The Assessment of Customer Response on Electronic

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THE ASSESSMENT OF CUSTOMER RESPONSE ON ELECTRONIC

BANKING SERVICES IN TANZANIA

A CASE STUDY OF BANK OF AFRICA (BOA)

GRACEANA PAUL MIHAMBO

Master Degree in Information Technology in Project Management (IT-Project

Management).

2020

THE ASSESSMENT OF CUSTOMER RESPONSE ON ELECTRONIC

BANKING SERVICES IN TANZANIA

A CASE STUDY OF BANK OF AFRICA (BOA)

STUDENT NAME; GRACEANA PAUL MIHAMBO

A dissertation Submitted in Partial Fulfilment of the Requirements for the Award of the

Master Degree in Information Technology in Project Management (IT-Project

Management).

2020

CERTIFICATION

The undersigned certifies that he has read and hereby recommend for acceptance by the

College of Business Education a Dissertation titled “Assessment of customer response on electronic Banking services in Tanzania, A case study of Bank of Africa” in partial fulfillment of the requirements for the award of a Master’s degree in Information

Technology in Project Management (IT-Project Management) of College of Business

Education.

______

(Supervisor`s Name)

______

(Supervisor`s Signature)

Date: ______

DECLARATION

AND

I, Graceana P. Mihambo, declare that this dissertation/thesis is my original work and that it has not been presented and will not be presented to any other higher learning

Institution for a similar or any other academic award/s.

Signature ______Date ______

This dissertation/thesis is a copyright material protected under the Berne Convention, the

Copyright and Neighbouring Rights Act of 1999, and other international and national enactments, on that behalf, on intellectual property. It may not be reproduced by any means, in full or in part, except for short extracts in fair dealing, for research or private study, critical scholarly review or discourse with an acknowledgment, without the written permission of the College of Business Education

ACKNOWLEDGEMENTS

I thank the Almighty God for granting me good health to accomplish this task. He has given me the strength to accomplish this work. I extend my sincere gratitude to my supervisor Dr. Ntimbwa, M.C for the role he played in supervising me tirelessly throughout this work. Despite his tight schedule at the College of Business Education

(CBE), he has been close to my concern and helpful whenever I needed his assistance and he has encouraged me to focus on accomplishing this work. His expertise in building information and his commitment to the research was a significant influence in shaping many of the concepts presented in this research report.

I would like also to acknowledge people who, in one way or another have supported me in accomplishing my research report. The heartfelt thanks should reach the Bank of

Africa staff, customers, and management for their support during my study. It is not possible to mention everyone here, but the few mentioned here are truly representative of the others. May God bless all for the entire support.

I would like to acknowledge my Friend and Classmate Bakisi Mathias for his endless support and encouragement throughout my studies Many thanks to my family as well for their support during my studies especially my daughter Gabriella as she is the reason and strength for me to accomplish this report.

iii

ABSTRACT

We have witnessedthe rapid growth of E-Banking Services worldwide and Tanzania has not been left behind. Most Banks in Tanzania have been marketing different innovations in banking products mostly in E-banking services to ensure the availability of Bank services 24/7 to their customers.The main purpose of the study was to assess customer response to E-Banking services in Tanzania. The study was conducted at the Bank of

Africa Tanzania branch networks. The sample size of 66 respondents which included

Bank customers, Head Retail Banking, Branch Managers, Customer Service Managers,

Projects Managers, E-Banking Officers, E-banking Managers, IT Security, and

Operations Managers were selected, and Questionnaires and interviews were used to collect data. Findings suggest that customers are aware of E-banking services offered by the Bank.The study found that the use of online banking systems such as ATMs, credit cards (electronic payment systems) was infrequent and majority preferred using bank teller services to withdraw and deposit cash. Also, the study shows that all business owners perceived cash as a safer and cheaper option for many transactions. Business owners reported as well that if customers demanded debit card, mobile, or online transactions in the future, they would invest in infrastructure supporting these services transactions.

Finally, the study reveals that e-banking needs to increase the complexity/effectiveness of the processes and supporting technological infrastructure whilst ensuring significant controls are capable of minimizing risks associated with services. In conclusion,

Education and marketing of E-banking products services should be encouraged in the bank

to attract more customers and maximize utilization to have more cashless transactions in

Tanzania.

TABLE OF CONTENTS

CERTIFICATION ...... i

DECLARATION ...... ii

ACKNOWLEDGEMENTS ...... iii

ABSTRACT ...... iv

TABLE OF CONTENTS ...... vi

LIST OF TABLES ...... ix

LIST OF FIGURES ...... x

LIST OF ACRONYMS AND ABBREVIATIONS ...... xi

CHAPTER ONE ...... 1

1.0 INTRODUCTION ...... 1

1.1 Background of the Study ...... 1

1.2 Statement of the Problem ...... 5

1.3 Research Objectives ...... 6

1.4 Research Questions ...... 7

1.5 Significance of the Study ...... 7

1.6 Scope of the Study ...... 7

CHAPTER TWO ...... 9

2.0 LITERATURE REVIEW...... 9

2.1 Introduction ...... 9

2.2 Definition of the Key Terms ...... 9

2.3 Theoretical Review ...... 16

2.4 Review of Empirical Studies ...... 19

2.5 Research Gap ...... 28

2.6 Conceptual Framework ...... 29

CHAPTER THREE ...... 32

3.0 RESEARCH METHODOLOGY ...... 32

3.1 General Overview ...... 32

3.2 Research Design ...... 32

3.3 Study Area ...... 33

3.4 Population of the Study ...... 33

3.5 Sampling Procedure ...... 34

3.6 Sample Size ...... 34

3.7 Methods and Procedures in Data Collection ...... 36

3.8 Data Analysis ...... 36

3.9 Ethical Consideration ...... 37

CHAPTER FOUR ...... 38

4.0 DATA PRESENTATION, ANALYSIS, AND DISCUSSION ...... 38

4.1 Introduction ...... 38

4.2 Demographic characteristics of participants ...... 38

4.3 Preference of Using Cash in most Transactions Despite Having Electronic

Banking Services ...... 41

4.4 Customers' responses to the benefits of electronic banking services ...... 42

vii

4.5 Customers’ response on risks and Customer suggestions on how to mitigate the risks associated with electronic banking services ...... 43

4.6 The use of cash transactions and electronic banking services ...... 46

4.7 Risk and the benefits of electronic banking services...... 57

4.8 Findings and Discussion ...... 65

CHAPTER FIVE ...... 71

5.0 SUMMARY, CONCLUSION, AND RECOMMENDATIONS ...... 71

5.1 Introduction ...... 71

5.2 Summary ...... 71

5.3 Conclusions ...... 73

5.4 Recommendation ...... 75

5.5 Suggested Area for Further Studies ...... 77

REFERENCES ...... 78

APPENDIX 1 ...... 84

APPENDIX 2 ...... 89

viii

LIST OF TABLES

Table 2.1: The percentage of cash transactions in presented ...... 18

Table 3.1: Sample Selected ...... 35

Table 4.1: Characteristics of participants by Age, Sex, Education and Occupation and

Marital Status ...... 39

Table 4.2: The use of cash transactions and electronic banking services ...... 54

Table 4.3: Risk and the benefits of electronic banking services ...... 63

LIST OF FIGURES

Figure 2.1: Distribution of E-Banking Services in East Africa ...... 18

Figure 2.2: Conceptual Framework...... 29

LIST OF ACRONYMS AND ABBREVIATIONS

ATM Automatic Teller Machine

AVR Automated Voice Response

BOA Bank of Africa Tanzania

BOT Bank of Tanzania

E-Banking Electronic Banking Services

EFT Electronic Funds Transfer

IB Internet Banking

ICT Information Communication Technology

IT Information Technology

POS Point of Sale

SCS Sharjah Co-operative Society

WB World Bank

WWW World Wide Web

CHAPTER ONE

1.0 INTRODUCTION

This chapter provides background of the study, statement of the problem, research objectives, research questions, significance of the study, and scope of the study.

1.1 Background of the Study

The economic sector in the world is faced with rapid changes that bring about high competition for limited opportunities and changes in business strategies. The competitiveness in the banking industries has resulted to the use of the electronic platform into industries around the world. Banks chose to implement, investigate, analyze, and endeavor to present internet banking service to decrease holding up time, lapses, costs, and enhance customer service support. All this occurs due to technological changes in commercial Banks (WHO, 2013). The banks have put themselves on the World Wide Web to take advantage of the E-banking in Commercial Banks and reach, to cope with the accelerating pace of change in the business environment. Jeevan (2012)asserted that the famous Bill Gates quotes that electronic banking is vital to healthy economy, but banks do not highlight the crucial nature of the electronic forces that affect banks more than any other financial service provider group. This transition of electronic banking operations is remarkably used by most financial institutions in the world by countries such as the USA and the UK.

According to Robert (Robert, 2011) in most of the African Countries, Electronic banking is rapidly becoming a crucial issue, also known as electronic funds transfer (EFT), which is simply the use of electronic to transfer funds directly from one person to another. The concept had initially been associated with the use of the Automated Teller Machines across the globe; with the growth of technology and new inventions. E-banking cuts across several forums used to access bank services electronically, these include the use of electronic technology as a substitute for cheques and other paper transactions, and manual services. Electronic banking offers a set of services that consumers find practical. The use of Automated Teller Machines providing services daily, payphone systems such as

Mobile-banking services, internet / online banking, card-less, or remittance services, and the direct deposit services.

Thornton and White (2011)asserted that customer orientations towards convenience, service, technology, change, computing knowledge, and the Internet affected the usage of different channels. Howcroft, et al., (2002) the most important factors encouraging consumers to use online banking are lower fee followed by reducing paperwork and human error, which subsequently minimize disputes. However, Byers and Lederer (2011), state that electronic banking changes consumer attitudes that determine the changes in distribution channels; virtual banks can only be profitable when the segment that prefers electronic media is approximately twice the size of the segment preferring street banks.

The convenience of conducting banking outside the branch official opening hours is significant in cases of adoption. Banks provide customers convenient, inexpensive access

to the bank 24 hours a day and seven days a week. Moutinho, Ali, Joan, and Hussen

(2013), indicated that each ATM could carry out the same, essentially routine and transactions performed by bank tellers at the offices.

Although E-banking services provide many opportunities for the banks, it also uses

Internet which is constrained by security, complexity, and technological problems.

According to the study conducted by Nancy, et al,. (2013), E-banking reaps benefits for both banks and customers. E-banking has enabled banks to lower operational costs through reduction of physical facilities and human resources, reduced waiting times in branches resulting in a potential increase insales performance, and a larger global reach.

Customers complain about computer login time which is usually longer than making a telephone call. Also, challenges on creating credentials and feeling online forms. Frequent slow response time and delay of service delivery cause customers to be unsure that the transaction has been completed (Jun, 2012).

Min and Galle (2013) asserted that the disruption of information access is a common factor related to the unwillingness to use internet channels for commerce activities. The sudy conducted by Binamungu and Ngwilimi (2013) asserted that banking activities in

Tanzania could be traced back to the 1900s,where banking practices are the result of the colonialists introduced banks to facilitate their economic activitiesin Tanzania and East

Africa. The earliest banks were a product of the Germany regime in Tanganyika. Plenty of banking regulations were made by the British regime in 1919s in Tanzania. Apart from

introducing more banks than ones held by Germans, the British enacted several laws to regulate banking activities in Tanzania.

From the empirical literature, several studies concerning the customer perception of electronic banking services have been made. Most of the studies focus on the demographic characteristics concerning customer Okeke (2013). Nevertheless, customers response to specific technologies, electronic banking services were uncovered. Davis (2012)contends that consumers’ acceptance of technological innovations may be influenced not only by their socioeconomic and demographic characteristics but also response of specific technologies and characteristics of different products and services.

According to Mayonga (2014), the Tanzania banking sector has made noteworthy progress in the development of ICT by introducing a banking service known as electronic- banking. Banks like CRDB, NMB, NBC, TPB, NBC, BOA, ACB, have invested significantly in ICT by introducing a different form of electronic banking services to facilitate electronic cash movement and services. New services originating from ICT development includes; mobile banking, internet banking and electronic statements cash depositor's machines. Thus E-banking services emerge from technological advancement thus enable banks to control its subsidiary bank allocated at a distance . In Tanzania, electronic banking services is in its early stages, though a great response of use is witnessed. The adoption of Automated Teller Machines (ATM) by various banks and financial institutions is of pride. Also the adoption of mobile banking by various financial

providers and communication companies such as Tigo, Vodacom, Airtel, Halotel, and

Zantel gear habits for deposits and quick transfers of money or payments via electronic payments services. The adoption of electronic banking services by banks such as BOA indicates the role played by electronic banking services in the country. Financial service providers have been using electronic messages transmitted through the proprietary software system before ICT introduced the internet. In the 21st century, introduction of the internet caused a dramatic revolution in the old traditional methods of transactions which have necessitated most banks and financial institutions in most countries to introduce the use of technology in most commercial activities (Huseie, 2012).

This indicates the gap between customers’ expectations of bank reliability and website fulfillment. Customers have a better perception of service quality when the banks fulfill their needs as promised through banks media. Furthermore, several studies show that e- banking service reliability and availability have greatest influence on customer satisfaction.. Hence, the ability to meet the promised standards of service reliability must be enhanced while providing service over the Internet.

1.2 Statement of the Problem

According to Robert (2011), recently, electronic banking services have been adopted in various commercial activities advancing services such as sale and purchase of items through the use of internet systems. The adoption of electronic-banking services indicates the role played by electronic banking in the country. In Tanzania consumer's response to

the use of electronic banking services is low as compared to other countries like developed countries. However, transactions are still carried in terms of cash and cheque payment at institutional and government office. This has witnessed the use of cash to remain as a key for many Tanzanians. Since consumers’ acceptance of technological innovations such as

Electronic-banking services may be influenced by their response to specific technologies and by the characteristics of different products and services (Davis, 2012). Therefore, there is a need to study the customer response on electronic-banking services in

Tanzania.Therefore, the study intended to assess the customer’s response to electronic banking services at Bank of Africa, in Tanzania digging out why cash remained as a source of transactions conducted within a country despite having E-banking services.

1.3 Research Objectives

1.3.1 Main Objective

The main objective of the study is to assess customer response to electronic Banking

Services, a case study of Bank of Africa in Tanzania.

1.3.2 Specific Objectives

i)To identify why the use of cash is preferred in most transactions despite having

electronic banking services.

ii)To identify Customers' response to the benefits of electronic banking services

iii)To identify Customers’ response to risks and Customers’ suggestions to mitigate

the risks associated with electronic banking services

1.4 Research Questions

i)Why is the use of cash preferred in most transactions despite having electronic

banking services

ii)What are customers' responses to the benefits of electronic banking services?

iii)What is customers’ response to risks and suggestions to mitigate the risks

associated with electronic banking services.

1.5 Significance of the Study

The study is useful to policymakers in making or amending policies concerning customers on the use of electronic banking services.

The study will enable bank to understand the risks and mitigation measure associated with the use of electronic banking. Furthermore, the study will provide awareness to the community on the benefit of electronic banking.

1.6 Scope of the Study

This study aims to assess customers response on electronic Banking services in Tanzania at BOA.This identified utilization of electronic Banking services in Bank of Africa and why customers prefer the usage of cash despite having different channels of E-banking services. BOA is qualified for the study due to its different branch locations and its widespread branch network with its high adoption in E-Banking services technology. The

study is therefore concerned with how the staff and customers of banks are responding to

E-Banking services utilization.

CHAPTER TWO

2.0 LITERATURE REVIEW

2.1 Introduction

The research problem focused on the assessment of customer response to electronic

Banking Services identifying why the use of cash is most preferred by customers when performing transactions. In this area, other scholars have propounded various theories in an attempt to explain the concepts or variables. Also, similar researches have been done serving as empirical studies. It is, therefore, important that the researcher reviews some of these theories and earlier works on the subject matter. Although most of these works had been written in different settings and contexts, their contribution to the success of this study is very meaningful.

This chapter presents related studies regarding customers response to electronic banking service.It is presented in three sections; This chapter shall broadly look at two major sections. First, the definition of the key term, theoretical review, and section concentrates on empirical works that have been conducted by other researchers.

2.2 Definition of the Key Terms

2.2.1 Electronic Banking (E-Banking)

Daniel (1999), defines electronic banking as the delivery of banks' information and services to customers through different delivery channels that can be used with different

electronic devices such as computers and a mobile phone with browser software, telephone, or digital television. The study confucted by Pikkarainen, et al., (2004), defined electronic banking as an internet portal, whereby customers can use different kinds of banking services ranging from bill payment to making investments. Apart from withdrawals cash, electronic banking gives customers access to distinctive sorts of banking transactions just by the snap of a mouse (De Young, 2001). The use of electronic banking as an option for the dissemination of financial institutions has turned into a competitive tool rather than only an approach to accomplish competitive advantage of preference with the appearance of globalization and fiercer rivalry (Flavián &

Fonchamnyo, 2013).

Timothy (2012), indicates that electronic banking alludes to the utilization of the internet as a remote conveyance channel for giving administrations, for example, opening a bank account, transferring funds among diverse accounts, and electronic bill presentment and payment. This can be offered in two principal ways. A bank with physical offices can build up a Website and offer these services to its customers notwithstanding its customary conveyance channels. The second is to set up a virtual bank, where the PC server is housed in an office that serves as the lawful location of such a bank. The banks offer their customers capacity to make deposits and withdraw funds using ATMs or other remote conveyance channels claimed by different foundations which an administration expense is acquired. Further, Ahasanul (2012) defines electronic banking as a modern delivery channel of banking services.

2.2.2 Customer

A customer is a person who maintains an account with the bank. One view of this question is that a person does not become a bank customer he opens account with a bank (Adebayo,

2013). Based on this study, the customer is defined as any person who seeks banking services or products from commercial banks.

2.2.3 Automated Teller Machines (ATMs)

According to Rose (1999) ATM is defined as combination of computer terminal, database system, and cash vault in one unit, allowing customers to enter the bank’s bookkeeping system with a plastic card containing a PIN or by punching a special code number into the computer terminal linked to the bank’s computerized records 24 hours a day. It offers plenty of banking services to customers. They are mostly situated outside the banks. They were introduced initially to serve as cash dispensing machines. However, as a result of the rapid increase in technology, ATMs go to the extent of given accounts balances and bill payments. Banks use this electronic banking device, to gain a competitive advantage. The combination of automation and human tellers gives more productivity to the bank during banking hours. It additionally spares time in customer service delivery as customers do not queue in banking halls,Furthermore, the ATM's ability to work after banking hours provide continuous productivity.

2.2.4 Telephone Banking / Card-less

Telephone Banking (Tele-banking) can be considered as a form of remote or virtual banking, which is essentially the delivery of branch financial services via telecommunication devices. This allow customers to perform retail banking transactions by dialing a touch-tone telephone or mobile communication unit, which is connected to an automated system of the bank by utilizing Automated Voice Response (AVR) technology” (Balachandher, et al, 2001).

As indicated by Leow (1999), telephone banking offers several advantages for customers and banks. It provides convenience, easy access and save time. In banks, telephone- banking services are less costly than those of branch-based services. It has almost all the benefits of ATMs, except that it lacks the productivity generated from cash dispensing by the ATMs. Customers get access to banking services at their various offices and homes.

2.2.5 Personal Computer Banking

Personal Computer Banking is a sort of service which provides the bank's customers to access their banking data through a restrictive system installed on their PC. By having access, the customer can perform plenty of banking services. The significance of PC proficiency has brought about expanding the utilization of PCs. This positively bolsters the development of PC banking. Customers have access to banking services even at their homes and offices (Abor, 2009).

2.2.6 Internet banking (IB)

According to Essinger (2001), internet banking is to give customers access to their bank accounts via a website and to enable them to enact certain transactions on their account, given compliance with stringent security checks. IB is described as the provision of traditional (banking) services over the internet”. Internet banking provides convenient and flexible services to customers. It enables customers to transact almost all their banking transactions online. Victor (2012), added that one could check accounts, query the bank, and also transfer funds to other people on different accounts. It is also the most financially savvy innovative method for yielding higher profitability. Another feature of internet banking is that; it gives 24/7 access to customers.

2.2.7 Mobile Banking

A very recent addition to electronic banking products is mobile banking. This is banking on the mobile phone. Mobile banking is a system or platform in which customers are automatically updated on changes in their accounts. These changes may come in the form of account debits and credits or any changes to the account. Mobile banking requires mobile phone with a well-functioning text messaging system. SMS banking falls under this category. This system uses a short text messaging system to inform customers of their account (Chovanova, 2006).

2.2.8 Bank

According to Crosby (2004), a bank is a financial intermediary that accepts deposits and channels into lending activities, either directly by loaning or indirectly through capital markets. A bank links together customers that have capital deficits and customers with capital surpluses.

2.2.9 Commercial Bank

A commercial bank is a financial institution that provides various financial services, such as accepting deposits and issuing loans (Ibid). Commercial bank customers can take advantage of a range of investment products that commercial banks offer like accounts and certificates of deposit. According to Crosby(2004) foremost benefit of E-banking service is competitive branding and better appreciation to the market demands.

2.2.10 Customer Response

Is the positive or negative feedback a company receives about its products, services, or business ethics.

2.2.11 Bank of Africa (BOA)

BANK OF AFRICA Group began in Mali in 1982, with the first BANK OF AFRICA, which was created with almost absence of external help.Today, the BANK OF AFRICA

Group is established in 18 countries. There are Eight BOA banks in West Africa (Benin,

Burkina Faso, Côte d’Ivoire, Ghana, Mali, Niger, Togo, and Senegal), Eight BOA banks

in East Africa and the Indian Ocean (Burundi, Djibouti, Ethiopia, Kenya, Madagascar,

Tanzania, Rwanda, and Uganda) and One in the Democratic Republic of the Congo and also one in France. However, across a network of 16 commercial banks, one financial corporation, one Banque de l’habitat, one brokerage firm, two investment companies, one asset management company, and one Group representative office in Paris.

Since 2010, the BANK OF AFRICA Group is owned by BMCE Bank, the second-largest private bank in Morocco. BMCE Bank brings strong strategic and operational support to the BANK OF AFRICA Group, as well as direct access to the international market as a result of its presence in Europe and Asia.The Bank began operations in Tanzania in June

2007 after acquiring Eurafrican Bank which had been operating in Tanzania since

September 1995. At the time of the acquisition, the Bank had 3 branches. Currently, the

Bank here in Tanzania has a network of 27 branches; 14 in Dar es Salaam and 13 upcountry (Arusha, Babati, Dodoma, Kahama, Moshi, Mtwara, Mwanza, Morogoro,

Mbeya, Tunduma, and one in Unguja, Zanzibar).

BMCE Bank brings strong strategic and operational support to the BANK OF AFRICA

Group, as well as direct access to the international market as a result of its as well presence in Europe and Asia.

2.3 Theoretical Review

2.3.1 Diffusion of Innovation Theory (IDT)

The process of adopting innovations has been studied over 30 years and one of the most adaptation models is described by Roger'sdiffusion of innovation" (2003). The study offered the following description of innovation. Innovation is an idea, practice, or project that is perceived as new by an individual or other unit of adaptation (Roger, 2003). The newness characteristics of adoption are more related to the three steps (knowledge, persuasion, and decision) of the innovation-decision process. Besides, Roger claimed there is a lack of diffusion research on technological clusters. For Roger (2003)"a technology cluster consists of one or more distinguishable elements of technology that are perceived closely interrelated. In general, IDT explains an individual's attention to adop technology as a modality to perform a traditional activity It also outlines the critical factors that determine the adoption of an innovation: such as relative advantage, compatibility, complexity, trialability, and observability. The nominalized factors are complexity, trialability, and observability (Moga, 2010).

2.3.2 The Decomposed Theory of Planned Behavior (DTPB)

The second reviewed theory is the decomposed theory of planned behavior (DTPB) which originates from the Theory of Planned behavior by Ajzen (1991). The theory was developed by Taylor and Todd (1995). This theory postulates that the intention to use a certain technology is influenced by attitude, subjective norm, and perceived behavior control. An attitude is defined as an individual’s positive or negative feeling about

performing the targeted behavior. It is related to intention to perform certain behaviors toward which they have a positive feeling. Subjective norms refer to the belief that important group of people support and approve certain behaviour. Perceived behavior control is concerning with difficulty related to internal constraints (Moga, 2010).

2.3.3 Dimension of the Decomposed Theory of Planned Behavior(DTPB)

According to Sarawak (2004) several dimensions related to attitudes are perceived as usefulness of technology, ease to use, and security. Those related to subjective norm cause leaders influence and lastly those dimensions related to behavioral control are self- efficacy of the user, computing experience, training, technological facilities, and computer anxiety. The purpose of employing the two theories was the consequences of the weakness of one theory. For that reason, the adoption was altered by the supplementary and complementary of one theory to another. Decomposed Theory of Planned Behavior concentrates on the behavioral aspects of adopting certain technology such as those of perceiving, attitudes, satisfactions, subjectivity and behavior control of people i.e. training, experience motivations, incentives, and awards. NMB bank adopted the e- banking system as everyone can observe the presence of ATM cards, mobile phone programs, and ATMs located all over the country. But the question remained on why the use of cash is preferred to most transactions at Bank of Africa in Tanzania. The study intention was guided by the DTPB theory.

Figure 2.1 is the distribution of some E-Banking services in East Africa. As shown below in Tanzania Internet and Mobile Banking are the most popular channels offered.

Figure 2.1: Distribution of E-Banking Services in East Africa Source: PWC East Africa Report

Table 2.1: The percentage of cash transactions in presented Name of the country Percentage of Cash Transactions (%) South Korea 14 Sweden 8 U.S.A 37 CHINA 40 UK 42 France 68 German 80 Tanzania 90 Kenya 90 South Africa 88

Source: World Cash report

2.4 Review of Empirical Studies

2.4.1 Worldwide

The study conducted by Nepal et al., (2013), used data from five banks and 60 customers to analyze electronic banking. They find out that though the majority of the sampled customers of the banks use the internet generally and have knowledge about electronic banking, they had not developed completely the attitude to make use of the internet banking facility. Khatri and Upadhyay (2013) point out that, the under-utilization of electronic banking in the country is a result of inadequate awareness and the fear of security. Poor internet infrastructural development in the country was also cited as the major challenge of electronic banking in the country.

Ahmed and Hassan (2011)conducted a study on e-banking functionality outcomes of customer satisfaction in Jordan.The study used empirical analysis on customer satisfaction, loyalty, and positive word of mouth. In using purposive sampling, they selected 179 customers from 24 commercial banks. The study found positive effect of electronic banking on customer satisfaction, loyalty.

Moberek (2007) identified four major commercial banks in Botswana such as Barclays

Bank, First National Bank, Bank of Baroda, and Standard Chartered Bank. The study based on electronic banking practices and customer satisfaction comprised of 100 customers. The study focusd on the use of automated teller machines, the internet, and telebanking. 98% of the respondents were satisfied and saw the use of the automated teller

machine to be good. Though 88% of them did not use telebanking, 62% of the respondents did not perceive telebanking as important. 78% see internet banking to be important.

Moreover, 72% of the respondents prefer electronic banking compared to manual type of banking. The study also finds out that electronic banking is more patronized by younger folks and business persons.

Mohammed, Yun, and Zakuan (2013), examine the relationship and effect of electronic service quality on electronic loyalty in the internet banking industry in Malaysia.

Specifically, the study was conducted on a particular commercial bank and 265 electronic banking customers of the bank. The study found positive relationship between electronic banking satisfaction and aesthetics (attractiveness and appearance of the website) assurance and the rate at which customers responded to. However, it finds a negative relationship with privacy.

Aghaei, et al,. (2013), Used 384 customers in Tehran to investigate the effect of electronic banking on customer satisfaction. The study found positive relationship between electronic banking services provided by the surveyed banks and customer satisfaction. A positive correlation between customer's‟ income and satisfaction of electronic banking services is found. Customer's positive experience with electronic banking is positively related to electronic banking customer satisfaction. The study however found negative relationship between customer's‟ education and their satisfaction with electronic banking

services. Also, customers' satisfaction with the services of electronic banking is negatively related to their acquaintance with the services provided by banks.

Masukujjaman (2010), conducted a study on the quality of Categorized Service and

Customer Satisfaction in the Banking Industry. The main objectives of the study were to evaluate the customer satisfaction of the service quality and to assess whether bank services provided by the institutions are satisfactory to Bangladeshi customers especially in terms of service categories like general banking, credit banking, and foreign exchange banking services. The study also examined empirically the determinants of service quality in Bangladesh. A questionnaire for such purpose was designed and different statistical methods were applied to analyze the collected data. From the study, it was found that the overall service quality in a private commercial bank in Bangladesh is moderate, where service quality in general banking services were better than the credit banking services and foreign exchange services.. Besides, top-ranked banks had high service quality in all categories of services and the lower ranked banks were struggling seriously with credit and foreign exchange services. It was recommended that banks especially the lower- ranked banks should give more emphasis on both the credit and foreign exchange banking services. With all the potential of the study, the study failed to incorporate the concept of e-banking and customer’s satisfaction. However, the study was done in Bangladeshi. This study will be done in Tanzania, specifically to assess e-banking and customer’s satisfaction in Tanzanian retail banks, the case of Azania Bank.

Shamsuddoha and Alamgir (2010) conducted a study on Loyalty and Satisfaction

Construct in Retail Banking in India. This study investigates customer satisfaction as the most important factor behind loyalty in retail banking. Various studies showed that satisfaction plays an important role to establish a loyal customer base. Their study points out that satisfaction and loyalty relationship was critical for retail banks. Understanding the factors behind loyalty as well as the antecedents of customer satisfaction was an important issue for academic research as well as for marketing in financial services. The major aim of this study was to identify satisfaction as the major factor behind customer loyalty in retail banking. The research has been carried out through secondary research and primary research. The survey method was used for primary research. A personal contact approach through questionnaires had been introduced to conduct the survey. The findings reveal that satisfaction and loyalty were related to each other. Moreover, satisfaction has a positive and direct impact on loyalty in banking. The study failed to examine the effects of e-banking on customer’s satisfaction.Jaspal and Gagandeep (2011) conducted a study on the determinants of Customer Satisfaction. The study examines customer satisfaction had been a common practice among banking and finance researchers over the years. The main reason for the continued interest in this area of research was the ever-changing banking business environment across the world. The objective of the present paper was to investigate the determinants of customer satisfaction of Indian

(Universal) banks. Data was collected from a sample of 180 respondents using a convenience sampling technique. Factor analysis results revealed that responsiveness, tangibles, services innovation, reliability and accessibility, assurance, pricing and other

facilities, problem-solving capability, and convenient working hours are the main determinants of customer satisfaction. With all the potential of the study, the study failed to incorporate the concept of e-banking and customer’s satisfaction. However, the study was done in Bangladesh. This study will be done in Tanzania, specifically to assess e- banking and customer’s satisfaction in Tanzanian retail banks, the case of Azania Bank.

Pikkarainen et al,. (2004), defined internet banking as an "internet portal, through which customers can use different kinds of banking services ranging from bill payment to making investments". Except for cash withdrawals, internet banking gives customers access to almost any type of banking transaction at the click of a mouse (De Young, 2001).

Indeed, the use of the internet as a new alternative channel for the distribution of financial services has become a competitive necessity instead of just a way to achieve a competitive advantage with the advent of globalization and fiercer competition (Flavián and

Fonchamnyo, 2013; Gan and Clemes, 2006). Deemas (2002), studied the satisfaction levels of a sample of customers of the Sharjah Co-operative Society (SCS). The primary part asked the respondents to provide universal background information (e.g., gender, age category, nationality, and so on). The next part listed the 21 attributes and asked respondents to specify their satisfaction with each attribute using a 5-point Likert-type scale. The outcomes indicate that UAE nationals and Arabs are the most predominant in their contributions to overall satisfaction whereas non-Arabs are the lowest.

2.4.2 The African Experience

The review of empirical literature gives an evidence-based and factual analysis of related works done inside or outside country on the technology acceptance model (TAM) provided by Davis (2012) and the use of questionnaires, Ankra (2012)conducted a survey in the Greater Accra region with a sample size of 6 banks and 360 customers. He finds that all the banks are engaged in internet banking and had business websites. Customers of the banks are also found to be generally enthused and satisfied with the banks. However, the study finds out that most of the customers do not visit the websites of the banks and do not patronize SMS banking (Abor, 2009). Customers are also found not to be patronizing the internet banking platform of the banks. Though most of the customers do not use the internet products and services, they are satisfied with banks state-of-the-art technology.

Jiaqin, et al., (2007) conducted a study on new issues and challenges facing e-banking in rural areas in Kenya. The study described an empirical study of investigation trends and development of the application of e-banking (banking through the internet) in rural areas and its economic impact on local financial institutions. The data were collected through a web-based questionnaire survey. The research objective was to investigate how those smaller and community banks located in rural areas have attempted to catch up with their counterparts in larger cities in terms of the application of e-banking, focusing on emerging issues and challenges. The results indicated that one of the challenges was unavailability of internet services and know-how. Dr. Jiaqin Yang, George College, and State

University, USA said that while the application of e-banking has advanced significantly during recent years, especially in developed nations, in comparison, the development of e-banking applications has lagged way behind in many developing nations, especially in rural areas. Commercial bank of Africa (2015) says that according to some analysts, customers still value personalized and responsive services from their bankers. While the problem of computer illiteracy among the majority of the population is still significantly high.

Sonja (2010) did a research on the effects of computerization on saving and credit cooperatives in Uganda and found out that technology is likely to increase the efficiency outreach and sustainability of microfinance institutions. Amaoko (2012) studied the impact of ICT on banking operations in Ghana. The study found that ICT has contributed positively to the provision of banking services and growth of the Ghanaian banking services and growth of the Ghanaian banking industry. Internet banking and e-banking are not yet developed in Ghana. The study recommended that banks should develop user- friendly systems and applications for the general population Government and banks should play a key in enhancing ICT infrastructure, put in place incentives like tax reduction, make PC available and affordable for every Ghanaian Financial institutions should offer programs to reassure customer’s safety with regards to ICT through sensitization, workshops and support the skills be a central monitoring unit permanently mannered by personnel to the operations of all the bank's ATM's so that shortage of funds, occasional shutdowns, seizure of electronic cards, etc. are handled with dispatch. Lastly,

the banking institutions should also come out with more electronic products and services to reduce the turnaround time of customers, such products will allow them to sit in the comfort of their homes, workplaces, and transact business with the banks.

Woldie et al,. (2008) Conducted a study to examine how internet banking can improve the relationship between customers (firms) and banks in Ghana. A sample of 180 firms were used. The results indicate that 68% of the respondent firms had awareness of internet banking whiles about 33% never heard of it. 55% of the firms do not patronize internet banking because of the fear of security. The majority of respondents indicate that even with the adoption of electronic/internet banking; they would still go to bank manually.

2.4.3 Emprical Studies fromTanzania

Wise and Ali (2009) argued that many banks in Tanzania want to invest in ATMs to reduce branch costs since customers prefer to use them instead of a branch to transact business.

The financial impact of ATMs is a marginal increase in fee income substantially offset by the cost of significant increases in the number of customer transactions. The value proposition, however, is a significant increase in the intangible item customer satisfaction.

The increase translates into improved customer loyalty which results in higher customer retention and growing organization value. Internet banking is a lower-cost delivery channel and a way to increase sales. Internet banking services have become one of the most important factors in the business economy today. Bank of Tanzania says that E- banking is a revolution by changing the way poor people are spending what they earn by

providing them with secure banking. It is also profitable for the companies, known as microfinance institutions, which run the banking systems. The most popular vehicle through which customers can utilize banking services electronically is via mobile phone.

The technology allows customers to check and manage their accounts, pay utility bills such as gas and electricity, and transfer money between accounts either their own or someone else all on their phone.

Bello (2005) uses some banks in Tanzania, CRDB bank plc and Diamond Trust Bank Plc and 155 customers that maintain a current account with these banks. The study found the impact of electronic banking on customer satisfaction. However, most of the respondent customers patronize electronic banking, they still patronize going tothe bank branches to have an meet with the officials. It also found that users of electronic banking of the banks are not satisfied with the quality and efficiency of services. Study reveals that about 130 bank customers founnd out that satisfaction bank, type, distance, automated teller machine, time to transact, switch cost, loan commitment, other facilities, and auxiliary banking are the significant determinants of customer loyalty to their main banks

Consequently, reflecting all the stated literature and researchers above. The study could conclude that none of the literature had researched the E-Banking services impact on customer satisfaction in the Tanzania banking sector. Moreover, researchers considered the E-Banking strategies from the bank’s management point of view. These two

observations created a knowledge gap which will be covered in this research along with the theoretical framework data analysis.

2.5 Research Gap

This study assessed the customer response to electronic Banking Services digging deeply into why the use of cash is preferred to most transactions at Bank of Africa in Tanzania.

From the above empirical studies, although there is a significant growth of electronic banking in many financial institutions in Tanzania and some of the banks have implemented such innovations like Bank of Africa, no significant studies have focused on e-banking customer response. It is evident that research in customer response to electronic

Banking Services in the banking sector has been done but not in a comprehensive approach. This study, therefore, intends to fill these pertinent gaps in the literature by studying the assessment of customer response on electronic banking services in Tanzania,

BOA being a case study.

2.6 Conceptual Framework

Dependent variables Independent Variables

Cash is preferred in most transactions despite having electronic banking

services.

The benefits of electronic banking Electronic Banking services Services

Risks associated with electronic banking services

Figure 2.2: Conceptual Framework Source: Researcher Conceptualization

The variables that are important from electronic banking services in perspective were identified from existing literature. It was felt that some of these specific objectives towards the growth of the electronic banking channel. These variables would determine the perception of E-banking. The purpose of identifying these variables in the study was to

find the categories of cash transactions based on demographic classification towards E- banking transactions. To provide a complete picture of the customer response on electronic Banking Services digging deeply into why the use of cash is preferred to most transactions, by promoting electronic banking, facilitating continued usage, and to accomplish the objectives of the study. Before embarking on developing a framework and model for user acceptability of electronic banking, it was necessary to address research gaps and research questions.

Electronic banking frees personnel from simple, repetitive, routine tasks, allowing them to devote more time to revenue-generating activities. The reduction in transaction costs may eventually lead to an increase in the bank’s profitability, but this performance improvement is gradual and may take a few years.

Banks risks do realize that adopting a new channel of service delivery such as e-banking has inherent risks. Proper security procedures are the only means to mitigate this risk, but refraining from providing this new channel of banking which offers a lot of convenience to the customer involves market risk. The threats from competitors for the banks are much higher compared to the risks of implementing internet banking. Electronic banking allows third-party services to provide customers value-added services, but at the same time increase security vulnerability. Banks’ entry into the electronic marketplace brings with it increased exposure to technological failure. The success of banks’ effort to market products over the internet will depend on the continued smooth functioning of their

computers and the underlying computer network. If individual computers fail, causing customer inconvenience the reputation of individual banks may be damaged; and if the network fails, a large amount of business may be lost. Banks could also suffer financial losses if hackers entered fraudulent transactions that compromised bank systems, forcing the institutions to shut their systems down.

Electronic Banking Services is expected have a positive effect on the profitability of commercial banks. The dependent variable was correlated with independent variables cope within an electronic banking system, measurable to the bank's overall system. Electronic banking shows, how much the provision of these services affect the service quality of the banks and hence their efficiency, to assess the impact of changing from traditional banking to electronic banking on the banks.

The risk associated with electronic banking services is a significant determinant of consumer satisfaction and has a positive impact on the customers’ perceptions but they are not considering the factor as a stimulator of usage of E-banking since the objective is not highly significant. These independent variables are positively related to the dependent variable or a risk-management.

CHAPTER THREE

3.0 RESEARCH METHODOLOGY

3.1 General Overview

This chapter presents the research methodology and design. The research methodology helps in explaining how the study has been done and how the research problem has been defined. Not only that but also it helps in explaining what data have been collected and which methods have been used and why the technique of analyzing the data has been selected. Kothari (2009), suggested the contents of research methodology to contain: the research design, area of study (coverage), sample and sampling techniques, methods for data collection, and techniques for data analysis. Given this, this study adopted the above outline as a framework for the presentation of this chapter.

3.2 Research Design

In this study, both qualitative and quantitative approach were applied with 66 respondents.

The choice of the two-research design is based on the fact that these two approaches vary in strength and weakness. Therefore, the study uses both of them for complementary purposes. The explanatory research design, for instance, uses open-ended and probing questions that allowed participants to respond in their own words rather than forcing them to choose from fixed responses. Creswell (2009), defines mixed-method research as “an approach to inquiry that combines or associates both qualitative and quantitative forms.

This approach will help in obtaining new thoughts and individual views on E-banking service.

3.3 Study Area

This study was conducted at BOA in Dar es salaam. BOA is among a commercial bank in

Tanzania. It is licensed by the Bank of Tanzania (BOT). Bank of Africa Tanzania is selected because of its strategic mission of Digital Transformation in the Bank with various investments done in E-banking platforms like a change of internet Banking, change Cards management system, and introduction of new cards in the market with time to time innovation done in the technology of E-Banking services.

3.4 Population of the Study

Mugenda (1999) defines a population as an entire group of individuals, events, or objects having common observable characteristics. The populations for the study was selected from the Bank of Africa. Due to the nature of this study, the study has involved about 66 respondents from BOA. The study population includes Bank customers, Head Retail

Banking, Branch Managers, Customer Service Managers, Projects Managers, E-Banking

Officers, E-banking Managers, IT Security, and Operations Managers because they are the key informants.

3.5 Sampling Procedure

To get a practical and more convenient sample a variety of sampling techniques were used to obtain quality and good representation from the population. This study used a purposive sampling technique. The purposive sampling technique is selected because it is less expensive and quick for selecting a sample. Through this sampling technique, the researcher got the respondents who were able to deliver the required data.

3.6 Sample Size

A sample is a small group selected to present a population into the study. It is selected to represent the whole population with the same look future of population (Sight, 2007). The sample size of the study consist of several respondents; the sample was purposively selected from all departments, units, and the Bank customers.The researcher would prefer to study the whole population in which he/she is interested. However, it is difficult to deal with large population because most populations of interest are large, diverse, and scattered over a large geographic area as well as time-consuming and expensive. Therefore, purposive sampling was used because it reduces time and labor. On that basis, this study covered 66 sample sizes of respondents because the calculations enabled researchers to draw strong conclusions from the limited amount of information and also permit the generalization of results.

The sample size is the unit of inquiry selected from the target population. The researcher used the proportionate stratification approach in which the sample size of the stratum is

proportionate to the population size of the stratum. Strata sample sizes are determined by the following equation;

푵 풏 = 풏 풊 풊 푵

Where,

푛푖=sample size for stratum i, i= 1, 2…4

푁푖=Population size for stratum, i=1, 2…4

N =Total Population size of the stratum n=Total Sample size

Using this formula, a sample size of 30 respondents was selected as shown in the table below.

Table 3.1: Sample Selected Respondents No of Percent Type of Data respondents Collection Branch Managers 10 15.0% Interview Customer service Mangers 9 13.8% Interview Customers 30 46.0% Interview E-Banking Managers 3 4.6% Questionnaires E-banking Sales officers 3 4.6% Questionnaires IT Security Officers 3 3.1% Questionnaires Project Managers 3 4.6% Questionnaires Operational Managers 4 6.0% Questionnaires Head Retail 1 1.5% Interview Total 66 100% Source: Researcher’s construction, 2020

3.7 Methods and Procedures in Data Collection

Data collection is defined as the process of obtaining the subject and collecting information needed for the study (Kothari, 2009). In the study, both primary and secondary data were used. Primary data used questionnaires and interviews which are an important part of the research. The inaccurate data collection method can easily affect the result of any study and finally lead to invalid results. The study employed both forms of data collection, which is primary data and secondary data, primary data are obtained from the field after distribution of the questionnaire and carrying out structure interview with some of the respondents.

3.8 Data Analysis

Since this study employed a mixed research design, both quantitative and qualitative methods of data presentation and analysis were used. Being qualitative, in this manner, after the data collection, they were edited for accuracy and validity. Then they were coded and analyzed in the form of frequencies, tables, percentages, and then inferential analysis.

For facilitating the exercise of Microsoft excel (software) and Statistics package for social science (SPSS) computer programs were used in data analysis. Then the interpretation was based on the description of the inferred statistics. Essentially the analysis and interpretation of data were helped to answer the research questions and ultimately recommend what should be done to improve the utilization of E-banking services.

Quantitative techniques were used as a supplement to assist in computing numerical responses to arrive at more compelling study findings.

3.9 Ethical Consideration

During the study, ethical issues were considered to avoid conducting unethical research, to avoid the possible risk to people who participated in the research. Moreover, to avoid harm participants as per Bank internal policy, regulatory policies including consumer protection law. The researcher ensured respondents that all provide information remained confidential and is only be used for this study.

CHAPTER FOUR

4.0 DATA PRESENTATION, ANALYSIS, AND DISCUSSION

4.1 Introduction

This chapter present discussion and analysis of the research findings. Research findings were obtained through interviews, questionnaires, documentary, and observation methods. The study intended to realize three research questions as presented in chapter one. The major questions that the study intended to answer include: why the use of cash is preferred in most transactions despite having electronic banking services, what are customers' responses to the benefits of electronic banking services and what are

Customers’ response to risks and suggestions on how to mitigate the risks associated with electronic banking services.

The sample size of the study consisted of respondents selected from departments, units, and the Bank customers that comprised of 66 respondents. This is the number that was tentatively selected. Based on the data collected from the tentative sample a saturation point was reached hence, there was no need for the inclusion of additional respondents.

4.2 Demographic characteristics of participants

It was the intention of the study to understand characteristics of participants in terms of age, sex, education level, marital status, and occupation. This information was considered

important because it would determine the type of responses obtained from the field.

Therefore, a summary of the characteristics of the respondents is provided in Table 4.1

Table 4.1: Characteristics of participants by Age, Sex, Education and Occupation and Marital Status Variables Number of Percentages Participants (%) Age in years 18-25 20 30.3% 26-35 18 27.3% 36-45 12 18.2% 46-55 10 15.2% 56-and above 6 9.1% Total 66 100% Sex Male 30 45.5% Female 36 54.5% Total 66 100% Education: Primary Education 10 15.2% Secondary Education 15 22.7% College Education 20 30.3% University Education 18 27.3% Non - Education 3 4.5% Total 66 100% Marital Status: Married 20 30.3% Divorced 13 19.7% Single 25 37.9% Widows 8 12.1% Total 66 100 Occupation: Employed in the Public Sector and private 28 42.4% sectors Small Scale farmers 23 34.8% Business men 15 22.7% Total 66 100% Source: Field Report, 2020

Findings show that nearly 30.3% of the participants were aged between 18 -25 years while

27.3% of respondents were aged between 26-35 and 18.2% of the respondents were aged

between36-45. However, 15.2% of respondents were aged between 46-55 while 9.1% of respondents were aged between 56 and above. This implies that most of the youth aged between18-25 had participated in this study effectively.

In addition to that, the sex group that participated in this study were both female and male whereby the findings show that the majority of participants’ female were 54.5% while male were 45.5% of respondents. In terms of educational qualifications, the findings show that 15.2% of participants had primary education while 22.7% of respondents had secondary education and 30.3% had diploma awards whilst 27.3% of the respondents had a university degree and the other 4.5% had no education at all. The findings imply the majority were 30.3% of respondents participated mostly in this study had diploma. With regards to the marital status, findings indicate that close to half 30.3% of the participants were married while 19.7% were divorced and 37.9%) were single whilst 12.1%) were widows. Regarding the occupation of respondents’study show that they had different occupations whereby, 34.8% of respondents were in small scale farmers and 22.7% of respondents were businessmen while 42.4% of respondents were employed in Private and public sectors.

These findings suggest that the study involved participants with different demographic characteristics including age, sex, education, marital status, and occupation. It was not possible to draw equal numbers of participants by gender. Therefore, more females than male participants were reached and included in the study. However, in general terms, the

under-representation of the male follows the general country trend which shows there are large number of female compared to male.

4.3 Preference of Using Cash in most Transactions Despite Having Electronic

Banking Services

Cash is the preferred mode of transaction because business owners lack electronic devices for processing cashless transactions like POS, MNO tills, etc., Also, lack of awareness and trust in the financial products impeded the usage of banking services. The researcher asked customer1 whythe use of cash is preferred in most transactions despite having electronic banking services; the answers were presented as follows:

“Despite cash being the most popular payment mode for business transactions,

business owners accessed banks primarily for personal banking needs. The use of

online banking systems, ATMs, and credit cards (electronic payment systems) was

infrequent, and a majority preferred using bank teller services to withdraw and

deposit cash.

This is, therefore; most of the interviewed respondents reported having bank accounts, though only a few reported ever conducting online transactions for a business. The study implies that almost all business owners perceived cash as a safer and cheaper option. Trust was an important factor that deterred the use of electronic transaction methods. For example, rumors circulated about people losing money through skimming activities while using credit or debit cards, though none of the business owners interviewed had such

personal experiences. Nonetheless, all business owners reported that if customers demanded debit card, mobile, or online transactions in the future, they would invest in infrastructure supporting these services.

4.4 Customers' responses to the benefits of electronic banking services

E-banking reaps benefits for both banks and customers. On side of the banks, e-banking has enabled banks to lower operational costs through the reduction of physical facilities and human resources required It also, reduced waiting times in branches resulting in a potential increase in sales performance. The researcher also asked Branch Manager1what is customers' responses to the benefits of electronic banking services; the answer presented was as follows;

E-banking allows customers to perform a wide range of banking transactions

electronically via bank's website anytime and anywhere. Also, customers no longer

are confined to the opening hours of banks, travel and waiting times are no longer

necessary, and access to information regarding banking services are now easily

available……. It allows companies to make new business contacts from different

global business alliances. Besides, transfer of funds, viewing and checking

account balances, paying mortgages, paying bills, and purchasing financial

instruments and certificates of deposits processes have improved significantly as

a result of e-banking

The result implies that indeed the use of electronicbanking as a new alternative channel for the distribution of financial services has become a competitive necessity instead of just a way to achieve competitive advantage with the advent of globalization and fiercer competition. Banks use online banking as it is one of the cheapest delivery channels for banking products.

4.5 Customers’ response on risks and Customer suggestions on how to mitigate the

risks associated with electronic banking services

E-banking has uncovered several risks facing the industry; the most significant is identified by the head of the financial department from BOA. However, the researcher asked what are customers’ response to risks and customer suggestions on how to mitigate the risks associated with electronic banking services; the answer presented by the E- banking Sales officer were as follows;

“………. security is one of the most discussed issues around e-banking. E-banking

increases security risks, potentially exposing hitherto isolated systems to open and

risky environments” …… security risks can be linked to four main technological

issues that must be addressed to enable a range of banking transactions to be

effective and secure just like security, anonymity, authentication, and divisibility.

However, the security risk posed by unauthorized access to online banking

accounts represents a real hazard to both bank and customer in its potential to

undermine confidence and confidentiality”

E-banking needs to increase the complexity/effectiveness of the processes and supporting technological infrastructure whilst ensuring significant controls are capable of minimizing these risks. The implication shows that e-banking service providers must assume a higher level of compliance risk because of the rapidly changing nature of the technology, the number of errors that can be replicated, and the frequency of regulatory changes that address e-banking issues. E-banking, similar to traditional banking, must focus on the quality, speed, and reliability of its service. Customer's faith in using technology also needs consideration as highlights the lack of familiarity or confidence with the Internet, which makes some customers reluctant to trust doing their banking online.

When customers were asked about how they mitigate risks associated with electronic banking and suggestions for future improvement, one of them said:

The customer service manager from BOA Bank identifies risk management in e-

banking whereby all banks conducting their transaction on-line have to focus on

controlling the associated risks; e-banking is no exception. …. he categories these

e-banking risks into three main areas to be managed: Board and Management

Oversight, Security Controls and Legal and Reputational Risk Management based

on the bank risk management principles”

The study reveals that particular attention should be paid to the adequacy of management information systems to track usage, cost, and profitability, competition from other banking providers, and adequacy of technical, operational, compliance, or marketing support for e-banking products and services.

The researcher asked some question about customers’ responses to risks and customer suggestions on how to mitigate the risks associated with electronic banking services.

Responses presented by E-Bank Managers1 were as follows:

E-banking product and service providers face a high level of compliance risk as a

result of the ever-evolving legal and regulatory changes often resulting from the

rapid pace of technological changes. Failure to comply with these changes often

has serious consequences involving rating downgrades, regulatory enforcement

action, monetary fines, and suspension of operations, reputational damage, and

even withdrawal of authorization to operate

This result implies that typical legal issues relating to customer privacy and disclosure must be managed at the basic level as well as contending with more serious situations involving money laundering resulting from systems that offer liberal balance and transaction limits and limited authentication of transactions.

The researcher asked IT Security Officer1 on customer’s responsesto risks and customer suggestions on how to mitigate the risks associated with electronic banking services. The

IT Security Officer1 had this to say:

E-banking transactions are often conducted remotely which makes it increasingly

difficult to apply traditional methods of detecting and preventing money

launderer’s activity.

The implication shows that compliance risks are often compounded in cross border situations as conflicting laws, tax procedures and reporting requirements add to the risk.

E-banking needs a responsibly managed compliance function employing well trained up to date personnel and the strengthening of risk mitigation measures to help reduce these risks

When the researche asked asked operation manager1 on the same issue, he said:

Security controls are an extremely important issue in e-banking and banks need to

ensure they have established authorization and authentication measures,

identifying the customer wishing to use e-banking services.

4.6 The use of cash transactions and electronic banking services

Cash and electronic banking transaction are preferred as business owners lack electronic devices for processing cashless transactions like POS, MNO tills, etc. Thus cash is widely accepted and lack of awareness and trust in the financial products impeded usage of banking services. Though banks, ATMs, and CSPs are proximal for electronic banking services, these institutions have not aggressively reached out to educate customers about the benefits of electronic transaction.The researcher wanted to know whether manual banking is more convenient than electronic Banking. about 9.1% agreed with the statement while 90.9% strongly agreed with the statement and 0% were both natural, disagree, and strongly agree with the statement. The implication of the study shows that cash is the preferred mode of transaction for the business owners who lack electronic

devices for processing cashless transactions like POS, MNO tills, etc., and cash is widely accepted.

Also,the researcher wanted to know while opening an account, respondents were aware of e-banking services provided by the bank. Generally,60% of respondents strongly agreed, 18.2% agreed, 2.1% were neutral, 4.5% disagreed and other 4.5% strongly disagreed with the statement. The implication of the study shows that E-banking includes the systems that enable financial institution customers, individuals, or businesses, to access accounts, transact business, or obtain information on financial products and services through a public or private network, including the Internet.

The researcher asked another question; do you use E-banking Services offered by BOA?.

Findings revealed that about 83.3% strongly agreed with the statement 13.3% agreed, and

3.1% were neutral. The implication of this study shows that customers access e-banking services using an intelligent electronic device, such as a personal automated teller machine

(ATM) and Smartphone through the time

However, theresearcher wanted to know whether there are service charges for the E-

Banking Services affordable. about 15.1% of respondents strongly agreed, 22.7% of respondents agreed and 45.5% of respondents were neutral. The study shows that 7.6% of respondents disagreed with the statement whilst 9.1% of respondents strongly disagreed.

The implication of the study shows that most of the respondents were neutral which means

that BOA bank offers fair charges amount of electronic banking products and services that enable customer’s fast and secure access to banking through BOA bank’s portfolio of the bank.

Also, the researcher asked respondents on the security of transactions through the E-

Banking services platform. About 95.5% strongly agreed with the statement and 4.5% of respondents agreed with the statement. The implication shows that BOA Bank based on an electronic banking display place providing integrated access to account information and securely practiced electronic funds transfers to the receiver at other banks.

Another question was whether clients were satisfied with the use of E-banking services.

Findings indicate that 87.9% of respondents strongly agreed and 9.1% agreed with the statement while 3.0% of respondents were neutral with the statement. The implication shows that the majority were 87.9% which means that E-banking systems enable financial institution customers, individuals, or businesses, to access accounts and transact business respectively

The researcher also wanted to know whether the degree of satisfaction from the service via the internet compared to service via banks; about 30.3% of respondents strongly agreed while 22.7% of respondents agreed with the statement. Also,the study shows that about 15.2% of respondents were neutral and 9.1% of respondents disagreed whilst 9.1% of respondents strongly disagreed. The study implies that the access of e-banking has

opened new horizons and scenarios for the retail banking industry where it provides their products and services through electronic banking which is considered to have a substantial impact on banks

Another question was to understand if human contact is important for banking relations.

Responses show that 97% of respondents strongly agreed while 3% of respondents agreed with the statement. The implication shows that it is very important for the people working in banking to be able to communicate with their customers. Therefore, they must have good communication skills, as communication with the customers ensures the success of the business; at the same time, foreign language skills have paramount importance, for example Chinese desk for customers from China who conduct business with local business partners but does not understand English.

Moreover,the researcher asked if respondents had confidence in E-banking Services.

Responses show that 90.9% strongly agreed with the statement while 9.1% of respondents agreed with the statement. The implication of these results shows the elements of trust and confidence are also considered important for the customers while they are choosing for any service provided by several bank. The confidence in BOA bank lies in the sense that they are truly following the rules and regulations, which ultimately builds customer’s trust in the institution providing service

Another question was on frequent usage of transactions in E-Banking Services. Findings indicate that 30.3% of respondents strongly agreed with the statement while 30.3% agreed with the statement and 15.2% of respondents were neutral whilst 15.2% of respondents disagreed and 9.1% strongly agreed with the statement. The implication of these results shows that most of the customers were able to use e-banking to the maximum level and keep the personal data and information of the buyer confidential and secure.

On the issue of constant availability of the e banking platform, the researcher asked respondents to rate the availability of such platform. Findings indicate that 63.6% of respondents strongly agreed while 18.2% of respondents agreed with the statement. At the same time, 4.5% of respondents were neutral while the other 4.5% of respondents disagreed with the statement. The implication of these results implies that E-banking has become a way for the banks to develop the banking system, and its role is increasing rapidly in many countries. It provides the opportunity to create services processes that need lesser internal resources and low cost. Moreover, it is easy for banks to reach more customers.

Furthermore, the researcher wanted to know whether the bank does not misuse personal information of its customers. Findings depct that 60.6% of respondents strongly agreed with the statement while 12.1% of respondents agreed with the statement and 18.2% of respondents were neutral whilst 4.5% disagreed and others 4.5% strongly disagreed. The implication of this study shows that the right information can create a well conducive

working environment that is ultimately adopted by potential customers. In case the customers are unmotivated to use the information system, it is not considered the success of the information system and ultimately might not bring any benefit to the bank.

The researcher wanted to know whether the bank responds quickly to customers’ requests.

Responses indicate that 33.3% strongly agreed, 39.3% of respondents agreed, 22.7% of respondents were neutral, 10.6% of respondents disagreed and 3.0% of respondents strongly disagreed. The implication of the study shows that the banks are willing to accept request from customers without any refusal and any service offered by an institution as long as they are fully aware of the service or the product are also accepted by the customers.

In orede to find out about accessibiklity of the ban, the researcher asked respondents atheir views about that and findings indicate that 48.5% of respondents strongly agreed while

21.2% of respondents agreed and 15.1% of respondents were neutral whilst 9.1% of respondents were disagree and 6.1% of respondents strongly disagreed. The result implies that calling is best for urgent issues that need immediate attention to customers, on the other hand, a specific question needs to be answered through secure support message.

Another question was whether the bank quickly resolves the problems encounter when using services, about 43.9% of respondents strongly agreed while 39.3% of respondents agreed and 16.7% of respondents were neutral whilst 7.6% of respondents were disagree

and 1.5% of respondents were strongly disagree. The result implies that banks need to analyze customer experience and resolve their problems carefully to find new growth opportunities and adopt them quickly.

Also, the researcher wanted to know whether using the bank’s E-banking services does not require a lot of effort; about 84.8% of respondents strongly agreed while 9.1% of respondents agreed and 6.1% of respondents were neutral. This follows that using e- banking services does not require a lot of mental effort while performing a certain action.

Another question was was on wheter banks give enough information about the E-banking service. Findings indicate that 33.3% of respondents strongly agreed while 27.3% of respondents agreed and 24.2% of respondents were neutral whilst 10.6% of respondents disagreed and 4.5% strongly disagreed. These results imply that giving enough information about the E-banking service to the customers is mandatory. On the other hand,the bank’s call desk and supporting, services are sufficient.

The researcher wanted to know whether it is quick to complete a transaction online.

Findngs show that 90.9% of respondents strongly agreed and 9.1% of respondents agreed.

This implies that most of the respondents were aware that Banking transactions offered online vary are generally quick and faster as most banks offer basic services such as transfers and bill payments.

Another question was asked do you prefer cash transactions to E-banking services

Transactions about 30.3% of respondents strongly agreed while about 22.7% of respondents agreed and 9.1% of respondents were neutral and 7.6% of respondents disagreed and 7.6% of respondents strongly disagreed. The result implies that about 30.3% of respondents prefer electronic transaction while few of them prefer cash transaction

The researcher also asked the respondenton whether they have frequent transactions in the

E-banking Services Platform; about 30.3% of respondents strongly agreed while 24.2% of respondents agreed and 15.2% of respondents were neutral. However, 15.2% of respondents disagree while the other 15.2% strongly disagree. The result implies that most of the respondents do a frequent transaction in the e-banking services.

Finally,the researcher wanted to know whether free of charge transactions encourage the use of E-banking services about 39.5% of respondents strongly agreed while 21.1% of respondents agreed and 18.2% of respondents were neutral whilst 12.1% of respondents disagreed and 9.1% of respondents strongly disagreed. These results imply that about 39.5 of respondents prefer free-of-charge transactions which encourage the use of E-banking services.

Table 4.2: The use of cash transactions and electronic banking services Strongl Agre Neutra Disagre Strongl Mea y Agree e l e y n Disagre e Manual Frequenc 0 0 0 6 66 Banking is y more Percent 90.1% 9.1% 0% 0% 0% 3.60 convenient than Electronic Banking While Frequenc 40 12 8 3 3 opening up y an account, Percent 60.6% 18.2 12.1% 4.5% 4.5% 2.20 were you % aware of e- banking services provided by the bank? Do you use Frequenc 55 9 2 0 0 E-banking y Services Percent 83.3% 13.6 3.1% 0% 0% 3.14 offered by % BOA? Are service Frequenc 10 15 30 5 6 charges for y the E- Percent 15.1% 22.7 45.5% 7.6% 9.1% 4.80 Banking % Services affordable? Are Frequenc 63 3 0 0 0 transactions y through the Percent 95.5% 4.5% 0% 0% 0% 4.40 E-Banking services platform secure? Are you Frequenc 58 6 2 0 0 satisfied with y the use of E- Percent 87.9% 9.1% 3% 0% 0% 4.20

banking services? Degree of Frequenc 20 15 10 15 6 satisfaction y from the Percent 30.3% 22.7 15.2% 15.2% 9.1% 2.62 service via % the internet comparativel y to service via banks Do you think Frequenc 64 2 0 0 0 that human y contact is Percent 97% 3% 0% 0% 0% 1.78 important for banking relations? Do you have Frequenc 60 6 0 0 0 confidence in y E-banking Percent 90.9% 9.1% 0% 0% 0% 5.21 Services? Are you a Frequenc 20 20 10 10 6 Frequent user y of Percent 30.3% 30.3 15.2% 15.2% 9.1% 2.56 transactions % in E-Banking Services? Frequenc 42 12 3 3 0 E-Banking y services Percent 63.6% 18.2 4.5% 4.5% 0% 4.12 platform % always available for usage Frequenc 40 8 12 3 3 The bank y does not Percent 60.6% 12.1 18.2% 4.5% 4.5% 5.72 misuse my % personal information Frequenc 22 20 15 7 2 The bank y responds Percent 33.3% 39.3 22.7% 10.6% 3.0% 3.62 %

quickly to my requests Frequenc 32 14 10 6 4 The bank is y easily Percent accessible through support lines Frequenc 29 20 11 5 1 The bank y quickly resolves the Percent 43.9% 39.3 16..7% 7.6% 1.5% 4.30 problems I % encounter when using services Using the Frequenc 56 6 4 0 0 bank’s E- y banking Percent 84.8% 9.1% 6.1% 0% 0% 5.68 services does not require a lot of effort (Not completed) Banks give Frequenc 22 18 16 7 3 enough y information Percent 33.3% 27.3 24.2% 10.6% 4.5% 2.43 about the E- % banking service. Frequenc 60 6 0 0 0 It is quick to y complete a Percent 90.9% 9.1% 0% 0% 0% 6.32 transaction online Do you prefer Frequenc 20 20 15 6 5 cash y transactions Percent 30.3% 30.3 22.7% 9.1% 7.6% 2.46 to E-banking % services Transactions ?

Do you have Frequenc 20 16 10 10 10 frequent y transactions Percent 30.3% 24.2 15.2% 15.2% 15.2% 2.90 in the E- % banking Services Platform? Will free of Frequenc 26 14 12 8 6 charge y transactions Percent 39.4% 21.1 18.2% 12.1% 9.1% 3.13 encourage the % use of E- banking services?

Source: Field Report, 2020

4.7 Risk and the benefits of electronic banking services

The uses of e-banking for cutting costs enhance customer loyalty, offer convenience, improve profitability and competitive marketing. The study showed that the major benefits of e-banking are improvement convenience to customers, cost reduction, and an improvement in customer loyalty. The perceived risks of e-banking were revealed to be low levels of computer literacy, low-security levels, lack of access to the internet for the majority of the population, and operational problems associated with computer systems for most banks.

The researcher wanted to know whether the benefit outweighs the cost, about 40.9% of respondents were strongly agree while 28.8% of respondents agreed and 15.2% of respondents were neutral whist 10.6% of respondents disagreed and 4.5% strongly

disagreed. The findings of the study implies that banks should invest more in improving customer awareness of e-banking products and reduce perceive risks of e-banking. The government and monetary authorities must improve legislation and infrastructure to encourage faster adoption of e-banking technologies

Another question asked was whether it allows banks to increase customer base. It was found out that 45.5% of respondents strongly agreed while 30.3% of respondents agreed and 18.2% of respondents were neutrsl while 6.1% of respondents disagree and 6.1% of respondents strongly disagreed. The findings imply that Banks should increase the customer base and adopt information technology to improve business efficiency, service quality, and attract new customers.

The researcher wanted also to know whether banks improve customer services. Responses indicate that 33.3% of respondents strongly agreed, 30.3% of respondents agreed, 19.7% of respondents were neutral,15.2% of respondents disagree with the statement and 1.5% of respondents were strongly disagree. The findings imply that banks can provide customers convenient, inexpensive access to the bank 24 hours a day and seven days a week.

Another question asked was whether the bank offers opportunities to provide additional services.It was revealed that about 27.8% of respondents strongly agreed with the statement while the other 27.8% of respondents agreed and 27.8% were neutral whilst

16.7% of respondents disagree and 15.2% strongly disagreed. The findings imply that banks should emphasize the importance of human and technology-based delivery channels in improving the level of bank customer satisfaction, retention, and switching.

The question was asked whether accounts were less costly to maintain. Under this, 19.9% of respondents strongly agreed while 45.5% of respondents agreed and 13.6% of respondents’ neutral whilst 10.6% of respondents disagreed and 10.6% of respondents strongly disagreed. Therefore, the result implies that less costly should develop the ability to attract new customers and widening the customer improving bank marketing and communication, and having the ability to retain high-profit customers.

Also, respondents were asked whether more customer training/customer education is required in promoting e-banking services. Findings show that 30.3% of respondents strongly agreed while 24.2% of respondents agreed and 21.2% of respondents were neutral whilst 15.2% of respondents disagreed and 9.1% of respondents strongly disagreed. The implication of the findings shows that training should be provided to educate conservative customers on electronic banking and its benefits. Steps should be taken to address cybercrimes and services respectively.

Respondents were asked whether E-banking services enhance Bank's competitive position in the market. A reasonable number (68.2%) of respondents strongly agreed while 18.2% of respondents agreed and 12.1% of respondents disagreed whilst 1.5% of respondents

disagreed. The findings imply that E-banking should offer a lot of benefits that add value to customers' satisfaction in terms of a better quality of service offerings and at the same time enable the banks to gain a more competitive advantage over other competitors.

The researcher wanted to know whether e-banking services increased the degree of customer satisfaction; about 90.9% of respondents were strongly agreed while 9.1% of respondents agreed. The findings imply that the increasing digitalization should make the service industry like banks provide e-banking services or online banking to access the competitive advantage and dedicate much market share for themselves as it has a crucial role in increasing the organizational profitability and customers’ satisfaction.

Another question was asked whether the bank believes that the customer's information security were better. 83.3% of respondents strongly agreed while 15.1% of respondents agreed and 1.5% of respondents were neutral. The findings imply that the Bank believes the confidentiality and protection of customer information is one of its fundamental responsibilities. While information is critical to providing quality service, it is recognized and understood that one of the Bank's most important assets is the trust of its customers.

The researcher asked whether Bank has an electronic banking committee reviewing

Products and services to offer the best services to its customers. Findings show that 90.9% of respondents strongly agreed while 9.1% of respondents agreed. The findings imply that

there is a promising future for e-banking. The product and services should offer the best services to its customers to enhance the adoption of E-banking in the country.

The researcher asked whether bank provides a guarantee or warranty when a payment is not properly made through the E-banking payment system; about 37.9% of respondents strongly agreed while 36.4 of respondents agreed and 15.2% of respondents were neutral whilst 4.5% of respondents disagreed and 6.1% of respondents were strongly disagree.

The result implies that bank gives the recipient of the guarantee to pay compensation in the extent of the guarantee amount if the recipient of the guarantee demands it from the bank.

Another question asked by the researcher was whether the bank has a target market for e- banking services. All respondents strongly agreed with the statement. The findings imply that customer satisfaction is the key to market e-banking services. Therefore, banks should target the unique needs of customers to succeed in providing e-banking services and to enable banks to determine the type of customers worth targeting.

The researcher also asked a question whether controls were in place for the prevention of hackers from accessing the system. It was revealed that 75.8% of respondents strongly agreed with the statement while 15.2% of respondents agreed and 9.1% of respondents were neutral. The implication of the findings shows that the prevention of hackers from accessing the system is required for better security and privacy. It follows that when banks

laws can demonstrate that degree of security it reassures the client and resolves a major pain point for the laws of a bank.

The researcher asked a question that is controlled in place for the prevention of line swapping; about 83.3% of respondents were strongly agreed while 9.1% of respondents agreed and 7.6% of respondents were neutral. The findings imply that from the perspective of the Bank of Africa, it shows that the swap line has a special control room for prevention.

Table 4.3: Risk and the benefits of electronic banking services Strongl Agree Neutra Disagre Strongly Mean y Agree l e Disagree The benefit Frequency 27 19 10 7 3 outweighs the Percent 40.9% 28.8 15.2% 10.6% 4.5% 2.62 cost % Allows banks to Frequency 30 20 12 4 0 increase Percent 45.5% 30.3 18.2% 6.1% 0% 2.60 customer base % Improves Frequency 22 20 13 10 1 customer service Percent 33.3% 30.3 19.7% 15.2% 1.5% 3.41 % Lowers Frequency 5 14 19 22 6 transaction costs Percent 7.6% 21.2 28.8% 33.3% 9.1% 3.21 % Offers Frequency 15 15 15 11 10 opportunities to Percent 27.8% 27.8 27.8% 16.7% 15.2% 2,82 provide % additional services Accounts are less Frequency 13 30 9 7 7 costly to Percent 19.7% 45.5 13.6% 10.6% 10.6% 4,91 maintain % More customer Frequency 20 16 14 10 6 training/custome r education is Percent 30.3% 24.2 21.2% 15.2% 9.1% 3.11 needed in % promoting e- banking services E-banking Frequency 45 12 8 1 0 services enhance Bank Percent 68.2% 18.2 12.1% 1.5% 0% 4.69 competitive % position in the market E-banking Frequency 60 6 0 0 0 services Percent 90.9% 9.1% 0% 0% 0% 4.53 increased the degree of customer satisfaction

Bank believes Frequency 55 10 1 0 0 that the customer's Percent 83.3% 15.1 1.5% 0% 0% 3.91 information % security is better Bank has an Frequency 60 6 0 0 0 Electronic Banking Percent 90.9% 9.1% 0% 0% 0% 4.64 Committee (or something similar)reviewin g Product and services to offer the best services to its customers Does the bank Frequency 25 24 10 3 4 provide a guarantee or Percent 37.9% 36.4 15.2% 4.5% 6.1% 2.73 warranty when a % payment is not properly made through the E- banking payment system Does the bank Frequency 66 0 0 0 0 have a target Percent 100% 0% 0% 0% 0% 5.01 market or trade area for E- banking services Are controls in Frequency 50 10 6 0 0 place to Prevention of Percent 75.8% 15.2 9.1% 0% 0% 4.50 hackers from % accessing the system Are controls in Frequency 55 6 5 0 0 place for Percent 83.3% 9.1% 7.6% 0% 0% 4.78 Prevention of line swapping Source: Field Report, 2020

4.8 Findings and Discussion

This section discusses the findings of three objectives of the study such as the use of cash is preferred in most transactions despite having electronic banking services, customers' response to the benefits of electronic banking services and customers’ response on risks and Customer suggestions on how to mitigate the risks associated with electronic banking services

4.8.1 The use of cash is preferred in most transactions despite having electronic

banking services

The study reveals that cash is the most popular payment mode for business transactions, therefore business owners must access banks primarily for personal banking needs. The study found that the use of online banking systems such as ATMs, credit cards (electronic payment systems) was infrequent and a majority preferred using bank teller services to withdraw and deposit cash. This is, therefore; most of the interviewed respondents' reported having bank accounts, though only a few reported ever conducting online transactions for a business. However,the study shows that all business owners perceived cash as a safer and cheaper option. Trust was an important factor that deterred the use of electronic transaction methods. For example, rumors circulated about people losing money while using credit or debit cards, though none of the business owners interviewed had such personal experiences. Nonetheless, all business owners reported that if customers demanded debit card, mobile, or online transactions in the future, they would invest in infrastructure supporting these services.

This study is related to the study conducted by AlHaliq (2016) on transactions with electronic banking services in Saudi Arabia in AlQassim region inside Saudi Arabia. The study examined the electronic banking adoption and customer satisfaction based on bank transaction and payment It revealed that ease to use, information security, and ability to control lectronic banking services play a very crucial role in the use of cash is preferred in most transactions despite having electronic banking services.

The study concludes that the banks should focus on customer awareness towards electronic banking transaction and services. The banks also need to improve the efficiency of the electronic banking core system, by having more problem-solving to build the trust of customers towards bank'stransaction. Lastly, banks need to enhance security for the customer to use electronic banking. In general, with full security and trust of the customer for electronic banking services, customer satisfaction will increase.

4.8.2 Customers' response to the benefits of electronic banking services

On the issue of customers' response to the benefits of electronic banking services study allows companies to make new business contacts from different global business alliances.

Also, the transfer of funds, viewing and checking account balances, paying mortgages, paying bills, and purchasing financial instruments and certificates of deposits processes have improved significantly as a result of e-banking. In addition,the study reveals that the use of electronic banking as a new alternative channel for the distribution of financial

services has become a competitive necessity instead of just a way to achieve a competitive advantage with the advent of globalization and fiercer competition. Banks use online banking as it is one of the cheapest delivery channels for banking products. The study also identifies benefits of electronic banking services. E-banking reaps benefits for both banks and customers. On side of the banks; e-banking has enabled banks to lower operational costs through reduction of physical facilities and staffing resources required, reduced waiting times in branches resulting in a potential increase in sales performance.

Nevertheless e-banking allow customers to perform a wide range of banking transactions electronically via the bank's website anytime and anywhere. Also, customers no longer confined to the opening hours of banks, travel and waiting times are no longer necessary, and access to information regarding banking services are now easily available.

This study is related to the study conducted by Addai et al. (2015) on the effect of electronic banking services delivered for customers in Ghana The study stated that

“Banking allows customers to access banking services from the comfort of their homes and offices and also be able to perform most of the transactions which would have been done in the banking halls. With the use of a personal computer (PC) or even mobile phone with an internet connection, customers can carry out transactions such as cash withdrawals, payments of utility bills, transfers from one account to the other, viewing and printing of statements as well as a request for checkbooks on their traditional accounts”. The study aims to evaluate the e-banking availability, convenience, and reliability.The result of the study point out the effect of e-banking services on customer

satisfaction in the Ghanaian banking sector. The study analyzed the relationship between

E-banking and customer satisfaction considering the three main dimensions, availability, reliability, and convenience.

The study also analyzed primary data using regression analysis, by creating a model to measure the customer satisfaction level considering three main independent variables: convenience, availability, and reliability of E-banking. It showed 72.5% of the dependent variable explained by independent variables. In sum and based on the analyzed data. Most banks in the world, especially the developed countries are moving towards electronic banking services. In the Ghanaian banking sector, it is evident that improved e-banking service delivery enhanced customer satisfaction.

4.8.3 Customers’ response on risks and Customer suggestions on how to mitigate

the risks associated with electronic banking services

The study reveals that e-banking has uncovered several risks facing the industry whereby security is one of the most discussed issue around e-banking. E-banking increases security risks, potentially exposing hitherto isolated systems to open and risky environments. Also, study shows that security risks can be linked to four main technological issues that must be addressed to enable a range of banking transactions to be effective and secure just like security, anonymity, authentication, and divisibility. However, the security risk posed by unauthorized access to online banking accounts represents a real hazard to both bank and customer in its potential to undermine confidence and confidentiality. Also,the study

identifies risk management in e-banking whereby all banks conducting their transaction on-line have to focus on controlling the associated risks; e-banking is no exception.

Therefore, the result categories e-banking risks into three main areas to be managed such as board and management oversight, security controls, and legal as well as reputational risk management based on the bank risk management principles.

Also,the study reveals that e-banking needs to increase the complexity/effectiveness of the processes and supporting technological infrastructure whilst ensuring significant controls are capable of minimizing these risks. The implication shows that e-banking service providers must assume a higher level of compliance risk because of the rapidly changing nature of technology, the number of errors that can be replicated, and the frequency of regulatory changes that address e-banking issues. E-banking, similar to traditional banking, must focus on the quality, speed, and reliability of its service.

Customer's faith in using technology also needs consideration as highlights the lack of familiarity or confidence with the internet, which makes some customers reluctant to trust doing their banking online.

However,the study identifies how does e-banking products and service providers face a high level of compliance risk as a result of the ever-evolving legal and regulatory changes often resulting from the rapid pace of technological changes. This shows that the failure to comply with these changes often has serious consequences involving rating downgrades, regulatory enforcement action, monetary fines, and suspension of operations,

reputational damage, and even withdrawal of authorization to operate. Therefore, particular attention should be paid to the adequacy of management information systems to track usage, cost, and profitability, competition from other banking providers, and adequacy of technical, operational, compliance, or marketing support for e-banking products and services.

This study is related to the study conducted by Ismail (2017) on the customers’ risks associated with electronic banking services in Jordan, considering the traditional banking effect on some people in developing countries. The study applied the quantitative approach in the analysis to find the relationship and impact of customer satisfaction. The survey was distributed among five selected banks in Jordan, and 100 questionnaires were considered and interviews were conducted in data analysis upon completion. In sum, the data analysis considered six main factors throughout this study (account access, account control, account use, cost and time effectiveness, easy to use, and privacy and security) were affected positively on the satisfaction level of customer, when it comes to the

Jordanian commercial banks, except for the privacy and security. As the client has some concerns regarding the security level while using online banking. Accordingly, contributing to a better quality of service and enhancing the awareness level of customers will increase the users of online banking, thus increasing online banking transactions, comparing to the traditional transactions and where the services are available and provided anywhere and anytime.

CHAPTER FIVE

5.0 SUMMARY, CONCLUSION, AND RECOMMENDATIONS

5.1 Introduction

This chapter presents a summary, conclusion, and recommendations of the study.

5.2 Summary

This study presents the customer response to electronic Banking Services digging deeply into why the use of cash is preferred to most transactions at Bank of Africa in Tanzania. the study based to identify why the use of cash is preferred in most transactions despite having electronic banking services, to identify Customers' response to the benefits of electronic banking services as well as customers’ response to risks and Customer suggestions on how to mitigate the risks associated with electronic banking services. The accessibility of customer response on E-banking in Tanzania uses cash transactions despite having electronic banking services.The study reveals how cash is the preferred mode of transaction because business owners lack electronic devices for processing cashless transactions like POS, MNO tills, etc.Also, lack of awareness and trust in the financial products impeded the usage of banking services. Therefore, despite cash being the most popular payment mode for business transactions, business owners accessed banks primarily for personal banking needs.

Further, customers' response on the benefits of electronic banking services study allows customers to make new business contacts from different global business alliances. Banks use online banking as it is one of the cheapest delivery channels for banking products. The study also identifies some of the benefits of electronic banking services. E-banking reaps benefits for both banks and customers. On side of e-banking is secure enough for customers as well as the risks encountered by customers when using e-banking in

Tanzania. The study revealed different responses on the bank customers using e-banking services and products, such impacts were accessibility, the time factor, availability, user friendly, and security.

Customers’ responses on risks and suggestions on how to mitigate the risks associated with electronic banking services. The findings show that e-banking increases security risks, potentially exposing hitherto isolated systems to open and risky environments. Also, security risks can be linked to technical issues that must be addressed to enable a range of banking transactions to be effective and secure.

There were different challenges of e-banking revealed such as network failure, limited withdrawal amount, no instant help in case of transaction failure, limited cash on machines especially during the weekends.

5.3 Conclusions

5.3.1 The use of cash is preferred in most transactions despite having electronic

banking services

Based on the above findings, it can be concluded that technology has greatly influenced the bank on the usage e-banking and encourage customers to conduct e-banking services.They have good awareness regarding ATMs and credit cards. Further, the variability of awareness of ATMs is less among the three groups of bank customers different age, education, and income groups whereas for all other e-banking delivery channels, the variability of awareness is high among different categories.

Therefore, the use of cash is preferred in most transactions despite having electronic banking services. However, cash and electronic banking transaction are preferred as business owners lack electronic devices for processing cashless transactions like POS,

MNO tills, etc., and cash is widely accepted, and lack of awareness and trust in the financial products impeded the usage of banking services. Though banks and ATMs are proximal for electronic banking services, these institutions have not aggressively reached out to educate customers about the benefits of electronic transaction.

5.3.2 Customers' response to the benefits of electronic banking services

This study showed that customers of BOA Bank patronize E-banking products such as

ATM. They derive certain benefits from the use of these products predominantly time- saving, easy access to cash, and convenience in the use of the products. However,

customers prefer ATM among the E-banking products because of their effectiveness and user-friendliness. The average operating time of E-banking products is less than 5 minutes.

Furthermore, E-banking products have security features such as usernames and passwords which are used to protect the products from easy theft. The adoption of E-banking products has influencing factors. Predominant factors are customer satisfaction and competition from other banks. Increasing competition among banks to increase or retain their customer base is driving the banks to continue to adopt E-banking technologies.

Despite the benefits of E-banking, it is associated with some challenges. The study shows that network failure from internet connection is the major challenge facing customers using E-banking products from Microfinance Bank. However, respondents believed that considerable education and marketing of E-banking products from the bank could attract more customers.

5.3.3 Customers’ response on risks and Customer suggestions on how to mitigate

the risks associated with electronic banking services

Based on the above findings and conclusion customers’ response to risks and Customer suggestions on how to mitigate the risks associated with electronic banking services. E-

Banking creates awareness, adoption, experience, and satisfaction, the following suggestions made to make further improvements in these aspects of e-banking.

The use of e-banking delivery channels is still not growing as expected by the banks. This requires customers awareness on the benefits of e banking services. Customers should be

properly educated about the mechanism of using these services. The banks have to initiate steps to educate customers about new banking services / new products, ATMs, online banking, mobile banking, etc. The banker may have to conduct different programs like customer's day, meeting customer, and customer campaign in which they can directly interact with their customers and educate them about their new products /services. Banks should take prompt and timely action to ensure the smooth functioning of ATMs.

Customers should be relieved from their apprehensions and make them feel comfortable while using ATMs. There is the need for banks to continuously persuade their customers to use ATMs for withdrawal of money. Even though most of the ATMs provide the service of accepting deposits, many users do not avail of this service as they have apprehensions about its security aspect. Bank officials must make necessary arrangements that will enable the customers to make their deposits through ATMs safely and securely. This will become a breakthrough in the growth phase of ATMs as it will relieve the customers from depending on their bank branches to make cash deposits. For ensuring security, banks must appoint watch and ward staff that would also be able to guide the customers for availing services at ATMs. Steps should also be initiated to avoid the problem of technical breakdown which is common in some of the ATM centers through regular inspection and preventive measures.

5.4 Recommendation

Based on the findings of this study, the following are the recommendations. As information and E-Banking technology grow so rapidly and bear an impact on each aspect

of life, to successfully implement electronic banking in Tanzania the following should be carried forward;

Education and marketing of E-banking products should be encouraged in the bank to attract more customers, (Ahmed & Hassan, 2011)

Electronic Banking should be featured in the laws governing it, this will ensure the bankers and customers of their status, rights, and obligation over the use of such technologies. Since electronic banking entails electronic payments and purchase, itessential for all laws covering commercial activities be featured with its aspects for various purposes.

There is a need to adopt various laws to regulate electronic banking, the good reflection can be on the USA and UK laws which set examples of the new laws to be considered for performing in Tanzania to facilitate easy implementation of electronic banking, such laws include; Electronic Funds Transfer Act, (USA); Data Protection Act, (UK);

(Balachandher, Essam, Matthew, & Kevin, 2001) Computer Fraud and Abuse Act, (USA);

Consumer Protection Act, (UK). Although Currently (Ahmed & Hassan, 2011) consumer protection act has been implemented in Tanzania.

5.4.1 Limitations of the Study

This study was conducted at BOA mainly covering Dar-es-Salaam Branches to represent the customer response in E-banking services due to its time constraint of the researcher.

The sample, responses, and result of the study confined in the area mentioned may not be a representation of the beliefs and adoption patterns of all people in the area. These may serve as a pilot study for understanding the customer response. It’s therefore recommended that further research be conducted with increased sample size in different geographical locations representing the population which may increase the external validity of the study.

Another limitation was cooperation from the bank customers. Most customers claimed that they did not have enough time to seat down to reply to the interview questions and questionnaires.

5.5 Suggested Area for Further Studies

The study was on the assessment of the customer response on electronic Banking Services at the Bank of Africa in Tanzania. Further study should be conducted on the same topic with all Banks in Tanzania.

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APPENDIX 1

QUESTIONNAIRE FOR RESPONDENTS The objective of this study is “the assessment of the customer response on electronic Banking Services digging deeply into why the use of cash is preferred to most transactions at Bank of Africa in Tanzania.”Information will be collected is for academic purposes only and will remain strictly secret that cannot reach any other person. Therefore, I request your cooperation through the contribution of your ideas. You are then assured that the information you provide in this questionnaire will only be used for the purposes intended in this study. So the respondent’s name will not appear anywhere in the questionnaire and in the thesis report itself. Thank you for your cooperation.

QUESTIONNAIRE FOR CUSTOMERS 1. Sex Male [ ] Female [ ] 2. Choose your age range: 18 to 30 [ ] 31 to 40 [ ] 41 to 50 [ ] 51 to 59 [ ] 3. Education: (a) Under Graduate (b) Graduate (c) P.G. (d) Professional (4). Occupation (a) Govt. Employee

(b) Private Employee (c) Self Employed Please rank the following statements: 5- 4- 3- 2-Disagree 1-Strongly Strongly Agree Neutral Disagree Agree 5 Manual Banking is more convenient than Electronic Banking 6 While opening up an account, were you aware of e-banking services provided by the bank? 7 Do you use E- banking Services offered by BOA? 8 Are service charges for the E-Banking Services affordable? 9 Are transactions through the E- Banking services platform secure? 10 Are you satisfied with the use of E- banking services?

11 Degree of satisfaction from the service via the internet comparatively to service via banks 12 Do you think that human contact is important for banking relations? 13 Do you have confidence in E- banking Services? 14 Are you a Frequent user of transactions in E-Banking Services? 15 E-Banking services platform always available for usage 16 The bank does not misuse my personal information 17 The bank responds quickly to my requests

18 The bank is easily accessible through support lines 19 The bank quickly resolves the problems I encounter when using services 20 Using the bank’s E- banking services does not require a lot of effort (Not completed) 21 Banks give enough information about the E-banking service. 22 It is quick to complete a transaction online 23 Do you prefer cash transactions to E- banking services Transactions? 24 Do you have frequent transactions

in the E-banking Services Platform? 25 Will free of charge transactions encourage the use of E-banking services?

26.Any suggestions to the Bank

APPENDIX 2 QUESTIONARRIES FOR BANK STAFFS 1. Sex i.Male [ ] ii.Female [ ] 2. choose your age range: i.18 to 30 [ ] ii.31 to 40 [ ] iii.41 to 50 [ ] iv.51 to 59 [ ]

3. Highest Education level i. Certificate level [ ] ii. Diploma level [ ] iii. Advanced diploma/Bachelor Degree [ ] iv. Post Graduate diploma [ ] v. Master’s Degree [ ] vi. Any other, (specify): …………………………………………………………………………… ……….. 4. Other professional level attained i. CPA [ ] ii. CSP [ ] iii. CISA [ ] iv. CIA [ ] v. PSPTB [ ] vi. Any other, (specify): ……………………………………………………………… 5. Position in the Bank

i.Head [ ] ii.Senior [ ] iii.Manager [ ] iv.Officer [ ] 6. Years of experience i.Less than [ ] ii.5 years B. [ ] iii. 6 to 10 years C. [ ] iv.11 to 15 years [ ] v.D. Above 16years [ ]

7. Based on your estimate how many total numbers of customers Bank has? (a) 20,001 to 50,000 (b) 50,001 to 80,00 0 (c) 80,001 to 100,000 (d) Over 100,000 8. Based on your estimate, how many Bank customers have been using e- banking services? (e) (f) Over 75% (a) 51% to 75% (b) 20% to 50% (c) Less than 20% 9. What was the Bank's reasoning for offering e-banking services? (a) Profit (b) Convenience (c) Retain customers (d) New customers

(e) Competition (f) Customers’ request 10. What kind of help or assistance is offered to your e-banking customers? (a) Training (b) Online demo (c) Others (e.g., employee assistance, personal service over the telephone, e- mailed Instructions)

Please rank the following statements relating to E-banking Services: 5- 4- 3- 2- 1- Strongly Agree Neutral Disagree Strongly Agree Disagree 11 The benefit outweighs the cost 12 Allows banks to increase customer base 13 Improves customer service 14 Lowers transaction costs 15 Offers opportunities to provide additional services 16 Accounts are less costly to maintain More customer 17 training/customer education is needed in promoting e- banking services 18 E-banking services enhance Bank

competitive position in the market E-banking services 19 increased the degree of customer satisfaction 20 Bank believes that the customer's information security is better 21 Bank has an Electronic Banking Committee (or something similar)reviewing Product and services to offer the best services to its customers 22 Does the bank provide a guarantee or warranty when a payment is not properly made through the E- banking payment system 23 Does the bank have a target market or trade area for E- banking services 24 Are controls in place to Prevention of hackers from accessing the system 25 Are controls in place for the Prevention of line swapping

26 Are controls in place for Discovered intrusion attacks 27 Are controls in place for Attacks after working hours 28 Is help or assistance offered to Banking services customers 29 Did the bank do a cost analysis specifically on e- banking services Products?

30. What do you think are Customer responses on the benefit of electronic Banking services? ______31 Any suggestions on E-Banking services