UNIVERSITY

COLLEGE OF BUSINESS AND MANAGEMENT SCIENCE (CoBAMS) SCHOOL OF STATISTICS AND PLANNING

FACTORS AFFECTING CUSTOMER SATISFACTION IN BANKING A CASE STUDY OF , MAPEERA HOUSE

BY WATSEMBA PHILLIS 214016519 14/U/15909/EVE

A DISSERTATION SUBMITTED TO THE SCHOOL OF STATISTICS AND

PLANNING IN PARTIAL FULFILLMENT OF THE REQUIREMENT FOR THE

AWARD OF A BACHELORS DEGREE IN SCIENCE IN ACTUARIAL

SCIENCE OF

JULY 2018

I

DECLARATION

i

APPROVAL

ii

DEDICATION

This work is dedicated to my mother Mrs Katisi Sylvia Siisa and my daughter Nampweera

Tyra Abigail for the belief in me and the usual prayers and care. You encouraged me, believed in me, advised me, mentored me and prayed for me.

This work would not have seen the light of day had it not been for your encouragement and inspiration. May God`s blessings always be upon you.

The piece is also dedicated to my future husband.

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ACKNOWLEDGEMENT

I would like to thank the Almighty God for His grace throughout my studies and for providing me with the resources and energy to make this research become a reality.

My greatest thanks go to my supervisor, Mr. Serunjogi Ambrose for his academic guidance throughout the course of this research.

I am indebted to Mr. Siisa Moses and Mr. Wakooba Christopher for the financial support to undertake this program. I register heartfelt gratitude to my friend Namazzi Vivian as my best friend for encouraging me personally. I would also like to recognise my friend Nyamwiza

Joan and all my classmates for the immense emotional support that played a very crucial role in helping me complete this study. I also take this opportunity to thank every respondent for taking time to fill in the study questionnaire or participant in key information interviews. I would also like to take this opportunity to thank the manager Centenary bank, Mapeera branch for allowing me to conduct this study.

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ABSTRACT

The purpose of this study was to establish the factors affecting customer satisfaction in banking in . The study was guided by the following objective: to find out the relationship between time spent at the bank and customer satisfaction; to identify the relevancy of availability of many tellers attending to customers in relation to customer satisfaction; to establish the relationship between the availability of ATM machines and customer satisfaction and to find out the other factors affecting that influence customer satisfaction apart from the ones mentioned above. The first approach is to first of all do pre- testing through a pilot study to ascertain the effectiveness of the questionnaire and find out if the questionnaire will be understood by the respondents and also if they are willing to answer it. The customers to Centenary on approach could give relevant information about factors affecting customer satisfaction. The study findings conclude that most of the factors that affect customer satisfaction, affect it negatively as most of the customers are not satisfied with the services the bank offers. The study also recommends the bank to put up more branches more so in the rural areas and also increase on the level of security around the banks

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TABLE OF CONTENTS

DECLARATION ...... i

APPROVAL ...... ii

DEDICATION ...... iii

ACKNOWLEDGEMENT ...... iv

ABSTRACT ...... v

LIST OF TABLES ...... ix

LIST OF FIGUREs ...... x

LIST OF ABBREVIATIONS ...... xi

CHAPTER ONE: INTRODUCTION ...... 1

BACKGROUND ...... 1

STATEMENT OF THE PROBLEM [SOP] ...... 4

OBJECTIVES ...... 4

MAIN OBJECTIVE...... 4

SPECIFIC OBJECTIVE ...... 4

RESEARCH QUESTION ...... 5

JUSTIFICATION OF THE STUDY ...... 5

SIGNIFICANCE OF THE STUDY...... 5

FUTHER RESEARCH ...... 5

GENERATION OF MORE KNOWLEDGE...... 6

SCOPE OF THE STUDY ...... 6

DEFINITION OF KEY TERMS ...... 6

CHAPTER TWO: INTRODUCTION ...... 8

A REVIEW OF THE LITERARURE ...... 8

SUMMARY OF THE LITERATURE REVIEW ...... 13

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CHAPTER THREE: METHODOLOGY ...... 14

INTRODUCTION ...... 14

RESEARCH DESIGN ...... 14

AREA OF STUDY ...... 14

STUDY POPULATION ...... 15

SAMPLING PROCEDURE AND SELECTION ...... 15

DATA COLLECTION INSTRUMENTS ...... 16

STRUCTURED INTERVIEWS ...... 16

QUANTITATIVE DATA ...... 16

VALIDITY AND RELIABILITY OF RESEARCH INSTRUMENTS ...... 17

VALIDITY ...... 17

RELIABILIY ...... 17

RESEARCH PROCEDURE ...... 17

DATA ANALYSIS ...... 18

UNIVARIATE ANALYSIS ...... 18

BIVARIATE LEVEL OF ANALYSIS ...... 18

ETHICAL CONSIDERATIONS ...... 19

LIMITATIONS OF THE STUDY...... 19

SUMMARY OF THE METHODOLOGY ...... 20

CHARPTER FOUR: DATA ANALYSIS ...... 21

INTRODUCTION ...... 21

DISTRIBUTION OF THE RESPONDETS ...... 21

THE LEVEL OF CUSTOMER SATISFACTION DERIVED FROM CENTENARY

BANK...... 23

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THE TIME THE CUSTOMER SPENDS AT THE BANK WHEN THEY GO TO MAKE

TRANSACTIONS...... 24

THE RELATIONSHIP BETWEEN TIME SPENT AT THE BANK AND CUSTOMER

SATISFACTION ...... 24

THE NUMBER OF TELLERS THAT WORK ON CUSTOMERS AT CENTENARY

BANK ...... 25

THE RELATIONSHIP BETWEEN NUMBER OF TELLERS AT THE BANK AND

CUSTOMER SATISFACTION...... 26

ARE ATMs IMPORTANT TO CUSTOMER SATISFACTION AT CENTENARY BANK

...... 27

THE RELATIONSHIP BETWEEN CUSTOMER SATISFACTION AND THE

AVAILABILITY OF ATMs...... 27

OTHER FACTORS AFFECTING CUSTOMER SATISFACTION...... 28

CHAPTER FIVE: CONCLUSION AND RECOMMENDATIONS ...... 30

INTRODUCTION ...... 30

SUMMARY ...... 30

CONCLUSION ...... 31

RECOMMENDATIONS ...... 31

SUGGESTIONS FOR FURTHER RESEARCH ...... 32

REFERENCE ...... 33

APPENDICES ...... 35

APPENDIX 1; QUESTIONNAIRE ...... 35

APPENDIX 2; WORK PLAN ...... 38

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LIST OF TABLES

Table 4. 1: The gender distribution ...... 21

Table 4. 2: The age distribution of the respondents ...... 21

Table 4. 3: Education level distribution ...... 22

Table 4. 4: The distribution of the period a customer has used centenary bank...... 22

Table 4. 5: The relationship between time spent at the bank and customer satisfaction ...... 25

Table 4. 6: The qui-square test for the relationship between time spent at the bank and customer satisfaction ...... 25

Table 4. 7: The chi-square test showing the relationship between number of tellers and customer satisfaction ...... 26

Table 4. 8: The relationship between customer satisfaction and the availability of ATMs ..... 28

Table 4. 9: A chi-square showing the relationship between customer satisfaction and the availability of ATMs ...... 28

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LIST OF FIGURES

Figure 4. 1: The level of customer satisfaction derived from Centenary bank ...... 23

Figure 4. 2: The figure showing if the customers are worked upon in time ...... 24

Figure 4. 3:Showing the number of tellers that work upon customers at the bank ...... 26

Figure 4. 4: Showing if the ATMs are important and derive customer satisfaction ...... 27

x

LIST OF ABBREVIATIONS

ATMs Automatic Teller Machine

BoU Banking of Uganda

EAD East African Development Bank

GDP Gross Domestic Product

HSBC Hongkong and Shanghai Banking Corporation

ICT Information Communication and Technology

TPS Thai Postal Services

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CHAPTER ONE: INTRODUCTION

This chapter explains details of the background, purpose, significance and the justification of the study. It highlights the objectives and the importance of the study. This study also outlines the research questions that are to be used in the study during data collection. The problem statement of the study and various factors that affect customer satisfaction. Due to an increase of banking institutions all over the world, this has led the researcher to pick an interest in customer satisfaction issues.

BACKGROUND

In the current banking industry worldwide, it is important that banks gain a competitive advantage by rendering good services to the customers. More emphasis should be pot on creating loyal customers. In the information communication and technology (ICT) era the mode of direct pay, online financial services has gained value unlike banking manually.

Today customers need more hours to transact. Due to increased competition all over the world in banking, customer dissatisfaction is higher. (Alkayed W, 2014)

Due to an increase in a business competitive environment all over the world, there has been an increase in the banking institutions all over the world as well. Customer satisfaction has been one of the factors that has led to the success of most of the banks. However for the bank to achieve customer satisfaction, it has to sustain high performance in operation to its customers and also ensure that everybody in the bank contributes to customer satisfaction.

(Love lock, 2014)

The main importance of Africa’s banking market is that it is potentially great and virtually untapped. Banking penetration among the continents 1billion inhabitants varies significantly from country to country, but an enveloping bandage of the population in Senegal and

Tanzania for instance, have virtually no access to banks. The differences within the countries

1 are striking too. South Africa for example, offers the world class services in banking from verdant lawns of Johannesburg’s main banking district.(Tobin. J, 2011)

Across sub-Saharan Africa as a whole only about a quarter of adults have bank accounts at formal financial institutions, and only 3% have credit cards. The challenge is finding a way profitably to reach the rest. Bankers typically think of markets as being ready to take off one

GDP per-person reaches about $10000, a level at which it becomes profitable to start building branches and opening accounts. Yet technology such as prepaid cards and mobile banking may be lowering that hurdle rate. (Spence, A.M, 2007)

Although many established banks in East Africa are seeking rapid regional growth through acquisitions, several officials at the Central Banks have stated that they would prefer more greenfield developments. They have hinted that they would favour banking licence applications in order to increase competition in the sector and across East Africa. (Mugerwa and Yasin, 2013)

Diamond trust Bank, is one of the financial institutions with regional aspirations in east

Africa, where by it exits in countries like Uganda, Kenya, Tanzania and Burundi. It recorded over 80% of its profits in 2009 with all the four markets contributing to the figure provided.

In 2010, Diamond Trust Bank performed extremely well with the group’s market shares of assets and profitability continuing to grow across the East African region.(Were and Nathan,

2010)

In addition to the general economic development in East Africa, the financial institutions established in each of the countries in East Africa are seeking to expand into neighbouring markets through the acquisitions growth, while the prospect of a strong regional economy is enticing some of the world’s banks to invest in the region of east Africa for the first time. The latest entrant into the Kenyan banking sector is one of the world’s biggest banks. Hongkong and Shanghai Banking Corporation (HSBC). It has been awarded an operating licence by the

2 central bank of Kenya, and it acts as there representative office in Nairobi to act as the sales and marketing base for the entire region. The Banks head of global banking for Africa, Ian

Carr, said will seek to replicate its strategy in South Africa. (Lau MM,Cheung R, 2011)

In addition, more people are believed to prefer the use of mobile banking in Kenya compared to traditional bank accountsto manage their finances. The Kenya’s biggest mobile operator launched the first mobile payment scheme in East Africa in 2007, and it still remains the biggest player in the sector. It is also believed that mobile banking and the traditional banking of accounts are working together rather than competing with one another. The East African

Development Bank(EAD), was established in 1967, and was jointly owned by Uganda,

Kenya and Tanzania. It was also concerned with development finance. It survived the breakup of the East African Community in 1977 and received a new hurter in 1980.(Nannozi,

Tereza, 2011)

Before Uganda’s independence in 1962, the government-owned institutions dominated most . In 1966 the (BoU), which controlled the issue of currency and managed foreign exchange services, became the Central Bank and national banking regulator. Uganda commercial bank, which fifty branches throughout the country, dominated commercial banking and was wholly owned by the government. The Uganda development bank was a state-owned development finance institution, which channelled loans from international source into Ugandan enterprises and administered most of the development loans made to Uganda.(Mugabe, Faustin,2013)

Centenary rural development bank ltd started as an initiative of the Uganda national lay apostolic in 1985 as accredit trust and it begun in 1985 with the main objective of serving rural poor people and contributing to the overall economic development bank ltd as full service commercial bank. Today it’s the leading microfinance bank in Uganda serving over

14000000 customers. Its services can be across its 65 branches, 167 ATMs and the phone

3 banking platforms. Centenary bank as a bank has a vision of “best providers of financial services” and the mission “to provide appropriate financial services especially micro finance particularly in rural areas”.(Sanya and Rupiny, 2006)

STATEMENT OF THE PROBLEM [SOP]

Currently every bank client would like to be treated as an equal partner with efficiency; therefore there is need for banks to make sure that the customers feel the value of using the bank services available. As far as the republic of Uganda is concerned, there are various banks that Uganda registered as a country. Due to these many banks, there is need for the bank to retain that one customer that they get, and this can only be done through providing good bank services that lead to customer satisfaction. The high competition has also created the need for banks to be innovative and creative so as to retain their customer and also get new clients.(willis and Harris, 2008). There is less concern when it comes to customer satisfaction in the banking institution, thus this research intends to examine the factors that affect customer satisfaction Uganda particularly in Centenary bank.

OBJECTIVES

MAIN OBJECTIVE

 To examine factors affecting customer satisfaction in Centenary bank in Uganda.

SPECIFIC OBJECTIVE

1. To find out the relationship between time spent at the bank and customer

satisfaction.

2. To identify the relevancy of availability of many tellers attending to customers in

relation to customer satisfaction.

3. To establish the relationship between the availability of ATM machines and

customer satisfaction.

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4. To find out other factors that influence customer satisfaction apart from the ones

mentioned above.

RESEARCH QUESTION

1. What is the relationship between time spent at the bank and customer satisfaction?

2. What is the relevancy of availability of many tellers attending to customers in relation

to customer satisfaction?

3. What is the relationship between the availability of ATM machines and customer

satisfaction?

4. What other factors influence customer satisfaction apart from those mentioned above?

JUSTIFICATION OF THE STUDY

However much there are several banks in Uganda today, one would say there is customer satisfaction in banking which is not the case. This is because most of the banks concentrate more on making profits rather than ensuring customer satisfaction. The failure by banks to provide customer satisfaction is the reason as to why this research has to be done in order to know some of the factors that affect customer satisfaction in banking.

Customer satisfaction becomes only evident when choices are made and actions taken by both bank staff and customers. Customer satisfaction is demonstrated by the action of both bank staff and customers, customers cannot be fully satisfied if they get poor services from the bank.

SIGNIFICANCE OF THE STUDY

FUTHER RESEARCH

This study may be of great importance to academicians and future scholars and would provide a literature to future research as well as provide a basis for future research on the factors affecting customer satisfaction. This research was also to enlighten the researcher

5 about more of the factors that affect customer satisfaction apart from those that are stated in the specific objectives above.

GENERATION OF MORE KNOWLEDGE

This study was important as it’s to give researchers exposure to a wider scope of knowledge that they need carry out research on the related topics. It was very important to develop an effective market strategy and to understand the new concept in banking in order to meet the customer satisfaction. Since customer satisfaction has a positive impact on outcomes in banking, which was one of the reasons for this research, then there was need for this research to be done in order to shed light on such issues.

SCOPE OF THE STUDY

The study was conducted in the township of in central Uganda. This location was chosen specifically because it has quite a large population in the country with many

Centenary bank branches with a good number of customers to be approached.

This study targeted a sample of customers to centenary bank. This study took place in the month of June 2018. The research was carried out in a period of only two months.

DEFINITION OF KEY TERMS

Customer satisfaction.

Customer satisfaction is the customers’ evaluation of a product in terms of whether that product has met their needs and expectations.

It’s also responding to the customer’s needs and expectations in such a way to motivate them to come back.

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Technology

In banking, this means use of machines to help customers access their accounts, information, and banking services, products and systems that enable customers to transact banking business.

Training

This is gaining of skills and knowledge as a result of instruction of occupational or applied skills.

Employee motivation

This refers to an internal drive to put forth the necessary effort and action towards work- related activities.

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CHAPTER TWO: INTRODUCTION

This section reflects the literature review on the effects of customer satisfaction in banking.

The literature review on factors affecting customer satisfaction in the banks situated in different countries around the world reflects the findings of many researchers. With the view to authorize the study, various literatures have been reviewed to identify the research gap of customer satisfaction.

A REVIEW OF THE LITERARURE

According to Mohsen Mazaheri Asad (2007), on the study of the factors affecting customer satisfaction in the internet banking system based on the cause and effect relationships, worked on the study of the key factors affecting customer satisfaction in internet banking, and used the method of Grey-based DEMANTEL method to achieve the main objective of the study. At the end of the study the values of R, D, R+D and R-D were calculated using the above method, based on these criteria the cause and effects relationships about the factors affecting customer satisfaction in internet banking. This research does not define the variables used in its method for example R and D and only looks at key factors affecting customer satisfaction leaving out others that would be of use in this study and the current study is to define all the variables that are to be used that is the dependent and the independent variables.

Basing on Ahmad Jamal and Kamal Nasser (2008) in the study of the factors affecting customer satisfaction in retail banking, where the aim of the study was to look into determinants of the relationship between customer satisfaction and service quality in the retail banking in western countries. The study involved the use of questionnaires to collect data where a total of 300 questionnaires were used and the AMOS software was used for statistical analysis. The results of the study showed that there was no strong relationship between service quality and customer satisfaction. It also concludes that there is no 8 relationship between customer satisfaction and tangible aspects of the service environment.

This study looks at service quality in relation to customer satisfaction, however this current study mainly concentrates on customer satisfaction and the factors affecting it.

According to Feinberg et al (2010), in their study factors influencing customer satisfaction and efficiency in contact centres, the main objective of the study was to expand understanding of the factors influencing customer satisfaction and efficiency in contact centres. More specifically the focus was on examining the grouped impact of the factors. The novel method in marketing called fuzzy set qualitative comparative analysis was used to achieve the above objectives. The key findings of this study was that a factor can have a different impact on customer satisfaction and efficiency depending on which other factors it is combined with. Additionally, separate factors or the same factors in a different form influence customer satisfaction and efficiency. The study gave an indication that a high degree of feedback can have a positive impact on customer satisfaction. The method used in this research only caters for a small population which might not give a good comparison to the entire population, hence this research is to use a better method that caters for a bigger population as a sample for example the Yamane’s formula.

A study conducted by Tanyaporn Kaniganat (2007), in a study of factors influencing customer satisfaction, where the main purpose of the study was to examine the relationship between operational performance, relational performance, cost performance, organisation, and customer satisfaction towards Thai Postal Service(TPS) in Bangkok. The method of analysis was Pearson’s correlation coefficient after collecting data with 400 self-administered questionnaires. The results of the study showed that all the independent variables have a positive relationship with customer satisfaction as expected. Based on this research,

Tanyaporn considered those factors in order to achieve customer satisfaction which may increase customer retention and loyalty that lead to high profits to the company. This current

9 study doesn’t look at customer loyalty as a factor of customer satisfaction but rather other factors that direct the customer directly and satisfaction.

Liseche Ashitiva Nicholas (2013), studied factors affecting customer satisfaction in Kenya airways cargo service, worked on the determinants of the factors affecting cargo customer satisfaction at Kenya air ways cargo. They used a descriptive survey design to achieve the main objective of the study. From the findings, the study concluded that promotion after customers’ satisfaction levels at Kenya airways cargo mainly through advertisements that satisfies customers through radio and television. The study also concludes that the services quality of the cargo service improved customer satisfaction. Furthermore it concludes that the brand had impact on customer satisfaction. The study recommended improvement of quality of service and use of a wider means of promotion in an effort to get more clients and compete with the growing market. The study also recommends use of fair prices in an effort to warranty customer satisfaction.

According to Peter M Osoti Omwanga (2016), In an analysis of factors affecting customer satisfaction at Safaricom out lets in Nairobi, worked on the aim to establish the affecting the level of customer satisfaction of Safaricom customers in Nairobi. Using the descriptive research design the study sought to establish the factors affecting customer satisfaction in

Safaricom (K) Limited. This study used this method and questionnaires were the main instrument of data collection. The study findings were that the capacity of Safaricom to differentiate its products offering from the other competitors acts as a source of competitiveness to the firm due to the product being able to meet a particular need of customers. The study also recommends that more customer agents and support points be opened. Furthermore, the study recommends that the study set that the firm can enhance the features of its product to have a seamless interface with different financial institutions without compromising the security of the customers’ deposits. This study is only limited to

10 safaricom which provides a narrow and specific focus of the scope whose results are limited to safaricom which may not translate to other industries for example banking according to the current study.

A study conducted by Md. Touhidul Islam (2012), in the study of factors affecting customer satisfaction on Berger paints Bangladesh, worked on the aim to explore and investigate the customer satisfaction level of Berger paints Bangladesh Limited. The research paper was to help the company to measure the present level of customer satisfaction and loyalty in Berger paints. The study used simple random sampling under the probability sampling method and used structured questionnaires for collecting information. The research used Microsoft Excel to analyse data. The major findings show that customers of Berger paints are mostly satisfied about perceived product quality, product reliability, product durability, product availability and size, product innovativeness, product relationship and delivery performances. The recommendations are given on the basis of findings that will be informative and fruitful for

Berger paints. According to this study the perceived value of customers is low yet one must value the customer needs in order to gain customer satisfaction and also to have a good relationship with them.

According to Rizwan Khan and Ganesh Narwane et al (2012), examining factors affecting customer satisfaction, worked the basic factors that may impact on customer satisfaction for instance responsiveness, efficiency and performance, service quality price and technology that have strong influence on the company’s products. This study collected both secondary and primary data that gave both the qualitative and quantitative aspect. The research approach was also both deductive and inductive and also exploratory. The findings of this study showed that the factors such as responsiveness, professionalism, complaint management system, customer care, technology, efficiency and performance are examined with a negative impact on customer satisfaction as almost half of company’s were observed dissatisfied. This

11 study also recommends that the company should take a serious consideration to remove the negative impact in terms of making customers satisfied. The main factors used to establish customer satisfaction are not well explained on how they are related to customer satisfaction in the company.

According to Dr. Mahmod Jasim Alsamydai et al (2011), the factors affecting consumers satisfaction and continuity to deal with E-Banking services, worked on the study to examine the factors affecting consumer satisfaction for the continuation in dealing with electronic banking services. The method used in this study was that in order to collect data, it required examining the hypothesis of the study and reaching conclusions using the path analysis method. Data collection was used by the questionnaire as a main tool of data collection. The results of the study showed that there is a significant relationship between all constructs of the study’s model. These results also indicated that the factors relating to electronic banking for example service quality, personal factors, and perceived usefulness have an influence on customer satisfaction. The above study shows that there is a significant relationship between all the constructs of the study which is unrealistic because some of them are not related to customer satisfaction.

According to Ahmed Hashed Nasser M (2012), he studied factors affecting customer satisfaction in mobile banking, worked on the main objective of the aim to find out the factors of customer satisfaction in mobile banking service providers. The study used the descriptive study and the hypothesis testing regression analysis to obtain the main objective of this study. The results of this study was based on the data collected online by the academic staff in public universities to investigate the relationship between perceived quality and customer satisfaction and the results were positive. The results also showed a significant impact of variables on customer satisfaction. The study also recommends that there should be more distribution of agents in places where there is less or no mobile banking. The provision

12 of more agents does not mean customer satisfaction if they are not operating hence there might need for supervision.

SUMMARY OF THE LITERATURE REVIEW

This chapter reviewed the literature relating to the study of objectives, the results, the recommendation and conclusions that have been written by various writers. The main objective of this study is factors affecting customer satisfaction in banking. Precisely, this literature review covers factors affecting customer satisfaction in the internet banking system, the factors affecting customer satisfaction in retail banking, factors influencing customer satisfaction and efficiency in contact centres, factors influencing customer satisfaction, factors affecting customer satisfaction in Kenya airways cargo service, factors affecting customer satisfaction at Safaricom out lets in Nairobi, factors affecting customer satisfaction on Berger paints Bangladesh ,factors affecting customer satisfaction, factors affecting consumers satisfaction and continuity to deal with E-Banking services, factors affecting customer satisfaction in mobile banking. The next chapter is about the research methodology which discuses the study population, data collection methods, and the instruments that are to be used in the data analysis.

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CHAPTER THREE: METHODOLOGY

INTRODUCTION

This chapter reviews the methodology which includes the research design, area of study, study population, data collection instruments, validity and reliability, research procedure, data analysis, ethical considerations and limitations of the study.

RESEARCH DESIGN

A research design is a frame work for conducting research. It details the procedures for obtaining information needed to solve a research problem. (Malhotra 2007). Survey method will be used for this study. This is because the method allowed the researcher to collect quantitative data which was analyzed quantitatively using descriptive statistics. It was also used because it reduces costs and time associated within the process.

This study was to use this method to generalize the findings to all the banking organizations.

This method was used to conduct an investigation of the most suitable problem solving solution that can be used to solve the problem at hand, which was the factors affecting customer satisfaction in banking.(Bratanovic, S. 2007). The study used a cross-sectional design and the reason was because it collects data on many variables, from a large number of subjects, from dispersed subjects, on attitudes and knowledge of banking and answers questions who, what, where, when covering both the target population within a specific time limit focusing on all sectors where quality and quantitative data was collected.

AREA OF STUDY

The study was conducted in Kampala district which is located in central Uganda. Kampala is the capital and the largest city of Uganda. The city is divided into five divisions namely;

Kampala central division, Division, division and Division.

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The study was conducted at the main headquarters of Centenary bank which is located in

Mapeera House in Kampala. Mapeera House is located in on

Kampala road, the main street in Kampala’s central Business district.

STUDY POPULATION

A population is a complete set of people, elements, services or groups of households with same observable characteristics. The population of the research will be the customers of

Centenary bank.

A sample of 100 customers of centenary bank were randomly selected from the customers that were in the bank on the day the research was conducted. This research involved all these people in the study because the researcher believed they possess the necessary study information.

SAMPLING PROCEDURE AND SELECTION

The study followed a random sampling procedure were individuals were selected and all respondents had equal chances of being selected to make up the 100 respondents To obtain the sample size, Yamane’s formula was used as shown below; n= N/(1+N(e²)) where n- sample size N- population size e- standard error Having known the population of the study, which was the number of customers that

Centenary bank serves which was 21539 customers per branch. Hence the sample size n= 21539/(1+21539(0.1²))=100

100 questionnaires were randomly used in the collection of data from the respondents that were sampled.

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DATA COLLECTION INSTRUMENTS

Data collection is the procedure through which a researcher collects information to be used in a given research. The data collected can either be secondary data or primary data and it can either be qualitative or quantitative data.

STRUCTURED INTERVIEWS

A structured questionnaire was administered to 100 respondents strictly from customers of

Centenary bank. The questionnaire was divided into different sections in such a way that would allow the researcher get the respondents bio-data, their knowledge on factor affecting customer satisfaction and their needs as far as banking is concerned.

The quality of research depended on a large extent on the quality of data collection tool.

Interviewing and administering questionnaires was the most used in the research therefore designing a good questionnaire helped to reduce time consuming in the development.

Due to limitations of secondary data sources such as inadequate coverage, out datedness of data, the study went beyond secondary sources. First hand information was obtained by means of a questionnaire which was administered to respondents.

QUANTITATIVE DATA

A primary source of data refers to statistical data which the researcher acquires for the purpose of the study through the use of questionnaires.

This kind of data provided is first hand type of data. Questionnaires were used to gather data from the targeted population which are customers of Centenary bank. The questionnaires were administered to each member of the sample, where by both close ended and open ended questions were used in the questionnaire. In order to obtain more variable responses, the close ended questions were used to test different attribute ratings which helped to reduce the number of related responses from respondents.(Buehler, K and Priston, G. 2009)

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VALIDITY AND RELIABILITY OF RESEARCH INSTRUMENTS

VALIDITY

Validity is the extent to which the interpretations of the results of a study are warranted, which depends on the particular use the study is intended to serve. Validity is the extent to which an instrument measures what it is supposed to measure and performs as it is designed to perform. Validation involves collecting and analyzing data to access the accuracy of an instrument for example pilot testing.(Dr. J. Patric Biddix, university of Missouri,2015)

RELIABILIY

Reliability is directly related to validity of the measure. Reliability can be thought of as consistency in other words, does the instrument consistently measure what it is intended to measure. For example do respondents give consistent answers of what is asked of them.

(Denzin and Lincoln,2014)

RESEARCH PROCEDURE

According to the data collection, the questionnaire were pre-tested through a pilot study to ascertain the effectiveness of the questionnaire. The responses obtained from the pilot study were used to determine whether the respondents will understand the questionnaire, and also determine whether they were willing to answer the questions.

Only 10 respondents were asked in the pre-test and this catered for 10% of the sample population. This was done in order to enhance the validity and accuracy of the data that was collected for the study. The questionnaire was administered through drop and pick method, where the questionnaire was given to the respondent and picked from them after responding to the questions. The respondents were promised confidentiality and anonymity of their responses.

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DATA ANALYSIS

A data analysis tool of SPSS was used to analyse the data in order to capture the relevant findings and also present it in a way that is easily understood by other researchers and users.

Data was presented in form of tables, frequencies, percentages, and bar graphs where necessary.

For the qualitative data specifically captured from the key information, descriptive statements were employed to bring out the picture and analysed highlighting the common themes by the participants. Micro Soft Excel was used numerically to understand the undelaying trends and patterns.

SPSS aided to carry out the respective tests using correlation to establish p-values under chi- square and fisher`s tests.

UNIVARIATE ANALYSIS

At this stage, background characteristics of respondents were described using frequency distribution tables. A single variable was analysed at a time giving detailed information about the respondent.

BIVARIATE LEVEL OF ANALYSIS

At this level of analysis, contingency tables such as cross- tabulations were used to investigate a relationship that exists between the dependent and the independent variables.

Two variables were analysed at a time, (the dependent and independent variables). Use of means and analysis of variance which can also tell if there was a significant relationship between the dependent variable and independent variables were used. These statistical tests were used mainly to show existence or non-existence of relationships between the dependent and the independent variables under considerations as shown below in the Chi-square formulae.

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Chi-square formulae

2 r c Oij  Eij X 2  i1  j1 Eij

Where; X2is the chi square test. oij is the total number of observed frequencies and eij is the number of expected frequencies. r = number of rows c = number of columns

ETHICAL CONSIDERATIONS

Permission to carry out the study was sought from Makerere University and Centenary bank before data was collected. The participants were assured of anonymity and confidentiality.

No names or person identification numbers were to be reflected on the questionnaires except the numbering for questionnaires, which was done for the purposes of identification of data during data editing.

Participants were free to decline to participate or to withdraw at any time without suffering any disadvantage. All the participants were cooperative.

LIMITATIONS OF THE STUDY

Limitations of the study are those characteristics of design methodology that impacted or influenced the interpretation of the findings from ones research. They can also be challenges that one faces before, during and after data collection.

There was a limitation in time and financial resources

 Respondents withheld some of the information that seemed rather personal

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 Most respondents had no direct interest in the research

SUMMARY OF THE METHODOLOGY

This chapter explains the methodology which includes the research design, area of study, study population, data collection instruments, validity and reliability, research procedure, data analysis, ethical considerations and limitations of the study. The researcher is to use a questionnaire to collect data which will be analysed. The next chapter presents the results of the survey after analysing the data

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CHARPTER FOUR: DATA ANALYSIS

INTRODUCTION

This chapter presents the study findings. It also presents how the findings are analysed in order to answer the research questions.

DISTRIBUTION OF THE RESPONDETS

Table 4. 1: The gender distribution

GENDER FREQUENCY OF PERCENTAGE OF THE RESPONDENT GENDER RESPONDENTS GENDER

MALE 53 53%

FEMALE 47 47%

GRAND TOTAL 100 100%

The distribution shows that the majority of the respondents are male with 53% and the minority are female with 47%.

Table 4. 2: The age distribution of the respondents

AGE MALE % FEMALE % GRAND DISTRIBUTION TOTAL

20-30 11 11% 7 7% 18

31-40 27 27% 21 21% 48

41-50 5 5% 15 15% 20

51+ 10 10% 4 4% 14

GRAND TOTAL 53 53% 47 47% 100

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The distribution in table 4.2 show that most of the respondents are between the age of 31 and

40 with a percentage of 48, followed by those between the age of 41 and 50 with a percentage of 20, followed by those between 20 and 30 with 18% and lastly those above 50 with

14percent.

Table 4. 3: Education level distribution

EDUCATION LEVEL FREQUENCY PERCENTAGE

Secondary level 3 3%

College level 32 32%

University level 56 56%

Post graduate level 9 9%

Grand total 100 100%

The distribution of the education level of the respondents shows that majority of the respondents ended at university with 56%, followed by those that stopped at college with

32%, followed by those who stopped at post graduate level with 9% and lastly the secondary level with 3%.

Table 4. 4: The distribution of the period a customer has used centenary bank.

PERIOD DISTRIBUTION FREQUENCY PERCENTAGE

Less than 2 years 3 3%

2-10 years 65 65%

11 and above years 32 32%

Grand total 100 100%

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The distribution in table 4.4 shows that majority of the customers have used Centenary bank between 2 and 10 years with 65%, followed by those that have used Centenary for 11 years and above with 32% and the least are those that have used Centenary bank for less than 2 years with 3%.

THE LEVEL OF CUSTOMER SATISFACTION DERIVED FROM

CENTENARY BANK.

According to the study, 31 of the respondents are satisfied with the services that centenary bank provides to its customers, while 69 of the respondents are not satisfied with the services.

Figure 4. 1: The level of customer satisfaction derived from Centenary bank

From the findings above, the level of satisfaction der ived from centenary bank is low which means that most of the customers are not satisfied with the services the bank offers.

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THE TIME THE CUSTOMER SPENDS AT THE BANK WHEN THEY GO TO

MAKE TRANSACTIONS.

Majority of the respondents are always not worked upon in time every time they go to centenary bank. According to the analysis, 73 said they have not been worked upon in time while 27 say they are worked upon in time as showed in the graph below.

Figure 4. 2: The figure showing if the customers are worked upon in time

From the figure 4.2 above, this shows that customers are always not worked upon in time most of the times they go to make transactions with the bank. This affects their satisfaction since they spend more time at the bank than they expect.

THE RELATIONSHIP BETWEEN TIME SPENT AT THE BANK AND

CUSTOMER SATISFACTION

Null hypothesis Ho: the time spent at the bank is a factor that affects customer satisfaction.

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Table 4. 5: The relationship between time spent at the bank and customer satisfaction

Are you worked upon in time

Satisfaction level Yes No

Yes 10 21 31

No 17 52 69

Total 27 73 100

Table 4. 6: The qui-square test for the relationship between time spent at the bank and customer satisfaction

Chi-Square Tests Asymp. Sig. Value df (2-sided)

Pearson Chi- 1.0122a 4 .000 Square Likelihood Ratio 11.409 4 .022 N of Valid Cases 101

Therefore the P-value which is 0.022 is less than the critical of 0.005 at 95% confidence. We then fail to reject the null hypothesis We conclude that there is a relationship between customer satisfaction and the time the customer spends at the bank.

THE NUMBER OF TELLERS THAT WORK ON CUSTOMERS AT

CENTENARY BANK

Null hypothesis Ho: There is a relationship between customer satisfaction and the number of tellers at the bank.

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From the findings, the number of tellers at the bank is always above 15, followed by between

10-15 and then lastly below 10.

Figure 4. 3:Showing the number of tellers that work upon customers at the bank

This implies that there are always enough tellers at the bank to work on its customers in time.

However this does not mean that the customers are satisfied since the population is also very

high in the region of Kampala.

THE RELATIONSHIP BETWEEN NUMBER OF TELLERS AT THE BANK

AND CUSTOMER SATISFACTION.

Using a Chi2 statistic the result is as showed below.

Table 4. 7: The chi-square test showing the relationship between number of tellers and customer satisfaction

Chi-Square Tests

Asymp. Sig. (2- Value df sided)

Pearson Chi-Square 1.0942a 4 .001

Likelihood Ratio 19.757 4 .001

N of Valid Cases 101

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From the findings in table 4.7, the chi square test statistic value is 0.001 which is below the

P-value which is 0.05 with 95% confidence. Therefore we fail to reject the null hypothesis and conclude that there is a significant relationship between customer satisfaction and number of tellers at the bank.

ARE ATMS IMPORTANT TO CUSTOMER SATISFACTION AT

CENTENARY BANK

From the findings below, 51 of the respondents say ATMs are important with 51% and the rest 49, with 49% of the respondents say they are not import.

Figure 4. 4: Showing if the ATMs are important and derive customer satisfaction

This clearly shows that ATMs are important in banking. However there is still need for more

ATMs to be put up because those available are not enough.

THE RELATIONSHIP BETWEEN CUSTOMER SATISFACTION AND THE

AVAILABILITY OF ATMS.

Null hypothesis Ho: there is a significant relationship between customer satisfaction and the availability of ATMs.

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Table 4. 8: The relationship between customer satisfaction and the availability of ATMs

Availability of ATMs is Total important to customer satisfaction.

Level of satisfaction Yes No

Yes 12 19 31

No 39 30 69 total 51 49 100

Table 4. 9: A chi-square showing the relationship between customer satisfaction and the availability of ATMs

Chi-Square Tests Asymp. Sig. Value df (2-sided) Pearson Chi- 1.0542a 4 .000 Square Likelihood Ratio 15.586 4 .004 N of Valid Cases 101

From the chi square statistic above, the P-value is 0.004 which is below 0.05 with confidence

95%. Therefore we conclude from the finding by not rejecting the null hypothesis and conclude that there is a significant relationship between customer satisfaction and availability of ATMs.

OTHER FACTORS AFFECTING CUSTOMER SATISFACTION.

Apart from the above factors that affect customer satisfaction, the respondents also pointed out some of the other factors that affect customer satisfaction in banking. Among them are the following; 28

 The bank rates which are commonly known as bank charges is one of the other factor

that affects customer satisfaction.

 The availability of few bank branches is also another factor that affects customer satisfaction in banking.  The high level of robbery alongside less security in banks is also another factor that affects customers satisfaction

However many of the respondents did not give their views about other factors affecting customer satisfaction as most of the questionnaires were blank in this section.

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CHAPTER FIVE: CONCLUSION AND RECOMMENDATIONS

INTRODUCTION

This chapter presents summary of the findings, conclusions and recommendations in view of collected data obtained from the field. The information analysed is not entirely the thinking of the researcher but a contribution of respondents` views and researcher`s input.

SUMMARY

The research questions were duly answered and from the findings, the level of customer satisfaction is low. The majority of the customers gave a negative response that they are not satisfied with the services that the bank offers because most of them complained about the long lines that are always at the bank.

The study also indicates that there is a relationship between customer satisfaction and the number of tellers that do work on customers at centenary bank. This is because the many tellers at the bank make sure that the large population or big numbers of customers at the bank are all worked upon in time to avoid long lines while at the bank.

The findings also shows that there is a relationship between customer satisfaction and time spent at the bank since customers spend more time while they are at the bank which decreases their level of satisfaction as they do not go meet their other needs or perform other duties in time mostly when they go to make withdraws and deposits.

The research also gives results about the relationship between customer satisfaction and the availability of ATMs. Its showed that there is a significant relationship between customer satisfaction and availability of ATMs. This is because one does not need to line up at the bank yet they have the ATM to make a transaction that would have been made at the bank counter. However the ATMs are very view compared to the big population or number of customers the bank has, which makes them to have to line up still to make a transaction.

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The research also identified some other factors that affect customer satisfaction among which were; the effect of bank charges and other bank rates that affect the satisfaction in banking because some of these rates are high which reduces on the customers finances and also the availability of few branches in the country is also another factor that affects customer satisfaction, because some of the customers need to travel long distances to access the bank especially those from rural areas.

CONCLUSION

The research makes it clear in the previous chapter on the factors affecting customer satisfaction in Uganda. The survey makes it clear about the factors affecting customer satisfaction in relation to all the other stated factors as showed in the previous chapter.

It should also be noted that the establishment of less branches has also greatly affected customer satisfaction more so in the rural area where people actually have no access to banking services as stated by some of the informants. However minority are affected by this factor.

The customers that use the bank however are not satisfied with the services that the bank offers, which means that majority of the factors that affect customer satisfaction affect it negatively. Since most of the customers are not satisfied, therefore we conclude that

Centenary bank offers less services to its customers than expected

RECOMMENDATIONS

From the survey, the following recommendations have been suggested;

The government should reduce on the tax that is imposed on these financial facilities more so centenary bank, because this will help to reduce on the high bank charges that the banks charge its customers, as this is brought about due to the high tax that the government imposes on the financial facilities.

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The study also recommends high levels of security more so around the ATMs to reduce on the high level of robbery as suggested by some of the respondents. There should also be cameras in all places with financial services more so Centenary bank to monitor all the activities that take place in and out or around the banks.

The Centenary bank management on the other hand should work on the establishment of branches in the rural area as most of its customers have to travel long distances to access the bank services. This will help to increase on the number of people that use the services and also increase on the level of satisfaction for all its customers at large.

However, management should also put up a suggestion box for its customers to make sure that all the small challenges that the customers go through are worked upon to ensure smooth running of the bank activities in relation to all its customers.

SUGGESTIONS FOR FURTHER RESEARCH

The study was set to find out the factors that affect customer satisfaction in banking in

Uganda while considering Centenary bank Mapeera house branch.

According to the researcher’s findings, the following areas were proposed for further research.

 The effect of government tax on the financial facilities more so banks in Uganda at

large.

 The relationship between good customer care and customer satisfaction.

 The relationship between employee training to customer satisfaction.

 A study about how to provide better services to customers.

This chapter summarizes the findings of the study according to the set objectives, the conclusion of the study, the recommendations to the study and the suggestions for further research.

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APPENDICES

APPENDIX 1; QUESTIONNAIRE

FACTORS AFFECTING CUSTOMER SATISFACTION IN BANKING.

This questionnaire aims at collection information for academic use by the researcher. Your participation will go along way in providing useful information required to complete this research. The information provided will be safe and will not be published anywhere but will only be used for academic purposes. You need not indicate your name or contact anywhere on this template. Please answer the questions precisely. The information will be treated confidentially.

SECTION A: Respondents general information.

1.Gender

Male Female

2.Indicate your age bracket

20-30

31-40

41-50

51 and above

3,What is your highest level of education

Secondary level

College level

University level

Post graduate level

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If none of the above please specify,......

......

4.For how long have you used Centenary bank.

Less than 2 years

2-10 years

11 years and above

SECTION B: Relationship between time spent at the bank and customer satisfaction.

1.Are you always worked on in time whenever you visit the bank?

Yes No

If No, please state the maximum time you always spend at the bank and how it affects your satisfaction as a customer.

......

......

SECTION C: The relevancy of availability of many tellers at the bank in relation to customer satisfaction.

1. How many tellers do you always find at the bank?

Only 10

10-15

More than 15

2. Does the availability of many tellers at the bank increase your satisfaction with Centenary bank?

Strongly agree Agree

Strongly disagree Disagree

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3. State any other reason why you think a bank needs many tellers at the bank.

......

......

SECTION D: Rate the availability of ATM machines in relation to customer satisfaction.

If YES=1 and NO=2

Indicators 1 2 The ATM machines are very important to customers. The availability of many ATM machines leads to a high level of your satisfaction in Centenary bank. Your satisfaction is directly influenced by the availability of ATM machines compared to when you get services from the bank tellers. The locations of ATM machines in different places is very important and highly contributes to customer satisfaction.

SECTION E: Other factors affecting customer satisfaction in banking.

1.Are you satisfied with the banking service at Centenary bank?

Yes

No

2.State any other factors that affect your satisfaction in Centenary bank.

......

......

......

......

THANK YOU FOR YOUR COOPERATION AND INPUT

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APPENDIX 2; WORK PLAN

DATE ACTIVITY 11TH June 2018 Presenting of the research proposal to the supervisor 12th June 2018 Editing the research proposal 15th June 2018 Data collection 25th June 2018 Data entry into excel 26th June 2018 Analysis of the data using SPSS 29th June 2018 Compilation of the report 2nd July 2018 Presenting and handing in the first draft of the report 10th July 2018 Editing and making corrections in the report 17th July 2018 Compilation of the final copy of the report 20th July 2018 Submission of the final report

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