Tosin Awofodu

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

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 DATEB.Sc/Ife), M.Sc (Econ), Ph.D IbadanReader,Department of Economics, University of Ibadan

ii

DEDICATION

This work is dedicated to Almighty God for his mercy and protection over me throughout the programme.

iii

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.

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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 Research Design 22

3.3 Population of the Study 22

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3.4 Sampling Technique and Sample size 23

3.5 Method of Data Collection 23

3.6 Administration of Instrument 24

CHAPTER FOUR: EMPIRICAL ANALYSIS

4.1 Introduction 25

4.2 Demographic Analysis of Respondents 25

4.3 Influence of education on customers’ adoption of mobile banking services 28

4.4 The influence of bank services on customers’ long term relationship 30

4.5 Discussion of Findings

CHAPTER FIVE: SUMMARY, RECOMMENDATION AND CONCLUSION

5.1 Summary 33

5.2 Recommendations 35

5.3 Conclusion 36

References 37

Appendix 40

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CHAPTER ONE

INTRODUCTION

1.1 Problem Statement

Banks are germane to economic development through the financial services they

provide. Their intermediation role can be 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 in several ways, most especially in terms 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

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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 security of customers’ information as a result of the fragility of information collected

and 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 used for performing balance 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

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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

identify the importance of mobile banking services on customers’ 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),

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(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 on lifelong relationships with their customers as 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 retention increases more profits (Reichheld, 1992, 1996), and Storbacka, 1994).

Customer loyalty is 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

information and communication technology in rendering effective 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 limited to the imperatives of mobile banking services on customers’

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 structured into 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.

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CHAPTER TWO

LITERATURE REVIEW

2.1 Introduction

The chapter focuses on review of received studies on the 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 theory provides a holistic insight into organisational adoption of innovations (new ideas,

concepts, or objects) and is appropriate to understand issues around the 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,

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willing to take risks, and are more socially mobile 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, they typically 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 cloud computing are aware of the technology or are prepared to learn how to use

the technology. Moreover, such adopters 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 offering lower prices than competitors for equivalent benefits

of providing unique benefits that more than offset a higher price (Porter, 1985). The theory

consists of three main strategies (cost leadership, differentiation and focus) which are shown

in the figure 2.1 while cost leadership and differentiation strategies address a whole industry,

focus strategies address specific or small clusters of customers within an industry.

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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 leadership strategy requires a firm 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

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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), which matches customer transactions to tailored marketing and sales pitches

Priority banking is another example of focus differentiation strategy (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, board target 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 attracting potential 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

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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 pointed out is

the successful firms tend to compete with multiple strategies. Contingent strategies are

important for their survival. (Hall 1983; Ham brick 1983; 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 and price can be easily copied. 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

2.2.2.1 Value 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

positioning strategies: 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

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customer relationships. With operational 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 with these customers. If ICT is embedded in a customer intimacy strategy, then

ICT will be relationship-oriented. Firms embedding ICT in an operational excellence

strategy focus on cost- 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 undertook its second share 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 500,000,000 Eurobond was the first ever

Benchmark Eurobond issue by a Nigerian corporate 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

MasterCard as well as the Platinum and World Signia cards and with 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

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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

tremendously improved the 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 designed to test profit sensitivity to such factors

as the size of institution in terms of both number and usage. The model of the study projects

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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 revealed that 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 likely to 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 in profitability in the short run and a positive effect in profitability 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

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(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 function of 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 on customer’s bank choice decision. Carrallio and

Siegel (2011) investigated the return on 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

14

regression for 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 on the 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 relationship between customer choice of banks and implementation of 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 patronized by customers (Central Bank of 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 increasingly associating quality 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 likely to 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

15

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 actualization of various organizational activities in

order to implement and enforce policies.

Orhan (1997) observed the relevance of a modern information infrastructure to the

economic and social well-being of 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

16

shortcoming is 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 required for effectiveness and 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

mobilization and allocation of financial resources in an economy. It also provides structures

for the management of liquidity for financial assets and instruments The Report on the

Nigeria system (1976) succinctly articulated the 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

17

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 equilibrating the 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

efficiency through mergers. Consolidation is viewed as the reduction in the number of banks

and other deposit taking institutions with a simultaneous increase in size and concentration of

the consolidation entities in the sector (Somoye, 2008).

The consolidation reform is consistently predicted to engender some positive changes

in the Nigerian banking industry. In line with this argument, Asikhia (2009) commented that

18

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 mega banks that enjoy hidden 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

19

Community Banks (NBCB).There is also a Financial Services Regulation Coordinating

Committee (FSRCC) charged with coordinating the activities of these regulatory institutions.

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 converted their 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

consolidation exercise, despite its good intents, has been the level of controversy it 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 -

20

2010 54 49 47

2011 69 54 53

2012 72 63 53

2013 79 68 62

2014 88 72 69

1 2 3 4 50

102030405060708090

100

4954

6368 72

ATM 56.1 54 50POS - 53 49MM - - -

Years 2007-2014

Table 2. 2 : Level of Adoption of e-Payment System by Volume (billion)

Payment

Instrument

2006 2007 2008 2009 2010 2011 2012 2013 2014

ATM 3,608,02

2

4,765,46

7

18,954,94

2

49,671,36

7

168,171,23

1

368,142

410,132

429,118

520,214

Web(internet

)

1.71 5.1 2.4 - 4.3 5.2 6.9 6.9 7.4

Mobile - 161,679 1,576,207 7,471,388 7,471,388 8,198, 211

198,102

663,135

789,129

POS 0.019769 0.091211 0.535376 0.627314 535,767 655, 676

719,434

845,957

849,146

Source: CBN Annual Reports: 2006, 2007, 2008, 2009, 2010, 2011, 2012 and 2013 Fourth

Quarter, Year 2013.

21

:

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 preparation of such a design facilitates research to 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 scientific query. 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

22

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

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 selection of some units from a study’s population of 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 population is 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 research project to 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

23

elicit questions related to the role of mobile banking services on customers’ choice of banks

in Nigeria.

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.

24

CHAPTER FOUR

EMPIRICAL ANALYSIS

4.1 Introduction

This chapter presents the data analysis and interpretation of the result. In achieving

the stated objectives in chapter one of the study, survey study that is the use of questionnaire

was adopted. Out of 200 copies of questionnaire distributed 193 copies were found usable 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

25

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.

Table 4.2: Customer’s Marital Status


Single 108 56

Married 85 44

Total 193 100


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 customers in the 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


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 surprising to discover that students transact business with banks more than

the customers on paid employment.

26

Table 4.4: Customers’ Employment Status


Paid Employment 54 28

Student 99 51

Jobless 40 21

Total 193 100


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 such as mobile money services, transaction alerts, the use

of ATM, POS and so on are some satisfaction factor considered by customers in their bank

selection.

Table 4.5 Customers’ Choice of Banks

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

27

Total 193 100.0


Table 4.6 shows that majority of the respondents (N=93) which constitute 48.2% claimed

that they have been patronizing the bank between 5-10 years. It further revealed that, only 17

representing 8.8% of the respondents have been banking with the bank for more than 10

years. They claimed that some of the factors responsible for their actions include efficiency,

constant network availability and desire for innovation.

Table 4.6 Year of Bank Patronage


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


4.3 Influence of education on customers’ adoption of mobile banking services

Table 4.7, clearly shows, most the customers of the banks were bachelor’s degree holders

i.e., 51% (N=99) and 18 representing 9% 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


Elementary and below 18 9

Secondary 53 28

Bachelors 99 51

28

Masters and above 23 12

Total 193 100


The table 4.8 presents the respondents knowledge of mobile banking services. It shows that

103 representing 53.4% of the respondents are 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 implication of 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


ATM 103 53.4

POS 28 14.5

Internet Banking 39 20.2

Mobile Money 23 11.9

Total 193 100


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?


Transfer of funds 37 19.2

29

Airtime/Credit purchase 12 6.2

Balance inquiries 45 23.3

Payment of utility bills such as DSTV 10 5.2

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


4.4 The 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

satisfaction is another factor determining the 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

30

claimed that the introduction of electronic payment products such as m- banking, ATM,

internet, etc has increased the level of economic activities

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

security concern is one of the

major problem affecting well

patronage of mobile banking

service in Nigeria banking sector

31

(16.1%)

101

(52.3%)

61

(31.6

%)3.5285

1.09946

Network problem is also one of

the contributory factors that

hinder the effectiveness of mobile

banking service in the 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 loyalty patronage

36

(18.7%)

63

(32.6%)

43

(22.3%

)

51

(26.4

%)

3.4352

1.07393

31

Mobile banking helps customer in

attaining personal satisfaction

26

(13.5%)

117

(60.6%)

21

(10.9

%)

29

(15.0

%)

mobile banking does not

positively influence service

delivery of commercial banks in

Nigeria

52

(26.9%)

35

(18.1%

)

34

(17.6

%)

72

(37.3

%)

2.3472

1.23267

The introduction of electronic

payment products such as m-

banking, ATM, internet, etc has

increased the level of economic

activities

36

(18.7%)

102

(52.8%)

22

(11.4%

)

33

(17.1

%) 3.7306

95740


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


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


32

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 simply to satisfy customers but to positively delight 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 interested in quality, they desire good and 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

focusing services on the best customers. This of course requires the radical remodeling of the

33

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

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.

34

CHAPTER FIVE

SUMMARY, RECOMMENDATION AND CONCLUSION

5.1 Summary

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 long term relationship. The study also established that mobile

banking service increase customer loyalty patronage. 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. Network connectivity problem is also one of the contributory

factors that hinder the effectiveness of 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;

35

E–security serves as a serious concern not only to 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,

verification system 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 should not need the 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-integrated process of mobile banking services in any 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 satisfaction model, 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.

36

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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 question that suit your purpose. All response will

be treated with absolute confidence and use for academic purpose only

Thank you.

SECTION ASocio-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 ( )

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SECTION B

CUSTOMER LEVEL OF EDUCATION

Highest level of education obtained by 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 mobile banking service on long term relationship QUESTIONS Strongly

AgreedAgreed Indifferent Disagree

dStrongly

Disagreed

10 Mobile banking services are highly efficient and improves quality of services delivery

11 Great value on the improved quality of life, inter relationship and other personal gains can be achieved from using mobile banking services

12 security concern is one of the major problem affecting effective patronage of mobile banking service in Nigeria banking sector

13 Network problem is also one of the contributory factors that hinder the effectiveness of mobile banking service in the Nigeria banking sector

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14 Mobile banking service is very flexible and comfortable to use

15 Mobile banking service increase customer loyalty patronage

16 Mobile banking helps customer in attaining personal satisfaction

17 mobile banking does not positively influence service delivery of commercial banks in Nigeria

18 The introduction of electronic payment products such as m- banking, ATM, internet, etc has increased the level of economic activities?

19 The introduction of electronic payment products such as m- banking, ATM, internet, POS, etc has increased the 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 ( )

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Documents

Tosin Awofodu