CHAPTER ONE

INTRODUCTION

• Introduction

This research is based on examining the effect of electronic banking transactions quality on customer’s satisfaction in the Buea Cameroon. With the main objective which is to examine the effect of electronic banking transactions quality on customer satisfaction in Buea. It has three specific objectives which are to examine the effect of ATM transactions quality, electronic funds transfers’ transaction quality and electronic bill payments transactions quality on customer’s satisfaction in Buea. Chapter one gives background information of electronic banking transactions and customers satisfaction, the problem statement which is the core issue in the study, the research question, the research objective which are derive from the problem statement, the hypothesis which are the condition to be investigated, justification or significant of the study and the scope of the study. The second chapter explain the different concepts of electronic transactions quality, review related and empirical conceptual and theoretical literature of electronic transactions written by different authors and the research gap. The third chapter explains how data will be collected and the method of data presentation and analysis (research methodology). The fourth chapter talks on how the various data collected will be presented and analyzed bringing out various facts. The fifth chapter will be the summary of the work conclusion and recommendations

• Background of the Study

Before the emergence of modern banking transactions, banking operations were done manually which led to a slowdown in settlement of transactions. This manual system involves posting transactions from one ledger to another by human beings and due to changes in technology, electronic transactions evolved. Electronic banking transactions refers to the use of electronic channels to conduct banking transactions, such as electronic bill payments, electronic funds transfer, and account inquires. The banking industry in Cameroon has undergone significant technological transformations in recent years, with the widespread adoption of electronic banking services. Electronic banking, which encompasses various transaction methods such as mobile banking, internet banking, and electronic funds transfers, electronic bills payments ATM transactions, has become increasingly prevalent among bank customers in the Buea. Understanding the effect of these electronic banking transactions quality on customer satisfaction is crucial for commercial banks to remain competitive and improve their service offering.

According to Oliver (1997), customer satisfaction is the consumer’s fulfillment response. It is a judgment that a product/service feature, or the product or service itself, provided (or is providing) a pleasurable level of consumption-related fulfillment, including levels of under or over fulfillment. Kotler and Keller (2016) define customer satisfaction as the extent to which a product’s perceived performance matches a buyer’s expectations. If the product’s performance falls short of expectations, the buyer is dissatisfied. If performance matches or exceeds expectations, the buyer is satisfied or delighted. Customer’s satisfaction is a critical determinant of customer loyalty, retention and long-term success of financial institutions (leninkumar, 2017).

Consumer satisfaction is a phenomenon of particular importance in the evaluation process of a shopping, consumption, or product or service usage experience and is therefore vital in long-term consumer responses (Gro¨nroos, 1991). Both the scientific literature and the business management world have shown a strong interest in meeting customer needs to determine subsequent purchase behavior

Growing attention has also been paid to satisfaction in the financial sector as a result of increased competition and recent technological developments. Given that financial institutions offer similar banking products and services, many attempts to justify differentiation and customer preference in terms of satisfaction with the services customers receive. Electronic banking, in particular, is one of the services that offers the greatest advantages to financial customers.

The origins of electronic banking can be traced back to the 1960s with the introduction of automated teller machines (ATMs) and electronic funds transfer (EFT) systems (Batiz-Lazo & Wood, 2002). The widespread adoption of personal computers, the internet, and mobile technology in the 1990s and 2000s led to the rapid growth of online and mobile banking (Malhotra & Singh, 2010). The emergence of fintech companies and digital payment platforms further accelerated the shift towards electronic banking transactions globally (Schueffel, 2016).

In Africa, the uptake of electronic banking began in the early 2000s, driven by the rapid growth of mobile phone usage and the introduction of mobile money services (Aker & Mbiti, 2010). Countries like Kenya, Tanzania, and Uganda saw significant increases in mobile money adoption, which facilitated electronic banking transactions (Mas & Morawczynski, 2009). The African Development Bank notes that electronic banking has transformed financial inclusion and access to financial services across the continent (AFDB, 2013). In Cameroon, electronic banking sector started to develop in the late 1990s with the introduction of ATMs and online banking services (Ndamsa et al. 2018). The launch of mobile money services, such as MTN Mobile Money and Orange Money, in the late 2000s and early 2010s significantly expanded electronic banking transactions in the country (Ndjanyou, 2013). A study by the Cameroonian Ministry of Finance found that electronic banking transactions in Cameroon grew by over 20% annually between 2010 and 2020 (MINFI, 2021).

Buea, as the capital of the South-West region of Cameroon, has witnessed a gradual adoption of electronic banking services, mirroring the national trends (Ngah & Njei, 2017). The presence of branches of several commercial banks and the expansion of mobile money services have enabled residents of Buea to increasingly use electronic banking for transactions (Nkwenti & Ngu, 2019). A survey by the University of Buea found that over 70% of the city’s population now engage in electronic banking transactions on a regular basis (UB, 2022). The rise of electronic banking has transformed the financial services industry, offering customers greater convenience, accessibility, and a range of innovative products and services. In the Buea, the adoption of electronic banking has been steadily increasing as financial institutions strive to meet the evolving needs and expectations of their customers.

 Alalwan et al. (2013) note that features, such as ease of use and reliability, on customer satisfaction is a critical factor in the Jordanian banking sector. Similarly, Dissanayake & Milman’s (2017) identified trust, perceived risk, and personal innovativeness as key drivers of customer acceptance and satisfaction. Ngoasong (2018) highlighted the importance of perceived usefulness, ease of use, and security concerns of by mobile banking. Additionally, Ndongo and Ngum (2020) emphasizes the need for improved infrastructure, security, and customer education.

Electronic banking has transformed the banking industry by enhancing customer satisfaction through various quality of transactions. Electronic banking offers 24/7 access to banking services, allowing customers to perform transactions anytime, anywhere. This convenience nature of these transactions leads to higher customer satisfaction as it eliminates the need to visit brick-and-mortar branches, saving time and effort. The convenience offered by electronic banking significantly enhances customer satisfaction, particularly for those with busy schedules (Sathye 1999). Electronic banking transactions are typically processed much faster than traditional methods. Quick transactions reduce waiting times and enhance the overall banking experience. Customers appreciate immediate feedback and transaction confirmations. The speed of electronic transactions is a key factor in customer satisfaction, as it leads to a more efficient banking experience (Karjaluoto et al. 2002).

Modern electronic banking platforms are designed with user experience in mind, featuring intuitive interfaces that are easy to navigate. A user-friendly design minimizes confusion and errors, leading to a more satisfactory experience for users. The usability of electronic banking systems significantly influences customer satisfaction levels (Liao & Cheung 2002). Robust security measures in electronic banking transactions help protect customer data and financial information. Enhanced security fosters trust, which is crucial for customer satisfaction. When customers feel secure, they are more likely to engage with electronic banking services. Perceived security directly correlates with customer satisfaction in electronic banking environments (Yousafzai et al. 2010). Electronic banking platforms often use data analytics to provide personalized services and recommendations. Tailored services can enhance customer satisfaction by making users feel valued and understood. Personalization in banking services leads to increased customer loyalty and satisfaction.

Electronic banking often reduces transaction costs compared to traditional banking methods. Lower fees and better rates can lead to higher customer satisfaction as customers feel they are receiving better value for their money. Cost savings are a significant factor influencing customer satisfaction in electronic banking (Gerrard & Cunningham 2003). Many electronic banking platforms provide robust customer support through various channels, including chatbots, FAQs, and live support. Accessible and effective support services enhance customer satisfaction by resolving issues promptly and efficiently. The quality of customer support in electronic banking is a critical determinant of overall customer satisfaction. (Khan et al. 2016). The qualities of electronic banking transactions convenience, speed, usability, security, personalization, cost-effectiveness, and support play a vital role in enhancing customer satisfaction. By addressing customer needs and preferences effectively, electronic banking has the potential to build stronger customer relationships and foster loyalty.

Given the growing importance of electronic banking transaction quality and its effect on customer satisfaction, it is crucial to investigate the specific dynamics and factors influencing the relationship between electronic banking transactions quality and customer satisfaction in the Buea municipality. This study aims to fill this gap in the literature by providing an in-depth analysis of the impact of electronic banking transaction quality on customer satisfaction in the local context.

The banking sector in Cameroon is a crucial component of the country’s financial system, contributing significantly to economic development. The sector has undergone various transformations and reforms to enhance its efficiency and stability. The banking sector in Cameroon began to take shape during the colonial period. According to (Ndebbio, 2001), the first banks were established to facilitate trade and support the colonial economy. The banking landscape was dominated by foreign banks, particularly French banks, due to the colonial ties. (Ndebbio, 2001). After gaining independence in 1960s, Cameroon sought to nationalize its banking sector to reduce foreign dominance. The government established state-owned banks to cater to the local population and support development projects. (Tchouassi, 2012).

The banking sector in Cameroon is composed of several commercial banks, microfinance institutions, and specialized financial institutions. As of 2023, there are over 15 commercial banks operating in the country, with a mix of local and foreign ownership. The banking sector in Cameroon is regulated by the Central African Banking Commission (COBAC), which operates under the auspices of the Bank of Central African States (BEAC). COBAC ensures that banks adhere to prudential regulations and maintain financial stability. (Kekem, G. 2017). The sector has seen significant reforms aimed at improving financial inclusion and enhancing the stability of financial institutions.

The introduction of mobile banking and digital financial services has been a game-changer, providing access to banking services for the unbanked population (Ngongang, E. F. 2019). Despite the progress, the banking sector in Cameroon faces several challenges such as High Non-Performing Loans (NPLs). The proportion of NPLs remains high, which affects the profitability and stability of banks. (Nguena, & Abessolo, 2018). Limited Financial Literacy a significant portion of the population lacks basic financial knowledge, which hinders the adoption of banking services. (Tchamyou, 2020). Regulatory and Operational Risks Banks face challenges related to regulatory compliance and operational inefficiencies. (Akonumbo, 2021).

The future of the banking sector in Cameroon looks promising, with ongoing reforms and technological advancements playing a pivotal role. The government’s commitment to improving the regulatory environment and fostering financial inclusion is expected to drive growth. (World Bank 2022). The banking sector in Cameroon has evolved significantly from its colonial roots to a more diversified and inclusive system. While challenges remain, the sector’s resilience and ongoing reforms provide a positive outlook for its future development 

• Problem Statement

Customer satisfaction is a critical determinant of customer loyalty, retention and longterm success of financial institution (Leninkumar, 2017). In the past, customers demand for banking services was driven basically by safety of their monies as well as interest from such savings. However, the present day customers’ demand has shifted from just safety of money to how banks deliver their services. The reason is that the present day customer requires efficient, fast, reliable and convenient services (Kwashie, 2015). Many banks in Cameroon are rapidly embracing electronic banking transactions in their services such as; ATM transaction, electronic funds transfer transactions, electronic bill payments transaction, mobile banking transactions; providing a huge competition in the banking sector. As a result, many banks are directing their strategies on providing transactions that will improve customers satisfaction and loyalty, as it gives them a competitive advantage by reducing operational cost and providing best satisfaction to customer’s needs. The argument has been that some of the transactions offered by the electronic banking technology does not meet customers’ satisfaction with quality.

Insufficient investment in digital infrastructures or innovation hinders quality and functionality of these transactions. Frequent technical issues can lead to frustration and dissatisfaction of customers (Kumar et al. 2019). According Lee et al. (2020), competition from fintech or other banks, regulatory constraint and slow processing are all causes of banks not meeting customers’ satisfaction through electronic transactions quality. Delay in processes, strict regulations or compliance requirements can cause inconveniences and anxiety while using these transactions. Furthermore, Smith et al. (2020), indicated that security concern, changing customers’ expectations, can erode trust and confidence in customers. Also, poor user interface and insufficient training for staffs and customers can lead to mistakes and frustration (Davis et al. 2020).  Also inadequate mobile support and overly restrictive security measures can create inconveniencies or barriers and limit accessibility. Which lead to dissatisfaction of customers.

Kumar et al. (2019) suggested that commercial banks should invest in modern scalable and secure technology to improve system performance and reliability, partner with fintech companies to leverage their expertise and innovation. Also enhance security protocols to protect customer’s data and prevent cyber threats should be put in place and commercial banks should form strategic alliances with other banks or financial institutions to share resources and expertise (Smith, et al. 2020). Furthermore, Davis et al. (2020) suggested that intuitive and users friendly interface should be design for electronic banking platforms, investment in digital transformation initiative should be made by banking institutions to stay competitive in order to meet customer’s satisfaction. It is obvious that banks who will not carry out the above measures will lose their customers to those who will carry out the measures.

A study carry out by Nkiendem et al. (2023) on electronic banking and customers satisfaction in banking institutions in Bamenda, indicated that ATM has a positive and significant influence on the customers’ satisfaction, mobile banking has a positive and significant influence on customers’ satisfaction. And also indicated that internet banking has a positive and significant influence on the customers’ satisfaction.

Ngoe, & Ndonwi. (2017), studied the determinants of customer satisfaction with electronic banking services in Cameroon and identified that the key factors influencing customer satisfaction with electronic banking services in Cameroon are  perceived ease of use, perceived usefulness, security, and responsiveness of the bank’s customer support. Dissanayake & Milman (2017), have highlighted the importance of factors like ease of use, reliability, trust, and perceived risk in influencing customer satisfaction with electronic banking.

Although, there are some empirical researches on this area of study, it focused on the determinant of customer satisfaction electronic banking, opportunities of e-banking adoption and the effect of electronic banking services on customer satisfaction. None of these studies have directly address the effect of electronic banking transaction quality on customer satisfaction in Buea. Therefore this study is out to fill this gap by examining the effect of electronic banking transaction quality on customer satisfaction in Buea.

• Research questions
  • Main research question

The main research question was;

To what extent does electronic banking transactions quality affect customer’s satisfaction in the Buea, Cameroon?

• Specific Research Questions

How does ATM banking transactions quality affect customer satisfaction in Buea Cameroon?

To what extent does electronic funds transfer’s transaction quality affect customer satisfaction in the Buea Cameroon?

How does electronic bill payments transactions quality affect customers’ satisfaction in Buea Cameroon?

• Research Objectives
  • Main Objective

The main objective of this study was:

To examine the effect of electronic banking transactions quality on customers satisfaction in the Buea Cameroon.

• Specific Objectives

To investigate the effect of ATM transactions quality on customer satisfaction in the Buea Cameroon.

To analyze the effect of electronic funds transfer quality on customer satisfaction in Buea Cameroon. 

To evaluate the effect of electronic bill payments transactions quality on customers satisfaction in the Buea Cameroon.

• Research Hypothesis

The hypothesis of the study will be stated in the NUL form that is:

H1 ATM transactions quality have no statistical significant effect on customer’s satisfaction in Buea Cameroon.

H2 Electronic funds transfer transaction quality have no statistical significant effect on customer’s satisfaction in Buea Cameroon.

H3 Electronic bill payment transaction quality have no satistical significant effect on customer’s satisfaction in Buea Cameroon.