CHAPTER ONE

INTRODUCTION

1.1 Background to the Study

In the modern banking landscape, multi-channel support has emerged as a crucial strategy for improving customer retention. Multi-channel support refers to providing customers with a variety of ways to interact with a business, including face-to-face service, phone, email, mobile applications, and social media (Lemon & Verhoef, 2016). The increasing reliance on technology in financial services has made multi-channel strategies indispensable for meeting the diverse needs of customers, especially as they demand greater accessibility, efficiency, and personalization. The role of multi-channel support in customer retention is particularly significant in the banking sector. A study by Verhoef et al. (2015) emphasized that offering customers seamless service across multiple channels increases their satisfaction and, consequently, their loyalty. The growing shift towards digital banking worldwide is reflected in the rise of mobile and online banking services, which offer customers greater convenience in managing their financial affairs (Chong et al., 2010). According to a 2020 report by Accenture, 75% of consumers now prefer to use digital channels to interact with their banks, signaling a major shift in customer behavior towards online services (Accenture, 2020).

However, challenges persist in achieving effective multi-channel integration. Research by Leeflang et al. (2014) found that while customers expect a consistent experience across all touchpoints, many banks struggle to synchronize their digital and physical channels, resulting in inconsistent service delivery. Moreover, as banking services become more digitized, concerns related to cybersecurity, data privacy, and the digital divide have surfaced, especially in developing economies (Liu & Lee, 2019). Inconsistent service across multiple channels, as well as poor integration between channels, can drive customers away and negatively impact their overall experience, resulting in increased churn rates (Payne & Frow, 2017).

In the African banking sector, multi-channel support has seen rapid growth, particularly through mobile banking and mobile money platforms. According to the African Development Bank (AfDB, 2020), mobile banking services have proliferated across the continent, providing financial inclusion to millions of previously underserved individuals. The mobile money service M-Pesa in Kenya, for example, is one of the most successful models of digital financial services in Africa, with over 50% of the adult population in Kenya using mobile money (Jack & Suri, 2014). Similarly, mobile banking in Nigeria has transformed the financial services landscape, with over 60 million users in 2020 (Adeniran & Adewale, 2021).

Despite these successes, African banks face a series of challenges in fully implementing multi-channel strategies. A report by McKinsey & Company (2020) found that while mobile banking adoption is increasing, many African customers still struggle with poor internet access, limited financial literacy, and an underdeveloped digital infrastructure. In Cameroon, for example, the internet penetration rate is still relatively low, especially in rural areas, hindering the widespread adoption of mobile banking (INS, 2019). In addition, unreliable mobile networks and inadequate customer support across digital channels have resulted in customer dissatisfaction and lower retention rates (Chong et al., 2010; Gounaris & Stathakopoulos, 2017). Despite these challenges, there is considerable potential for African banks to improve their customer retention through effective multi-channel support. According to a study by Asongu and Nwachukwu (2016), African banks that invest in mobile banking and digital platforms, while improving customer service across all channels, are likely to see higher customer satisfaction, loyalty, and retention.

In Cameroon, the adoption of digital banking services is still in its nascent stages, although commercial banks are increasingly incorporating mobile banking and internet banking services. The Bank of Central African States (BEAC, 2020) reported that less than 20% of Cameroonian citizens have access to formal digital banking services, a significant gap that limits the reach of multi-channel banking. The Central African Banking Commission (COBAC, 2020) noted that while most commercial banks in Cameroon offer mobile banking services, the quality of these services varies significantly between institutions, and many customers report dissatisfaction with the technology and lack of support.

Customer retention in Cameroon’s banking sector is also challenged by poor customer service and inefficient multi-channel integration. According to the Cameroon National Institute of Statistics (INS, 2019), over 60% of Cameroonian banking customers expressed dissatisfaction with service delivery in banks, citing issues such as long wait times, impolite staff, and poor follow-up on customer inquiries. The fragmented nature of service across different channels further exacerbates the problem, with customers often unable to resolve issues through digital platforms, forcing them to visit branches in person (Njoroge & Ochieng, 2020).

A major obstacle to customer retention in Cameroon is the slow pace of financial inclusion, especially in rural areas like Bamenda. According to the Cameroon Communication Regulation Agency (ART, 2020), only 35% of Bamenda’s population has reliable internet access, which hinders the ability of commercial banks to fully engage customers through mobile apps or internet banking. As a result, many customers in Bamenda still rely heavily on traditional banking methods, leading to slower adoption of multi-channel services. Furthermore, research by Batna and Kamdjou (2017) showed that despite the growing adoption of mobile banking services in Cameroon, banks continue to face difficulties integrating these services with physical branch operations. This lack of integration leads to a disjointed customer experience, where customers may be able to complete some transactions online, but encounter issues when they need to interact with bank staff in person. This lack of seamless service is a critical issue for customer retention, as customers increasingly demand consistency and efficiency across all touchpoints.

Bamenda, the capital of the Northwest Region of Cameroon, provides an interesting case study of multi-channel support in the Cameroonian banking sector. The city has a growing urban population, yet it still faces significant infrastructure challenges, including poor internet access and inadequate mobile coverage. According to a report by the Cameroon Communication Regulation Agency (2020), only 35% of Bamenda’s population has access to reliable internet, limiting the effectiveness of mobile banking services. Some commercial banks in Bamenda, such as Ecobank and Société Générale, have made strides in implementing multi-channel support, offering mobile apps, internet banking, and customer service hotlines. However, these services often face technical glitches, slow response times, and poor customer support, contributing to customer dissatisfaction (CBA, 2019). A study by Kengne and Mba (2020) found that despite the introduction of mobile banking services, customer loyalty remained low in Bamenda, with many customers preferring to visit bank branches in person to resolve issues, even for transactions that could have been completed online. A report by the Cameroon Banking Association (CBA, 2020) found that one of the main challenges faced by commercial banks in Bamenda is the lack of coordination between digital and physical channels. This lack of integration has led to customers experiencing delays and difficulties when transitioning from one channel to another. Furthermore, customer support on digital channels is often inadequate, with long response times and insufficient resolutions to customer queries.

1.2 Statement of the Problem

Customer retention has become a critical concern for commercial banks in Bamenda, especially in a competitive and evolving banking environment. Retaining customers not only reduces the cost of acquiring new ones but also ensures long-term profitability and growth (Kotler & Keller, 2016). However, many banks in Bamenda struggle to keep customers loyal due to inconsistent service experiences, poor customer support, and limited responsiveness to customer needs. These challenges have led to increased customer dissatisfaction and a growing tendency for clients to switch banks in search of better services (Njoroge & Ochieng, 2020). To address this problem, many banks have turned to multi-channel banking as a strategy to improve customer satisfaction and loyalty. Multi-channel banking involves providing customers with different ways to interact with their banks, including mobile apps, internet banking, USSD codes, and traditional branch services (Chiguvi & Ngwenya, 2017). When effectively implemented, this approach allows banks to reach a wider customer base, provide convenience, and respond to customer needs faster. In theory, this should improve customer experiences and boost retention (Ramdani et al., 2019).

However, the reality in Bamenda tells a different story. Despite adopting various digital channels, many banks still face difficulties in delivering a seamless and reliable customer experience. Challenges such as poor internet access, unreliable mobile networks, and limited digital literacy hinder the effective use of mobile and online banking platforms (ART, 2020). According to the Cameroon National Institute of Statistics (INS, 2019), only about 35% of Bamenda’s population has consistent access to reliable internet, limiting the reach and effectiveness of digital banking. Furthermore, the lack of integration between digital and traditional banking services creates additional frustration for customers. Users often encounter technical issues, delayed responses, and poor coordination between in-branch and digital platforms (Batna & Kamdjou, 2017). As a result, many customers abandon mobile or online services and return to physical branches for assistance, thereby undermining the benefits of multi-channel strategies (CBA, 2020).

Although some progress has been made in promoting digital banking in Cameroon, there is still a limited understanding of how well these channels are helping banks retain customers. Existing studies have largely overlooked the practical barriers faced by customers in Bamenda, such as service interruptions, poor user experience, and weak technical support (Njoroge & Ochieng, 2020). This gap makes it difficult for banks to develop effective customer retention strategies that meet the unique needs of the local population. Therefore, this study seeks to investigate how multi-channel support influences customer retention in Bamenda’s banking sector. By focusing on the real challenges faced by customers and how they interact with different banking channels, the research aims to provide practical solutions to enhance service delivery and build stronger, longer-lasting relationships with clients.

1.3 Research Questions

1.3.1 Main Research Question:

What is the effect of multi-channel support (online, mobile, and in-branch) on customer retention in commercial banks in Bamenda?

1.3.2 Specific Research Questions:

• What is the effect of online banking services on customer retention in commercial banks in Bamenda?
• What is the effect of mobile banking affect customer retention in Bamenda’s commercial banks?
• What is the effect of  in-branch service quality on customer retention in commercial banks in Bamenda?

1.4 Objectives of the Study

1.4.1 Main Objective:

To examine the effect of multi-channel support on customer retention in commercial banks in Bamenda.

1.4.2 Specific Objectives:

• To assess the effect of online banking services on customer retention in commercial banks in Bamenda.
• To evaluate the effect of mobile banking in enhancing customer retention in Bamenda’s commercial banks.
• To investigate the effect of in-branch banking services on customer retention in commercial banks in Bamenda.