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Tosin Awofodu

  2. 2. ii CERTIFICATION I certify that this work was carried out by Oluwatosin Ayo Awofodu of the Department of Economics, with matriculation number 174264 under my supervision ……………………….. ……………………………. Dr. A.S. Bankole DATE B.Sc/Ife), M.Sc (Econ), Ph.D Ibadan Reader, Department of Economics, University of Ibadan
  3. 3. iii DEDICATION This work is dedicatedto Almighty God for his mercyand protectionover me throughout the programme.
  4. 4. iv ACKNOWLEDGEMENT I am extremely grateful to God Almighty for his divine knowledge and understanding in writing this project and also for making this programme a success. I’ m indebted to my project supervisor Dr. A.S. Bankole who took his time to go through my work. I am indeed grateful to my parents Mr. and Mrs. Awofodu for their love and belief in me, without their undying love, understanding and sacrifices both financial and in time, this project would not have a successful one. Finally, I acknowledge Abosede ,Olajide, Ayomide and loved ones whose names are mentioned here, you are all duly recognized .i thank you all for your support towards me. May God uphold you all.
  5. 5. v TABLE OF CONTENTS PAGE Title Page i Certification ii Dedication iii Acknowledgement iv Table of Contents v CHAPTER ONE: INTRODUCTION 1.1 Problem Statement 1 1.2 Objectives of the study 3 1.3 Significance of the Study 3 1.4 Scope of the Study 5 1.5 Organization of the Study 5 CHAPTER TWO: LITERATURE REVIEW 2.1 Introduction 6 2.2 Theoretical Review 6 2.3 Stylized facts about Guarranty Trust Bank Plc 11 2.4Review of Empirical Results 12 2.5 The Nigerian banking system 17 CHAPTER THREE: METHODOLOGY 3.1 Introduction 22 3.2 ResearchDesign 22 3.3 Populationof the Study 22
  6. 6. vi 3.4 Sampling Technique and Sample size 23 3.5 Methodof Data Collection 23 3.6 Administrationof Instrument 24 CHAPTER FOUR: EMPIRICAL ANALYSIS 4.1 Introduction 25 4.2 Demographic Analysis of Respondents 25 4.3Influence of education on customers’ adoption of mobile banking services 28 4.4The influence of bank services on customers’ long term relationship 30 4.5Discussion of Findings CHAPTER FIVE: SUMMARY, RECOMMENDATION AND CONCLUSION 5.1Summary 33 5.2Recommendations 35 5.3Conclusion 36 References 37 Appendix 40
  7. 7. 1 CHAPTER ONE INTRODUCTION 1.1 Problem Statement Banks are germane to economic development through the financial services they provide. Their intermediationrole canbe said to be a catalyst for economic growth. Nigerian Banks have however, fallen short of the expectations of their customers in recent time. Customers have experienced challenges ranging from delay, stock out, non-availability of staff at service points, unprofessional conduct or rudeness by the staff of the bank, poor standard of records or improper information, failed promises among others. In the words of Ogunnaike and Ogbari (2008), customer service in our banking industry can be mistaken to mean customer delay and frustration. With the recent development in technology business organizations has been affected inseveral ways, most especiallyinterms of management and control; marketing and research; operations and decision making. It is therefore, the vogue that every organization wants to tap the benefits accrue from technology development. In other word, most organizations find means of enjoying the advantages encapsulated in the new technologies (Larpsiri and Speece, 2004; Durkin and Howcroft, 2003; Masocha et al, 2011). It brought about the reduction of cost through substantial improvement in efficiency by business organizations. This resulted in banks diverting their focus towards extensive computerization and electronic operations (Masocha et al, 2011). The electronic delivery of banking service has become ideal for banks in meeting customers’ expectations and building close customer relationship (Ching, 2008; Lamb et al, 2002). It is therefore, no doubt that e–banking will definitely overwhelm traditional banking in the near future; since more developing nations seem to direct their focus on. According to Ozuru et al, (2010); internet banking can be described as a means whereby banking businesses are transacted through automated processes and electronic devices such as personal computers, telephones, and fax machines, Internet card payments and other electronic channels (Turban et al, 2006; Ozuru et al, 2010). The electronic
  8. 8. 2 communications used in Internet banking includes: Internet, e–mail, e– books, data base and mobile phones (Chaffey et al, 2006). Cell phone banking apart from Internet banking is considered the way of the future (Fisher – French, 2007; Masocha et al, 2011). Basically, there are certain issues raised in the literature on e–banking that are considered as major problems of Internet banking amongst which include: the case of Internet criminals and fraudsters attempt to steal customer information through various methods such as phishing and pharming. There is also an increased concern about privacy and securityof customers’informationas a result of the fragilityof informationcollectedand held electronically and transferred via computer – mediated communications (Singhal and Padhmanbhan, 2008; Harris and Spencer, 2002). Other problems are: fund transfers make it very easy for criminals to hide their transactions; inaccessibility to e–banking due to poor internet penetration, customer inflexibility to new technology, low educational level, poor computer literacy and constructive use of Internet services; language, cultural and logistical barriers; different legislation and information overload to customers (Williamson, 2006; Singhal and Padhmanbhan, 2008; Masocha et al, 2011; Harris and Spencer, 2002). As a result of the aforementioned problems, online banking services have thus become a crucial concern of financial institutions during this era of sophisticated technological breakthrough (Williamson, 2006). The fact therefore remain that the various electronic banking services and products have no doubt exposed customers to new ways of convenience better than the conventional banking. Mobile banking on the other hand is a term usedfor performingbalance checks, account transactions, payments, credit applications and other banking transactions through a mobile device such as a mobile phone or Personal Digital Assistant (PDA). It is also known as M-Banking, SMS Banking etc. The earliest mobile banking services were offered over SMS. With the introduction of the first primitive smart phones with WAP support enabling the use of the mobile web in 1999, the first European banks started to offer mobile banking on this platform to their customers. Mobile banking has until recently most often been performed via SMS or the Mobile Web. Apple's initial success with iPhone and the rapid
  9. 9. 3 growth of phones based on Google‘s Android (operating system) have led to increasing use of special client programs called apps downloaded to the mobile device. The banking industry has been undergoing changes since the mid 1990s, in the form of innovative use of information technology and development in electronic commerce (Kalakota and Whinston, 1996). This development made e–banking pose as a threat to the traditional branch operations. One of the benefits banks derive from the current technologies in banking operations especially with respect to service delivery is improved efficiency and effectiveness of their operations so that more transactions can be processed faster and most conveniently, which will undoubtedly impact significantly on the overall performance of the banks. The customers on the other hand, stand to enjoy the benefit of quick service delivery, reduced frequency of going to banks physically and reduced cash handling, which will give rise to higher volume of turnover. However, these developments in the Nigerian banking industry seem not to have achieved the desired aims. Queues are still seen in the banking halls, bank customers still handle too much cash, and hardly do people talk about the electronic banking products that are available in Nigeria. It is against this background that this study is being carried out to identifythe importance of mobile banking services oncustomers’choice of banks in Nigeria. 1.2 Objective of the Study The broad objective of this study is to evaluate the impact of mobile banking services on customers’ choice of banks. The specific objectives are to: i. examine the influence of education on customers’ adoption of mobile banking services ii. determine influence of services offered these banks on customers’ long term relationship 1.3 Significance of the Study Several studies have been embarked upon by different researchers with a view to investigate factors affecting selection of retail banks such as (Ogbadu and Usman, 2012),
  10. 10. 4 (Ahmed, 2011), (Omo, 2011), (Oladelele, 2012), (Adeyeye, 2013). Other earlier studies are (Maiyaki and Mokhtar, 2010; Devlin and Gerrad, 2005; Gerrard and Cunningham, 2001; Owusu-Frimpong, 1999; Khazeh and Decker, 1992; Joy, Kim and Laroche, 1999), however, their studies were not directly linked to satisfaction and selection preferences. Building and strengthening relations with customers is vital in banks (Agbolade, 2011). If banks build up and maintain firm relationships with their customers, it is hard for their competitors to beat them (Gilbert, 2003). The most significant area for banks these days is to make their customers loyal. Banks depend onlifelongrelationships withtheir customersas the customer grows, generally profits also grow so customer satisfaction ultimately increases bank`s profits. Bank`s basic purpose is to make profit and to remain successful, making customers loyal become vital for these banks as loyal customers contribute more towards profits of the banks. Satisfied customers also recommend their bank to their family and friends and through this mouth referencing, bank is able to acquire and retain more customers. Increase in customer retentionincreases more profits(Reichheld, 1992, 1996), and Storbacka, 1994). Customer loyaltyis more important than increasing number of customers in a bank (Colgate, 1999). A critical review of banking sector indicates that customer loyalty has been neglected in the banking sector especially after the consolidation of banks and the restructuring exercise in the banking industry in Nigeria. The researcher developed interest and found that a research study would be of much significance to be undertaken within the capacity limits of the researcher to discover the major factors that affect customer satisfaction and loyalty, which is a focus of devising informationand communicationtechnologyinrenderingeffective banking services. Findings of this research study will be of great use for banking sector. The results of this research study will also be helpful in improving ICT application in banks. This research study will also be helpful for banks to make their customers loyal to overcome high competition in the banking sector of Nigeria.
  11. 11. 5 1.4 Scope of the study The scope of the study is limitedto the imperatives of mobile banking services oncustomers’ choice of banks in Nigeria. The scope of the study shall be limited to Guaranty Trust Bank (GTB). The choice of selecting this bank is based on the fact that it represents the new generation banks as well as due to the availability of data. 1.5 Organization of the Study The study is structuredinto five chapters. Chapter one discusses the background of the study, objectives and justification of the study. The second chapter reviews the theoretical framework, related literatures and empirical research findings. Chapter three focuses on methodology adopted which will be basically primary data intended to be sourced through interviews and questionnaire drawn from selected population. This chapter will also discuss data type, data collection and administration. Chapter four will be for data analysis and interpretation of results, while chapter five gives conclusion of findings obtained in chapter four.
  12. 12. 6 CHAPTER TWO LITERATURE REVIEW 2.1 Introduction The chapter focuses onreview of receivedstudies onthe subject matter. In particular, the chapter documents theoretical and empirical studies that have been produced over years. The first section reviews theoretical issues while the second section reviews empirical evidence. The essence of the theoretical review was to appreciate some theories that have been developed and how these theories have been improved over time. The review of empirical evidence was for the purpose of examining how the received theories have been able to capture true life situation. It also shows the countries or banks that these theories have been used. 2.2 Theoretical Review 2.2.1 Diffusion of Innovation Theory Diffusion of innovation theory was originally developed by Rogers in 1962. It remains one of the oldest social science theories originated in communication with the purpose of explaining how, over time, an idea or product gains momentum and diffuses through a specific population or social system. The theory was however reviewed in 2003 by Rogers. The theoryprovides a holistic insight into organisational adoption of innovations (new ideas, concepts, or objects) andis appropriate to understand issues aroundthe adoption of emerging technologies such as the use of ICT for mobile banking services. Under the diffusion of innovation theory, there are five established categories and while the majority of the general population tends to fall in the middle categories. When promoting an innovation, the different strategies used to appeal to the different adopter categories. The categories are: innovators, early adopters, early majority, late majority and laggards. Rogers (1962) has developed a detailed profile of "ideal types" for each of the adopter categories on the basis of demographic and personality characteristics. For example, innovators are "venturesome", they are cosmopolitan in outlook, tend to be better educated,
  13. 13. 7 willing to take risks, and are more sociallymobile than their peers. There also early adopters who represent opinion leaders. They enjoy leadership roles, and embrace change opportunities. They are already aware of the need to change and so are very comfortable adopting new ideas. Strategies to appeal to this population include how-to use manuals and information sheets on implementation. They do not need information to convince them to change. The third category includes early majority which are rarely leaders, but they do adopt new ideas before the average person. That said, theytypically need to see evidence that the innovation works before they are willing to adopt it. Strategies to appeal to this population include success stories and evidence of the innovation's effectiveness. The fourth category is late majority with people that are always skeptical of change, and will only adopt an innovation after it has been tried by the majority. Strategies to appeal to this population include information on how many other people have tried the innovation and have adopted it successfully. The last category is laggards where tradition bound people and they are very conservative. They are very skeptical of change and are the hardest group to bring on board. Strategies to appeal to this population include statistics, fear appeals, and pressure from people in the other adopter groups. By looking at the processes and characteristics of innovations adoption of Rogers (1962; 2003), it is conceivable that adopters of cloudcomputing are aware of the technology or are prepared to learn how to use the technology. Moreover, suchadopters form an attitude to accept or reject the use of cloud computing in their environments. Acceptance decision is possible provided that cloud computing adoption offers better value in data center management. 2.2.2 Competitive Advantage Theory Competitive advantage grows fundamentally out the value a firm is able to create for its buyers that exceeds the firm’s cost of creating it. Value is what customers willing to pay and superior value stems from offeringlower prices than competitors for equivalent benefits of providing unique benefits that more than offset a higher price (Porter, 1985). The theory consists of three mainstrategies(cost leadership, differentiation and focus) which are shown in the figure 2.1 while cost leadershipand differentiationstrategies address a whole industry, focus strategies address specific or small clusters of customers within an industry.
  14. 14. 8 i. Cost Leadership The strategy requires a firm (bank) to serve at the lowest cost in the industry. Economies of scale, unique technology that is not available to other firms, using cost effective channels are some of the ways for being able to use the strategy. The strategic logic of cost leadershipstrategyrequires afirm to be cost leader, not one of the several firms vying this position. 2.1: Three Generic Strategies of the Generic Strategies Framework Source: Porter (1985), Competitive Advantage For banking sector, a broad target cost leadership strategy itself is not a good strategy as it decreases the profit margins extensively which will soon be followed by other banks. That's why there is no significant difference in general interest rates, loan rates, transaction fees of bank in a stable economy and banking sector. ii. Differentiation The aim of the strategy is to be unique in the industry and this uniqueness must be valuable for customers. The uniqueness can be one or a set of dimensions. Areas of differentiation can be: product service, marketing, sales, image, delivery and etc. In banking sector, differentiation can be crafted by a single or a set of these dimensions. While brand differentiation and product differentiation would be applicable for broad targeting service, marketing and delivery differentiation strategies would be suitable for narrow scope
  15. 15. 9 targeting. A broad target service differentiation is not for banks they are looking for profitability. That is why today many banks use customer segmentation to service its customers rather than given the same service to all customers. iii. Focus Strategy The focus strategy involves concentration on particular buyer groups, geographic areas or product/market segments. By selecting a particular segment group or group of segments, company attempts to tailor its strategy to service the needs of its segment better than the competitors. A focus strategy may emphasize differentiation or cost advantage (Payen). Events based marketing is an example of focus differentiation strategy (marketing differentiation), whichmatches customer transactions to tailoredmarketing and sales pitches Prioritybanking is another example of focus differentiationstrategy(service differentiation), which aims to give better service to more profitable customers of a bank. Today customers look for individualize service from their banks and banks highly use focus differentiation strategies to satisfy customers. Banks use "cost focus strategy" mostly for profitable customers in order to retain them by increasing their switching cost. It can be synthesize that, for banking sector, boardtarget differentiation strategies are likely to attract the potential customer, while narrow target differentiation strategies (focus strategy) are likely to retain bank's existing profitable customers and allocate the bank's resources more effectively. For example, brand, image of the bank is an important why for bank to differentiate themselves from all the other banks and attract potential customers. Launching innovate products is another why of attractingpotential customers. Michael Porter (Porter 2006, cited in Streeter 2006) states his thoughts, about competition and banks, in a recent banking conference. Porter thinks that banking sector is entering an era of strategic positioning. To succeed in the new era, companies have to deliver something unique, but most banks do what others do, what he calls, to competition. He stated that "The worst thing you can do is compete with your rival on the same things. If you do, the competition almost always becomes a destructive arms race. Strategy, is striving to be unique, which required choices." As it can be understood, porter insists the
  16. 16. 10 successful firms can only compete with one generic strategy, in isolation of other generic strategies. For many researchers this viewpoint is not accurate. What should be pointedout is the successful firms tend to compete with multiple strategies. Contingent strategies are important for their survival. (Hall 1983;Ham brick1983;Wright, 1986, cited in Wright et al 1988). The other critical view for porter's monolithic strategy comes from Wright (1986) cited in Wright et al.), he expounds that in a fragmented industry like banking, where there the many players in different sizes, it is difficult to be successful with adapting one generic strategy. In banking industry, a sustainable competitive advantage can be gained with a blend of different strategies, but a powerful focus differentiation strategy in service cannot be neglected. Products andprice can be easilycopied. Service is more difficult to imitate than a product because service requires customer input and involvement (Payen, 2006). Today, building a competitive advantage is based on how well a bank serves its customer. ICT is a differentiation strategy that banks can use to acquire, grow and retain profitable customer relationships, with the goal of creating a sustainable competitive advantage. In the following part, another important competitive advantage strategy framework will be discussed and comparisons will be done with porters' Generic Strategies framework Discipline Model Porter’s “Generic Strategies Framework” alone is not enough to understand the positioning strategies of banks in terms of ICT. Porter’s focus on industry structure is a powerful means of analyzing competitive advantage in itself, but it has been criticized for being too static in an increasingly fast changing world. For a deeper understanding, Michael Treacy and Fred Wieserma’s “Value Disciplines Model” has been examined. This model is another important strategic framework for market positioning which has the following 3 positioningstrategies: Operational Excellence; Product Leadership; Customer Intimacy; ICT can be strategically embedded particularly in two of the three value disciplines (1) Operational Excellence, and (2) Customer Intimacy. With customer intimacy,Wieserma (1998) shows how companies can profit from establishing closer, more co-operative
  17. 17. 11 customer relationships. Withoperational excellence, firms aim to have economical, efficient processes whose resulting delivered values to customers are low prices and service convenience. (Wieserma and Treacy 1996). Firms applying customer intimacy focus on knowing the customer and building close relationships withthese customers. If ICT is embedded in a customer intimacy strategy, then ICT will be relationship-oriented. Firms embeddingICT in an operational excellencestrategy focus oncost- reductions and raising the quality of the customer interaction process through process improvements (Verhoef and Langerak, 2002). 2.3 Stylized Facts about Guaranty Trust Bank Guaranty Trust Bank plc was incorporated as a limited liability company licensed to provide commercial and other banking services to the Nigerian public in 1990 and commenced operations in February 1991.In September 1996, Guaranty Trust Bank plc became a publicly quoted company and won the Nigerian Stock Exchange President’s Merit award. In February 2002, the Bank was granted a universal banking license and later appointed a settlement bank by the Central Bank of Nigeria (CBN) in 2003. Guaranty Trust Bank undertookits secondshare offering in 2004 and raised over N11 billion from Nigerian Investors to expand its operations.On 26 July 2007 GTBank became the very first sub- Saharan bank and first Nigerian joint stock company to be listed on London Stock Exchange and Deutsche Börse. In the same year, they successfully placed Nigeria's first private Eurobond issue on the international capital markets. The GTBank USD 500,000,000Eurobondwas the first ever Benchmark Eurobond issue by a Nigeriancorporate and the second Eurobond programme by GTBank in the last 5 years. The long-term debts of Guaranty Trust Bank plc are rated BB- by Standard & Poor's and AA- by Fitch Ratings, which are the highest ratings for a Nigerian bank. They introduced online banking and SMS banking in Nigeria and a naira denominated MasterCardas well as the Platinum and World Signia cards andwith GTB-on-wheels, mobile branches. On 12 March 2008, GTBank was given a banking licence for the United Kingdom by the Financial Services Authority. GTBank is a partner of Eko Atlantic City a new made
  18. 18. 12 island (820 ha.) in the Atlantic ocean, adjacent to Victoria Island Lagos. It will be the home of the new Financial District. The building of Eko Atlantic City started in 2009 and is expected to be finished in 2016. In commemoration of the bank's 20th anniversary, the Nigerian Postal Service issued a set of GTBank Anniversary postage stamps. This was the first time in Nigeria that a corporate organization was honored in such a way. In 2011, the bank became the biggest bank in Nigeria by market capitalisation. In 2013, the Bank issued a USD 400,000,000 Euro bond at a coupon rate of 6%; the least obtained by a Nigerian company in the international capital market. The Eurobond was issued under the USD 2,000,000 Global Medium Term Note Programme, which is registered under both Regulation in the United State of America and Rule 144A in the United Kingdom and sold to investors across Africa, America, Asia and Europe. The bank has over 10,000 employees 2.4 Review of Empirical Results Several empirical studies have shown that automation has tremendously improved bank services, for instance Agboola (2001) studied the impact of computer automation on banking services in Lagos using 6 banks and concluded that electronic banking has tremendouslyimprovedthe services of the banks to their customers. Lustsik(2004) explores the implementation of techniques of activity-based-costing (ABC) in the banking sector on the example of Estonia bank in order to analyze the cost structure for traditional and electronic channel transactions. The methodology and empirical parts of the study were based on Hans bank’s analysis and statistical report as well as on Hans banks internal documents that stipulate rules for cost allocation and limit cost calculation. The findings of the study revealed that banks additional profits on the transactions effected via electronic channel banking services have high profitability for banks, as the absolute unit cost numbers are lower than those of fees collected from clients. Trajhavo (2005) carried out an empirical investigation on the impact of electronic banking on bank profitability. The study was designedto test profit sensitivityto suchfactors as the size of institution in terms of both number and usage. The model of the study projects
  19. 19. 13 profitability measured in net present value and internal rate of return over a five years time horizon considering anticipated migration of customers from traditional to online channels. The results of the study revealedthat it is not possible to blindly state that internet banking is always profitable because very small institutions only offer a limited set of internet banking and are not likelyto achieve profit unless they are able to persuade a very substantial portion of their customers to bank online; that internet banking provides financial institutions with array of applications including home banking with electronic bill payment, check images, authenticated online applications, online statement modules, e-commerce finance services portal and online lending application for consumers loans. The implication of the study above is that there will increase in bank performance if the use of electronic banking system is improved and practiced in Nigeria irrespective of size. Siam (2006) examined the effect of electronic banking on bank’s profitability in Jordan. The population of the study included all working banks in Jordan which have sites on the internet for the periods of 1999-2004. The result from the data analysis that were gathered from the study instrument (questionnaire) showed that there is a correlation with statistical significance between electronic banking and banks profitability. Showing a negative effect inprofitabilityinthe short run and a positive effect inprofitability in the long run. Thus, managers and banks employees in the area prefer their banks to expand their electronic operation in servicing customer but not converting all banks to total electronic banks. Hernando and Nieto (2007) attempted to fill this gap by identifying and estimating the impact of the adaptation of a transactional web site on financial performances using a sample of 72 Deposit Money banks in Spain over the period 1994-2002. The analysis of the sample is based on several financial performance ratios. These financial ratios measure business activity as a percentage of average total assets and profitability. The results showed that the impact of transactional web adoption on banks performance take to appear. The adoption of the internet as a delivery channel involves a gradual reduction in overhead expenses. This effect is statistically significant after one and half year after adoption. The cost reduction translates into an improvement in banks profitability, which becomes significant after one and half year in terms of return on assets
  20. 20. 14 (ROA) and after three years in terms of return on equity (ROE). Onay, Ozsoz and Ash (2008) investigated the impact of internet banking on banks profitability. Their analysis covered thirteen (13) banks that have adopted online banking in Turkey between 1996 and 2005. Using the approach of Hernando and Nieto (2007) and by using specific and macro- economic control variables; they investigated the impact of internet banking on the return on assets (ROA) and return on equity (ROE). The results of the findings show that internet banking starts contributing to banks return on equity (ROE) with a time lag of two years confirming the findings of Hernando and Nieto while a negative impact is also observed for one and half years of its adoption. Madueme (2010) studied the impact of ICT on banking efficiency in Nigeria employing a survey of 13 banks. Based on the CAMEL rating and a transcendental logarithmic functionof the banks, it was revealed that the efficiency values obtained through the CAMEL rating system were higher during post adoption era than before adoption and estimated that a 1% increase in ICT capital on average leads to 0.9185 Naira increase in bank output post ICT adoption era. Maiyaki and Mokhtar (2010) employing a survey of 407 bank customers in 33 organizations in Kano State of Nigeria studied the effects of availability of electronic banking facilities among other factors. They study reveals that the availability of electronic banking facilities such as ATM, online banking and telephone banking do not have significant influence oncustomer’s bankchoice decision. Carrallio and Siegel (2011)investigatedthe returnon investment for online banking services an analysis of financial account aggregation. The return on investment of the account aggregation technology was evaluated using the calculation of earnings before interest and taxes (EBIT) and the net present value (NPV) for a period of five years. The sample covers three basic bank sizes according to the number of its online accounts;medium banks those with 2.8 to 6.0 million online accounts and large banks, those with 8.8 to 16 million online accounts. The study concluded that account aggregation is a compelling technology that should become a commodity in the sense that most important banks will provide it and it will represent no more a differentiated competitive advantage. This study employed descriptive (survey) design as its methodology while using multiple
  21. 21. 15 regressionfor the analysis of the time series data from 2006-20011. The major deviation of this study is that it studies the impact of electronic banking instruments onthe intermediation efficiency of Nigerian economy. It also employed disaggregated and selected e-payment instruments and used data involving all the deposit money banks in Nigeria. Furthermore, in their study Salawu and Salawu, (2007) found among other things that there is a significant relationshipbetweencustomer choiceof banks and implementationof e- business. Hence, Nigerian banks are not left out in utilising ICT in order to improve their general service delivery. For instance, some of the ICT processes that are being used by banks in Nigeria include: mobile telephony, facsimile, wireless radio phone, very small aperture terminal satellite (VSAT), Automated Teller Machine (ATM), internet banking and local area network (LAN) among others (Idowu, Alu and Adagunodo, 2002; Salawu and Salawu, 2007; Ugwu, 1999). According to Idowu, Alu and Adagunodo (2002), Nigerian banks have realized that the way in which they can gain competitive advantage over their competitors is through the use of technology. Thus, there is a growing rate of technology adoption in the Nigerian banking operations (Salawu and Salawu, 2007). Among the e-banking processes adopted by Nigerian banks, it seems ATM is the most patronizedby customers (Central Bankof Nigeria, 2007). In addition, it was found that attitudinal dispositions significantly influenced their ATM usage. Similarly in their research, KPMG (2009) found that Nigerian bank customers give special consideration to ICT particularly ATM. Although, it seems that Nigerian banks customers are increasinglyassociatingquality of bank services with online real time, they are now more alert and meticulous in choosing banks to patronize (Idowu, Alu and Adagunodo, 2002). Harold and Jeff (1995) contend that financial service providers should modify their traditional operating practices to remain viable. According to Woherem (2000) only banks that overhaul the whole of their payment and delivery systems and apply ICT to their operations are likelyto survive and prosper in this millennium. He called the attention of the banks on the need to re-examine their service and delivery systems in order to properly
  22. 22. 16 position them within the framework of the dictates of the dynamism of information and communication technology. Furthermore, Wali (2010) submitted that the relationship between ICT and the various organizational activities is similar to government and civil servants while government outlines policies and civil servants execute those policies. ICT in a proper perspectives acts as a tool for the actualizationof various organizational activities in order to implement and enforce policies. Orhan (1997) observed the relevance of a modern information infrastructure to the economic andsocial well-beingof a society. He found that it is only in an atmosphere where reliable facts and figures are available that citizens can form opinions, express preferences, hold government officials accountable for their actions, and that democracy can thrive and reach a consensus on the policy options towards desired objectives. Technological advancement facilitates payments and creates convenient alternatives to cash and cheque for making transactions. Such new practices have led to the development of a truly global, seamless and Internet enabled 24-hour business of banking. Technological advance in payments are important due to the fact that it will be feasible to outsource quite a number of the banks’ role in the payments system. Also banks’ regulation can be more technologically dependent and better focused rather than focusing on conceptual guidelines. Information and Communication Technology (ICT) revolution both in terms of innovation rate, speedy operation and cost per unit (portraying reduction in average total and marginal costs) has made a good number of banks embrace the use of ICT infrastructure in their operations (Akinuli, 1999). Consequently, the advances in ICT have intensified the international competition, thus, making it difficult or even impossible for firms to satisfy customers (McKenna, 1997). ICT is the modern way of handling information electronically which involves its access, storage, processing, transferring and delivery (Ige, 1995). It was found that ICT influences the general operations of financial services through easing of enquiry process, speed and effective service delivery (Idowu et. al 2003). However there may be little interruptions at times due to network failures, which may make customers unable to carry out transactions at a particular point in time. This little
  23. 23. 17 shortcomingis not in any way comparable to the days when banking halls were characterized by long queues mainly as a result of delays in the traditional banking operations. Banks should therefore incorporate ICT into their strategic plans for effective performance in payment and delivery systems. This calls for proper analysis to determine the type, nature and extent of ICT products requiredfor effectivenessand efficiency. It is imperative for bank management to intensify investment in ICT product to facilitate speed convenience and accurate service. 2.5 The Nigerian Banking System The financial system consists of various financial institutions, operators and instruments that give the system its character and uniqueness. According to the Central Bank of Nigeria research series (1993) the Nigerian financial system refers to a set of rules and regulations and the aggregation of financial arrangements, institutions, agents, that interact with each other and the rest of the world to foster economic growth and development of a nation. The financial system plays the vital role of improvement and sustains the efficient mobilizationand allocationof financial resources in an economy. It also provides structures for the management of liquidity for financial assets and instruments The Report on the Nigeriasystem (1976)succinctlyarticulatedthe functions of the financial system. According to the report, the financial system should facilitate effective management of the economy, provide non inflationary support to the economy, achieving greater mobilization of savings and its efficient and effective channeling. In view of this development, the Nigerian banking industry has witnessed and is still witnessing revolutionary metamorphosis in recent years as a result of the restructuring programmes channeled towards resolving the existing problems of the industry by the apex bank (Central Bank of Nigeria). The most recent championed epitome is the recapitalization exercise which has shaped the structure of the Nigerian banking industry significantly. According to Adegbaju and Olokoyo (2008), the banking sector reforms and recapitalization resulted from deliberate policy response to correct perceived or impending banking sector crises and subsequent failures. A banking crisis can be triggered by weakness in banking
  24. 24. 18 system characterized by persistent illiquidity, insolvency, undercapitalization, high level of non-performing loans and weak corporate governance, among others they added. Similarly, Uchendu (2005) submitted that the reforms in the banking sector proceeded against the backdrop of banking crisis due to highly undercapitalization deposit taking banks; weakness in the regulatory and supervisory framework; weak management practices; and the tolerance of deficiencies in the corporate governance behaviour of banks. The primary objective of the reforms therefore is to guarantee an efficient and sound financial system by equilibratingthe competitive muscles of the existing weak banks through mergers and acquisitions (Asikhia, 2009; Lemo 2005). By far, the most widely pursued corporate strategies are those designed to achieve growth in sales, assets, profits or some combination. Companies that do business in expanding industries must grow to survive. Continuing growth involves increasing sales and a chance to take advantage of the experience curve to reduce the per-unit cost of products sold, thereby increasing profits. A company can grow internally by expanding its operations both globally and domestically or it can grow externally through mergers, acquisitions and strategic alliance (Wheelen and Hunger, 2008). The consolidation of banks has been the major policy instrument being adopted in correcting deficiencies in the financial sector as well as accelerating the rate of growth in the sector. The economic rationale for domestic consolidation is indisputable. An early view of consolidation in banking was that it makes banking more cost efficient because larger banks can eliminate excess capacity in areas like data processing, personnel, marketing, or overlapping branch networks. Cost efficiency also could increase if more efficient banks acquired less efficient ones. Though studies on efficiency in banking raised doubts about the extent of overcapacity, they did point to considerable potential for improvement in cost efficiencythroughmergers. Consolidation is viewed as the reduction in the number of banks and other deposit taking institutions witha simultaneous increaseinsize and concentrationof the consolidation entities in the sector (Somoye, 2008). The consolidationreform is consistentlypredictedto engender some positive changes in the Nigerian banking industry. In line with this argument, Asikhia (2009) commented that
  25. 25. 19 this new policy has the intention of repositioning the Nigerian banking industry for the development challenges of the 21st century. It however hopes to place the industry in a better stead to compete at the global level, more so that national barriers have been dismantled by Information and Communication Technology (ICT). It also hopes to equip the Nigeria banking industry to finance the key sectors that will foster growth in the economy, reduce unbridled competition among banks and over dependence on government and interbank funds. Kwan (2004) and Oyewole (2008) further reported that bank recapitalization will allow for emergence of megabanks that enjoyhidden subsidy referred to as ‘too-big-to-fail” subsidy due to the market’s perception of an illusion of government backing of a mega bank in times of crisis”. Experts equally predict a change from the usual banking method to retail banking by most banks. In the past, banks have not found this segment of the market profitable and one doubts if things would change significantly, unless banks are able to deliver retail banking services in a very efficient manner, with technology playing a major role, banks may not be able to keep their customers (Asihia, 2009). Although the consolidation programme sounded attractive at the onset, experts have argued that the exercise is policy induced rather than market-driven and as such may encounter difficulties in realizing the anticipated goals. According to Somoye (2008), the government policy-promoted bank consolidation rather than market mechanism has been the process adopted by most developing or emerging economies and the time lag of the bank consolidation varies from nation to nation and as such. Ezeoha (2007) as well as Soludo (2004) opined that there are instances, where there is high degree of suspicions among the antagonists that the consolidation policy lacks critical consideration of the realties on ground, and that the authorities may have adopted it to disempower certain group of bank owners who were recently linked to various forms of economic crimes and financial improprieties. It must be noted that the regulatory and supervisory framework for the financial system in Nigeria is composed of the Central Bank of Nigeria (CBN), the Ministry of Finance, the Nigerian Deposit Insurance Corporation (NDIC), the Securities and Exchange Commission(SEC), National Insurance Commission(NAICOM), and the National Board for
  26. 26. 20 Community Banks (NBCB).There is also a Financial Services Regulation Coordinating Committee (FSRCC) chargedwith coordinatingthe activities of these regulatoryinstitutions. The banking system in Nigeria governed by the Banking and Other Financial Institutions Decree (BOFID) 1997 and the industry is regulated by the CBN. The banking system was traditionally made up of the commercial, merchant and community banks and was dominated by the commercial and merchant banks. In 2001 most banks convertedtheir licenses to a Universal Banking license allowing them to participate in various banking and other financial services activities. In 2004, Nigeria had 89 banks whose businesses covered retail, commercial and merchant banking. The CBN’s rating of licensed banks using CAMEL parameters revealed that 11 banks were “sound”, 53 were “satisfactory” while 14 and 9 banks were rated “marginal” and “unsound” respectively. Further analysis of the activities of banks revealed a heavy reliance on the inter-bank funds market, as 40% were net takers of funds from the banking system. A great concern for the consolidationexercise, despiteits goodintents, has been the level of controversyit generated since the CBN announcement in July 2004.Akpan (2009) remarks that, maximizing returns and optimizing profitability became the challenge for banks immediately after the consolidation exercise where banks were required to significantly increase their level of returns and at the same time manage costs, to realize this, banks will have to offer innovative products and services to the marketplace including new ways of delivering them. Available data on various e-payment channels from the Central Bank of Nigeria Economic Report for the fourth quarter of 2013 revealed that “ATM remained the most patronized, Table 2. 1. Percentage value of Electronic Payments Channels, Fourth Quarter Year 2014 Year ATM POS MM 2007 56.1 - - 2008 54 53 - 2009 50 49 -
  27. 27. 21 2010 54 49 47 2011 69 54 53 2012 72 63 53 2013 79 68 62 2014 88 72 69 Table 2. 2 : Level of Adoption of e-Payment System by Volume (billion) Payment Instrument 2006 2007 2008 2009 2010 2011 2012 2013 ATM 3,608,022 4,765,467 18,954,942 49,671,367 168,171,231 368,142 410,132 429,118 Web(internet) 1.71 5.1 2.4 - 4.3 5.2 6.9 6.9 Mobile - 161,679 1,576,207 7,471,388 7,471,388 8,198, 211 198,102 663,135 POS 0.019769 0.091211 0.535376 0.627314 535,767 655, 676 719,434 845,957 Source: CBN Annual Reports: 2006, 2007, 2008, 2009, 2010, 2011, 2012 and 2013 Fourth Quarter, Year 2013. : 49 54 63 68 72 0 10 20 30 40 50 60 70 80 90 100 1 2 3 4 5 Years 2007-2014 ATM 56.1 54 50 POS - 53 49 MM - - -
  28. 28. 22 CHAPTER THREE METHODOLOGY 3.1 Introduction This chapter presents the procedures that will be employed in carrying out the study. The methodological issues discussed in this chapter include the research design, the population/sample determination, data collection and the method of data analysis. 3.2 Research Design Research design is concerned mainly with the conceptual structure within which research would be conducted. The preparationof such a design facilitates researchto be as efficient as possible yielding maximal information. In other words, the function of research design is to provide for the collection of relevant evidence with minimal expenditure of effort, time and money (Kothari, 2004). In their own submission, Verhonic and Seaman (1978) described research design as a plan of study providing the overall framework for collecting data. The type of research design employed in this study is descriptive survey. The main characteristic of this method is that the researcher has no control over the variables; he can only report what has happened or what is happening. This method helps to identify the impact of mobile banking services on customers’ choice of banks in Nigeria. The design is helpful as it will enable the researcher to obtain the needed primary data directly from the respondents. 3.3 Population of the study Population is a complete set of elements (persons or objects) that possess some common characteristic defined by the sampling criteria established by the researcher. A research population is generally a large collection of individuals or objects that is the main focus of a scientificquery. All individuals or objects within a certain population usually have a common, binding characteristic or trait. The study population comprises customers of commercial bank in Nigeria.However, it is glaring that the population is so large that the researcher may not be able to reach individual, even if all of them can be identified from Central Bank of Nigeria database. This is due to several reasons. First, the population is
  29. 29. 23 densely distributed and reaching each and everyone is extremely difficult. Second, the logistic and time involved in filling the questionnaire is another reason. To this end, to get a reliable result, a sample will be taken. This is the reason why researchers rely on sampling techniques 3.4 Sampling Technique and Size Sampling is the selectionof some units from astudy’s populationof interest. It is a technique that allows a researcher to make inferences about a population based on the nature of the sample (i.e selected units). In selecting a sample that is representative and unbiased, it is always necessary to apply sampling techniques in selecting a valid sample from the population (Aina,2002). There are a number of these techniques employed by the researchers, however, for the purpose of this study; simple random sampling technique will be employed. Simple random sampling technique aims at giving each person in the sampling frmae an equal chance of being included in the sample. There is no doubt that the banking customer populationis too large to study, thus the customers of commercial banks in Ibadan Metropolis will be selected as the sample representing the customers of commercial banks. Random sampling technique will be employed to select two hundred (200) respondents. 3.5 Method of Data Collection According to Onyango (2002), data collection involves measuring some research phenomenon, whether it is a process, an object or a human subject’s behaviour. This object of measurement will differ from one researchprojectto another depending on the purpose of the enquiry and the availability of suitable instruments. Some popular instruments include questionnaire, checklists, observations, attitudes scales, written or oral tests and interviews. In this study however, self-structured questionnaire will be developed to collect primary information. The questionnaire is divided into two parts. The first section is designed to obtain socio-demographic information of the respondents. The second part is designed to elicit questions relatedto the role of mobile banking services on customers’ choice of banks in Nigeria.
  30. 30. 24 3.6 Administration of Instrument Two hundred (200) copies of questionnaire will be made to distribute at different locations in Ibadan Metropolis. Hence the analysis that will follow will be based on the information gathered from the respondents. The Software Package for Social Science will be used to analysis the data gathered for the study. The SPSS is equipped with the computational formula and for the presentation and interpretation of the result.
  31. 31. 25 CHAPTER FOUR EMPIRICAL ANALYSIS 4.1 Introduction This chapter presents the data analysis and interpretation of the result. In achieving the statedobjectives inchapter one of the study, survey study that is the use of questionnaire was adopted. Out of 200 copies of questionnairedistributed193 copies were foundusable for the study. Several factors ranging from level of education and effect of mobile banking services were considered. Under the mobile banking services questions bothering on efficiency, value security, flexibility etc were asked while under loyalty questions on ability of bank to meet needs of customers were asked. Thus the result of the analysis presented below: 4.2 Demographic Analysis of Respondents The demographic data analysis of the customers of the banks is presented in Table 4.1. According to the Table above 42% of the respondents are males (N=82), and female constitute 58% (N=111) of the total sample. It indicates that majority customers of these banks are female that is 58%. Table 4.1: Customer’s Gender Response Frequency Percentage Male 82 42 Female 111 58 Total 193 100 Source: Field Survey, 2015 Table 4.2 shows the marital status of the respondents. According to the Table, 56% of the respondents are single (N=108), and 44% are married i.e. (N=85). It indicates that majority of the customers of this bank are married.
  32. 32. 26 Table 4.2: Customer’s Marital Status Response Frequency Percentage Single 108 56 Married 85 44 Total 193 100 Source: Field Survey, 2015 According to Table 4.3 46% of the individuals in the sample were between the age of 20-30 (N=88), 35% of the individuals in the sample were between the age of 31-40 (N=67), 19% of the customersinthe sample were between the age of 41-50 (N=38). It indicates that majority of customers fall in the category of 20-30 years. Table 4.3: Customer’s Age Response Frequency Percent 20-30 88 46 31-40 67 35 41-50 38 19 Total 193 100 Source: Field Survey, 2015 Table 4.4 shows that in Ibadan majority of the customers of the bank is student 51% (N=99) transact businesses with bank while paid employment (salary earners) were computed to be 28% (N=54). It is surprisingto discover that students transact business with banks more than the customers on paid employment.
  33. 33. 27 Table 4.4: Customers’ Employment Status Response Frequency Percentage Paid Employment 54 28 Student 99 51 Jobless 40 21 Total 193 100 Source: Field Survey, 2015 From Table 4.5, it is clear that the most patronized bank in Ibadan was GT Bank of Nigeria with 35.8%. Only 11 (5.7%) of the respondents patronized Maintsreet Bank. Having examined the demographic characteristic of the respondents, the researcher also investigates respondents’ perception on the mobile banking services in Nigeria. It must be recalled that the use of electronic transactions suchas mobile moneyservices, transactionalerts, the use of ATM, POS and so on are some satisfaction factor considered by customers in their bank selection. Table 4.5 Customers’ Choice ofBanks Variable Frequency Percentage GT bank 69 35.8 First Bank 32 16.6 Access bank 27 13.9 Mainstreet Bank 11 5.7 Zenith Bank 39 20.2 Others 15 7.8 Total 193 100.0 Source: Field Survey, 2015 Table 4.6 shows that majority of the respondents (N=93) which constitute 48.2% claimed that they have beenpatronizing the bank between5-10 years. It further revealed that, only 17
  34. 34. 28 representing 8.8% of the respondents have been banking with the bank for more than 10 years. They claimedthat some of the factors responsible for their actions include efficiency, constant network availability and desire for innovation. Table 4.6 Year of Bank Patronage Variable Frequency Percentage 1-5 years 54 27.9 5-10 years 93 48.2 10-15 years 29 15.0 More than 10 years 17 8.8 Total 193 100.0 Source: Field Survey, 2015 4.3Influence of education on customers’ adoption of mobile banking services Table 4.7, clearlyshows, most the customers of the banks were bachelor’s degree holders i.e., 51% (N=99) and18 representing9% of the respondents have intermediate and below level of education. The implication of this is that , it appears that most of the mobile banking services of the bank are more embraced and utilized by the learned compare to those customers with low level of formal education (elementary and below). Table 4.7: Customer’s Educational Level Variable Frequency Percentage Elementary and below 18 9 Secondary 53 28 Bachelors 99 51 Masters and above 23 12 Total 193 100 Source: Field Survey, 2015
  35. 35. 29 The table 4.8 presents the respondents knowledge of mobile banking services. It shows that 103 representing53.4% of the respondentsare quite familiar with Automated Teller Machine (ATM), 11.9% of them are aware of internet banking services, Point of Order Sales Terminal (POS) constitute 14.5% and only 11.9% of the respondents are aware of mobile money services. The ATM appears to be the most popular mobile banking services among the respondent, the implicationof this for banks is that more effort should be intensified towards creation of awareness on other mobile banking services. Table 4.8 which of these mobile banking services are you aware of Variable Frequency Percentage ATM 103 53.4 POS 28 14.5 Internet Banking 39 20.2 Mobile Money 23 11.9 Total 193 100 Source: Field Survey, 2015 Table 4.9 indicates that in terms of usage, the most common uses of the service are for: cash withdrawals (26.9%), balance inquiries (23.3%), funds transfer (19.2%) and airtime/credit purchase (6.2%). Only 5.2% use mobile banking service in payment of utility bills. This implies that majority of the respondents use mobile banking service for withdrawals of cash. Table 4.9 what do you most use mobile banking service for? Variable Frequency Percentage Transfer of funds 37 19.2 Airtime/Credit purchase 12 6.2 Balance inquiries 45 23.3 Payment of utility bills such as DSTV 10 5.2
  36. 36. 30 Cash withdrawals 52 26.9 Cash deposits 14 7.3 Receipt of funds 20 10.3 Payment for goods and services 3 1.6 Total 193 100 Source: Field Survey, 2015 4.4The influence of bank services on customers’ long term relationship Table 4.10 presents the influence of bank services on customers’ long term relationship As much as 47.7% of the respondents were of the opinion that mobile banking services are highly efficient and will improve quality of services delivery. Sixty three respondents constituting 32.6% claimed that through mobile banking services great value on the improved quality of life, inter relationship and other personal gains can be achieved. The table further shows that 101 representing 52.3% of the respondents submitted that security concern is one of the major problems affecting well patronage of mobile banking service in Nigeria banking sector. The table further indicate that 92 (47.7%) of the respondents claimed that network problem is one of the contributory factors that hinder the effectiveness of mobile banking service in the Nigeria banking sector. In this same vein, 111 of the respondents claimed that mobile banking service is very flexible and comfortable to use. As much as 51 (26.4%) claimed that mobile banking service increase customer loyalty patronage. Personal satisfactionis another factor determiningthe use of mobile banking services 117 constituting (60.6%) of the respondents testified to this assertion. In another development, 72 representing 37.3% of the respondents opined that mobile banking does not positively influence service delivery of commercial banks in Nigeria. Also 102 of the respondents claimed that the introduction of electronic payment products such as m- banking, ATM, internet, etc has increased the level of economic activities
  37. 37. 31 Table 4.10 Bank services and Customers’ long term relationship Questions SA A I D SD Mean Std. Deviation Mobile banking services are highly efficient and will improve quality of services delivery 36 (18.7%) 92 (47.7%) 38 (19.7% ) 27(14. 0%) 3.7098 .92913 Great value on the improved quality of life, inter relationship and other personal gains can be achieved from using of mobile banking services 36 (18.7%) 63 (32.6%) 43 (22.3% ) 51(26. 4%) 3.4352 1.07393 securityconcernis one of the major problem affectingwell patronage of mobile banking service in Nigeriabanking sector 31 (16.1%) 101 (52.3%) 61 (31.6 %) 3.5285 1.09946 Network problem is also one of the contributoryfactors that hinder the effectiveness of mobile banking service inthe Nigeria banking sector 36 (18.7%) 92 (47.7%) 38 (19.7% ) 27 (14.0 %) Mobile banking service is very flexible and comfortable to use 36 (18.7%) 111 (57.5%) 46(23. 8%) 3.7098 1.03015 Mobile banking service increase customer loyaltypatronage 36 (18.7%) 63 (32.6%) 43 (22.3% ) 51 (26.4 %) 3.4352 1.07393 Mobile banking helps customer in attaining personal satisfaction 26 (13.5%) 117 (60.6%) 21 (10.9 %) 29 (15.0 %)
  38. 38. 32 mobile banking does not positivelyinfluence service delivery of commercial banks in Nigeria 52 (26.9%) 35 (18.1% ) 34 (17.6 %) 72 (37.3 %) 2.3472 1.23267 The introductionof electronic payment products suchas m- banking, ATM, internet, etc has increasedthe level of economic activities 36 (18.7%) 102 (52.8%) 22 (11.4% ) 33 (17.1 %) 3.7306 95740 Source: Field Survey, 2015 The table presents the response of those who have never used the mobile banking service. They indicate an inadequate understanding of mobile money services as the main reason why (47.67%). Additional reasons given include technical issues in processing transactions (6.22%), as well as concerns about fraud (46.11%). Other reasons given for non- usage of mobile banking service include “Problems with network service providers” and “Insufficient funds to warrant use” Table 4.11 If you have never used mobile banking services, indicate why Variable Frequency Percentage Inadequate understanding of mobile banking services 92 47.67 Other technical issues in processing transactions 12 6.22 Concerns about fraud 89 46.11 Total 193 100 Source: Field Survey, 2015
  39. 39. 33 4.5 Discussion of the Findings The findings from the study show that many banks’ customers in Nigeria are fully aware of the positive developments in Information and Communication Technology which led to the introduction of new delivery channels for Nigerian commercial banks’ products and services. The aim is to satisfy and get customers delighted. Most customers however, still patronize the bank branches and find interaction with human tellers as very important. It also finds that customers enjoying mobile banking services are still not satisfied with the quality and efficiency of the services. The findings which state that if mobile banking services are highly efficient and that it will improve quality of services delivery by commercial banks is line with submission of Agboola (2001) who claimed electronic banking has tremendously improved the services of the banks to their customers. Customers’ perception of and reaction to these developments are issues of concern to both Government and banking industry. A lot need to be done to create confidence in the minds of customers about the benefits and security of the new delivery channels. Lack of patronage for mobile banking products is expressed in lack of confidence and security. A bank has to profitably meet the needs of customers and continuously improve its ability to do so. It has to be accurate, reliable, helpful and understanding. The goal is not simplyto satisfycustomers but to positivelydelight them. The specific things that delight the customer vary from industry to industry and from product to product. But most customers want the same things. According to Balachandher (2001), customers are interestedinquality, they desire goodand effective service delivery, they want flexibility so that the specific product or service is obtained, and they covet value by not wanting to pay a price that exceeds the value received from the product. Therefore, banks in particular, need rebuild a customer focused banking with new improved processes, modern technology, a competitive range of delivery channels and focusingservices onthe best customers. This of course requiresthe radical remodelingof the banks delivery channels and business process engineering resulting in significantly improved: process excellence, speed of delivery, and value to customers. Through these, customers’ perception of and reaction to electronic/mobile banking products and services
  40. 40. 34 would be positive. The frequent breakdown in systems in some branches does not promote customer satisfaction. Also, if a system is slow or its capacity is limited, it would affect the operations staff service delivery to customers.
  41. 41. 35 CHAPTER FIVE SUMMARY, RECOMMENDATION AND CONCLUSION 5.1Summary The study investigated the impact of mobile banking services on customers’ choice of banks in Nigeria. the effect of education on customers’ adoption of mobile banking services as well as the influence of bank services on customers’ long term relationship were examined. The descriptive analysis shows that majority of the respondents claimed to be banking with Guaranty Trust bank among all the commercial banks in Ibadan Metropolis. The study also established that there is strong relationship between the efficiency of bank services and customer longterm relationship. The study also establishedthat mobile banking service increase customerloyaltypatronage. There are lot of issues raised in the study which border on security, theft and fraudulent practices with regard to the use of mobile banking services. Networkconnectivityproblem is also one of the contributoryfactors that hinder the effectivenessof mobile banking services. Though this problem is not common with Guaranty Trust Bank, however it is rampant in other commercial banks in the Nigerian banking sector. These issues if not addressed can jeopardized the success of this innovative and laudable financial services in the banking industry. 5.2 Recommendations Following the findings, the study therefore, recommends the following measures to abate the scurrent level of decadence and difficulty being experienced in the utilization of mobile banking services in our financial institutions and banking industry:  Improved Internet connectivity is very essential for the success of e-banking. The banking industry therefore, needs to ensure regular Internet connections with sustained power supply for this objective to be achieved;  E–securityserves as a serious concernnot onlyto the banking industry but also the e– commerce. There are various measures that can be put in place to ensure more security using e–banking services such as installation of encrypted software,
  42. 42. 36 verificationsystem for customer’s identification cards, frequent change of password, examining test questions and using mixed password such as the use of alphanumeric  Customers need to be given more sustained public education concerning the use of mobile banking services  The users shouldnot needthe service of a specialist to conduct their transaction using mobile banking. It should also be suitable for all categories of customers even the physically challenged 5.3 Conclusion A well-integratedprocessof mobile banking services inany bank is not effective until banks recognize and observe the drivers of efficient customer service delivery such as security, network connectivity, flexibility and value as this research study found that these factors affect one another and have a strong influence on building customer satisfaction. This research study contributes in identifying the effects of education and efficient service delivery on customer long term relationship in the banking sector of Nigeria. Therefore, with the help of this customer satisfactionmodel, banks can understand the causes of customer satisfaction. It is also a fact that precondition to customer satisfaction is customer loyalty as this research study has also proved it. Further, there is hardly any research study conducted for Guaranty Trust bank and other banks in Nigeria that has seen the effects of mobile banking services on customer satisfaction as the findings of this research study indicates that efficiency affect customer long term relationship in the banking sector of Nigeria.
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  46. 46. 40 QUESTIONNAIRE INFLUENCE OF MOBILE BANKING SERVICES ON CUSTOMERS’ CHOICE OF BANKS IN NIGERIA: CASE STUDY OF GUARANTY TRUST BANK PLC Dear Sir/Ma, My name is Tosin Awofodu, a postgraduate student of the Department of Economics, University of Ibadan. I am conducting a research titled “Impact of Mobile Banking Services on customers’ choice of banks In Nigeria using Gurranty Trust Bank Plc as a case study. Please tick(√) in one of the boxes for each questionthat suit your purpose. All response will be treated with absolute confidence and use for academic purpose only Thank you. SECTION A Socio-Demographic Characteristics 1. Gender: (a) Male ( )(b) Female ( ) 2. Marital Status: (a) Single ( ) (b) Married ( ) 3. Age: (a) 20-30 ( ) (b) 31-40 ( ) (c) 41-50 ( ) (d) 51 and above ( ) 4. Employment Status (a) Paid Employment ( ) (b) Business ( ) (c) Student ( ) (d) unemployed ( ) 5. How Long have you been banking with GT Bank (a) 1-5 years ( ) (b) 5-10 years ( ) (c) 10-15 years ( ) (d) More than 10 years ( )
  47. 47. 41 SECTION B CUSTOMER LEVEL OF EDUCATION Highest level of educationobtainedby the customers 6. (a) Elementary and below ( ) (b) Secondary ( ) (c) Bachelors/HND/OND ( ) (c) Masters and above ( ) 7. which of these mobile banking services are you aware of? (a) ATM ( ) (b) POS ( ) (c) Internet banking ( ) (d) Mobile Money services ( ) 8. what do you most use mobile banking service for? (a) Funds Transfer ( ) (b) Airtime/Credit purchase (c) Balance inquiries ( ) (d) Payment of utility bills such as DSTV ( ) (e) Cash withdrawals ( ) (f) Cash deposits ( ) (g) Receipt of funds ( ) (h) Payment for goods and services ( ) Effect of mobilebanking service onlongterm relationship QUESTIONS Strongly Agreed Agreed Indifferent Disagreed Strongly Disagreed 10 Mobile banking services are highly efficient and improves quality of services delivery 11 Great value on the improved quality of life, inter relationshipand other personal gains can be achieved from using mobile banking services 12 securityconcernis one of the major problem affecting effective patronage of mobile banking service inNigeria banking sector 13 Network problem is also one of the contributoryfactors that hinder the effectiveness of mobile banking service in the Nigeriabanking sector
  48. 48. 42 14 Mobile banking service is very flexible and comfortable to use 15 Mobile banking service increase customer loyalty patronage 16 Mobile banking helps customer inattaining personal satisfaction 17 mobile banking does not positivelyinfluence service delivery of commercial banks in Nigeria 18 The introductionof electronic payment products suchas m- banking, ATM, internet, etc has increasedthe level of economic activities? 19 The introductionof electronic payment products suchas m- banking, ATM, internet, POS, etc has increasedthe level of economic activities? 20. If you have never used mobile banking services, indicate why (a) Inadequate understanding of mobile banking services ( ) (b) Other technical issues in processing transactions ( ) (c) Concerns about fraud ( ) (d) Others ( )