1

ELECTRONIC BANKING AND CUSTOMER SATISFACTION IN COMMERCIAL

BANKS

CASE STUDY CENTENARY BANK UGANDA

BY

NAMUGERWA ROSE

09/U/13292/EXT

0783-405224

SUPERVISOR: DR MUYINDA PAUL BIREVU

A Dissertation Submitted to the Department Of Distance Education in Partial Fulfillment

of the Requirements for the Award of the Degree of Bachelor of

Commerce of Makerere University.

AUGUST, 2013

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DECLARATION

I…………………………………………….., do solemnly declare that to the best of my

knowledge, wisdom and belief, the work am presenting is entirely mine, from my sweat, the

scope of the dissertation and its contents are truly from my efforts and has never been submitted

for the award of any degree in any University or Institution.

Signature …………………………………………………….. Date, ………../………/……..

NNAMUGERWA ROSE

ii

APPROVAL

I certify that Ms........................................................................... carried out this research under

my supervision and is submitted with my approval.

........................................................................ ..............................................................

Dr. Muyinda Paul Birevu Date

Supervisor

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DEDICATION

I dedicate this book to all readers and researchers, that with great pleasure I truly appreciate

those who gave in their time to read and also extract all the data. This report is dedicated to my

beloved Family, Friends and Relatives who have tirelessly and generously supported me

financially and morally from childhood all through life.

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ACKNOWLEDGEMENTS

It is with deep gratitude that I thank God for giving me the life, strength and wisdom i needed to

accomplish this report. First and foremost I give thanks to my supervisor Dr. Muyinda Paul

Birevu for the guidance, support and the supervision that enabled the successful completion of

this report. Special thanks go to my beloved mum and dad Mr. and Mrs. Charles Tamale for all

the financial and moral support that they have given me, Mr and Mrs Kajjumbi Steven,May the

Almighty God reward them tremendously. Special gratitude also go to all my dear friends who

have supported me in one way or another all through the compilation of this report, most

especially Patrick, Alex, Lukwango, Nobert, Fabio, Mercy, Monica ,Zulpher and others for their

endless love, support, and encouragement all through my student life at campus. May your lives

always be as rich, warm and loving and may your income, peace, joy and satisfaction increase

every day. I thank my sisters and brothers that is to say, Brian, Angella, Immy for the financial

support, the love and the positive influence towards my life, and finally to my dear aunt

Nantongo. Am forever grateful to everyone who contributed towards the successful completion

of this project. May the good Lord bless you abundantly.

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TABLE OF CONTENTS

Page

DECLARATION ............................................................................................................................. i

APPROVAL ................................................................................................................................... ii

DEDICATION ............................................................................................................................... iii

ACKNOWLEDGEMENTS ........................................................................................................... iv

LIST OF TABLES ........................................................................................................................ vii

ACRONYMS ............................................................................................................................... viii

ABSTRACT ................................................................................................................................... ix

CHAPTER ONE ........................................................................................................................... 1

1.0 INTRODUCTION .................................................................................................................. 1

1.1 Background ............................................................................................................................... 1

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

1.3 Purpose of the Study ................................................................................................................. 5

1.4 Objectives ................................................................................................................................. 5

1.5 Research Questions ................................................................................................................... 5

1.6 Scope of the study ..................................................................................................................... 5

1.6.1 Geographical scope ................................................................................................................ 5

1.6.2 Content / Variable Scope. ...................................................................................................... 6

1.6.3 Time Scope ............................................................................................................................ 6

1.7 Significance of the Study .......................................................................................................... 6

CHAPTER TWO .......................................................................................................................... 7

2.0 LITERATURE REVIEW ......................................................................................................... 7

2.1 Introduction ............................................................................................................................... 7

2.1.0 Electronic Banking................................................................................................................. 7

2.1.1 Electronic Banking or Electronic Fund Transfer Services available in Banks ...................... 8

2.2 Customer Satisfaction ............................................................................................................. 12

2.2.1 Introduction .......................................................................................................................... 12

2.2.2 Definition ............................................................................................................................. 12

2.2.3 Determinates of Customer Satisfaction ............................................................................... 13

2.3 Electronic Banking and Customer Satisfaction in Commercial Bank .................................... 17

Conclusion .................................................................................................................................... 18

CHAPTER THREE .................................................................................................................... 19

3.0 METHODOLOGY ................................................................................................................. 19

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3.1 Introduction ............................................................................................................................. 19

3.2 Study Design. .......................................................................................................................... 19

3.3 Area of study ........................................................................................................................... 19

3.4 Population ............................................................................................................................... 19

3.5 Sample Size and Selection Method......................................................................................... 19

3.6 Data collection tools and methods .......................................................................................... 20

3.7 Data Management ................................................................................................................... 20

3.7.1 Data Processing .................................................................................................................... 20

3.7.2 Data Analysis ....................................................................................................................... 20

3.8 Limitations of the Study.......................................................................................................... 20

CHAPTER FOUR ....................................................................................................................... 22

4.0 PRESENTATION, INTERPRETATION, AND DISCUSSION OF FINDINGS .................. 22

4.1 Introduction ............................................................................................................................. 22

4.2 Characteristics of respondents ................................................................................................ 22

4.2.1 Gender .................................................................................................................................. 22

4.2.2 AGE ..................................................................................................................................... 23

4.2.3 Education Level ................................................................................................................... 24

4.2.4 Period of banking with the organization .............................................................................. 24

4.2.5 Accounts held....................................................................................................................... 25

4.3 Electronic banking services .................................................................................................... 26

4.3.1 Knowledge about e-banking services .................................................................................. 26

4.3.2 Availability of Electronic banking services ......................................................................... 30

4.4 Customer satisfaction determinates ........................................................................................ 31

4.4.1 Determinates of customer satisfaction ................................................................................. 31

4.5 Relationship between electronic banking and customer satisfaction ...................................... 35

CHAPTER FIVE ........................................................................................................................ 36

5.0 SUMMARY, RECOMMANDATIONS, AND CONCLUSION ........................................... 36

5.1 Introduction ............................................................................................................................. 36

5.2 Summary of findings............................................................................................................... 36

5.2.1 Findings on the availability of Electronic banking services in Centenary bank .................. 36

5.2.2 Findings on determinants of customer satisfaction .............................................................. 36

5.2.3Findings on the relationship between Electronic banking and customer satisfaction .......... 37

5.3 Conclusions ............................................................................................................................. 37

5.4 Recommendations ................................................................................................................... 38

5.4 Areas for further study ............................................................................................................ 38

REFERENCES ............................................................................................................................ 39

APPENDICES .............................................................................................................................. 42

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APPENDIX I: QUESTIONNAIRE .............................................................................................. 42

LIST OF TABLES

Page

Table 1: Showing ownership of centenary bank in percentage ...................................................... 4

Table 4.1: Showing respondents by gender ................................................................................ 22

Table 4. 2: Showing age distribution of respondents ................................................................... 23

Table 4. 3: Showing distribution of respondents according to level of Education ...................... 24

Table 4. 4: Shows the period of banking with the bank .............................................................. 25

Table 4.5: Shows the accounts held by the respondents .............................................................. 25

Table 4. 6: Show knowledge about e-banking services ............................................................... 27

Table 4. 7: Shows the availability of E-banking services ............................................................ 30

Table 4.8: Shows customer satisfaction determinates .................................................................. 32

Table 4. 9: Relationship between Electronic banking services and Customer satisfaction ........ 35

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ACRONYMS

ATM - Automated Teller Machine

CS - Customer satisfaction

DD - Direct Deposit

E-Commerce - Electronic Commerce

E-B. - Electronic banking

EBS.. - Electronic Banking Services

E-Water - Electronic Water payment system

NWSC - National Water and Sewerage Corporation

NSSF - National Social Security Fund

OTC - Over The Counter

PIN - Personal Identification Number

PC - Personal Computer

SMS - Short Messaging Systems

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ABSTRACT

The study was on Electronic Banking and Customer Satisfaction and was conducted from

Centenary Bank, Kampala branches. The objectives of the study were to find out the electronic

banking services, to find out the determinates of customer satisfaction and the relationship

between Electronic banking and customer satisfaction. The study adopted an exploratory

research design and a cross-sectional research design. The study population included both staff

and customers of Centenary Bank. A total of 40 respondents participated in the study. Thirty

were customers while Ten were bank staff. The study used both primary and secondary sources

of data, primary data was collected using questionnaires and it was presented in tables. The

relationship was measured using Pearson rank correlation. It was found out that Electronic

banking services affected customer satisfaction. However, some other factors were instrumental

in achieving customer satisfaction such as sensitizing customers on the benefits of the services,

advertising and teaching most of them how these services work, providing a satisfying provision

that these services are secure and low fradulental activities. The relationship between Electronic

Banking and customer satisfaction indicated a 0.0875 which is a very weak positive relationship.

The weak relationship was attributed to the insecurity of the services, time taken when making

any transaction that is to say many of the users were iliterate with using computers and

management does not always care about those needs and requirements of their customer.

It „s therefore concluded that the management of centenary bank should allocate resources on

customer sensitization and education about all services that show a slow adoption by customers

like PC, SMS banking , electronic payment systems and direct deposits to increase on customer

satisfaction and they had also to take care of factors which satisfy their customers.

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CHAPTER ONE

1.0 INTRODUCTION

During the last years, the banking industry around the world has been undergoing a rapid

transformation. The deepening of information technology has facilitated better tracking and

fulfillment of commitments, multiple delivery channels for online customers and faster

resolution of issues has developed noticeably. The financial services industry is altering rapid

and visible. Previous ways of doing business are fading fast. Together with this fast transition is

also the rising competition among banks. One of the greatest influences behind all of this is the

growing development in information technology. Because of this, costumers have not been

familiar with the ways of electronic banking services and its systems. Therefore, it is due to this

that the research focused on the impact of Electronic Banking on customer satisfaction in

commercial banks. To add on that, this chapter will show the background, problem statement,

purpose of the study, study objectives, research questions, and the scope of the study in terms of

geography, variable, time, and the significance of the study.

1.1 Background

Technological developments particularly in the area of telecommunications and information

technology are revolutionizing the banking industry. With the development of this technology,

electronic commerce is now holding a promise of new revolution. A number of studies have

examined the development of electronic banking and its operations. It is widely believed that the

impact of e-commerce enables banks to provide an inexpensive and direct way of exchanging

information and to sell or buy products and services. Today, financial sector firms are competing

to increase their profit share in the market. Among these firms, banks have radically shifted from

traditional banking to branchless mode of banking. Adoption of latest technology has enabled

banks to extend their customer base, where electronic banking has proved to be the chief

advancement. There fore with globalization, Ugandan banks have no choice but to adopt

electronic banking services to enhance effective service delivery that transcends to customer

satisfaction, if they really want to stay in the business race, to be profitable (Madureme, 2009).

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According to Swaminathan J and Ananth A (2010) Electronic banking is the automated delivery

of new and traditional banking products and services directly to the customer through the

electronic communication like computers, ATM‟s and internet websites. It is further means the

provision of retail and small value banking products and services through electronic channels.

Pahnila and Pikkarainen (2004) further define Internet banking as an „Internet portal, through

which customers can use different kinds of banking services ranging from bill payment to

making investments‟. With the exception of cash withdrawals, Internet banking gives

customers access to almost any type of banking transactions at the click of a mouse.

However, Electronic banking is a 24-hour access to cash through an automated teller machine

(ATM) with Personal Identification Number (PIN) for the purpose (Marsh, 2005) or direct

deposit of paychecks into checking or saving accounts. However internet banking includes the

systems that enables financial institutions customers, individual or businesses access accounts,

transact business or obtain information on financial products and service on public or private net

work including internet while it is further defines internet banking as the act of conducting

financial intermediation through the internet. Many banks worldwide including developing

countries like Uganda use computers and computerized equipment like ATM‟s which is the

perfect example for such equipments whose purpose is to provide banking services to customers

at there convenience and such banking service include cash withdraws, balance enquiries, mini

bank statement and many others, (Kateeba,2001)

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 competitive advantage with the

advent of globalization and fierce competition ( Flavián, and Torres,2012). There is little

doubt that the proliferation of, and advancements in, Internet-based technologies have resulted in

fundamental changes in how companies interact with their customers (Ibrahim et al, 2006;

Bauer et al., 2005; Parasuraman and Zinkhan 2012). However, Thomas (2002) explains that

since the rise of the internet the way business interact with people and other businesses has

changed and banks have benefited with the advantages associated with the electronic banking

services. The benefits banks derive from electronic banking products and services delivery are

improved efficiency and effectiveness of their operations so that more transactions can be

processed faster and most conveniently, which will undoubtedly impact significantly on the

overall performance of the banks, (Suresh Padmalatha 2011)

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According to Edfy (2000) customer satisfaction is the process through which businesses ensure

customer loyalty and non defection of customers to the competitors. Customer satisfaction has

business leader‟s attention, as it is the basis for ensuring sustainability in a business. Nigell Hill

et al (2008) defines it as a measure of how products and services supplied by a company meet or

surpass customer expectation and there for in a competitive market place where businesses

compete for customers, customer satisfaction is seen as a key differentiator and increasingly has

become a key element of business strategy

According to Hesket et al (2011) the concept that the customer is important in achieving business

success dates back to about fifty years ago when business management studies recognized

marketing as an essential discipline.

But according to the recent research and reports customers are still un aware of these services

and they have not taken time to look at them as a solution, that is why most of them are still

crowding banks for withdraws, deposits and this make the researcher to wonder and try to find

out the cause of this.

Commercial banks in Uganda have valued the importance of electronic banking in improving

their organization performance and profitability

According to Mutebile (2007) Ugandan bank customers have shown a low adoption rate to

internet banking which means that they are dissatisfied with them. Most banks in Uganda have

registered few customers using the service. Baraghani (2007) further says that, consumers go

through “a process of knowledge, persuasion, decision, implementation, and confirmation before

they are ready to adopt a product or service and get used to the service.

Internet banking adoption common concerns include the performance and security of banking

transactions as well as the confidentiality of personal account data and therefore these concerns

increase the level of perceived risk which is further exacerbated by declining levels of trust in

banks thus leading to low levels of internet banking adoption. Its asserted that Ugandan bank

customer have adopted internet banking at a very slow rate. She identifies security concerns to

increase the customer‟s risk leading to distrust of internet banking leading to customers not being

satisfied and that‟s why customers prefer to use cash to electronic means of payment because

they don‟t find these electronic means to be important and not easy to use

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In addition, Topisita (2006) says that customers are not satisfied with the services provided by

commercial banks in Uganda. She reveals that customers raise a number of complaints to include

breakdown in the system, unavailability of conformation receipts for withdraw among others. It

is based on these developments in the industry that the study will seek to empirically examine the

impact of Electronic Banking Service (EBS) on customer satisfaction in the Ugandan banking

industry.

Centenary back was founded in 1983 as a credit trust, centenary rural development trust (CRDT).

In 1985, centenary rural development trust began to provide financial services to the public.

Centenary bank became a fully licensed commercial bank in 1993, after receiving a banking

license from the bank of Uganda. On 26-03-2007 centenary rural development bank re-branded

and trimmed its name to just centenary bank. Centenary bank is now Uganda‟s largest

indigenous bank with over 37 branches.(www.centenary bank.co.ug). As of April 2010 centenary

bank is the 5‟ largest commercial bank in Uganda with an asset base of US 306.7 millions

representing approximately 7.4% of the all banks assets in the country. (www.centenary

bank.co.ug) the bank‟s stock is owned by the following corporate entities and individuals,

Table 1: Showing ownership of centenary bank in percentage

Rank Name of Partner Percentage ownership

1 Roman catholic dioceses of Uganda 39.00

2 Uganda roman catholic secretariat 31.00

3 Stitching Hivos Triodos Fonds 18.00

4 SIDI 11.00

5 Ugandan individuals 01.00

Total 100

Source: www.centenary bank .co.ug

Despite all efforts of Centenary Bank to provide efficiency, effectiveness and

quality services through electronic banking, majority of the users of the system are ignorant

which has left the problem of long queues in Centenary Bank halls unsolved many customers

have lost their money under this system (Byarugaba 2001).

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1.2 Statement of the Problem

Since e-banking service adoption by banks, customers seem not willing to adapt to these services

and this is evident by increased queues in the banking halls, customers are still carrying large

amount of cash, which points to their being dissatisfied with the services. However, banks have

tried to improve their systems by building more infrastructures and new services like Cente

mobile to increase customer satisfaction but the problem has persisted. This is probably due to

the increasing problems associated with e-banking systems. This is asserted by Bwonditi (2010)

who observed that several complaints by customers about these services mostly the ATM‟s, that

stopping a payment, reversing a transaction and refund is not possible and hardly do people talk

about these services. Therefore, that is why the researcher wants to find out the impact of

electronic banking on customer satisfaction in Centenary Bank.

1.3 Purpose of the Study

The purpose of the study is to establish the contribution of electronic banking on customer

satisfaction in Ugandan commercial banks using Centenary Bank as a case study.

1.4 Objectives

i. To find out the different e- banking services in commercial banks.

ii. To find out the determinants of customer satisfaction

iii. To establish the relationship between electronic banking and customer satisfaction

1.5 Research Questions

i. What are the different e-banking services in commercial banks?

ii. What are the determinants of customer satisfaction at centenary bank?

iii. Is there any relationship between e- banking and customer satisfaction?

1.6 Scope of the study

1.6.1 Geographical scope

The study will cover Centenary Bank at different branches in Kampala that is to say Nakivubo

road branch, Entebbe Road Branch, Namirembe Branch and Mapera Main Branch.

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1.6.2 Content / Variable Scope.

The study is to look at electronic banking services like ATM‟s and how it is linked to customer

satisfaction variables like disconfirmation in Centenary bank.

1.6.3 Time Scope

This study is to cover a period from 2000 to 2013 this is the period when most people started

using ATMs and other electronic banking services as expected by banks.

1.7 Significance of the Study

To commercial banks, the results will help in providing information on the extent to which

electronic banking has affected customer satisfaction.

It will further suggest alternative ways through which customer satisfaction can be ensured.

To the researcher, it will act as a par fulfillment for the award of a bachelor of commerce degree

from Makerere University.

To scholars and other researchers the finding will act as a yardstick for them to use when

carrying out research in relation to this topic such that it can widen their knowledge about the

problems and various solutions.

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CHAPTER TWO

2.0 LITERATURE REVIEW

2.1 Introduction

This chapter contains salient issues in the existing published literature on the effect of electronic

banking on customer satisfaction in commercial banks in Uganda. It has been carefully selected

from published journals on the internet, text books and other relevant presentations made outside

Uganda.

2.1.0 Electronic Banking

This is where a customer can access his or her bank account via the internet using personal

computer (PC), or mobile phone and web browser However Marsh (2005) defined electronic

banking as a 24 hour access to cash through an automated teller machine (ATM) with Personal

identification Number (PIN) or direct deposit of paychecks into checking or saving accounts.

Insely and Fleming (2000) say that electronic banking is an umbrella term for the process for

which a customer may perform banking transactions electronically without visiting a brick and

Mortar institution. Bhattacherjee (2001) summarizes it all and defines it as an integrated system

that can provide customers‟ flexible, convenient and inexpensive platform with integrated

services of online personal banking products including online checking and saving accounts,

money market accounts, certificate of deposit, credit cards, home equity loan, home mortgage,

insurance, investment services, portfolio management and other related financial services.

Therefore using internet banking, bank customers can conduct the same banking transaction

provided by brick and mortar branch at any time and any place through a simple and user-

friendly browser Polatoglu and Ekin (2001).

Through Internet banking, you can check your transactions at any time of the day, and as many

times as you want to. In a traditional method the banks customer gets quarterly statements from

the bank. If the fund transfer has to be made outstation, where the bank does not have a branch,

the bank would demand outstation charges. Whereas with the help of online banking, it will be

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absolutely free for you. Recently Centenary bank offers a number of electronic banking services

and lets go a head and elaborate on these services.

2.1.1 Electronic Banking or Electronic Fund Transfer Services available in Banks

Automated Teller Machines (ATMs)

These are electronic terminals that let you bank almost virtually any time. For customers to

withdraw cash, make deposits, or transfer funds between accounts, they generally insert an ATM

card and enter their PIN‟s. ATM‟s have a positive response. Since the introduction of the first

cash dispenser 30 years ago, ATM technology has gradually become the electronic face for most

bank customers. They are 24 hours around the clock electronic cashiers which provide access

into customers account by use of ATM cards on the banks ATM machine located on site in all

branch offices and off site in strategic places in the main towns around the country. Uganda now

has a good network of these ATM machines in most of the important business towns which are

also VISA electronic enabled and thus you can withdraw cash for your use locally. Wakefield

J.(2010).

According to Morris,c. (2004), ATMs have extended banking services to the remote areas

depositing and withdrawing of funds can be carried out thus yielding positive results. Looking at

the service range of ATM as reported by Chattered Institute of bankers journal (1995) and Peter

Wandri of Daily Monitor, include, cash withdraws, school fees payment, balance inquiry,

ordering of financial statements, topping up air time, and also paying credit and utility bills to

mention but a few. ATMs come with advantages like, they save time, one does not need to come

to the bank and wait in a cue or fill some paper work every time one wants to withdraw cash.

Ramsay (2000) in his managerial auditing journal says that ATMs are also easy to use and the

machine guides the customer through each step. All what the customer has to do is to follow the

instruction appearing on the screen.

E-Water Payments

This is a flexible and convenient water bill payment method for all customers

through all Centenary Bank‟s branches and service centers. These services are offered free of

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charge, instant confirmation of the customers payment is done through your phone and to use

this service the customer must have a National Water and Sewerage Corporation Water bill or a

NWSC customer reference number and a mobile phone number. Benefits of the services to the

customers are ease of making your water bill payment in a secure environment, ability to make

your water bill payment in over 39-service locations countrywide, flexibility of payment (cash,

draft, standing order, or cheque) and many others.

Cente Mobile

Cente Mobile is a 24/7 full banking service that allows Centenary Bank customers to perform

financial transactions and access banking information using their mobile phones anytime and

anywhere, here a customer can see his balance, mini statement, fund transfer, Airtime purchase

and bill payment using your phone. Benefits of this service to the customers include a 24/7

banking at your fingertips, convenience- allows transactions from anywhere, anytime, simple to

use, instant services received like airtime, transfer of money.

SMS Banking

SMS banking uses short text messages sent through the client‟s mobile phone. SMS text

messages are used for both passive and active operations similarly as with classic telephone

banking. A client can automatically receive information about his account balance the message is

sent to the client immediately after a certain operation is performed, or on request: a client sends

the bank a correctly formatted message, which processes it and answers the client‟s request by

SMS. Information sent on request mostly concerns current interest rates or currency exchange

rates. Providing these is simple for the bank because this is publicly accessible information that

needs no protection. A client however can request information about the balance in his account,

which is not public information and must be protected when it is provided. Passwords are used

for this purpose or technologies based on the principle of an electronic key. A client however is

required to know the code of every transaction including constant and variable symbols.

Direct Deposit

Another E-banking service is the direct deposit and these let you authorize specific deposits like

paychecks, Social Security checks, and other benefits to your account on a regular basis. A

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customer may pre-authorize direct withdrawals so that recurring bills like insurance premiums,

mortgages, utility bills, and gym memberships are paid automatically. Bank customers should

also be cautious before they pre-authorize recurring withdrawals to pay companies they are not

familiar with, funds from their bank account can be withdrawn improperly. Therefore, customers

should make sure that direct recurring payments take place and are for the right amount.

Mail Banking

Mail banking is another electronic banking service that makes it possible to communicate with

the bank by electronic mail or e-mail. The most frequently used service is sending account

statements at agreed periodicity to the client‟s mailbox. E-mail are not used for operations that

are more complex. Payment Instruments and Self-Service Zones Apart from those already

mentioned, there are other more or less widely known forms of electronic banking, including a

payment card.

An electronic wallet represents a chip card similar to a payment card that\contains a record of a

financial sum that is available to its owner. A self-service zone is a fully automated alternative

work place of a bank with terminals and devices that clients can use to get various bank services.

It enables active and passive operations offered by the bank to be made without the presence of a

bank employee. Devices are constructed for very easy use with simple intuitive controls (user

friendly).

NSSF Payments

The Bank on behalf of the National Social Security Fund accepts payments from organizations

that have registered to remit their employees social contributions. The cash for the contributions

is credited directly to NSSF‟s Collection and there is no need for customers to go to NSSF

premises.

Personal Computer Banking

PC banking helps customers to handle many banking transactions using their personal

computers. For example, you may use your computer to request transfers between accounts and

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pay bills electronically. Customers can get a number of benefits that 24 hours availability of the

services, hassle free and no queues.

Debit Card Purchase or Payment Transactions

A payment card is currently one of the most widely used payment instruments designated for

authorized holders through which they can perform non-cash payments or cash withdrawals from

an extensive network of automated teller machines. These let you make purchases or payments

with a debit card, which also may be your ATM card. Transactions can take place in-person,

online, or by phone. The process is similar to using a credit card, with some important

exceptions. A debit card purchase or payment transfers money quickly from your bank account

to the company's account, so you have to have sufficient funds in your account to cover your

purchase. This means you need to keep accurate records of the dates and amounts of your debit

card purchases, payments, and ATM withdrawals.

Telephone banking

Africa has experienced an incredible boom in mobile phone use over the past decade. Today

there are more than 500million mobile users and in Uganda alone over 10 million people or

about 30% of the population own mobile phones, and the number is growing rapidly every day.

In respect to this research, telephone-banking technology means availability, accessibility, and

use of telephones (wired or wireless telephones) to engage in deposits, withdrawals and account

balance inquiry by users in the industry.

Electronic Check Conversion

This service converts a paper check into an electronic payment in a store. When the customer

gives her check to a cashier in a store, the check is ran through an electronic system that captures

the customers banking information and the amount of the check. The customer signs a receipt

and gets a copy for her records. When the check is given back to her, it should be voided or

marked by the merchant so that it cannot be used again. The merchant electronically sends

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information from the check (but not the check itself) to the customer‟s bank or other financial

institution, and the funds are transferred into the merchant's account.

The success of electronic banking, as agued by many researchers, depends probably on bank

service quality, customer preferences, and satisfaction. Recent studies found that consumer

behavior is changing partly because of more spare time. The way of use of financial services is

characterized by individuality, mobility, independence of place and time, and flexibility (Seitz

and Stickel, 2004).Despite the fact that banks have taken this innovative step in adding value to

customers, some environmental factors are affecting banks in achieving the desired level of their

intentions. Financial institutions on a global scale have lost over 650 billion ($5 billion) to

internet banking fraud from 2005 to 2007. He further stressed that, when such losses are

incurred, banks are very fast in passing the bill to the final consumer (bank customers) which

does not create any value to them. This situation heightens fear amongst consumers of this very

product/service

2.2 Customer Satisfaction

2.2.1 Introduction

Businesses always start and close with customers and hence customers must be treated as the

King of the market. All the business enhancements, profit, status, image etc of the organization

depends on customers. Hence, it is important for all the organizations to meet all the customers‟

expectations and identify that they are satisfied.

2.2.2 Definition

Customer satisfaction is the customers overall feeling of contentment in a business interaction

(Elaine 2005). Customer satisfaction is defined as a measure of how products and services

supplied by an organization meet or surpass customer satisfaction. According to Berry (2000)

customer satisfaction is defined using 10 dimensions of satisfaction which include quality, value,

timeless, efficiency, ease of access, environment, interdepartmental team work, frontline

services, behavior, commitment to the customer and innovation. Satisfaction may develop

quickly or it may be cultivated over a period. It is the overall pleasant experience after

consuming a product or service. Therefore, customer satisfaction is the state of mind that

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customers have about a company when their expectations have been met or exceeded over the

life time of the product or service.

The international consortium,(2005) spells out the ability to be flexible in managing customers

enables the business to reap the benefits of good customer satisfaction and this is because

customer satisfaction is closely linked to quality in recent years. The achievement of customer

satisfaction leads to company loyalty and product repurchase. Clearly defining and

understanding customer satisfaction can help any company identify opportunities for product and

service innovation and serve as the basis for performance appraisal and reward systems. Only

customers can evaluate service in light of their unique expectations. Consequently, responsibility

for measuring and demonstrating continuous service improvements should focus to the service

professional. Only when service teams are actively involved in every facet of the service

business, including measurement of quality, can organizations capture the enthusiasm needed to

radically enhance service delivery.

2.2.3 Determinates of Customer Satisfaction

Consumer satisfaction can be determined by a number of factors that is to say customer

expectations, fees and charges, quality, customer care, and many others as discussed below.

Product perceived performance and expectations,

If the performance falls short of the expectations, the customer is dissatisfied. And when the

performance exceeds expectations, the customer is highly satisfied or delighted (Ulrich 1999).

Many companies are aiming for high satisfaction because customers who are just satisfied still

find it easy to switch when a better offer comes in. Customer satisfaction does not only result

from providing excellent service, but from customers perceiving that a company delivers a

service that is unique. Achieving this quality of service takes a serious commitment from every

employee in the organization through providing excellent service that exceeds customers‟

expectations to the extent that they are willing to tell others about their experience. Oliver (1980)

found that disconfirmation can affect customer satisfaction. Positive disconfirmation (perceived

performance above the expectation) increased consumer satisfaction and while negative

disconfirmation (perceived performance below expectation) decreases consumer satisfaction

14

15

Customer Service

Employees should answer the phone with a smile. A smile can be "heard" in someone's voice.

Nothing frustrates customers more than being served by an employee who feels the customer is a

waste of their time. According to Craig C (2003) improving an organizations customer service

requires commitment and consistence effort from every one in the organization. They advanced

10 fundamentals that will help create a culture of continuous service improvement. Companies

need to define success for every one in the organization as continually improving everything

everyday. Customer service improvement is the cumulative effect of thousand small

improvement made daily at every level in the organization. It often requires changing the culture

from one that accepts the status quo to one that is excited about change and constant

improvement. Listening is the foundation of all good relationship and pre-requisite to business

success, but surprisingly, few companies systematically listen to customers, suppliers,

employees, and competitors. The radical service improvements needed to sustain a competitive

advantage, require better customer information systems. The more the organization knows about

customers‟ business and needs, the easier for it to form strategic partnership with in them.

Service Quality

Service quality or perceived service quality is a determinant of customer satisfaction. Some

researchers state that service quality and satisfaction measure the same underlying concept and

therefore are the same. Other authors argue that satisfaction with a specific transaction precedes

the perception of the overall quality of the firm and therefore is the antecedent of perceived

quality. Finally others suggest that the concept of satisfaction and quality are different and that it

is the perceived service quality that will affect customer satisfaction. Fornell (1992) finds that as

a general psychological phenomenon, satisfaction is primarily a function of customer‟s quality

experience with a product or service. So over all it is expected that the greater the perceived

quality, the higher the level of customer satisfaction.

16

Needs and desires of the customers.

This is one of the determinants of customer satisfaction (Grigoroudis 2010). In order for a

business to meet the needs and desires of customers, the business must know the needs and

desires of the customers. This information is vital not only for successful business but also for

understanding and improving customer satisfaction. This important component helps to set the

standards and components of satisfaction from the perspective of the consumer.

Value of Products and Services

According to SwaminathanJ & Ananth A (2010) perceived value of the product is one of the

determinants of customer satisfaction. Customer satisfaction depends greatly upon receiving a

quality product with the expected value attached and service at a competitive price. Not only is

the customer looking for the right product or service, he is looking for someone who is

knowledgeable about the product or service as well.

Product ambiguity

Clarity of issues is also determines customer satisfaction. Product experience can often be

ambiguous, such as when the guilty of a product is difficult to evaluate. The difficulty may arise

when a product for example clothes or insurance cannot be judged based on objective criteria, or

when a product for example diamond may have many credence qualities or subjective attributes,

Alternatively, there might be a potential for multiple interpretations of product quality

Sometimes it is difficult to determine what is acceptable, desired, or valued from product. If the

product is difficult to evaluate or ambiguous, consumers are likely to lack confidence about the

performance ratings.

Fees and Charges

Service quality attributes in e-banking industry are important since human-internet interaction is

the main service delivery and communication channel. Offering high quality services to satisfy

consumers' needs, at lower costs, are potential competitive advantage of e banking. So me

studies show that e-banking has successfully reduced operating and administrative costs (Speece,

2003). Cost savings have helped e-based banks offer lower or no service fees, and offer higher

17

interest rates on interest-bearing accounts than traditional banks (Gerlach et al 2000). Therefore,

it is hypothesized that fees and charges have positive impact on customer satisfaction.

2.3 Electronic Banking and Customer Satisfaction in Commercial Bank

Electronic banking is linked to customer satisfaction through globalization. He explains that this

has not only brought the world closer together, but it has allowed the worlds economy to become

a single interdependent system. This means that local and international business can easily share

information quickly and efficiently.

Lenart .S. (2012) argues that customer satisfaction for financial institutions and banking Website

display positive growth in 2010 and nearly two thirds of online financial customers now use bill

pay across,credit cards and third party websites.

Electronic banking has drown attention of many banks to application of various technology

devices in promoting or achieving better customer service delivery that guaranteed customer

satisfaction that translates into increased profitability and higher return on investment.

Electronic banking services and customer satisfaction have a positive relationship, which has

afforded banks the opportunities to impress customers, which eventually encourage them to keep

coming back. Today it would be difficult to see any bank in the country that doesn‟t render one

form of electronic banking service or the other, even banks in the most remote parts of the world.

Vaidya (2011) argues that emerging technology would enable to create new ways of lead

generation, prospecting as well as developing deep customer relationship and electronic banking

would achieve superior customer experience with bi-directional communications. In his view ,

ascertains that access to basic financial services, ability to save, transfer and also invest small

amounts of money can make a huge difference to people around the world.

The other linkage between electronic banking and customer satisfaction as revealed by (Barney

2006) is cost effectiveness. He explains that information technology has helped to computerize

the business process thus streamlining businesses to make extremely cost effective money-

making machines.

18

Barney (2000) also adds on the fact that electronic banking has created more time for businesses.

This is so in that electronic banking has made it possible for business to open 24/7 all over the

globe. This means that a business can be opened any time anywhere, making purchase from

different countries easier and more convenient. It also means that you can have your goods

delivered right to your doorstep with having to move a single muscle.

Conclusion

In conclusion, it can be noted that not much scholarly work exists about electronic banking in

Uganda and how it affects customer satisfaction. This is due to the fact that Electronic Banking

is just a new initiative in the banking sector. However a few scholars have come up to raise their

views about electronic banking and how it relates to customer satisfaction particularly in

unpublished work like dissertation, concepts paper and proposal, articles from World Wide Web

(internet), in journals and chapters in un edited books. Therefore, the area continues to be a

researchable zone for the current researcher this is mainly because most research is done on case

study basis and there is always a feeling that information collected is inadequate.

19

CHAPTER THREE

3.0 METHODOLOGY

3.1 Introduction

This chapter entails the description of how the research was conducted. It includes the area of

study, the research design, the type of correspondents, and the research tools used, procedures for

data collection, and methods of data analysis applied in the study.

3.2 Study Design.

The researcher used an exploratory research design to generate basic knowledge, clarify relevant

issues and to break grounds about the characteristics and nature of the problem and also to

uncover the variables associated with the problem and the researcher used a cross sectional

design in addition so as to establish the relationship between electronic banking and customer

satisfaction

3.3 Area of study

The area of study was centenary bank branches in Kampala Central because it‟s strategically

located and the researcher can easily get access to the many customers who are using these

electronic banking services offered.

3.4 Population

The population in the study involved centenary bank staff who attend to most customers and

finally a number of accessible Centenary customers.

3.5 Sample Size and Selection Method.

The researcher used a non-random sampling design to focus on the few elements in the

population selected properly with some prior knowledge and because of limited resources

particularly time, wide dispersal of the population and absence of the sampling frame from

which samples were selected. The sample size constituted 40 respondents. The formula below

20

was used to determine the size. N-n whereby N represents the population and n represents the

sample population. Therefore we assume N=100 – 60 = 40.

The sample size distribution

Respondents Number of respondents

Bank staff 10

Customers 30

Total 40

3.6 Data collection tools and methods

The data was collected by use of questionnaires, documents review which entailed reading,

interpreting and analyzing the information in the documents. The questions in the questionnaire

were closed-ended. For close-ended questions, respondents were offered a set of answers and

were asked to pick one that closely represents their views.

3.7 Data Management

3.7.1 Data Processing

Data processing involved scrutiny of the responses put on the questionnaires. Then the data was

sorted, edited, and interrelated. Finally, coding and tabulation of the data obtained followed.

3.7.2 Data Analysis

The data collected from questionnaires where summarized in light with the objectives and the

research questions of the study. The answers where translated into numeric data, tabulated with

percentages and figures obtained for understanding and presentation of the data.

3.8 Limitations of the Study

The researcher encountered a number of problems

There was lack of comprehension of some questions especially where the respondents selected

had little knowledge about a particular question.

21

Financial problems in gathering data about the institution and it was common with customers

who do not want to share their experiences without a fee. In addition, expenses related to

transport to and from the bank premises and all other related expenses such as stationary,

photocopying and printing.

Time period provided was very short, so the researcher had to minimize whatever had to be done

in order to be on time and do the needful. Therefore, the researcher had to do everything as quick

as possible

22

CHAPTER FOUR

4.0 PRESENTATION, INTERPRETATION, AND DISCUSSION OF FINDINGS

4.1 Introduction

This chapter presents the analysis of data collected from the field. Findings are presented on the

respondents characteristics, that is to say age, gender, education level, period of banking with the

organization and accounts held by the respondents. They also show the knowledge respondents

know about the electronic banking services, their availability at the bank and finally the

determinates of customer satisfaction in Centenary Bank.

4.2 Characteristics of respondents

This sub-section presents staff and customers‟ bio-data by gender, age, education level, duration

of banking with the organization and type of account held by the sample population.

4.2.1 Gender

In order to establish the gender which frequently uses Electronic banking services, the

respondents where asked to state their sex. The results are as presented in table 4.1 below.

Table 4.1 Showing respondents by gender

Gender Frequency Percent

Female 22 55.0

Male 18 45.0

Total 40 100.0

Source: Primary data

The table above shows female customers where more than male.

This is attributed to the fact that female customers love direct contact with some one. It was also

found out that they like to deal with tellers for any of there transactions such that they know that

their money is safe rather than dealing with machines. To use an ATM to deposit money they

23

consider it very insecure that is why they continue to use banking halls than males who are very

bold and they can use EB service with out feeling insure.

4.2.2 AGE

The age of the respondents was relevant to establish the age bracket, which used the EBS in most

banking halls. The results are as in the table below.

Table 4.2 Showing age distribution of respondents

Frequency Percent

Below 25 5 12.5

26-30 14 35.0

31-35 13 32.5

36-40 5 12.5

41 & Above 3 7.5

Total 40 100.0

Source: Primary data

Table 4.2 shows that most of the people who use EBS in Centenary Bank are in the brackets of

26-30 and 31-35.

Due to the advancement in technology, most of the things change as technology changes.

Therefore its found out that people in the age group of 26-30 always try to find out the

advancement and its very clear they always like using the new technology. It is also revealed that

using the EBS is not the problem but banks do not put in a lot of effort to advertise these services

which creates that gap of usage. Recently most of the people in this age group own atleast

computers so they can use the services however, they say that they also fill insecure due to the

internet fraud associated with the EBS.

24

4.2.3 Education Level

In order to find out the knowledge respondents may have about these services, they were asked

to state their education level. The results are as below

Table 4. 1: Showing distribution of respondents according to level of Education

Education level Frequency Percent

O' Level 5 12.5

A 'level 3 7.5

Degree 19 47.5

Diploma 7 17.5

Post graduate 6 15.0

Total 40 100.0

Source: primary data

Results show that most of the respondents where degree holders, which indicated that

information was obtained from well educated respondents as well as the Centenary bank staff is

well educated. The respondents are familiar with the use of the computers and it‟s very easy for

most of them to use the EBS services. If the person is not a computer irritrate, it is very easy for

them to operate these services hence increasing the usage, but most of them use ATM‟s and keep

on ignoring the other services.

4.2.4 Period of banking with the organization

In order to ascertain how long these respondents shared a number of issues with the bank and

how they rate this organization to others, they where asked to state the period they have banked

with the organization. The results are as shown in table 4.4

25

Table 4. 2: Shows the period of banking with the bank

Period of banking with the bank Frequency Percent

less than 3years 7 17.5

3-6years 14 35.0

7-9years 9 22.5

More than 9year 10 25.0

Total 40 100.0

Source: primary data

Table 4.4 shows that most of the respondents have banked with the organization for more than 3

years. Customer‟s show that they have banked with the organization for along period of time and

this is attributed to the good and excellent work done by the organization. According to the

respondents, the bank has tried to carter for their needs that is to say, they have opened up more

branches to help them ease their banking. They have opened up over 100 ATM‟s such that

customers save time with out going to banking halls, E- water payment systems to help them pay

their pills in time and they have kept on introducing a number EBS services to help them with

their banking needs like the introduction of Cente Mobile by the bank. There is a lot of

confidence they put in their bank and tell that they can be royal to the bank.

4.2.5 Accounts held

In order to establish how frequently they use the electronic banking services, customers where

asked to state the accountants they hold with the bank. Results are as shown in table 4.5 below.

Table 4.3: Shows the accounts held by the respondents

Accounts held Frequency Percent

current account 17 42.5

fixed deposit account 5 12.5

savings Accounts 18 45.0

26

Total 40 100.0

Source: primary data

Results indicate that customers held saving accounts and current accounts with the bank. The

respondents said that most of them opened those accounts in order to receive their money

electronically and easily. They could easily make transfers to other accounts locally and

internationally through online banking anywhere, anytime and it is supported by (Moriss.c 2004)

that the electronic banking services have extended banking to even remote areas. They also said

it was very easy to view their account balance with the new services like Cente Mobile. It only

works if you hold a saving or current account with the bank. Making payments also becomes

very easy and messages are sent to each customer once a transaction is made.

4.3 Electronic banking services

This section presents findings on the knowledge and availability of electronic banking services at

centenary bank.

4.3.1 Knowledge about e-banking services

To establish the wide experience and involvement of the respondents with Electronic banking

services, they where asked on the knowledge they had about EBS.

27

Table 4. 4: Show knowledge about e-banking services

Electronic banking N Minimum Maximum Mean

Sig. (2-

tailed)

Std.

Deviation

I understand what is meant by

electronic banking 40 1.0 5.0 2.075 0.000 1.1410

Customers know the

electronic banking services

available

40 1.0 5.0 2.450 0.008 1.2393

Electronic banking is the

cheapest way of making

transactions

40 1.0 5.0 2.500 0.015 1.2403

There is flexibility while

using electronic banking

systems

40 1.0 5.0 2.175 0.000 1.1522

I consider human tellers more

important despite the

emergency of electronic

banking

40 1.0 5.0 2.350 0.003 1.3117

Statement and account

balance enquiries are carried

out electronically

40 1.0 5.0 2.150 0.000 1.1668

Source: primary data

Results from table 4.6 show that a number of respondents understand what e- banking means. It

was found out that when customers enter the banking halls, they only know a few banking

services. They also said that they knew ATMs very well and in their statements, they were not

aware of how they can use them while depositing and making other specific transactions.

With the availability of the Electronic banking services, results show that customers knew the

services available. Findings revealed that respondents knew a few of the EBS‟s like ATMs, PC

banking, Western Union however, while they were asked apart from knowing them, how often

they used them, they were very clear that most of them used ATMs and the reason for not using

others was that they did not own computers and internet is another problem.

Results on whether EB was the cheapest way of making transactions revealed that they agreed to

the statements. While interacting with the respondents, results revealed that ATM withdraws,

28

were very cheaper than OTC transactions it is supported by (bhattacherjee 2001) who says that

the EBS are very cheap. They also said that the bank charges 500# per withdraw via the ATM

and over the counter you will be charged 1000#. They continued to say that due to the

introduction of the Cente Mobile the OTC transactions are now charged 2000 such that they

discourage people from using them, however many have not cared about the increment or they

are still un aware of the increment, they still go ahead to use them.

Results on whether customers knew the electronic banking services available revealed that the

respondents knew the services. Findings show that most of the respondents were aware of the

availability of the ATM services, SMS banking, direct deposit, transfers and the newly

introduced Cente Mobile and the E-water and E-NSSF payment system. They did not know

about the other services and they often used them.

Results on electronic banking being the cheapest way of making transactions were a good

number supported the question. Findings show that most of the respondents agreed to the

question. They mostly compared ATM services to the OTC transactions. It‟s revealed that ATM

services are cheaper and fast (Ramsay 2000) also says they are the cheaper ways to make

transactions, there is no need to hustle with people in a queue. You also do not get to cooperate

or react with those faces of the tellers.

Further, more in table 4.6, respondents supported the question on the flexibility while using

electronic banking services. In our discussions, respondents said that there is flexibility.

However many of them said that the problem is with ATMs as asserted by Topista that stopping

an instruction is not very easy while using them.

On the question of considering human tellers more important despite the emergency of the

electronic banking services was also very supported and according to the results its revealed that

many consider them more important. This would show that bank customers in Uganda do value

the importance of the personal touch in the banking services. In fact observation in the banking

halls of the most banks reveals that although relationship offices encourage customers make

inquires directly through telecommunication means available, it amazes one to see that many

customers prefer coming physically to the bank to make inquires. They say one can not ask a

machine to do for him or her any transaction but for a person it is very easy to interact with them

29

and ask them what you want to do. For any ;error in any nothing it wouldn‟t be your fault but the

tellers fault and they will have to do everything in their favour to electrify the mistake but when

you do a mistake will using the a machine you have to waste time such that they can help you

out. That why most of them are still using banking halls than the EBS.

Most of the respondents agreed that statements and account balance inquires are carried out

electronically. Findings show that statements and accounts opening are done electronically

though the customers have to first fill papers. This part has to be revised atleast they remove that

process of the paper work and they do every thing electronically such that the process is

simplified.

30

4.3.2 Availability of Electronic banking services

In order to establish how respondents were well conversant with EB services, respondents where

asked whether they knew the EBS available at Centenary Bank. The results are shown in table

4.7.

Table 4. 5: Shows the availability of E-banking services

Electronic banking services N Minimum Maximum Mean Std.

Deviation

Sig. (2-

tailed)

Electronic payment systems are

available at centenary bank 40 1.0 5.0 2.225 0.000 1.0497

I can access electronic banking services

at any time 40 1.0 5.0 1.750 0.000 .9268

Personal computer banking is available

at the bank 40 1.0 5.0 2.450 0.009 1.2598

ATM services are available at

centenary bank 40 1.0 5.0 1.975 0.000 1.0250

E-tax payment systems are available at

centenary bank 40 1.0 5.0 2.900 0.634 1.3166

E-bill payment system are available at

the bank 40 1.0 5.0 2.550 0.043 1.3578

SMS banking services are available at

centenary bank 40 1.0 5.0 3.000 1.000 1.1094

Cente Mobile is available at centenary

bank 40 1.0 5.0 2.250 0.000 1.2352

E-NSSF system is available at

centenary bank 40 1.0 5.0 3.125 1.560 1.3433

Direct deposits are available at

centenary bank 40 1.0 5.0 2.475 0.012 1.2606

Source: primary data

31

From table 4.7, respondents agreed that electronic payments systems, easy access of the EBS, PC

banking, ATM services, E-Tax payment systems, E-bill payment systems, Cente Mobile and

Direct deposit were available at Centenary Bank. However, they were not sure of the SMS

banking and E-NSSF system‟s availability at the bank. Findings on the availability of these

services at the bank was very critical, respondents believed that the services were available

although their use was very slow. The respondents were very sure of the availability though they

were not sure of whether they could use them with out any guidance from the bank. They were

familiar with ATM‟s, they only use the machines for withdrawing, and they did not use the

ATMs for any other transaction because they did not trust the machine like with depositing. The

bank also should try to make them aware that the services are safe but if that fails people will not

vacate banking halls for taking deposits.

On the other hand, with E-NSSF and SMS banking respondents said they should be sensitized of

their availability and advantages one can achieve with the use of the services

4.4 Customer satisfaction determinates

Customers have a number of determinates organizations have to consider such that they are

satisfied. Therefore, under this subsection we will determine whether Centenary Bank meets the

customer‟s needs such that they are satisfied with the services offered

4.4.1 Determinates of customer satisfaction

In order to establish whether customers were satisfied with the services offered by the bank, they

were asked whether what they consider their satisfaction determinates are fully met by the bank

and the results are as follows.

32

Table 4.6: Shows customer satisfaction determinates

Customer satisfaction

determinates N Minimum Maximum Mean

Std.

Deviation

Sig.(2-

tailed

Electronic banking affects the

attainment of customer

satisfaction

40 1.0 5.0 2.175 0.000 1.2380

Management understands

customers needs which satisfy

them

40 1.0 5.0 3.925 0.730 1.3660

The bank offers good quality e-

banking services 40 1.0 5.0 2.700 0.220 1.5225

Management offers serious

attention to its clients 40 1.0 5.0 3.711 0.176 1.2926

Customer requirements and

needs are satisfied in centenary

bank

40 2.0 5.0 4.30 0.025 0.0087

Customer problems are

promptly responded to by staff 40 1.0 5.0 3.200 0.372 1.3996

Electronic banking facilities

are reliable to customers 40 1.0 5.0 4.667 0.556 0.000

The banking system of the

organisation is computerized 40 1.0 5.0 2.175 0.000 1.1742

There is effective

communication with customers 40 1.0 5.0 2.737 0.244 1.3692

There is a conducive working

environment in the

organization

40 1.0 5.0 2.550 0.040 1.3388

Internal processes in the

organization are reviewed

regularly

40 1.0 4.0 2.650 0.065 1.1668

The variety of products offered

are charged fairly 40 1.0 5.0 2.541 0.030 1.2382

Management focuses on the

needs, desires and customer

values

40 1.0 5.0 4.550 0.537 0.000

Source: primary data

33

Respondents where asked how EB affects the attainment of customer satisfaction. According to

results in table 4.8, they agreed that EB affects customer satisfaction. Findings show that

customer‟s are satisfied with things which do offer them care but dealing with machines can not

help them in anyway or another.

Results show that respondents did not agree that management understands their needs. Its very

clear that most of them did not support the question and they had to say that its very rear to get

management attention towards your needs unless many of you shut it loud and throw your query

at their faces. After that reaction atleast after some time, some one has to respond to the needs of

the customers but they do not consider them their first priority. There fore you find it very

difficult for the customers to use these electronic banking services in that for any mistake you

don‟t get care immediately, they take a long time to work on ATM‟s when there is a breakdown

in the network, when a customers losses his or her ATM card replacement is also a problem.

The respondents agreed that the bank offers good quality Electronic Banking services as seen

from the results above in table 4.8.

Customers revealed that the services offered are of a good quality such as SMS banking. They

agreed that whenever a deposit or withdraw are made, an SMS is sent to the owner of the

account, one can easily know the balance on his or her account hence they consider them to be of

good quality. Respondents that use EB products and services are satisfied with the quality of the

products and efficiency of delivery. This calls for concern. Banks therefore, need to intensify

effort in seeing that customers are not satisfied but also delighted with electronic banking.

Results also show that respondents were not sure that management pays attention to its clients.

They say that these people seem to be having a lot of work at they do not immediately give

attention any query made by the customer. Therefore, customers do not also mind to get to know

the EBS available because when they try to consult some one tells you little about the specific

service and yet to use some thing new one has to be with the necessary information about the use

of the service.

Basing on the results in table 4.8, it shows that customer requirement and needs are not satisfied

in Centenary Bank. Findings revealed that customers have no say the bank sets the rules and then

the customers follow. Therefore, Centenary Bank should consider involving their customers in

some decisions made.

34

Results show that also customers were not sure that their problems where responded to promptly.

Most of them said that whenever you want to know something you are given a few minutes yet

some of them take long to understand. Therefore, the bank customers request s that staff should

always listen to the customers and give them time to solve their problems.

Results show that most of the respondents did not support they said that these services are not

reliable. Findings show that these services have many problems like insecurity. Network brake

downs, delays, misstatements and others. Therefore, they do not think that they can trust these

machines with their money.

Respondents agreed that the banking system of the organization is computerized. This is as

shown above in table 4.8. Most of the things are done with the computers like E-Tax, E-NSSF

systems an d accounts opening even they take your passport photo using their electronic

machines, therefore no need for the already made photos as well as bank statements are got

electronically. Customers can see balances via phone or PC and transfers are done with

computers.

Results show that there is effective communication with customers at Centenary Bank.

Customers need attention to every query they have, that is, one has to make sure that they are

satisfied with what they need. Staff has to be able to spend some time explaining to them on

what they need and always be friendly each time one sees a customer.

There is a conducive working environment in the organization. This is revealed by the results in

table 4.8 where respondents agreed to the statement. This shows that Centenary bank satisfies

customers with their working environment. Most of them agreed that Centenary Bank offers a

good working environment. The place is well aerated, drinking water is provided in plastic

containers to cool the customers down, and seats are provided to the customers. This shows that

the customers are satisfied with the working environment in the Bank.

Internal processes in the organization are reviewed regularly. Results show that the respondents

were sure that the organization reviews internal processes regularly. While in the banking halls,

most of the staff is change regularly. A person does not spend a month working at that specific

branch, and staff is changed regularly such that customers get to interact with new faces when

they arrive at the bank.

35

Results show that the respondents agreed that the products are charged fairly. Centenary bank

offers low charges on the ATM withdraws and nothing is charged while a person is depositing

money and this really satisfies customers because no one can love banks charging a lot of money

via transactions made. Therefore, most of the transactions are done at affair price and with

accounts opening nothing is charged however, one is charged for getting an ATM, the bank

charges like 10000 for it.

4.5 Relationship between electronic banking and customer satisfaction

In order to establish how Electronic banking services and customer satisfaction affected each

other, we had to evaluate the relationship between the two variables.

Table 4. 7: Relationship between Electronic banking services and Customer satisfaction

Variable

Customer satisfaction

Correlation

Coefficient Sig. (2-tailed) N

Electronic banking services at centenary

bank

0.0875 0.628 40

Source: primary data

Findings revealed that there is an insignificant positive relationship between Electronic banking

and customer satisfaction (0.0875), this is due to the number of weaknesses associated with the

Electronic banking such as network break downs, insecurity/ fraud, hackers on the computers,

internet breakdown and illiteracy. Therefore the availability of the electronic banking systems

like ATM services, Cente mobile, SMS banking, personal computer banking, direct deposit and

others have not led to customer satisfaction. This means that customers are still not satisfied with

the services. Therefore, Centenary bank should always devise means of improving on the

electronic banking services such that they can increase customer satisfaction. They should also

continue to make customers aware of these service, look at the determinates of customer

satisfaction and they provide the services such that they can figure out a way they can try to

provide the services in order to satisfy their customers.

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CHAPTER FIVE

5.0 SUMMARY, RECOMMANDATIONS, AND CONCLUSION

5.1 Introduction

This chapter highlights discussion and summary of major findings, the researcher also made

conclusions based on the conclusions in chapter four and recommendations on the possible way

forward to improve Electronic banking and customer satisfaction and areas of further study. The

discussion was based on the study objectives and research questions as shown below;

5.2 Summary of findings

5.2.1 Findings on the availability of Electronic banking services in Centenary bank

It was found out that ATM services, direct deposits, personal computer services, cente mobile, E-

bill payment systems are available at centenary bank since they registered the highest number of

respondents who agree on their availability. Most of the respondents supported their availability

however; respondents did not talk about their usage. This was due to some reasons like

insecurity, reliability, inflexibility, lack of internet protocols, most of them where computer

illiterate and it was also found out that its not easy to get ATM cards because processing it takes

a good period of time and fear of losing the cards or being stolen.

Most of them said they could not use them because they do not own personal computers and it‟s

not very easy to make transactions in an internet café in town.

Results further confirmed that the respondents had some knowledge about these services at

Centenary bank and they could explain what they meant and how one uses them. However

analysis revealed some of them did not know that SMS banking, E-NSSF and E-tax payment

systems where available at the bank

5.2.2 Findings on determinants of customer satisfaction

It was discovered that service quality, customer needs, flexibility, good working environment,

and effective communication highly determine customer satisfaction and are crucial in order to

make customers come the next time. Further analysis showed that Centenary bank has some

weaknesses during service encounters for example, management does not focus on the

customer‟s needs, and requirements, failure to understand customers or user‟s needs and their

37

services are not reliable. This implies that, customer expectations and needs are not recognized

yet this is critical in customer satisfaction.

5.2.3Findings on the relationship between Electronic banking and customer satisfaction

The findings revealed that there exists a weak positive relationship between electronic banking

and customer satisfaction. Furthermore, the relationship in these two variables was tested using

Pearson‟s correlation coefficient, which was 0.0875 and showed that there was 95% insignificant

positive relationship between electronic banking and customer satisfaction. This shows that

customers are not satisfied with the electronic banking services. Therefore there is a lot of work

needed to do about these services such that customers can really adjust and love them as they try

to meet their satisfaction.

5.3 Conclusions

After carrying out a close analysis of the study findings, it is evident that Centenary bank

customers have a lot of knowledge about the electronic banking services available at the bank for

example Phone banking, Personal computer banking, ATM services, and E-NSSF payment

systems

It follows from the above findings that many potential problems associated with customers not

being satisfied are because of poor communication with staff, management does not focus on

customers needs and requirements, product ambiguity, and management do not know and

understand customer expectations and needs.

Finally, results confirmed existence of a weak insignificant positive relationship between

electronic banking and customer satisfaction in Centenary bank, thus customers are not yet

satisfied with the e-banking services offered by the bank.

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5.4 Recommendations

Basing on the study findings the researcher recommends the following:-

The bank should consider customer sensitization about the E-banking services that is to say how

to use the services, ensure their security, reliability of the services and clear operation of these

services at the bank premises.

The bank should continue advertising their services that is to say though many agreed to their

existence they cannot tell you how to use them, how important these services can be. They

should try to make the population aware of the advantages of the services.

The organization needs to look at the customer satisfaction determinates such that they know

clearly what they have to do to make their potential customers satisfied for example,

understanding customer needs, Value and expectations because if expectations are not reached,

then the organization will not ever satisfy their customers

In order to improve on customer satisfaction, management should always consider the customer

as first priority at their premises, they should not look at customers stuck, and they continue

doing their own things because if that happens then customers will never be satisfied. A

customer loves it when she is cared for, she cannot regret ever making you his or her bank

5.4 Areas for further study

Although this study was on electronic banking and customer satisfaction, it could not exhaust all

the researchable aspects concerning the above. Therefore, further research should be carried out

on:-

Electronic banking and customer adoption

Impact of ATM services on customer satisfaction

Service quality of banking services and customer need satisfaction

Security, responsiveness and reliability of electronic banking and customer satisfaction

39

Mobile banking and organization performance

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APPENDICES

APPENDIX I: QUESTIONNAIRE

This questionnaire is designed to generate information on the impact of electronic banking and

customer satisfaction. (Case study of Centenary Bank Nakivubo branch)

Dear respondents,

The researcher is a student of Makerere University carrying out research on the topic, electronic

banking, and customer satisfaction. The research is purely academic and the information

obtained will be used strictly for academic purposes, and will be handled with utmost

confidentiality.

The researcher therefore is kindly requesting you to spare some of your time and provide

answers to the questions below.

PART ONE: Background information

(Please tick where appropriate)

1. Gender.

(i) Female (ii) Male

2. Age

(i) Below 25 years (ii) 26-30 years

(iii) 31-35 years (iv) 36-40 years

(v) 41and above

3) Education level

(i) O‟ Level (ii) A‟ level

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(iii) Diploma

(iv) Degree (v) Post graduate

4). How long have you worked with this bank?

(I) Less than 3 years (ii) 3-6 years

(ii) 7-9 years (iv) More than 9 years

5).Which type of account do you hold with this Bank?

i) Current Account ii) savings account iii) Fixed deposit account

PART TWO: Electronic banking services at Centenary Bank

Please choose and tick the most appropriate option using the scale; 1=strongly agree,

2 = Agree, 3=Not sure, 4= Disagree and 5=strongly disagree.

Opinions 1 2 3 4 5

6) I understand what is meant by electronic banking

7) Customers know the electronic banking services available

8) Electronic banking is the cheapest way of making transactions

9) Electronic payment systems are available at Centenary bank

10) I can access electronic banking services at any time

11) There is flexibility while using electronic banking systems

12) Personal computer banking is available at the bank.

13) ATM services are available at Centenary bank.

14) I consider human tellers important despite the emergency of

electronic banking

15) E-tax systems are available at centenary bank.

16) E- bill payment systems are available at the centenary bank

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17) Statement and bank balance enquiries are carried out

electronically.

18) SMS banking services are available at centenary bank

19) Cente Mobile is available at centenary bank

20) E-NSSF system is available at centenary bank

21) Direct deposits are used at centenary bank

PART THREE: Customer satisfaction determinates.

Opinions 1 2 3 4 5

22) Electronic banking affects the attainment of customer satisfaction

23) Management understands customer needs which satisfy them

24) The bank offers good quality services to customers

25) Management offers serious attention to its clients

26) Customer requirements are satisfied in Centenary bank

27) Customer problems are promptly attended to

28) Electronic banking services are often reliable

29) The banking system of the organization is computerized

30) There is effective communication between customers and staff

31) There is a conducive working environment in the bank

32) Internal processes are reviewed regularly

33) The variety of products are charged fairly

34) Management focuses on the needs, desires and customer values

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Thanks for your cooperation