THE CONTRIBUTION OF ELECTRONIC BANKING TO CUSTOMER SATISFACTION: A CASE OF GC...
Tosin Awofodu
1. INFLUENCE OF MOBILE BANKING SERVICES ON CUSTOMERS’ CHOICE OF
BANKS IN NIGERIA: CASE STUDY OF GUARANTY TRUST BANK PLC
BY
OLUWATOSIN AYO AWOFODU
MATRIC NO: 174264
A PROJECT SUBMITTED TO THE DEPARTMENT OF ECONOMICS, FACULTY
OF THE SOCIAL SCIENCES, IN PARTIAL FULFILLMENT OF REQUIREMENT
FOR THE AWARD OF DEGREE OF MASTERS’ OF BANKING AND FINANCE
(MBF),
UNIVERSITY OF IBADAN
OCTOBER, 2015
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. iii
DEDICATION
This work is dedicatedto Almighty God for his mercyand protectionover me throughout the
programme.
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. 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. 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. 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. 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. 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. 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.
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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. 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. 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. 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. 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. 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
2.2.2.1Value 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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 -
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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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.
43. 37
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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. 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. 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 ( )
