues such as unfair and deceptive trade practice by the supplier and unauthorized access by hackers. It is argued that it is not clear whether electronic documents and records are acceptable as sufficient evidence of transactions. They also pointed out that the jurisdiction of the courts and dispute resolution procedures in the case of using the Internet for commercial purposes are important concerns.
2.5 Online Banking and its Impact on Customer Satisfaction
Most of users who implement internet banking including youths, educated people, students and business traders have not been actively using internet banking services and that there is a significant relation between demographic variables and internet banking in a way that internet banking is safeguarding their accounts and information and has led to attraction of customer satisfaction and has also reduced the times of physical presence at banks. Usually the quality of web pages (website) had no significant effect on comprehension of total user satisfaction and their trust and loyalty towards internet banking but also, the positive effect of a high quality website on the quality of comprehended services and trust and ultimately satisfaction of employees is felt. Banks can provide the contexts for customer satisfaction and improve the quality of their provided internet banking services through paying attention to their employees’ needs and demands. They also concluded that employees are extremely sensitive towards employees’ performance agility and a higher quality in services is companied by customer satisfaction and increased efficiency.
Researchers have verified that provision of quality service to employees make them to stay with an organization, catch the attention of new ones, augment corporate image and assures endurance and profitability of an organization. (Negi, 2009; Ladhari, 2009).Customer pleasure is the contributor of absolute gains of a quality revolution, which is majorly contingent on customer’s cognizance of overall service quality (Husnain and Akhtar, 2015). This is the reason why it is very crucial to recognize how consumers perceive service quality and how it will affect their satisfaction level, through which banks can identify the gaps in service quality delivery to take essential curative actions to improve upon their activities. Internet has changed the dimensions of competition in the retail banking sector. It has also provided opportunities for emerging countries to build up their financial intermediation infrastructure. Investing in internet banking is a gradual process..”
The recent growth in technology and innovation has fast-tracked the desire of employees of banks for exceptional services to meet the current trend of technological advancement. Contemporary studies on e-banking acknowledges that factors that drive customer satisfaction are security/trust, design, availability, convenience and reliability with availability, convenience and reliability being the most influential factors of internet banking on customer satisfaction.
2.6 Measuring Satisfaction
From the perspective of Kanojia and Yadav (2012), satisfaction implies happiness, relief, achieving aims, no hassle and happiness with outcomes. This observation implies that the customer often has an expectation below which he will not be satisfied. As a result, Mosahab et al. (2010) maintained that employees’ expectations are often beyond their perception of bank performance. Sometimes customer satisfaction level on the perception is demonstrated by behavioral loyalty. Nimako et al. (2013) conceptualize satisfaction to have different components. They identify elements such as customer service, web design, assurance, preferential treatment and information provision. Amoah-Mensah (2010) did comparative study of customer satisfaction in the banking industry of Ghana and Spain and pointed out that reliability, convenience and empathy are the determinants of overall satisfaction in Ghana while only reliability explains satisfaction in Spain. The study again revealed that employees in both countries were dissatisfied with the services and products of the banks. Wandaogu and Jalulah (2011) show that within Ghana Commercial Bank, satisfaction is highest for feeling of relief of employees to transact on the internet banking portal and accuracy of online transaction process of the bank. Almost as high as 90% of employees were found to be dissatisfied with the services received from their banks.
This chapter is composed of the various research tools that were used to conduct the study and the mode within which the study was carried out. Thus, it depicts the mechanisms and approach used in achieving the research outcomes.
3.1 Research design.
The study was carried out based on descriptive and explanatory method of undertaking research. A survey mechanism was chosen to help elicit the required data to be processed into information. Under the survey, a cross sectional survey was chosen to carry out the processes. This study used descriptive survey which is appropriate in making description on characteristics of subject, attitudes, perceptions and opinions of issues of concern to a study. This research uses both qualitative and quantitative approaches. The quantitative aspect of the study dealt with closed ended questions from the questionnaires which were numeric whilst qualitative aspect dealt with the interviews, reports and responses on the open-ended questions in a non-numerical manner.
The targeted population was the employees of Adum Branch at Adum branches. The population comprised of all employees of all the departments within the organization that have account with their respective banks that use online accounts to conduct banking businesses.
3.3 Sample Size
A sample size of hundred (100) employees was taken from the population. This selection was done to represent every department selected to get a fair view of issues understudy. The reason for the selection of the employees is that most of the employees are computer literates which will make it easier to answer the questionnaire. Thus, the researcher randomly selected the respondents based on their departments to ensure that every department was represented. The number of individuals selected from each department was based on the size sample size selected for the study.
3.4 Sampling Technique
The researcher used a cross sectional survey to capture the respondents from the categories of employees at Adum branches. This was facilitated by the use of a simple random sampling procedure to choose the respondents. The idea was to ensure a fair chosen of the each category of employees without concentrating on only some few sectors of the organization or large number of employees who are not used to internet banking. This method ensured that every member had a possibility of being selected.
3.5 Data Sources
The data gathered was based on two categories namely primary and secondary data sources. The primary data consisted of the data gathered from the survey through the questionnaires administration and interviews. This category of data served the basis for the analysis. Moreover, the secondary data depicts the various materials that the study used .These include magazines, newspapers, journals, articles, reports and internet searches. These helped in building the foundation of the study and served as reference materials for the study in executing the task.
3.6 Data collection tools
For the purpose of this study, a structured questionnaire was administered to the respondents. The structured questionnaire was prepared to enhance strict confidentiality of the respondents by avoiding the possibility of exposing the individual’s identity that has the tendency of causing any future troubles to these respondents. In addition to this, a structured interview was conducted to facilitate the data gathering processes.
3.7 Validity and Reliability
To ensure the validation of the results gathered through the administration of questionnaires, consistent procedure was followed. However, since the process were consistent with each other, the study at the end of the analysis was able to answer what it was intended to be achieved, hence making the data reliable.
3.8 Ethical considerations :
Ethical issues are very important in today’s research. Respondents expressed concern about the confidentially of the responses to the questionnaire but they were assured of non-disclosure of their personal and other demographic information and answers provided for the questionnaire would be treated with the confidentiality it deserves and used only for the purpose of this research .
4. RESULTS AND DISCUSSIONS
The gathered data that was made possible through the use of the questionnaires and the interviews was coded and analyzed with the help of SPSS version 22. The purpose of data analysis is to make the gathered data a more presentable and meaningful in a way that, it can be easily communicated. The data was arranged and carefully coded to ensure that there would be reliability and consistency. The Descriptive and inferential statistics was used in the process to discuss the results and to go beyond the face value of the data and infer possibilities that the data might show.
4.2 Motivating factors for using Internet banking
It was found from charts 4.2 that majority of respondents alluded that they are motivated to use internet banking services due to easy access to banking (32%). Most users of internet banking embark on such activities purely on easy accessibility of banking services especially from afar. Employees due to their busy schedules and distance prefer to use internet banking services to undertake their transactions. This spares them the time to join long queues at the bank and the frustrations associated with sometimes. Through internet banking, employees are able to deal with their clients and perform various transactions deemed fit so far as there is adequate funds available in their accounts. This finding supports assertions that the introduction of internet banking has facilitated easy banking services to employees in various banks due to easy access to internet.
The second most dominant factor has to do with efficiency and effectiveness (17%). Some respondents held the view they adopted internet banking on the premise of achieving high efficiency and effectiveness in banking activities. It was emphasized that the use of internet banking has an embedded quality of ensuring that transactions are executed fast, accurately, timely and easily. As stated by Berger (2003), the use of internet banking has been major strategic tool adopted by banks for achieving greater efficiency. For instance, payments can be made to clients of employees within shortest possible time through funds transfer system. Moreover, the use of internet banking was found to be influenced largely by the desire of banks to reduce paper work and human error (14%). The manual system of conducting business at the banking hall has the possibility of attracting high volumes of paper work which mostly become voluminous and difficult to handle. The use of internet banking curtails or minimizes the existence of papers .This tends to reduce the bank’s expenditure on stationeries. Berger (2003) added again that the use of internet banking helps in replacing paper-based and labour intensive methods with automated processes.
It was established that one of the reasons employees adopt internet banking was convenience (13%). Out of convenience, employees of banks are not burdened with the desire to carry huge sums of money around them to perform certain transactions. This reduces the likelihood of people falling victim to armed robbers and negligence on the part of employees themselves in losing their money. The use of internet banking enhance privacy and convenience for its users. Other reasons enumerated by respondents have to do with profitability and quality of service and lower fees.
4.3 Internet banking services provided by Adum Banks
Findings from the survey indicates that the use of ATM card was the most widely used form of internet banking by most respondents (26%). Through ATM cards, employees are able to redraw funds any time without fear of banks closing for a day’s work. The system generates printout for employees to know their balances after the redrawal. Secondly, funds transfer was another key service of internet banking which most respondents embark on (22%). Employees use internet banking to transfer funds from their accounts to other peoples’ and in some cases to perform several transactions like payment of school fees, settling debts and other forms of activities.
Some respondents (17%) also alluded that users of internet banking use them to pay bills of all kinds that permits online payments. It was found that through internet banking loan applications were done by employees of Adum Branch (13%) and other forms of investment such as payment of bills.
4.3 Challenges associated with internet banking
From the responses, it was known that majority of the respondents were in support of the assertion that security of data was a major concern to respondents (38%). Users of internet banking are usually burdened with data security. Some employees of banks out of fear of data insecurity usually do not want to patronize internet banking services. Employees feel that their personal data account details can be compromised through internet banking and in their quest to achieve maximum confidentiality will do everything possible to avoid internet banking. This confirms findings by Takyi and Poku (2015) who reiterated data insecurity was a problem towards internet banking.
It was stressed by some respondents that lack of basic knowledge of computers was another big challenge to internet banking (19%). Most employees are not literate in computing and this prevents them from patronizing internet banking services. The desire may be there but the skills to undertake such practices put them at a disadvantage. This assertion is coupled with low financial literacy by most employees of banks (14%). Lack of employees of banks literacy in computing has led to poor patronage of internet banking. Moreover, high cost of internet accessibility also contributes to poor patronage of internet banking (10%). The cost of using internet in Ghana is relatively high. A lot is needed to subscribe to various internet bundle plans available to employees by telecommunication companies. Aside the cost, the issue of reliability also becomes a problem in most times and one is compelled to buy more than one internet broadband for easy switch in case of bad networks. This situation has not improved the desire of people to use internet banking. Again, the high cost of internet accessibility contributes to poor patronage of internet banking.
Table 4.4: The impact of internet banking on customer satisfaction
From Table 4.4, it was found that majority of respondents agreed that they were content with quality of services rendered to them through Adum Branch internet banking (Mean=3.96, SD=.23). Majority of respondents feel the products and services products offered by Adum Branch through internet banking were of good quality and were therefore comfortable with it. This helps in building trust and confidence in employees towards Adum Branch. Taleqani et al. (2013) indicated that customer satisfaction can be improved and achieved satisfactory when quality of services provided by banks improves. It was emphasized by some respondents that ATM booths within the Kumasi Metropolis were mostly found to be working orderly (Mean=3.94, SD=.19).This situation helps employees to make redrawals anytime they prefer without any difficulties. The existence of these facilities enhances and builds efficiency in banking since it creates convenience and reliability to employees. This makes performing of transactions very easy by employees. The use of internet banking is reliable at Adum Branch. This assertion was agreed by majority of respondents and moreover it was found that the bank shows sincere interest in solving problems employees encounter through internet banking.
5. CONCLUSIONS AND RECOMMENDATIONS
This section states the conclusions drawn from the findings as well as recommendations enumerated from the findings to improve internet banking for future researchers.
The existence of internet banking by Adum Branch has been a major strategic tool by the bank to improve accessibility to employees to perform transactions at their convenience. The use of internet banking is found to create convenience, efficiency, accuracy and effectiveness in banking activities. Internet banking saves time but despite this its patronage has not been impressive as expected. The poor patronage has been attributed to lack of some employees knowledge on the use of computers, fear of scams, high cost of internet accessibility and lack of adequate knowledge on financial literacy. Though internet banking comes with enormous benefits, there is still a lot that needs to be done.
5.3 Recommendations for future researchers
It is necessary for government to put in place conducive environment for banks to adopt internet banking. Researchers must come out with models of internet banking and practical examples of benefits to particular banks. This will build trust and ensure maximum satisfaction for employees. The study was centered at Adum Branch within Kumasi Metropolis only so future studies can be extended to the entire Ashanti Region. One key point that needs further research is how internet banking affects profitability of banks in Ghana. Larger sampling size covering the entire banking industry in the capital cities can provide more insight into the benefits provided by online banking to both the companies and employees. The finding from the larger sampling size can be generally applied to the whole country as well as most of the countries in the Continent that have common banking structures like Ghana.