APPROVAL FORM

The undersigned certify that they have supervised the student Naison Zvotoona. Dissertation
entitled an analysis on the impact of technological innovation on Zimbabwean commercial
banks financial service distribution submitted in partial fulfillment of the requirements of the
Bachelor of Commerce Honors degree in Banking and Finance at Midlands State University.

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SUPERVISOR

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CHAIRPERSON

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LIBRARIAN

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DATE

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DATE

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DATE

RELEASE FORM

NAME OF STUDENT:

NAISON ZVOTOONA

DISSERTATION TITLE:

An analysis on the impact of technological

innovation on Zimbabwean commercial
banks financial service distribution.

DEGREE TITLE:

Bachelor of Commerce in Banking and

Finance Honors Degree

YEAR THIS DEGREE IS

GRANTED:

May 2014

Permission is hereby granted to the Midlands State University Library to produce single copies
of this dissertation and to lend or sell such copies for private, scholarly or scientific research
purpose only. The author does not reserve other publication rights and the dissertation nor may
extensive extracts from it be printed or otherwise reproduced without the authors written
permission.
SIGNED: .
PERMAMENT ADDRESS: 2054 Grass flats Chipinge, Zimbabwe

DATE..

DEDICATION
This thesis is devoted to Mr. and Mrs. Zvotoona, my real parents and not forgetting my wife
Sibongile for their aid and back-up they gave me in doing this thesis despite denying you all the
time we would have spent together. To you all I say thank you.
I salute you all.

ACKOWLEDGEMENTS
Firstly, to the Lord Jesus Christ and my God Almighty in whose wonderful arms I am so
comforted and protected, I will forever without fail worship and honour you. I could never and
can never, do without your eternal blessings for thus far you have led me. My prayer is, The
Lord is my Shepherd and I shall not worry.
This project is a product of determined efforts by various men and woman of immense respect,
whose contribution the writer cannot go without mentioning, the writer hereby relays his
heartfelt honor and gratitude to the project supervisor Ms Santu T.V for all the constructive
criticism and direction. Indeed my supervisor was the ship captain championing it to its
destination.
To all the bank managers and bank customers who responded to my interviews and
questionnaires and those who spared their time and resources helping with relevant information,
I feel humbled by your interest.
Finally my warm and profound appreciation goes to Mr. and Mrs. Zvotoona, brothers and sisters
for all the financial and moral support during the course of the project. All work no play makes
John dull, my appreciation goes to my friends who made things easy and these are

Farai

Majoni, Farai Masendeke, Lisberty, Haig and not forgetting Raymond.

ABSTRACT
Technological innovations brought change in the way banks distribute their services to their
customers. They came in to computerize banking activities and thus reduce the need for more
bank workforce and in the long run trim down costs. The introduction of technological products
improved distribution systems for other banks products. Innovation has increased profits for the
banks. There were many challenges that hampered banks in introducing technological products
that has to do with installation costs, advertising costs and general customer poor uptake as well
as equally a number of benefits and limitations associated with technological innovations. The
main reasons for banks to introduce electronic products for service distribution were to reduce
congestion in the banks and to improve on the quality of services being distributed to satisfy
customers. Furthermore, the study wanted to assess the benefits of technological innovations to
both the customers and banks and identifies drawbacks for further action. In coming out with
answers to research questions the researcher conducted a descriptive research sampling and
random sampling for the four banks selected was used. Questionnaires were accidentally and
conveniently distributed to customers. Findings of the study proved that technological
innovations have been a success in such that customers and bankers have benefited in terms of
improved service, increased revenue and increased productivity. However, there are other areas
where improvement is needed like timely responses to technological products queries faults.
Finally the study recommends on a number of issues that will lead to customer satisfaction and
call for effective technological financial service distribution. It also recommends on issues to
lessen the constraints of the services.

LIST OF ACRONYMS
ATMAUTOMATED TELLER MACHINES
CBZ.COMMERCIAL BANK OF ZIMBABWE
CABS..CENTRAL AFRICAN BUILDING SOCIETY
E-BANKING..ELECTRONIC BANKING
GDP.GROSS DOMESTIC PRODUCT
ICT...INFORMATION, TECHNOLOGY, COMMUNICATION
RBZ.RESERVE BANK OF ZIMBABWE
SST..SELF SERVICE TECHNOLOGY
24/7..24 HOURS A DAY,7 DAYS A WEEK

CONTENTS
APPROVAL FORM........................................................................................................................i
RELEASE FORM.........................................................................................................................ii
DEDICATION..............................................................................................................................iii
ACKOWLEDGEMENTS............................................................................................................iv
ABSTRACT....................................................................................................................................v
LIST OF ACRONYMS................................................................................................................vi
CONTENTS....................................................................................................................................i
LIST OF TABLES.........................................................................................................................v
LIST OF FIGURES......................................................................................................................vi
LIST OF APPENDICES.............................................................................................................vii
CHAPTER ONE: INTRODUCTION..........................................................................................1
1.1 Introduction............................................................................................................................1
1.2 Background to the Study.......................................................................................................1
1.3 Statement of the Problem.......................................................................................................3
1.4 Objectives of the Study..........................................................................................................4
1.5 Research Questions................................................................................................................4
1.6 Significance of the Study.......................................................................................................5
1.7 Delimitation of the Study.......................................................................................................5
1.8 Assumptions of the Study......................................................................................................5
1.9 Limitations of the Study........................................................................................................6
1.10 Definition of Terms..............................................................................................................6
1.11 Organization of the Study....................................................................................................6
CHAPTER TWO: LITERATURE REVIEW.............................................................................7
1

2.1 Introduction............................................................................................................................7
2.1.1 Financial Service Distribution............................................................................................7
2.2 Technology in the Banking Sector.........................................................................................8
2.2.1 Electronic Banking.........................................................................................................10
2.2.2 Internet Banking...............................................................................................................11
2.2.3 Telephone Banking...........................................................................................................12
2.2.4 Mobile Banking/SMS Banking.........................................................................................12
2.2.5 PC Banking (Off line Banking)........................................................................................13
2.2.6 ATM Banking....................................................................................................................13
2.3 Theories...............................................................................................................................13
2.3.1 Innovation Diffusion Theory............................................................................................13
2.3.2The Decomposed Theory of Planned Behavior.................................................................14
2.3.3Theory of Reasoned Action (TRA)....................................................................................15
2.4 Incentive Factors of Technological Innovation....................................................................15
2.4.1Trust and Security..............................................................................................................15
2.4.2Cultural Factors.................................................................................................................16
2.4.3 Time, Cost and Accessibility............................................................................................16
2.5 Benefits of Technological Innovation to..............................................................................16
2.5.1Banks.................................................................................................................................16
2.5.2 Customers.........................................................................................................................17
2.6 Bankers and Customers Perception on Technology............................................................18
2.7 Empirical Review................................................................................................................19
2.7.1 Impact of Technology in Kenyan Banks...........................................................................19
2.7.2 The Impact of Electronic Banking in Chinese Banks.......................................................20
2.7.3 Impact of Automation in Nigerian Banks.........................................................................21
2

2.8 Summary..............................................................................................................................21
CHAPTER THREE: RESEARCH METHODOGY................................................................23
3.1 Introduction..........................................................................................................................23
3.2 Research Design..................................................................................................................23
3.3 Research Population............................................................................................................24
3.4 Research Sample..................................................................................................................24
3.5 Data Collection Methods and Instruments..........................................................................24
3.5.1 Questionnaires..................................................................................................................24
3.5.2Interviews..........................................................................................................................25
3.6 Data Presentation and Analysis Plan...................................................................................25
3.7 Summary..............................................................................................................................26
CHAPTER FOUR: DATA PRESENTATION AND ANALYSIS.............................................27
4.1 Introduction..........................................................................................................................27
4.2 Response Rate Analysis.......................................................................................................27
4.2.1 Questionnaire Response Rate...........................................................................................27
4.2.2 Interview Response Rate..................................................................................................28
4.3 Data Presentation and Analysis...........................................................................................28
4.3.1 Technological Products that are being used by Banks......................................................28
4.3.2 Customer Perspectives on Technological Innovation.......................................................29
4.3.2.1 Consistency....................................................................................................................29
4.3.2.2 Responsiveness..............................................................................................................30
4.3.2.3 Congestion.....................................................................................................................31
4.3.2.4 Variability of services....................................................................................................32
4.3.2.5 Reliability......................................................................................................................33
4.3.2.5 Overall Satisfaction.......................................................................................................34
3

4.3.3 Bankers Perspective on technological innovations...........................................................35

4.3.3.1 Overtime Claims............................................................................................................35
4.3.3.2 Revenue Increase...........................................................................................................36
4.3.3.3 Staff Productivity on Non Technological Product Activities.........................................37
4.4 Factors that Influence Financial Service Distribution.........................................................37
4.4.1 Customer Literacy Level..................................................................................................37
4.4.2 Country Economic State...................................................................................................38
4.4.3 Infrastructure.....................................................................................................................38
4.5 Summary..............................................................................................................................39
CHAPTER FIVE: SUMMARY, COCLUSIONS AND RECCOMENDATIONS.................41
5.1 Introduction..........................................................................................................................41
5.2 Summary..............................................................................................................................41
5.3 Conclusions..........................................................................................................................42
5.4 Recommendations................................................................................................................44
5.5 Suggestion for Further Research.........................................................................................45
REFERENCES............................................................................................................................46
APPENDICES..............................................................................................................................51

LIST OF TABLES
Table 4.1 Response Rate from Questionnaires (Customers).............................27
Table 4.3 Technological Products.........................................................................29
Table 4.4: Rate of Problem/Query Resolution....................................................31
Table 4.5 Reliability...............................................................................................34
Table 4.6 Overtime Claims...................................................................................36
Table 4.7 Revenue Increase...................................................................................36
Table 4.8 Staff Productivity..................................................................................37
Table 4.9 Customer Literacy Level......................................................................38
Table 4.10 Country Economic State.....................................................................38
Table 4.11 Infrastructure......................................................................................39

LIST OF FIGURES

Figure 4.1 24 hours continuous service (consistency).........................................30

Figure 4.2 Congestion............................................................................................32
Figure 4.3 Variability.............................................................................................33
Figure 4.4 Overall Satisfactions...........................................................................35

LIST OF APPENDICES
APPETIX A..................................................................................................................................51
APPENDIX B...............................................................................................................................53
APPENDIX C...............................................................................................................................55

CHAPTER ONE: INTRODUCTION

1.1 Introduction
Todays business atmosphere is exceptionally active and characterized by rapid changes as a
result of technological innovation, increased attentiveness and demands from customers.
Business organizations, particularly the banking industry of the 21st century operates in a
compound and aggressive situation. Technological innovation is at the heart of this universal
change arch. This chapter encompasses a study background; it also looks at problem statement,
the main objectives, and looks at research questions. The significance of the study is also
highlighted in this chapter. Delimitations, limitations and study assumption are also looked at in
this chapter.

1.2 Background to the Study

The background of technology was the history of the invention of tools and techniques.
According to Greenwood, Jeremy (1997) technology rose to prominence in the 20 th century in
connection with the Second Industrial Revolution. The 19th century saw amazing developments
in technology originating in Europe. In 20th century technology developed quickly due to the
scientific gains directly coupled to military research and development, as they did in part due to
World War II. Despite the fact that we have just entered into the 21st century technology have
been developed even more rapidly through different innovations, marked progress in almost all
fields of science and technology has led to massive improvement to the technology we currently
possess. Khalifa (2000) defined technology as the making, modification, usage, and knowledge
of tools, machines, techniques, crafts, systems, and methods of organization, in order to solve a
problem improving pre existing solution to a problem, achieve a goal , handle an applied input or
output relation or perform a specific function.
The opening up of the Zimbabwean economy in 1990 brought an increase in the number of
players in the financial sector especially in the developments of payment instruments used.
1

The opening and developments in the economy have exposed banks to the greater competition;
hence need innovative financial service distributions strategies. Liberalization and deregulation
of the financial sector has created a competitive culture, which has taken the service industry and
particularly the banking industry by storm. According to Income, Consumption and Expenditure
(ICES) (1995) there were many new entrants in the sector, particularly the commercial and
merchant banking sector, building society business, leasing and insurance. This resulted in a
massive mobilization of savings. The decontrol of interest rates boosted this process.
Liberalization of the sector also created a more competitive environment although the market is
still largely imperfect because of de-segmentation of the market. Competition has improved the
range of services provided by the sector. It has led to new innovations, the introduction of ATM
machines, computerization, all of which have improved services to the consumer though in a
limited manner.
The Quarterly Economic and Statistical Review (1994-98) really shows that prior to
Liberalization, the Zimbabwean Financial System comprised of the RBZ, 5 commercial banks, 2
discount houses, 4 merchant banks, 3 building societies, 6 finance houses and the Post Office
(POSB). After Liberalization, growth was noticed in the financial sector, hence need for
technological innovations to be competitive. The implementation of the technological
instruments has brought the changing in the economic and financial service reforms. The
dynamics in the banking sector in the course of technology and innovation have a sweeping and
hammering impact on any country especially on how financial services are distributed, that
forming the basis of carrying out a research on how technological innovations impacts the
distribution of financial services.
Hyperinflation environment that characterized Zimbabwes economy for almost a decade,
seriously impacted on the financial service users attitude towards the technological products in
the Zimbabwean banking sector payment systems, particularly during 2008. Banking and other
Information Technology (IT) systems experienced capacity constraints in handling increased
volumes and multiple digits in values of transactions that were being processed at the time and
power outages also affect the attitude of the service users.

There has been generally a lot of cooperation amongst the banks in as far as reforming the
technology payment system is concerned. It was envisaged that this cooperation was to extend to
the provision of payment instruments in order to save on costs through shared structures and to
maintain the attitude of service users in the banking sector. CABS introduced telebanking service
in November 1996. This was basically to provide the convenience of paying accounts from home
or office using swift and secure means.
An electronic commerce (e-commerce) development was expected to grow following the
launching of Zimbabwes first electronic commerce company in October 1997. The Zimbabwean
banking sector has seen so major changes in technological innovation in terms of electronic
banking. The invention of mobile banking as an innovation to the distribution of financial service
was seen with low response to it by the service users in the banking sector. The (ATM) and
(POS) networks offers a wide range of services which include cash withdrawal, account balance
enquiries, ordering of cheque books, funds transfer and utility bill payment facilities.
Management decisions are unswervingly affected by technology, the way managers plan and the
type of products that are provided in the banking sector or industry. It has continued to change
the way banks and their corporate associations are organized worldwide and the diversity of
innovative procedures on hand to improve the speed and quality of service distribution. The most
considerable weakness in the banking industry today is how technological innovations can be
efficiently used to distribute financial services.
1.3 Statement of the Problem
The distribution of financial services is complex and challenging in each and every day and these
services have unique characteristics which makes it very difficult for service distributors. Most
banks are faced with the challenge of distributing financial services which can satisfy their
service users. In an effort to distribute financial services, the banking sector undertakes numerous
approaches and among them is the use of Electronic banking products. Though banks are reaping
an advantage of technological innovations, still customers cry for quality of financial service
distribution and has been not up to what they expect and some still stick to their ways of
banking.
3

1.4 Objectives of the Study

The chief objective of this study is to establish how technological innovation impacts the
commercial banks financial service distribution from a customer and bank perspective and to
assess if customers are satisfied. The study seeks to explore why customers and banks use
products of technology, why service users do not use these innovations and in the last to look on
service users perceptions about improvements that should bring into innovation in Zimbabwe.
The following objectives will be investigated from this research:

To assess the performance of technological innovations with regard to the expectations of

the customers and banks.

To identify the problem areas in the use of technological innovations if any.
To explore how technological innovations affect financial service distribution.
To identify benefits obtained from investing in technological innovations.
To measure the level of customer satisfaction as a result of technological innovations.
1.5 Research Questions
In order to assess the effectiveness of technological innovation in relation to the distribution of
financial service distribution by commercial banks in Zimbabwe, it will be important to come up
with questions that could be answered during the research which are as follows:

What are the banks innovative products that can be used to distribute financial services

in Zimbabwe?
Have technological innovation improved the quality of service distributed to customer

thereby result in customer satisfaction?

Have the banks benefited in terms of revenue increase?
Have technological innovations reduced congestion in banks?
What are the determinant factors that affect financial service distribution?

1.6 Significance of the Study

It is the belief of many scholars, that technological innovation in banking is one of the best ways
in which the banks can effectively use to distribute financial services.

The research will

4

contribute to existing knowledge on technological innovation on the financial service distribution

in the Zimbabwean banking sector and creates a base for further studies. This exploration will
put in significance to what is presently obtained in the banking segment in that both banks and
customers will come out conclusions. It will help banks in formulating policy in terms of future
investments in technological innovations as well as in trying to improve quality of service
provided and reduce costs. The customer will benefit in terms of improved service and reduced
time spent at the banks hence resulting in customer satisfaction and confidence in the banks. The
study will help banks that do not yet have these types of innovations to plan properly before
going into this kind of business.
1.7 Delimitation of the Study
The study will mainly focus on how technological innovation impacts the commercial banks
financial service distribution. This includes regional and local banks, particularly those in Gweru.
In terms of geographic distribution, all the targeted banks have Head Offices in Harare but the
study will be concentrated in Gweru targeting four banks which are believed to have experience
over others and they are both domestic and foreign owned.
1.8 Assumptions of the Study
The following assumptions will be made in the research:

The information provided by the respondents will be unbiased, sufficient and

truthful.
The sample studied is assumed to be correct and true representation of the whole
population and the findings can be generalized to the whole short term banking

sector.
Technological innovation is the integral part of the banking sector survival.

1.9 Limitations of the Study

The researcher found a lot of difficulties in obtaining information as some of the customers were
reluctant in giving in relevant information suitable for the study. Managers on the other hand
were difficult to see especially for answering questionnaires and responding to interviews.
5

Limited resources forced the researcher to carry his research in Gweru focusing on only four
banks.
1.10 Definition of Terms
The following are terms defined in the context in which they are used in this paper
Technology:

technological innovations

Services

financial services

Banks

commercials banks

1.11 Organization of the Study

Chapter one consists the general introduction; the study background, problem statement, research
objectives. Valid research questions for the study as well as the study significance are looked at in
chapter one. Delimitations, assumptions, limitations, and definition of terms are all covered in
chapter 1. Both empirical and theoretical literature review are all in chapter two. Chapter three
outlined the methodology used in data gathering, analysis and presentation. Chapter four presented
the findings, analysis and interpretation of such. Chapter five then concluded the research with a
summary of major findings, conclusions and recommendations. At the end of the document were the
appendices and references. Appendices cover mainly quantitative data used in this research.

CHAPTER TWO: LITERATURE REVIEW

2.1 Introduction
Technological innovation is one of the top and most 100 ideas of the 20 th century,
(Mushabati, 2008). This chapter looks at the literature that discusses the foundation of the
research. It seeks to scrutinize as well looking into how the impact of technology is viewed by
6

different authors on financial services that are technologically distributed. It also explored the
reward and disadvantages of these innovations on both the banks and customers perspective. It
highlights how best managers can implement the products of innovation in managing the
distribution of services. The effect of technological plans to the management of a bank is
clarified in this chapter. Empirical on the challenges being faced by banks in terms of
technological innovations in distributing financial services are evaluated in this Chapter. Finally
it also explains various products of technology that can be used to distribute financial services
and make them available to intended customers at low cost and authors view on factors that
should be taken into consideration when choosing the type of technological product that can be
effectively used to distribute a particular service.
2.1.1 Financial Service Distribution
A service is any act or performance that one part can provide to another that is intangible and
does not result in ownership of anything (Kotler, 2002). In this study services are viewed at in
the context of a financial service. The commercial banks are now offering these services via
innovative technologies. A service by nature should be dependable, ease to use and tactically
applied, banks are trying to depict this by offering a service beyond its banking hours. Dabholkar
(1994) identified categories of technology based service deliveries namely:

Who distribute the service?

Where is the service distributed?
The contact that a customer has with service operator

He further outlined the various service characteristics that affect their distribution and customer
perception as; perishability, intangibility, variability, inseparability. Financial Services are the
economic services provided by the finance industry, which encompasses a broad range of
organizations that manage money, including credit unions, banks, credit card companies,
insurance companies, accountancy companies, consumer finance companies, stock brokerages,
investment funds and some government sponsored enterprises (Sullivan, 2013). The services that
are technologically distributed are savings accounts, checking accounts, confirming, leasing and
money transfer as well as balance enquiries.

Financial service distribution is an act which involves the use of banks to fulfill their obligations
towards their customers through the use of facilities such as internet banking. Banks do this to
satisfy their customers. Kotler (1997) defines satisfaction as a persons feelings of pleasure and
disappointment resulting from comparing a products perceived performance or outcome in
relation to his or her expectation. Heskett, Hart (1990) pointed out that total customer satisfaction
is the highest form of service quality.
In a nutshell, commercial banks use technological innovations to distribute quality financial
services to satisfy customers and hence be able to analyze the impact they have in distributing
services. Furthermore, technology has provided self-service facilities in delivering customers
with variety of services such as opening accounts and opening their credentials on line without
visiting physical banking hall. Customer account validation is quickly and easily facilitated.
2.2 Technology in the Banking Sector
Technology is the making, modification, usage, and knowledge of tools, machines, techniques,
crafts, systems, and methods of organization, in order to solve a problem, improve a pre-existing
solution to a problem, achieve a goal, handle an applied input or output relation or perform a
specific function (Khalifa, 2000). It can also refer to the collection of such tools, including
machinery, modifications, arrangements and procedures (Kremer, 1993). Technological
innovations have greatly substituted related human errors with fast and cost efficient distribution
channels as compared to pre technological days when manual work dominated the banking
industry. Banks have found new ways of distributing their services through electronic
technologies, thus innovations. These innovations also provide customer information that it
would be much more expensive to provide on a person-to-person basis. Customers do not have
need to visit the brick and mortar institution for services that can be carried out electronically.
Some scholars like (Dabholkar, 1996) availed technology adds an advantage to the customer in
general because of the feeling of superior control through an undeviating conduct with the
technology. Smith (1987) was of the view that technology was adopted in banks for cost
reduction but the fact that back and front offices had been portioned in banks, technology can be
embattled to improve different functions. The sticky situation still remains, on how customers
can be satisfied through face to face interaction. However, Rogers (2004) recognized five
8

attributes that characterizes customers attitude towards the adoption of innovation and these
include (relative advantage, compatibility, complexity, divisibility, and communicability.
Additional characteristics were later added, (Ostlund, 2005), (Zeithaml, 2005) added social and
financial cost to the five attributes respectively.
Dabholkar (1994) pointed out that for customer flexibility to be allowed there should be a
certain degree of flexibility in technology designing so that customers will be able to make some
adjustments at the time they will be undertaking their transactions and for that they should be
provided with service advices at the time advice is required without any delay. Technological
innovations have improved accessibility in terms advancements and the introduction of new
distribution products and channels, hence permitting customers to an electronic conduct with
their service firms from home.
Harold and Jeff (1995) argued that for service providers to remain viable they should have their
traditional operating practices modified, in the early 1990 and the succeeding year and they
pointed out that the major weakness in the banking industry today has something to do with a
wide spread of failure attributed to senior management in banks to grasp the importance of
technology and incorporate it into their strategic plans accordingly. Woherem (2000) claimed that
only banks that overhaul the whole of their payment and distribution systems and apply
technology to their operations are likely to survive and prosper in the new millennium. He
advices banks to re-examine their service and distribution systems in order to properly position
them within the framework of the dictates of the dynamism of information and communication
technology. The banking industry has witnessed tremendous changes linked with the
developments in innovations over the years. The quest for survival, global relevance,
maintenance of existing market share and sustainable development has made exploitation of the
many advantages of innovations through the use of automated devices.
As far as these technological products have been introduced in the banking industry, there still
appears to be a general outcry from bank customers that the quality of financial service
distribution has not been up to their expectations. The burden still remains with the service

provider because these products are underutilized by general customers, but, still, they play a
pivotal role in enhancing the distribution of service
2.2.1 Electronic Banking
Klein (2005) has defined E- banking as a variety of subsequent platforms: Internet banking,
telephone banking, TV-based banking, mobile phone banking/SMS banking, mobile money,
ATM banking and Personal Computer (PC Banking). These services provide customer access to
accounts, the ability to move their money between different accounts or making payments via echannels. E-banking relies heavily on information and communication technology to achieve its
promise for 24 E-banking hours availability, low error rates and quicker delivery of financial
services (Graham, 1999). The advantages generated by this services have determined an
accelerate developing of this industry over the entire world. There are some of the advantages of
Electronic banking in distributing financial services to consumers such as the one which defines
it as an up-to-the-minute fully automatic service which delivers traditional banking products to
customers with the help of information technology platforms and interactive communication
channels.
Many banks and other organizations have by now implemented or are preparing to put in place
e-banking because of many possible benefits linked with it (Kotler, 2009). Some of these chief
benefits of e- banking comes in inform of choice and expediency for customers, attracting high
value customers, improved representation, increased revenues, easier expansion, and load
reduction on other channels, cost reduction and managerial efficiency only to mention a few.
It is supposed to be well-known that there are numerous expressions used differently to describe
and give details to several products of e- banking and they are interchangeably applied (Dirk de
Villers, 2003) and there disadvantages which are associated with e-banking such as installation
costs. The products of electronic banking will be critically analyzed as:
2.2.2 Internet Banking

10

Banks consider internet banking as a way to keep existing clients, as well as to attract new
clients to them (Coviello and McAuley, 1999). Internet banking is a service which concerns
individual and companies who are customers of a certain bank and have access to the Internet.
The internet as a channel for services delivery is fundamentally different from other channels
such as branch networks, telephone banking or Automated Teller Machines. Therefore, it brings
up unique types of challenges and requires innovative solutions (Rindfleisch and Heide, 2007).
The growth in Internet-enabled products and service has been rapid in some sectors and slower
in others.
Liao and Cheung (2002) brought into being that individual prospects concerning precision,
protection, network speed, accessibility, and user participation and expediency were the most
significant quality attributes in the apparent helpfulness of Internet-based banking. The vital
attributes that affect an individuals choice to employ or not to make use of online services have
got something to with age, complexity in using the Internet and unfavorable dynamics that might
occur in the banks that can be due to economic fluctuations caused by macro economic variables.
Fear of changes that can be attributed to technological advancements that might add another load
of confusion to intended users accompanied with poor information asymmetry towards the
introduction of new products offered to customers by banks as channels of distribution. So cost
reduction and speed of transaction have got less impact on customer satisfaction as well as final
choice (Mavri and Ioannou, 2006). Ibrahim et al (2006) discovered six multiple proportions of
electronic service quality which include

the stipulation of well-located/precise electronic

banking activities, the ease of access and consistency of service distribution; excellent queue
administration, personalization of services; the stipulation of welcoming and receptive customer
service; and the provision of beleaguered customer service, apparent utility, safety and seclusion
are agued to be the major perusing factors as stated by (Qureshi et a 2008). Internet banking is
perceived to change the habitual banking industry (Mols, 2000) Banking services are with no
trouble digitalized and computerized and, thus, from ready viewpoint, loan themselves to the
internet (Elliot, 2000). The probable aggressive benefit of internet for banks lies in the areas of
reducing cost and fulfillment of consumer needs.

11

In debate of the Internet bankings effect on the economic services distribution, the importance
was over and over again been positioned directly on cost-saving special effects of internet to
distribute transactional services. These savings are certainly considerable and in the long run
may lead to significant conception of value. However, there are some considerable limitations to
realize much of worthiness. Many of the prospective gains from mechanization have already
been noticed in some industries like credit card industry.

In other industries the benefits are

strong in few areas of the value chain.

2.2.3 Telephone Banking
Telephone Banking is a service provided by a financial institution, which allows its customers to
perform some banking transactions over the telephone. Most telephone banking services use
automated phone answering systems with phone keypad response or voice recognition capability
(Mohamad, 2011) Telephone banking facilities allow non-cash transactions to be carried out,
which would have required a visit to a branch earlier (Prendergast, 1994). Similarly, Internet
banking allows customers to perform tasks at a time and in a place convenient to them. Due to
the introduction of telecommunication companies in developing countries, provisions of network
has increased and for that reason Telephone Banking has helped much in the distribution of
services.
2.2.4 Mobile Banking/SMS Banking
Mobile banking can be treated as a technological innovation because it allows customers to
conduct banking transactions without constraints of time and place and to connect banking
services easily and quickly with mobile devices (Laukkanen, 2007). Mobile banking is a term
used for performing balance checks, account transactions, payments, credit applications and
other banking transactions through a device such as a mobile phone or Personal Digital Assistant.
2.2.5 PC Banking (Off line Banking)
Personal computer banking is another word for electronic banking. This kind of electronic
banking permits a customer to conduct several transactions from their homes or offices on their
personal computers or ATMs all over the country. PC banking has a distinctive advantage in
permitting and giving access to customers on their own schedule without limited to official
banking hours. Other types of PCs include PayPal which are tied to customers accounts.
12

Accounts are directly linked to checking accounts. In contrast to benefits of PCs, there are
prevailing challenges that has to do with security with everyone online to keep their information
secure. Computer penetration in developing countries has affected PC banking.
2.2.6 ATM Banking
Mushabati (2008), defined ATM (Automated Teller Machine) as a self service technology device
that is used by banks for financial service delivery, it can be described as an electronic,
computerized device that is used by bank customers to access their accounts and carry out the
transactions without human bank teller during and outside banking hours. In the service sector,
technology has been used to standardize services by reducing the employee/customer interface
(Quinn, 1996), of which ATM is part. ATM, however was the first electronic banking service to
be introduced to customers, and up to now it form an important instrument for financial service
distribution.

2.3 Theories
2.3.1 Innovation Diffusion Theory
Innovation is the process of making changes, large and small, radical and incremental, to
products, processes, and services that result in the introduction of something new for the
organization that adds value to customers and contributes to the knowledge store of the
organization (O Sullivan, 2008). It is a term that generally covers the harnessing of electronic
technology for the information needs of a business at all levels. Irechukwu (2000) lists some
banking services that have been revolutionized through the use of technological innovations as
including account opening, customer account mandate, and transaction processing and recording.
The first theory taken in consideration is the Innovation Diffusion Theory which explains
individuals purpose to use a technology as a modality to carry out a usual activity. The theory is
developed by Rogers in 1983. The vital factors that settle on the acceptance of an innovation at
the general level are argued as the following, relative advantage, compatibility, complexity,
trialability and observability (Rogers, 1995). Researchers such as ( Tan and Teo, 2000), ( Gerrard
and Cunningham, 2003) and ( Md Nor and Pearson, 2008) tested the theory on the e-banking
13

adoption. Various studies were developed to facilitate the uptake of innovation by several
industries of which the banking sector is one. However a few studies have been available on the
diffusion of internet platforms for banking transaction and distribution of financial services. The
most of the theories have dealt with the distribution of ATMs (Corrocher, 2002) . The mother
factors that affect the diffusion of innovation include: cost reduction competitive advantage and
tactical position (Bradley and Stewart, 2003). Jayawadhera and Foley (2000) discovered that
internet banking is diffusing at a very slow tempo. From the theory, the individual objective to
adapt to a technology plays an important role in identifying factors that affect the uptake of a
particular innovation. If perceived advantages are realized from a particular innovative product,
it can then effectively used by customers as a financial service user.
2.3.2The Decomposed Theory of Planned Behavior
Decomposed Theory of Planned Behavior is a succeeding reviewed theory that also emphasizes
on the intention to use a certain technology introduced. The theory was developed by (Taylor and
Todd, 1995). The assumption states that, the intention to use and adopt a definite technology is
prejudiced by subjective norm, perceived behavioral control and attitude. Starting from the
research conducted by (Pearson, 2008), (Chervany, 1999) such determinant factors were outlined
as: the attitude toward behavior and the Perceived Behavioral Control.
Using technological products is not only affected by objective alone but by attitude towards
behavior of service users should be put into consideration since they also affect the utilization of
these innovations.
2.3.3Theory of Reasoned Action (TRA)
The theory was introduced in the psychological field most importantly to explain the attitude
and behavior of an individual where the intention to use an innovative product is determined and
perceived by two distinctive factors that has to do with an individuals attitude towards the
results of the behavior and not forgetting the opinion of the individuals social environment which
is sometimes called the personal norm (Fishbein and Ajzen, 1975). The theory was then fruitfully
practical in internet banking in setting and predicting the performance pertaining behavior and
intention. Some researchers like (Shih and Fang, 2004) have used it in Taiwan in observing

14

subjective norms and the position of the customer on how they affect internet banking adoption
and the result was that the theory model offer a good suit data.
Adption and and behavioral intention to use an innovative product depends on the users
intention in accepting or adopting more for the IT fields.According to this theory, behavioral
intention is determined by the users intention to accept, use or adopt one or more of the IT
fields. Since this factor is one of the the largest part of factors that conclude the final definite
practice, mainly preceding study in internet banking established important and constructive bond
between purpose and real (Al-Qeisi, 2009. Innovation diffusion planned behavior and reasoned
action theories have explained how technology is perceived by bankers and customers. In this
context, these theories are of great importance as they equip management with valid information
for decision making how to manage technological innovations for an effective financial service
distribution.
2.4 Incentive Factors of Technological Innovation
Technology has got its incentive factors which benefit both the service provider and the customer
if the innovations are effectively and efficiently employed to distribute financial services.
Discussed incentive factors include trust and security; cultural; cost and time minimization.
2.4.1Trust and Security
Trust is defined as a eagerness to be defenseless to the events of others (Mayer, 1995) . On the
other side of the coin, security is associated with the techniques implemented to uphold security
within a computer system. (Onieva, 2009) Many researchers had studies that were meant to
evaluate the manipulation of trust and security on individuals intention to engage in online
activities (Long, 2006). Moreover, trust has been recommended to be one of the obstacles that
deter individuals to use the Internet as a tool in performing their banking activities (Todd, 2008).
Technological innovations have got this type of incentives it offers to both customers and banks
in distributing financial services.

2.4.2Cultural Factors
15

Culture is defined as the total of material and spiritual values created by the mankind. Culture
also includes the institutions necessary to make these values available. Researchers as Erumban
and Jong (2006) suggest that culture influences the level of information technology adoption.

2.4.3 Time, Cost and Accessibility

Time is the main online service users advantage, factor which is acknowledged by banks and
which is displayed in the e-banking service presentation list (Moga L, 2010). Cost is another
important factor in the transition to the employment of online banking services especially in
distributing financial services. He further explained the price policy as being regarded as highly
important by banks, which means that they identified the role played by the cost paid for the
transaction in taking the decision of giving up the traditional way of conducting banking
activities.

2.5 Benefits of Technological Innovation to

2.5.1Banks
To critically analyze the impact of technology in the distribution of financial services, it is of
paramount importance to look at the advantages that the bank reaps from innovations such as:
Cost reduction and revenue increase: banks can expand revenue through the initial costs
involved in securing, installing, updating, and servicing these technical products. These
technologies resulted in the automation of services which were previously done manually, thus
reducing the costs of servicing some customer demands. For example a bank can have services
as a result of reduction in the number of cashiers and over time claims made by employees
working late. Banks primarily consider e-banking as a self-service and convenient channel that
decrease costs (Nath et al., 2001). However, if they perceive technology as a threat to their job
prospects and a way to lose customers, then they will be likely to resist its adoption to keep
customers in the branches and their jobs (Mols, 2001).

16

Productivity in bank staff is increased in that the innovations take up some of the activities that
were traditionally only performed by the banker such as giving out cash, statements and hence
the bank staff can now concentrate more on other areas that need improvement.
Technological reputation, in that, customers will come to have confidence in the technology
once they have seen the benefits of using such technology, however, literacy, and people did not
know how to use these technological innovations, because some are technophobia.
Congestion, in the banks especially during month ends is reduced, a factor enhances by the
increase in the number of technological innovations. The problem of serving long queues by
bankers was also reached as most customers got their services outside the bank. On the other
hand, congestion is noticed at ATM points at during month ends. In addition, reduces face to face
interaction, feedback and lost customer loyalty.
2.5.2 Customers
Increases the perception of control consumer benefits from self service technologies include
being in control (Dabholkar, 1996). This simply means the customer is in control of the
technology. The uptake of technology forces consumers to consider concerns about password
integrity, privacy, data encryption, hacking, and the protection of personal information (Benamati
and Serva, 2007).
Convenience is an important aspect as customers have to access to their bank accounts and
related banking information 24 hours. They can transact as and when they feel like. Several
studies have investigated why individuals choose a specific bank. Important consumer selection
factors include convenience, service facilities, reputation and interest rates (Kennington et al.,
1996; Zineldin, 1996).
Saving time and money, is also an advantage to the customer as they will save time by
accessing accounts at convenient times. Grilches (1994) pointed out that improved access
generates unmeasured but presumably not unvalued time savings for other users. Delvin (1995),
customers have less time to spend on activities such as visiting a bank and therefore want a
17

higher degree of convenience and accessibility. The service-quality attributes that the Internet
banks must offer to induce consumers to switch to online transactions and keep using them are
perceived usefulness, ease of use, reliability, responsiveness, security, and continuous
improvement (Liao and Cheung, 2008). Though technological innovations benefit customers in
some ways, customers still have the anxiety to visit the physical bank building, thus
underutilizing the services provided by these electronic technological products. Customers are
crying for quality services that are even satisfactory.
2.6 Bankers and Customers Perception on Technology
Banks perception of and expectations towards banking technologies are a crucial element in the
development of successful e-banking implementation projects (Lymperopoulos and Chaniotakis,
2004). Bank staff resistance to technology adoption is a common problem in the banking sector
(Chan and Lu, 2004; Constantine and Chaniotakis, 2005).
Davis et al. (1989) argue that the introduction of new technology is bound to cause a disturbance
within organizations and to individuals within those organizations as older technologies and
systems are displaced by new ones. Davis et al. (1989) also state that the successful
implementation or adoption of any new technology is principally determined by organizational
users attitudes: employees and managers build up an attitude and feeling about the new
technology, and that feeling could direct them to the adoption or rejection of the proposed
technology.
Attitude can be a very powerful enabler or a barrier towards the adoption of the new technology.
Ajzen and Fishbein (1980) defines the term attitude as a complex conundrum of feelings,
desires and fears that create a state of readiness to act within a person. Understanding users
attitude towards the adoption of new technologies has proved to be one of the most challenging
issues in technology adoption literature (Tan and Teo, 2000).
However, in reviewing the above literature, it was found that despite the various attempts to
provide clear understanding of the factors that affect users attitude towards the acceptance of
new technological innovations, nearly all of these have attracted heavy criticism from
researchers for being one-dimensional and insufficient in successfully predicting the factors
18

impeding the adoption rate of technology in less developed countries (Danowitz et al., 1995,
Abdul-Gader, 1997; Centteno, 2004; Kamel and Hassan, 2003).
So for service distribution to be satisfied it starts with the attitude of bank staff on whether they
accept and take it or not. Electronic banking requires perhaps the most consumer involvement, as
it requires the consumer to maintain and regularly interact with additional technology (a
computer and an Internet connection) (Jane et al, 2004). Consumers who use e-banking use it on
an ongoing basis and need to acquire a certain comfort level with the technology to keep using it
(Servon, and Kaestner, 2008).
2.7 Empirical Review
2.7.1 Impact of Technology in Kenyan Banks
A study by (Nyangosi, Arora, 2006) in Kenya was to evaluate from Kenyan customers on the
several technologies adapted by their banks that can be used to distribute financial services. They
also carried a study on internet banking usage, the perceived utility of SMS banking and they
analyzed the banking services adopted by Kenyan customers through mobile phones. The study
comprised of customers of all Kenyan commercial banks in some selected major cities and those
were done by approaching the respondents and ask if they can accept or use technological
innovations. They found out that all Kenyan banks have adopted different technologies for the
distribution of services through which electronic banking services are provided. Customers
indicated various technologies that their banks have adopted and seven common technologies
were selected to represent the variables which include: ATM, internet banking, tele-banking,
SMS banking, PC banking, debit cards and credit cards.

The study revealed that ATM technology is the most available distributor of financial service in
Kenyan banks and these banks are still at preliminary technological stages. However, the study
showed that in developing countries, like Kenya technology state is still at its initial stages. More
so, electronic banking services are not fully used and its impact on financial service distribution
cannot be well evaluated.
19

2.7.2 The Impact of Electronic Banking in Chinese Banks

In their study on the impact of technological impact in the Chinese banking sector on the
distribution of financial services, (Zheng and Zhong, 2005), examined the internet changes that
have put Chinese banking sector in motion and factors which have influenced the use of internet
banking in China. They revealed that internet availability, awareness, attitude towards change,
computer and internet access, cost and trust in ones bank, security concerns, ease use and
convenience were the major factors affecting the usage. Furthermore, their study was intended to
assess the e-banking adoption situation in China by looking at pushing factors for e-banking and
the barriers to e-banking. China was chosen as an example of a developing nation because of its
unique position and condition which resulted from its experienced rapid economic development
associated with annual GDP growth rate of about 10%. It noticed infrastructural developments
through various Golden projects to develop e-banking in China.
Furthermore, Chinas relatively immature technical, legal e-commerce infrastructures made it a
representative case for developing countries. Researchers chose a domestic state owned bank to
analyze the impact of e- banking in distributing services. These state owned banks in china
control the majority of market share and enjoy abundant resources. In order to address the
competition pressure posed by new foreign players, Chinese domestic banks are being proactive
in implementing strategies to advance their e-banking in China guided by the Technology
Organizations Environment. In conjunction with previous studies, most barriers to e-banking
identified in their study were related to infrastructure, legal frameworks and cultural attributes
that lead customers reluctance to fully use electronic banking services.
Though believed that technology offers competitive advantages to banks through productivity
gains, transaction cost reduction; developing countries still lag behind developed countries in the
realization of e-banking benefits. However, it is believed that in the long run, developing
countries could benefit more from electronic technologies since they can leap frog their
technology development by gaining experience from developed countries.
2.7.3 Impact of Automation in Nigerian Banks

20

Agboola (2001) studied the impact of computer automation on the banking services in Lagos
and discovered that Electronic Banking has tremendously improved the services of some banks
to their customers in Lagos. The study was however restricted to the commercial nerve center of
Nigeria and concentrated on only six banks. He made a comparative analysis between the old
and new generation banks and discovered variation in the rate of adoption of the automated
devices. Aragba-Akpore (1998) wrote on the application of information technology in Nigerian
banks and pointed out that technology is becoming the backbone of banks services regeneration
in Nigeria

2.8 Summary
This chapter looked at the theoretical and empirical reviews on the impacts of technological
innovations on the distribution of financial services. It also availed the advantages and
disadvantages of technology in banks and their customers. Several issues and theories have been
discussed on the use of these self service technological innovations for the provision of financial
services to the banking clientele. On the whole, it can be concluded that there is still potential for
the growth in the technological innovations in developing counties that are yet to reach their
pinnacle as customers are just beginning to be pleased about these innovations in financial
services distribution. Despite the banks taking advantage of the technological advancement, there
still appears to be a general outcry from customers that the quality of financial services
distribution has not been up to their expectations. The next chapter will be reporting on methods
to be used in carrying out the research. It will also report on how the methods will be used and
why the methods were selected.

21

CHAPTER THREE: RESEARCH METHODOGY

3.1 Introduction
Having looked at the evolution of technological innovation and how it has impacted the financial
service distribution not only in Zimbabwe where it is still at its preliminary stages, but all around
the globe, this chapter outlines the methods used to contact the research. With the research
problem in mind, and then come up with variables for achievement of the objectives that have
been set out, this chapter also examines the various techniques used. This chapter also deals with
the research design, targeted population, sample chosen, sampling techniques, data collection
methods and data analysis plan. Looking at of technological innovations we can only ask if they
are worthwhile to bankers and customers.
3.2 Research Design
The research was conducted through a survey between technological products users and
technological products providers (banks). That is, only four out of seven operational commercial
banks in Gweru were randomly selected. The banks chosen were (BANC ABC, (BARCLAYS,
CBZ, STANDARD CHARTERED) both foreign owned and domestic owned. These banks are
more experienced and they are true and unbiased representations. The descriptive research which
involves the use of questionnaires and interviews was used. Questionnaires were distributed to a
number of customers chosen using accidental/convenience sampling as they were distributed.
Questionnaires were also distributed to selected banks management staff that is in charge of
technological innovations in each of the four banks considered in study. The determinants that
affect technology either positively or negatively were broken down into banks perspective and
customer perspective. Banks perspective with regards to increase revenue, increased business
and increased productivity. Congestion, reliability, variability, responsiveness, security,
convenience and consistency are the variables used measure the perspective of customers to
technology.

22

23

3.3 Research Population

The study was carried out in the city of Gweru in the Midlands province. The population of
technological product customers for the four banks is not known though it is assumed to be quite
large. As for the bank, a manager in charge of technological product operations from each bank
was targeted for the study giving a total number of four.
3.4 Research Sample
Judgmental sampling and random sampling techniques were used as for the four banks chosen
for the study that have been believed to have a greater representation and experience over those
that were not considered. Accidental/convenience sampling was used in the distribution of
questionnaires to technologic products users. In coming up with the sample respondents to the
research, the researcher distributed questionnaires to 20 customers from each bank who he found
from their different baking halls and ATM points during the day. Total number of customers
targeted was 80 from all selected banks. This will reflect a representative sample which has less
bias.
3.5 Data Collection Methods and Instruments
Primary data was collected by means of a survey based on questionnaires and in-depth
interviews
3.5.1 Questionnaires
A questionnaire is a structured technique of collecting primary data. This is an impersonal
research instrument made up of a series of questions that a respondent answers. It is standardized
and the respondent usually feels it in as per instruction. The questionnaires distributed to the 4
commercial banks (Barclays, Standard Chartered, CBZ, BANC ABC) comprised of closed
ended. The researcher used the questionnaire as a method of primary data collection mainly
because it is capable of producing large quantities of highly structured and standardized data.
Use of questionnaires was appropriate because they allow for free style of investigation, and
pursuing particular issues in greater details. It was relatively quick to collect information using
questionnaires and it was possible to collect information from a large portion of the sample
24

population. However, questionnaires were limited to simple questions as the researcher would
avoid the use of technical terms which compromised the quality of the data collected. In other
cases, there was non-response, provision of incomplete information and they are vulnerable to
wrong administration of the questionnaire.
3.5.2Interviews
Interviews were conducted in a structured form to ensure consistency. An interview schedule was
used. Personal interviews more flexible and enabled the researcher to have control over the
respondents so as to meet the researchers objectives of the study. However, they allow for
interviewer and respondent bias. It was also a challenge to find an appropriate time for the
interview as the respondents would have been committed to other pressing work related issues.
3.6 Data Presentation and Analysis Plan
Both qualitative and quantitative techniques were used to analyze the data gathered in the
administration of the research instruments pointed above. Qualitative analysis was used on the
data collected through secondary data gathering and phrases in personal interviews. On the other
hand, there was quantitative analysis of questionnaire responses through the use of descriptive
statistics, as well as variables such as frequencies, averages and ranges. Quantitative data
analysis was used to statistically uncover associations from the findings, trends and patterns.
Qualitative analysis was done through:

Data reduction: paraphrasing and summarizing responses, classifying responses into

categories and content analysis.

Mechanical analysis: noting patterns and finally drawing conclusions.

The use of tables and charts with percentages was used with the help of Microsoft Excel
Software to enable wide data to be condensed into few manageable tables for further analysis.
This facilitated comparability, where necessary, with recommendations for good practice.

25

3.7 Summary
Technological innovation is a factor that brought about a number of changes on how banks are
operating with the view of improving their service provision to customers. The chapter
highlighted on how the research was conducted and how primary data was gathered. The
research was carried out with the use of questionnaires and secondary data. The justification of
each method used was presented and the data analysis techniques were also highlighted. The next
chapter presents data analysis, interpretation and analysis.

26

CHAPTER FOUR: DATA PRESENTATION AND ANALYSIS

4.1 Introduction
This chapter presents on how the data collected was presented and analyzed. In addition, other
relevant information to the study was collected and analyzed to achieve research objectives as
well as answering the research questions set. The variables that were defined in the study are
looked at to see the impact they have on financial service distribution by banks from a bank and
customer perspective and the factors that affect the quality of services distributed.
4.2 Response Rate Analysis
4.2.1 Questionnaire Response Rate
A total of 84 questionnaires distributed, 4 of the 84 were distributed to the banks management
staff and were successfully completed and returned, representing a 100% response rate from
banks. Of the 80 questionnaires distributed to the technological products users (customers), 12
were not successfully completed that is 68 were successfully completed and returned, thereby
representing an 85% response rate. CBZ has the highest response rate which stands at 90%,
followed by ABC and Standard chartered with response rates standing at 85% and the least
response rate is from Barclays which stands at 80%. The table 4.1 and 4.2 below shows the
response rates from customers and banks respectively.

Table 4.1 Response Rate from Questionnaires (Customers)

Bank
BANC ABC
BARCLAYS
CBZ
STANDARD

Original send
20
20
20
20

Response
17
16
18
17

Response rate %
85
80
90
85

CHARTERED
TOTAL

80

68

85

Source Raw Data

Table 4.2 Response rate from Banks
27

Category

Original send

Responded

Response rate %

Banks

100

Source Raw Data

4.2.2 Interview Response Rate

In-depth interviews were distributed to all four selected banks and they were all successfully
answered and returned, representing a 100% response rate.
4.3 Data Presentation and Analysis
The analysis of single variables which have a great impact on financial service distribution was
done to bring out the most important features that each might have, this was done by looking at
the factors that affect service distribution from customer and bank point of view.
4.3.1 Technological Products that are being used by Banks
Among the technological products that are in place for financial service distribution, 44.1% of
the respondents indicated that they use ATM banking. This is due to the fact that customers are
still sticking to ATM banking because it is the first electronic banking product introduced.
Customers feel comfortable to use ATMs since they are physically available outside each
banking hall. Customers are familiarized with ATMs as compared to other technological
innovations like internet banking which has 19.1% response rate this however is attributed to
infrastructural development in internet linked computers in organizations and individuals, mobile
banking has 22.1% due to improved penetration of mobile phones supported by network
providers like Econet, Net-one and Telecel to individuals, and telephone banking which has
14.7% poor response rate due toinadequate services provided by Tel-one. All poor response rates
can be due to poor computer penetration in developing nations where Zimbabwe is categorized
in. Table 4.3 below shows the results.
Table 4.3 Technological Products
ATM Banking

Frequency
30

Response rate %
44.1
28

Internet Banking
Mobile Banking
Telephone Banking
Total
Source Raw Data

13
15
10
68

19.1
22.1
14.7
100

4.3.2 Customer Perspectives on Technological Innovation

4.3.2.1 Consistency
Figure 4.1 shows the results that customers have the feeling that the distribution of services 24
hours continuous is fair and stands at 45.6% and followed by those who feel the services are
good who represents 29.4% of the total respondents. This is due to the point that some of the
technological products services are up and running for a good part every week. On the other
hand, some of the respondents were of the view that technological innovations do not fulfill the
24 hours service, hence lacks consistency and they stand at 17.6%. 7.4% were a few who viewed
services as excellent. Poor consistency is as a result of technical failure and customers indicated
that banks seem to neglect servicing of these products. Network downturns and power cuts
compromises consistency. Inconsistency in the case of ATM banking is accelerated by the
cashless economy where liquidity challenges are paralyzing the economy. Grilches (1994)
pointed out that improved access generates unmeasured but presumably not unvalued time
savings for other users. Delvin (1995), customers have less time to spend on activities such as
visiting a bank and therefore want a higher degree of convenience and accessibility

29

Figure 4.1 24 hours continuous service (consistency)

50
45
40
35
30

frequency

25

response rate

20
15
10
5
0
poor

fair

good

excellent

Source Raw Data

4.3.2.2 Responsiveness
In terms of responsiveness, customers were asked about how well and quickly their queries that
relate to the technological innovations services are rectified by the banks. Table 4.4 shows that
13.2% of the respondents feel that the responsiveness to queries is very slow whilst 44.1% feel
that responsiveness is slow. Those who are on average represent 33.8%. Therefore more than
50% are unhappy with this service. The reason for slow responsiveness is due to slow response
to fault by system technicians and bank lengthy fault/grumble resolution procedures. Customers
relate these problems to the bank inefficiencies. Furthermore, banks are failing to resolve these
queries online as it is perceived by customers, their queries call numbers are always unreachable
and sometimes they take long to respond. However, customers from Standard Chartered and
Barclays customers pointed out that there is fair responsiveness to technological queries both
manually and electronically due to improved infrastructural developments attributed to these
foreign owned banks.

30

Table 4.4: Rate of Problem/Query Resolution

Very quickly
Quick
Average
Slow
Very slow
Total
Source Raw Data

Frequency
2
4
23
30
9
68

Response rate %
2.9
5.9
33.8
44.1
13.2
100

4.3.2.3 Congestion
Congestion in the banks has reduced as it is indicated by figure 4.2. It is found by looking at the
percentages of those that support and those who are on average which are 35.3% and 41.2%
respectively. This is due to the fact that the numbers of customers who use technological
innovations have increased and also the fact that technological products are meant to be
functional 24 hours a day. Customers visit the bank whenever they feel like hence eliminating the
rush to beat the bank closing time if it is the case of using ATMs. Most of the transactions are
now done electronically hence no queues are noticed in banking halls especially in Standard
Chartered and Barclays due to improved technological facilities that distribute services, these
banks has representation of all foreign owned commercial banks operating in Zimbabwe.
Contrary to this, congestion is however a major concern in CBZ and BANC ABC because
customers are resisting to change from their traditional ways of banking and there low
technological innovation uptake. Though technological innovations are in place, congestion
during month end is still a major concern from banks. These are clear representation of local
commercial banks operating in Zimbabwe.

31

Figure 4.2 Congestion

congestion
not reduced

average

15%

reduced

very much reduced

24%

21%

41%

Source Raw Data

4.3.2.4 Variability of services
Majority of the customers feel that the variety of services that technological products offer in
distributing financial services is adequate to satisfy a customers needs as shown in figure 4.3.
The variety of services that are offered ranges from cash transfers between accounts, cash
deposits, cash withdrawals, balance enquiries as well as issuance of mini statements as in the
case of Barclays Bank. More than 50% of the customers feel that the variability of services is
adequate. Most of the banking activities orbit around these factors, hence the reason why
customers feel they are satisfied. The fact that customers can enquire their account balances,
buying airtime and paying council bills using their phones (mobile banking) is a distance moved
by banks in distributing variety services to their customers. However, some customers pointed
out that the variability of services is not adequate, yes, because responses from some banks like
CBZ showed that only a few services are offered to customers as it will be costly to offer
services which will in turn not be used by customers.

32

Figure 4.3 Variability

inadequate

average
frequency
response rate%
adequate

very adequate
0

10

15

20

25

30

35

40

Source Raw Data

4.3.2.5 Reliability
In case of emergency, respondents were asked on how useful the availability of technological
products services is in time of need. Combined results show that50% can depend on the
innovations (internet banking, telephone banking, ATM banking and mobile banking) in case of
emergency. This is due to the 24 hours seven days a week service that is provided by banks
through technological products.32.4% view the services as fair. However, 17.6 % of the
respondents feel the service is poor as sometimes the system will be out of service at the time
service is needed, hence do not rely on them. Poor response rate to queries, inadequate varieties
and lack of consistency are the major reasons why customers are not relying on these
technological innovations offered by banks. For example one might visit an ATM point midnight
to access funds for medication only to find that it cannot dispense cash or is out service. That
customer will be unsatisfied and can describe this service as unreliable. Liao and Cheung (2002)
found that individual expectations regarding reliability, security, network speed, userfriendliness, and user involvement and convenience were the most important quality attributes in
the perceived usefulness of Internet-based banking.

33

Table 4.5 Reliability

Poor
Fair
Good
Excellent
Total
Source Raw Data

frequency
12
22
18
16
68

Response rate
17.6
32.4
26.5
23.5
100

4.3.2.5 Overall Satisfaction

The results that are in figure 4.4show that there is no marked distinction between those that are
very satisfied and those that are satisfied. The combined response rates stands at 48.5%. The
majority are on the average and stands at 42.6%. On the other hand, a very few were both
dissatisfied and very dissatisfied and their combined response rates stands at 8.8%. Overall
satisfaction is as a result of 45% of the respondents who feel there is fair consistency on the
provisions offered by technological products, 32.4% who feel there is fair reliability in
technological products, 41.2% feel there is average reduction in congestion and 38.2% feel there
is adequate variety of services provided by the technological products. This is due to the fact that
technological innovations performed better than the physical bank staff in distributing financial
services and provides more features than anticipated. A few that is dissatisfied about the services
talked mostly about the congestion that characterizes the month ends if it is the case of ATM
banking. Customers are satisfied with these services because of the advantages technological
innovations offer such as the perception of control, security, and cost reduction as well easy
accessibility for (Kotler, 1997) defines satisfaction as a persons feelings of pleasure and
disappointment resulting from comparing a products perceived performance or outcome in
relation to his or her expectation. Banks are toiling day and night in a bid to advance their ways
of distributing services technologically to satisfy their customers because (Heskett, Hart 1990)
pointed out that total customer satisfaction is the highest form of service quality.

34

Figure 4.4 Overall Satisfactions

very dissatisfied

dissatisfied
frequency

average

response rate %

satisfied

very satisfied
0

10

15

20

25

30

35

40

45

Source Raw Data

4.3.3 Bankers Perspective on technological innovations
4.3.3.1 Overtime Claims
Overtime claims have a direct effect on the banks revenue and that is why it is included in it the
determination of revenue. The results in Table 5 below show that out of 4 banks, 2 banks feel that
the amounts of overtime claimed by staff has reduced and greatly reduced. This shows that 50%
of the banks both domestic and foreign owned feel that overtime claims have been since the
introduction of technological innovations. This can be attributed to the point that some of the
work done by the staff is now being performed by technological products and hence members of
staff can balance their work in time and reduced overtime claims. All in all, it shows that
overtime claims have reduced and hence increased revenue.

35

Table 4.6 Overtime Claims

Reduced
Greatly reduced
Total
Source Raw Data

Frequency
2
2
4

Response rate %
50
50
100

4.3.3.2 Revenue Increase

Out of 4 banks considered, 3 banks feel that the introduction of technological innovations has
greatly contributed to increased revenue for the banks. In addition, 1 bank to a greater extent,
also agrees that there is increased revenue. An increase is attributed to the increase in efficiency
of technological products which are being used for financial service distribution. Banking
services are easily digitalized and automated and, thus, from an operational perspective, lend
themselves to the internet. Elliot and Loebbecke (2000), Daniel (1998) also pointed out that the
potential competitive advantage of the internet for banks lies in the areas of cost reduction and
satisfaction of consumer needs. There is also an aspect of banks making savings, due to reduced
bank tellers to provide the same service as that provided by technological products. More savings
from transaction costs also increased revenue. More technological products, more transactions,
lead to increased revenue.

Table 4.7 Revenue Increase

Average
Greatly increased
Total
Source Raw Data

Frequency
1
3
4

Response rate %
25
75
100

4.3.3.3 Staff Productivity on Non Technological Product Activities

36

The results in Table 6 below show that productivity in other sectors like loan processing centers
and credit risk analysis has increased. This is due to the fact that most of the customers are now
being served by technology leaving the bank staff focusing on non technologic issues that does
not relate to service distribution. One major reason for technological innovation was to reduce
teller/ customer interaction, thus giving the staff amble time to concentrate on other activities
than before. Technological innovation led to staff productivity. . In the service sector, technology
has been used to standardize services by reducing the employee/customer interface (Quinn,
1996). Technological innovations have greatly substituted repetitive, time consuming tasks,
human error and extended access to banking related facilities. Banks have found new ways of
distributing their services through electronic technologies.
Table 4.8 Staff Productivity
Has increased
Source Raw Data

Frequency
4

Response rate %
100

4.4 Factors that Influence Financial Service Distribution

4.4.1 Customer Literacy Level
Customer literacy levels in 3 out of 4 banks considered are positively affecting the service that
the banks are distributing through technological innovations. The results show that customers are
equipped with information about the operations of the technological products and transact with
ease. On the other side of the coin, one bank still has customers struggling with services offered
by technological products and this is because there is poor information dissemination to
customers about the innovations. However, some of the customers have a tendency of ignorance
and they dont want to learn.

Table 4.9 Customer Literacy Level

Negatively affect

Frequency
1

Response rate %
25
37

Positively affect
Total
Source Raw Data

3
4

75
100

4.4.2 Country Economic State

Of the 4 banks considered 3feel that countrys economy impacts negatively on the technological
innovation financial service distribution especially in the cashless economies where the economy
is facing liquidity challenges. Rapid technology advancements have introduced major changes in
the worldwide economic and business atmosphere (Qureshi et al, 2008). CBZ proved that
economic state is negatively affecting on service distribution citing on the reasons such as poor
liquidity the economy is facing, network downturns, unanticipated power cuts and system
failures. Efficiency of technological products will not be noticed. However, Standard Chartered,
being a foreign owned bank feels that the .economy has no effect and this attributed to its
standards which are more advanced over others which are failing to adapt to prevailing economic
conditions
Table 4.10 Country Economic State
Negatively affect
No effect
Total
Source Raw Data

Frequency
3
1
4

Response rate %
75
25
100

4.4.3 Infrastructure
Infrastructure plays a pivotal role in the distribution of financial services through technological
products. Out of 4 banks 3feel their infrastructure is adequate in service distribution due to
telephone, and ATM banking. Technological products are well implemented and protect
customers from being vulnerable. However, the study showed that in developing countries, like
Zimbabwe technology state is still at its initial stages. The prevailing infrastructure prohibits the
maximum implementation and utilization of technological innovations for financial service
distribution. Barclays bank, in contrast to others, feels that infrastructure has negative effect. The
one bank that feels infrastructure has a negative impact on financial service distribution and other
factors such as literacy, country economic state as determinants effective financial service
38

distribution. Zheng Zhong (2005) in is study on the impact of technology in the Chinese banks
pointed out infrastructural developments through various Golden projects developed e-banking
in China. Furthermore, Chinas relatively immature techSnical, legal e-commerce infrastructures
made it a representative case for developing countries.
Table 4.11 Infrastructure
No effect
Positively affect
Total
Source Raw Data

Frequency
1
3
4

Response rate %
25
75
100

4.5 Summary
This chapter focused on data presentation and analysis. It clearly spelt out the findings from both
questionnaires and interviews looking at the variables (reliability, responsiveness, consistency,
congestion and convenience) from a customer point of view. Variables like: increased revenue,
increased staff productivity and reduced overtime claims were looked at from a banks point of
view. However, there are problems as a result of technological innovations in banks. Literacy
was a major problem in the use of technological innovations which is even true even to this date.
Congestion was also noticed at baking and ATMs since all the withdrawals were transferred to
ATM points. Face to face interactions between customer and teller was reduced as result of
innovations, thus creating a lack of feedback especially with increase in the number of
technological products. Some customers still want to use traditional means of service distribution
due to technophobia which also forced banks to introduce charges for all transactions done
at the bank counter. Customer acceptance was one of the challenges faced the banks in
Zimbabwe. So as customers become acquainted with technological innovations, they started to
demand for more and greater convenience and higher quality services. All in all, the aspect of
electronic banking is still at its infancy in Zimbabwean commercial banks and the lagging is
escalated by poor liquidity conditions the economy is facing. Customers level of satisfaction on
the use of technological products was also looked at. The factors that impact financial service
distribution positively and negatively were looked at form a banks point of view. Data was
presented graphically with the help of Microsoft Excel for easy interpretation. The next chapter
39

outlines the major findings of the study and draws conclusions. Finally recommendations are
outlined as well as areas that need further research.

40

CHAPTER FIVE: SUMMARY, COCLUSIONS AND

RECCOMENDATIONS
5.1 Introduction
The purpose of the study is to analyze the customers and banks expectations of the
technological products service and how it impacts on financial service distribution. Guided by
objectives and research questions, this chapter outlines the conclusions and major findings of the
study as well as suggestions for further research.
5.2 Summary
The study was set out to analyze the impact of technological innovation on Zimbabwean
commercial banks financial service distribution in Gweru. For valid analysis, various authors
views were analyzed on how technology has impacted the distribution of financial services.
Various studies from other countries were comparatively analyzed to come out with a detailed
and rich literature review. Textbooks, journals were used for reviewing the literature in the
research. Theories that provided relevant literature to the were also looked at so as to synthesize
what other authors view the impact technological innovation has on distribution of financial
services. In order to answer the research questions, and achieve the objectives set in the study, a
sample size of four banks believed to have experience and larger customer and clear
representation of all commercial banks studied according to the area of study base (both foreign
and domestic owned) was used using both judgmental and random sampling. Total number of 80
customers that is 20 customers from each bank was targeted and accidental/convenient sampling
was used to distribute questionnaires. Questionnaires and in depth interviews were also
distributed to bank managers. Descriptive survey was used for data collection. Data collected
was analyzed and presented graphically with help of Microsoft Excel from a customer and bank
perspective in line with the set objectives and research questions. The researcher came out with
findings which will be used to come up with conclusions and recommendations.

41

5.3 Conclusions
The findings were looked at from customer and bank perspective. The determinants that affect
financial service distribution by technological products either negatively or positively were
looked at to see if there are challenges and problem areas that need to be improved.

Consistency: From the findings it was deduced that the majority of customers are happy
with the 24 hours a day and

7 days a week service provided by the banks via

technological products. However, consistency may be hindered in times of congestion

like month ends and during the day when network is congested.

Responsiveness: Findings from the study showed that this is an area that needs
improvement as queries from customers concerning system failures and account
anomalies are not attended to at the appointed time. However, delays to attend to failures
and breakdowns are sometimes due to negligence or network failures in times when there
is need. Quick reaction to queries and problems generates a customer satisfaction.

Congestion: Technological innovation has reduced congestion in the banks as it was

found that most customers are now familiar with their use. Technology has come all the
way to help customers not to rush to the bank to beat the closing time to have a financial
service like what they were used to prior to technological innovations. However, survey
showed that congestion is still experienced during the month end and at the beginning of
the month in the case of ATM banking. During the day, in the case of internet based
banking products, network congestion will be at its pick. As a result, customers opt to use
technological products in the middle of the month and at night times when there is
limited congestion. It was also found that congestion differs from one bank to another
depending on factors like number of ATMs a bank has, network link, and client base the
technological innovations provide which comprises of account balance enquiries, cash
withdrawals and fund transfers to name a few.

Convenience: According to the study, most customers are satisfied with the convenience
of the technological products in distributing services beyond banks operating hours.
42

Customers who are busy during the day are able to access the services everywhere and
anywhere they are. Study showed that technological innovations are faster than the bank
staff in the distribution of services with everything in place.

Satisfaction: The findings from the study showed that more customers are satisfied with
technological products services looking at their responses on the variables.

Increased revenue: The showed that revenue has increased due to reduced overtime
claims from bank staff. The increased revenue is as a result of reduced costs due to
efficiency. Bank staff is now able to complete their work on time because more customers
are acquainted with technological products in carrying out a variety of transactions which
will in turn increase revenue as a result of transaction costs. The more the transaction, the
more the money is generated from transaction charges.

Increased productivity: Technological innovation has increased productivity in non

technologic sectors such as loan processing centers. Customers use technological
innovations for their transactions. The banks are coming up with several technological
products such as sms banking, online banking as a result of freed resources. Interaction
with customers was to some extend reduced and hence tellers are able to effectively carry
out their other banking activities.

Literacy levels: From the findings, it was seen that the literacy levels have improved.
Literacy has a positive impact on technological financial service distribution. However,
one ban feels that customer literacy has no effect on service distribution due to the fact
that the members of staff assigned to sensitize customers on the use of technological
products have been withdrawn due to ever rising number of customers some of whom
would require sensitization.

Having looked at the findings as outlined, the study was able to achieve the research objectives
and to answer the research questions as expected. The conclusion was that technological
innovation has improved financial service distribution by banks to their customers. In addition,
the banks have benefited from the use of technological products in financial service distribution.
43

5.4 Recommendations
It was also the purpose of this study to make recommendations that would advance on the
distribution of services by banks through technological innovation. Therefore the following
recommendations are well thought out to be suitable in improvement of service distribution
through these self-service technologies.

For satisfactory financial service distribution, technological products need to be

operational 24/7 and they need to be in good condition most of the time for consistency.
Findings showed that most customers are happy with continuous service with a few who
still feel that the service is poor. From the bank perspective the research showed that the
rates of service failure affect service negatively. In this regard, technological innovations
should be monitored and manned 24 hrs to reduce downtime in case of faults. The banks
need to consider having all technological innovations fully serviced.

Findings on responsiveness showed that customers are not happy with the response to
their queries in case of technological products complications. To counter this, custodians
need to be trained in order to handle customer queries with competence and confidence.
Banks should consider having staff specifically assigned to check with customers so as to
improve their response to queries as this is one of concern.

Congestion has reduced as compared to pre technological days though congestion during
month ends and during the day still remains a challenge to the banks. It will be therefore
prudent for the banks to improve number on available products such as opening up more
ATM outlets away from the bank in places like shopping centers, hotels and filling
stations.

Findings show that three quarters of the banks feel that customer literacy levels affect
service distribution positively and a quarter feels it negatively affect. So, banks need to
inform customers on technological innovations that is they must provide customers with
technical how.

Banks should improve their infrastructure so as to suit with the dynamic technological
environment for service distribution to effective and competitive.
44

5.5 Suggestion for Further Research

This study focused on the analyzing the impact of technological innovation on commercial bank
financial service distribution and it has been received by customers. Further study can be carried
out in the following areas. Are technological innovations fully utilized by commercial banks in
distributing financial services?

45

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50

APPENDICES
APPETIX A
Questionnaire to customers
I am a Midlands State University student currently studying for a Bachelor of Commerce in
Banking and Finance Honors Degree and undertaking the research on an analysis on the impact
of technological innovation on Zimbabwean commercial banks financial service
distribution.
I wish to request for your input in the following questionnaire so as to enable me make an
informed decision.
The information that will be obtained from this study will be used strictly for academic purposes
only and will b
e handled with strictest confidentiality.
Finally I want to thank you all in advance for taking your precious time responding to this
questionnaire
Your Bank.
1. Which one is your banks most technological product it uses to distribute its services?
1 internet banking

2 ATM banking

3 mobile banking

4 telephone

banking
2. In comparison to using bank staff, how do you rate technological products services?
1 slower

2 same

faster

3. In terms of consistency, how do you rate the technological products in offering 24 hours
continuous service?
1 poor

2 fair

3 good

4 excellent

4. Which time do you find most convenient to use technological products?

1 day time 2

2 night time

3 any time
51

5. In case of an emergence where you need a service urgently, how do you rate
technological products in responding?
1 poor

2 fair

3 good

4 excellent

6. To what extend have technological innovations reduced congestion in your banks?

1 not reduced
S

2 average

3 reduced

4 very much reduced

7. How do you rate the variety of services offered technological products so as to satisfy
your needs?
1 very adequate

2 adequate

3 average

4 inadequate

8. How satisfied are you with the technological innovations services in terms of the
following? Tick where appropriate
Very
satisfied

Satisfied

average

Dissatisfie

Very

dissatisfie
d

1 Provision of 24
hours consistent
service
2 Provision of
service at
convenient time
3 Reliability in
emergency cases
4 Reducing
congestion in the
bank
5 Provision of
variety of services

52

53

APPENDIX B
Questionnaire to managers
I am a Midlands State University student currently studying for a Bachelor of Commerce in
Banking and Finance Honors Degree and undertaking the research on an analysis on the impact
of technological innovation on Zimbabwean commercial banks financial service
distribution.
I wish to request for your input in the following questionnaire so as to enable me make an
informed decision.
The information that will be obtained from this study will be used strictly for academic purposes
only and will be handled with strictest confidentiality.
Finally I want to thank you all in advance for taking your precious time responding to this
questionnaire
Your Bank.
1. To what extent have over time claims been reduced since you introduced technological
innovations?
1

not reduced

2 average

3 reduced

4 greatly reduced

2. How do you rate the number of customer transactions since you introduced technological
innovations?
1

increased

2 neither

3 deceased

3. To what extent are technological products contributing to the revenue of the bank?
1

no effect

2 average

3 greatly contributing

4. What about your staff productivity in other activities considering the technological
innovations have taken up some functions?
54

has increased

2 neither

3 has decreased

55

5. To what extent do you believe the following factors have impacted financial service
distribution that is offered though technological products? Tick the appropriate answer.

negatively

no effect

positively

1 Customer literacy level

2 State of the countrys economy
3 Infrastructure

APPENDIX C
Interview guide
56

1. Has overtime claims been reduced since the introduction of technological innovations?
2. Has the number of customer transactions increased since you introduced technological
innovations?
3. Are technological products contributed to revenue increase?
4. Has staff productivity increased other areas considering technological innovations have
taken up some of the functions?
5. Has customer literacy, country economic state, infrastructure affect technological
financial service distribution?

57