You are on page 1of 87

ELECTRONIC BANKING AND FINANCIAL EFFICIENCY OF COMMERICAL

BANKS

A CASE STUDY OF STANBIC BANK,

KYAMBOGO BRANCH

BY

AURUGA EDITH LUCY

UBB209/2017/B/D/A/40724

SUPERVISOR

MS AHUMUZA DOREEN

A RESEARCH REPORT SUBMITTED TO THE DEPARTMENT OF BUSINESS

AND FINANCE IN PARTIAL FULFILMENT FOR THE AWARD OF

A DIPLOMA IN ACCOUNTING AND FINANCE OF UGANDA

BUSINESS AND TECHNICAL EXAMINATIONS BOARD

DECEMBER, 2019
DECLARATION
I hereby declare that this submission is my own work towards the award of a Diploma in
Accounting and Finance and to the best of my knowledge, it contains no material previously
published by another person nor material which has been accepted for the award of any other
diploma of any institution of higher learning, except where due acknowledgement has been
made in the text.

Signature ………………………………………….. Date…………………………….

AURUGA EDITH LUCY

UBB209/2017/B/D/A/40724

i
APPROVAL
This research has been done under my supervision and is now ready for submission

Signature…………………………… Date……………………………..

MS. AHUMUZA DOREEN

ii
DEDICATION
This report is dedicated to my parents and family of the late George William Obany who
have tirelessly and generously supported me financially and morally from childhood all
through life.. You have been a great source of inspiration to me. God bless you all!

iii
ACKNOWLEDGEMENT
It is with deep gratitude that I thank God for giving me the life, the strength and the wisdom I
needed to accomplish this report. First and foremost I give thanks to my supervisor Ms.
Ahumuza Doreen for her useful advice, patience, guidance, direction, counsel in seeing me
through this study support and the supervision that enabled the successful completion of this
report.

A special thanks to my beloved parents for all the financial and moral support that they have
given me, May the Almighty God reward them tremendously.

Special gratitude also go to all my dear friends who have supported me in one way or another
all through the compilation of this report and encouragement all through my student life at
campus. May your lives always be as rich, warm and loving and may your income, peace, joy
and satisfaction increase every day.

Also special thanks go to the manager of Stanbic Bank for having accepted my request to use
Stanbic Bank as my case study and for having allowed me to contact the entire employees of
Stanbic Bank who heartedly responded expectedly. May almighty God reward you
abundantly.

I thank my sisters and brothers for the financial support, the love and the positive influence
towards my life Am forever grateful to everyone who contributed towards the successful
completion of this project. May the good Lord bless you abundantly.

iv
TABLE OF CONTENTS
DECLARATION............................................................................................................................ i

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

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

ACKNOWLEDGEMENT ........................................................................................................... iv

TABLE OF CONTENTS ............................................................................................................. v

LIST OF FIGURES ................................................................................................................... xiii

LIST OF ACRONYMS ............................................................................................................. xiv

ABSTRACT ................................................................................................................................. xv

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

1.0. Introduction .............................................................................................................................. 1

1.1 Background of the study ........................................................................................................... 1

1.2 Statement of the problem .......................................................................................................... 3

1.3. Purpose of the study ................................................................................................................. 4

1.4. Objectives of the study............................................................................................................. 4

1.5. Research questions ................................................................................................................... 4

1.6. Scope of the study .................................................................................................................... 4

1.6.1 Content scope ......................................................................................................................... 4

1.6.2. Geographical scope ............................................................................................................... 5

1.6.3 Time Scope ............................................................................................................................ 5

1.7 Significance of the study........................................................................................................... 5

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

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

2.0. Introduction .............................................................................................................................. 7

2.1. Electronic banking ................................................................................................................... 7

v
2.1.1 Definition of the Electronic Banking ..................................................................................... 7

2.2. Types of E-banking systems .................................................................................................. 10

2.3 Advantages of E-Banking ....................................................................................................... 13

2.3.1 Factors Influencing the Adoption of Electronic Banking .................................................... 13

2.4 Electronic-Banking and Financial Efficiency ......................................................................... 18

2.5 Challenges of E-Banking revolution ....................................................................................... 20

2.6. Conclusion of literature review .............................................................................................. 24

CHAPTER THREE .................................................................................................................... 25

METHODOLOGY ..................................................................................................................... 25

3.0 Introduction ............................................................................................................................. 25

3.1 Research Design...................................................................................................................... 25

3.2 Study Population ..................................................................................................................... 25

3.3 Sample size ............................................................................................................................. 25

3.4 Sampling Techniques .............................................................................................................. 26

3.4.1 Purposive Sampling. ............................................................................................................ 26

3.4.2 Random Sampling ................................................................................................................ 26

3.5. Source of Data........................................................................................................................ 26

3.5.1 Primary Data ........................................................................................................................ 26

3.5.2 Secondary Source ................................................................................................................. 26

3.6 Data Collection Methods ........................................................................................................ 27

3.6.1 Interviewing ......................................................................................................................... 27

3.6.2 Instruments of data collection .............................................................................................. 27

3.7 Research Procedure ................................................................................................................. 28

3.8 Data Presentation and Analysis .............................................................................................. 28

3.9 Ethical Consideration .............................................................................................................. 29

vi
3.10 Limitations of the study ........................................................................................................ 29

CHAPTER FOUR ....................................................................................................................... 31

PRESENTATION, DISCUSSION AND ANALYSIS OF FINDINGS .................................. 31

4.0 Introduction ............................................................................................................................. 31

4.1 Demographic characteristics of respondents .......................................................................... 31

4.1.1 Sex of respondents ............................................................................................................... 31

4.1.2 Age of respondents .............................................................................................................. 32

4.1.3 Time spend working with Stanbic Bank (U) Limited Bank ................................................ 34

4.1.4 Position in the company ....................................................................................................... 35

4.1.5 Duration of adoption of mobile banking .............................................................................. 36

4.2 Methods or Types used in Electronic payment ....................................................................... 37

4.2.1 Meaning of electronic payment ........................................................................................... 37

4.2.2. Does Stanbic Bank (U) Limited takes part in the use of electronic system? ...................... 37

4.2.3 Different types/ methods used in electronic payment .......................................................... 38

4.2.4 Length of Stanbic Bank (U) Limited using Electronic payment ......................................... 39

4.3 Impact of electronic banking methods on financial performance ........................................... 40

4.3.1 Opinion if the bank is in a good financial position .............................................................. 40

4.3.2 Rating of the financial position of the bank on a rate of 1 – 10, 10 being the highest ........ 41

4.3.3 Rating of the use of electronic payment .............................................................................. 42

4.3.4 Major benefits of electronic payment to Stanbic Bank (U) Limited ................................... 43

4.3.5 Influence of electronic banking to the profitability of the bank .......................................... 44

4.3.6 Electronic banking is convenient to the customers thus more transactions for the bank .... 45

4.3.7 Electronic banking reduces number of manual tasks thus reduces labour expenses .......... 46

4.3.8 Electronic banking bring services closer to the client ......................................................... 47

4.3.9 It is easy to deposit and withdraw money from any ATM branch....................................... 48

vii
4.3.10 The electronic systems in Stanbic bank are timely and adequate according to the

customer emergency needs ........................................................................................................... 49

4.3.11 The ATM cards are renewed on time and the customers get informed on time to

acquire them .................................................................................................................................. 50

4.3.12 The E banking systems are strong with electronic passwords that are hard to be

penetrated by the hijackers so as prevent fraud ............................................................................ 51

4.3.13 There is an increase in new customers as well as sustaining the royal customers at the

same time due to the presence of adequate electronic systems in Stanbic bank........................... 52

4.3.14 Stanbic Bank information systems are regularly updated to avoid unnecessary

breakdowns to inconvenience customers ...................................................................................... 53

4.3.15 Stanbic Bank has issued out credit cards to their customers to enable quick purchase of

commodities from supermarkets, malls etc. ................................................................................. 54

4.3.16 Stanbic Bank is partnering with other service providers to ease the payment of utility

bills by accepting deposits from its clients, thus more revenue for the bank. .............................. 55

4.4 Challenges in in using electronic banking .............................................................................. 56

4.4.1 Does the bank face any challenges in using electronic banking? ........................................ 56

4.4.2 Challenges facing Stanbic Bank (U) Limited in electronic payment .................................. 57

4.4.3 Impact of challenges on profitability of Stanbic Bank (U) Limited .................................... 58

CHAPTER FIVE ........................................................................................................................ 60

SUMMARY, CONCLUSIONS AND RECOMMENDATIONS ............................................ 60

5.0 Introduction ............................................................................................................................. 60

5.1 Summary of major findings .................................................................................................... 60

5.1.1 Findings on the types of electronic banking on financial efficiency of Stanbic Bank ........ 60

5.1.2 Impact of electronic banking methods on financial performance ........................................ 61

5.1.3 Challenges in in using electronic banking ........................................................................... 61

viii
5.2 Conclusions ............................................................................................................................. 62

5.3 Recommendations ................................................................................................................... 62

5.4 Areas for Further Research ..................................................................................................... 65

REFERENCES ............................................................................................................................ 66

APPENDICES ............................................................................................................................. 68

Appendices: Questionnaire ........................................................................................................... 68

ix
LIST OF TABLE
Table 1 : Showing the nature of respondents ...........................Error! Bookmark not defined.

Table 2: Doing Business with the Bank ...................................Error! Bookmark not defined.

Table 3: Benefits of E-Banking Adoption ...............................Error! Bookmark not defined.

Table 4: Methods in electronic payment ..................................Error! Bookmark not defined.

Table 5: Banking Services Subscribed ....................................Error! Bookmark not defined.

Table 6: Showing the rating of the use of electronic payment methodsError! Bookmark not

defined.

Table 7: Showing weather the E banking methods employed by Stanbic bank offer quick

services .....................................................................................Error! Bookmark not defined.

Table 8: Showing whether it is easy to transfer money from one account to another account

electronically ............................................................................Error! Bookmark not defined.

Table 9: Showing whether there is sufficient number of ATM boothsError! Bookmark not

defined.

Table 10: Showing whether it is easy to deposit and withdraw money from any ATM branch

..................................................................................................Error! Bookmark not defined.

Table 11: Showing whether Electronic bank methods employed maintain error free records

..................................................................................................Error! Bookmark not defined.

Table 12: Showing whether the customer representatives for on-line services respond to your

queries on a timely fashion ......................................................Error! Bookmark not defined.

Table 13: Showing whether the Bank educates or sensitize customers about electronic

banking methods available .......................................................Error! Bookmark not defined.

Table 14: Showing whether Electronic banking services are available all time (24hours)

..................................................................................................Error! Bookmark not defined.

Table 15: Showing whether Electronic banking services are secureError! Bookmark not

defined.

x
Table 16: Showing whether Electronic banking services is time savingError! Bookmark not

defined.

Table 17: Showing whether Electronic banking methods are cheapError! Bookmark not

defined.

Table 18: Showing whether there are a lot of problems associated with electronic banking

..................................................................................................Error! Bookmark not defined.

Table 19: Whether the bank encourages customers to use E-banking services ............... Error!

Bookmark not defined.

Table 20: Showing whether ATMs are located in convenient placesError! Bookmark not

defined.

Table 21: Challenges facing electronic payment methods at Stanbic Bank (U) Limited.Error!

Bookmark not defined.

Table 22: Showing whether the electronic systems in Stanbic bank are timely and adequate

according to the customer’s emergency needs.........................Error! Bookmark not defined.

Table 23: Showing whether the ATM cards are renewed on time and the customers get

informed on time to acquire them ............................................Error! Bookmark not defined.

Table 24: Showing whether the E banking systems are strong with electronic passwords that

are hard to be penetrated by the hijackers so as prevent fraud Error! Bookmark not defined.

Table 25: Showing whether the Customer is satisfied according to the way Stanbic bank carry

out their electronic systems ......................................................Error! Bookmark not defined.

Table 26: showing whether there is an increase in new customers as well as sustaining the

loyal customers at the same time due to the presence of adequate electronic systems in

Stanbic bank .............................................................................Error! Bookmark not defined.

xi
Table 27: Showing whether there is conducive atmosphere in Stanbic bank that motivates the

employees to work hard and thus offer good services like customer care to their clientsError!

Bookmark not defined.

Table 28: showing whether Stanbic bank’s information systems are regularly updated to

avoid unnecessary breakdowns to inconvenience customers ..Error! Bookmark not defined.

Table 29: showing whether Stanbic bank has enough security mechanisms in place to safe

guard the customers’ funds. .....................................................Error! Bookmark not defined.

Table 30: Showing whether Stanbic bank has issued out credit cards to their customers to

enable quick purchase of commodities from supermarkets, malls etc.Error! Bookmark not

defined.

Table 31: Showing whether Stanbic bank has opened up more serving centers hence bringing

its services closer to its customers ...........................................Error! Bookmark not defined.

Table 32: Showing whether Stanbic bank is giving loans to its customer at relatively lower

interest rates. ............................................................................Error! Bookmark not defined.

Table 33: showing whether Stanbic bank is partnering with other service providers to ease the

payment of utility bills by accepting deposits from its clients.Error! Bookmark not defined.

Table 34: showing whether through its Automatic Teller Machines, Stanbic bank has eased

the depositing and withdrawal of funds from its clients ..........Error! Bookmark not defined.

Table 35: showing whether the customer use e-Banking because the website clarifies its

privacy policy about my private information...........................Error! Bookmark not defined.

Table 36: Showing whether there is a relationship between electronic banking and financial

efficiency..................................................................................Error! Bookmark not defined.

xii
LIST OF FIGURES
Figure 1: Benefits of E-Banking Adoption ..............................Error! Bookmark not defined.
Figure 2: Banking Services Subscribed ...................................Error! Bookmark not defined.
Figure 3: Benefits of Stanbic Bank (U) Limited is accruing from Electronic payment
methods. ...................................................................................Error! Bookmark not defined.

xiii
LIST OF ACRONYMS
ATMS Automatic Teller Machines

EFT Act The federal Electronic Fund Transfer Act

EFT Electronic Funds Transfer

EPS Electronic Payment System

IT Information Technology

NSSF National Social Security Funds

PC Personal Computer

PDA Personal Digital Assistant

PIN Personal Identification Numbers

xiv
S2B Straight 2 Bank

SME Short messaging service


TC Total Cost
TR Total Revenue
UCB Uganda Commercial Bank
UIA Uganda Investment Authority
URA Uganda Revenue Authority

ABSTRACT
This study was carried out to assess the effect of electronic banking and financial efficiency
in Stanbic Bank using Kyambogo branch as a case study in Kampala District. The objectives
of the study were; to examine the types of E-banking used by Stanbic Bank, to evaluate the
effectiveness of electronic banking methods employed by Stanbic Bank –Kyambogo Branch,
to establish how E-banking has influenced the financial efficiency of Stanbic Bank and to
establish the challenges of E-banking in Stanbic Bank.. A non experimental design was used
to select a sample size of 50 respondents and Purposive and Simple random sampling
procedures were used. Data was collected using questionnaires; it was later analyzed to be
presented as a report.

xv
This study indicates that there are several electronic payment methods being used by Stanbic
Bank and they include; credit cards, internet banking and withdrawing, use of debit/ prepaid
cards and Electronic fund transfer cards. Also several factors were identified as benefits to
electronic payment to Stanbic Bank and these were; reduced manual labour, maintenance of
customer contact, reduced duplication, transparency and improved sourcing. Findings on the
effectiveness of electronic banking methods employed at Stanbic bank Kyambogo branch
indicated that the methods offer quick services to its clients; respondents can easily transfer
money from one account to another electronically; there is insufficient number of ATM
booths. Findings revealed that Electronic Banking has satisfied most of people banking
needs; Stanbic bank is characterized by long queues; few break downs in ATM machine; the
presence of breakdowns of ATM machines affects Electronic banking services hence
affecting the level of client’s satisfaction. High costs of machine maintenance, cash based
economy, channel conflicts and lack of more skilled and experienced labour force turned out
to be the main constraining factors limiting profitability of Stanbic Bank that would be
accruing from the use of electronic payment methods. The Pearson’s correlation between
Electronic banking and financial efficiency stood at 0.388 which is a weak direct relationship
between the two variables

Then the study ended up by making recommendations about; massive sensitization of public
on electronic payment methods, introduction of other electronic payment methods by
financial institutions, reducing over reliance on cash based economy and lastly more
comprehensive studies about electronic payments methods.

CHAPTER ONE

1.0. Introduction
This chapter comprises of the background of the study, the statement of the problem, purpose
of the study, objective of the study, research questions, and scope of the study and
significance of the study.

1.1 Background of the study


Daniel (1999) defines electronic banking as the delivery of banks' information and services
by banks to customers via different delivery platforms that can be used with different
terminal devices such as a personal computer and a mobile phone with browser or desktop

xvi
software, telephone or digital television. According to Khan (2007), Internet (electronic)
banking includes the system that enables financial institution customers, individuals or
businesses, access accounts, transact business, or obtain information on financial products
and services on public or private network including Internet. According to Saha and Zhao
(2005), customer satisfaction is defined as a collection of outcome of perception, evaluation
and psychological reactions to the consumption experience with a product/service.

Banking industry has traditionally operated in a relatively stable environment for decades.
However, with the advent of Internet banking, the industry is characterized by dramatically
aggressive competition. The shift from traditional branch banking to Internet banking has
meant that new strategies to attract new customers and retain existing ones have become
critical (Wong, 2005). Electronic Banking allows customers to access banking services 24
hours a day, 7 days a week. Like ATMs, Electronic banking empowers customers to choose
when and where they conduct their banking transactions. However, Electronic Banking
innovations at Stanbic Bank-Kyambogo Branch seem not to have achieved its aims. Long
Queues are still seen in the banking hall, bank customers still handle too much cash, and
hardly do people talk about the electronic banking products that are available. The long
queues and huge crowds are highly devastating and discouraging most times, especially when
the weekend is near. Most times, these long queues are as a result of the breakdown of the
computers used by the Bank tellers, sometimes it occurs as a result of the Bank tellers
absolving them from duty and passing the bulk to someone else. (Journal of Management and
Sustainability Vol. 1, No. 1; September 2010)

According to Kenneth (2000) states the financial efficiency as the ability of organizations to
perfectly utilize its goals within organization and also maximum use of the total costs of
production. According to the United Nations recommendation Act 2002) and invoices
reports that with the improvement in the application of Electronic banking (payments) like
online payment terminologies have led to improvement on profitability of the business
organization. Gray (1994) said that profitability of the business organization depends on the
utilization of the business related goals and objectives.

Electronic payment methods such as credit cards, debit cards, automated clearing house
networks have changed the exchange transactions of goods and vendors on the e-business
industry in developed countries like China (Burton, 2005). E-business is a progressive
industry that is becoming popular among merchants all around the world. Many individuals

2
have put up small e-business to earn. Through electronic payments, the importance of using
cash as the only means of exchange value has decreased. For small e-businesses, one would
need to have these types of electronic payment to ensure profit maximization. Electronic
payment emerged in the late 1960s in more developed nations as communication tool that
enable companies within an organization to exchange. Electronically a wide range of
business documents including purchase orders invoices, shipping orders and confirmations.
This has enabled the number of companies using electronic to grow significantly. Stanbic
Bank report (143-151), 2009)

Uganda being under developed, technological innovation still affects its electronic payments
methods in most financial institutions. Besides most clients to these banks do not understand
the system well, this affects profitability of most institutions due to limited number of clients
who prefer these methods in business transactions (UIA Report, 2008). Stanbic Bank is the
leading banking institution in Uganda which was formally known as Uganda Commercial
Bank (UCB) due to technology improvement with in the banking systems, electronic
payment practices have led to increased innovations, creativity and profitability of financial
institutions. This preamble therefore sets a broad foundation for the study to investigate the
role of electronic banking on the profitability of financial institution and for this case Stanbic
bank, Kyambogo branch.

Despite the continuing decline in banks share of financial assets, as of April 2010, Stanbic
Bank is the largest commercial bank in Uganda, by assets, with an estimated asset base of
US$20 million second to chartered bank. The Bank owns an estimated 15% of total bank
asset in the country and maintains approximately 2.5% of all bank branches in Uganda.
Electronic banking is an umbrella term for the process by which a customer may perform
banking transactions electronically without visiting a brick-and-mortar institution. The
following terms all refer to one form or another of electronic banking: personal computer
(PC) banking, internet banking, virtual banking, online banking, home banking, remote
electronic banking, and phone were banking. PC banking and internet or online banking is the
most frequently used designations. It should be noted, however, that the terms used to
describe the various types of electronic banking are often used interchangeably (Hawke,
2001). This raises a lot of questions: are customers really enjoying these Electronic Banking
services? Are they satisfied with the Electronic banking services and products? Is there any
relationship between Electronic Banking and consumer satisfaction? This study will proffer

3
answers to these questions; the study seeks to empirically examine the impact of Electronic
Banking Service on financial efficiency at Stanbic Bank Kyambogo Branch.

1.2 Statement of the problem


Despite the growing interest and importance of Electronic banking in many financial
institutions in Uganda, the implementation of such innovations in Stanbic Bank-Kyambogo
Branch has remained low, the adoption rates among clients and its usage has not brought
significant outputs in the way clients become happy with the services offered, and indeed
extent literature indicates that despite such growing interest, no significant studies that have
focused on consumer adoption and more so, customer satisfaction (Katri, 2003; Gao and
Owolabi, 2008). One of the benefits banks derive from Electronic Banking in banking
operations especially with respect to service delivery is improved efficiency and effectiveness
of their operations so that more transactions can be processed faster and most conveniently,
which will undoubtedly impact significantly on the overall performance of the banks. The
customers on the other hand, stand to enjoy the benefit of quick service delivery, reduced
frequency of going to banks physically and reduced cash handling, which will give rise to
higher volume of turnover. However, this development at Stanbic Bank- Kyambogo Branch
seems not to have achieved its aims. Long Queues are still seen at the banking hall, bank
customers still handle too much cash, and hardly do people talk about the electronic banking
products that are available Stanbic Bank- Kyambogo Branch.

As much as electronic banking offers so many services that a human teller cannot do,
electronic banking on banks profitability is negative in the short run. This is because of the
costs and investments the banks carry to have the technical and electronic infrastructure, train
their workers to be skilled and competent and prepare what is called an electronic bank
environment where the banks can electronically operate. Despite the need by Bank of Uganda
to provide fast, convenient, reliable and secure domestic payments and collections, the
system has not solved the growing problem per second, but only accelerated the funds flow
system. Also, given that the system is new, both the implementers and customers have not
grasped properly its usability (BOUEFT Manual, 2007). Electronic banking helps in effective
flow of information which is centrally to the best interest of an organization. It is therefore
upon the above argument that the researcher report is to find out the relationship between
electronic banking and financial efficiency in Stanbic Bank.

4
1.3. Purpose of the study
The purpose of the study was to assess the effect of electronic banking on financial efficiency
of Stanbic Bank using Kyambogo branch as a case study.

1.4. Objectives of the study


This study was based on the following objectives;
(i) To examine the types of E-banking used by Stanbic Bank.
(ii) To establish how E-banking has influenced the financial performance of Stanbic Bank.
(iii)To establish the challenges of E-banking in Stanbic Bank.

1.5. Research questions


This research was set to answer the following research questions:
i. What are the types of E-banking used in Stanbic Bank?
ii. How E-banking has influenced the financial performance of Stanbic Bank-Kyambogo
Branch?
iii. What are the challenges of E-banking in Stanbic Bank of Stanbic Bank?

1.6. Scope of the study

1.6.1 Content scope


This study is about Electronic banking system on financial efficiency in Stanbic Bank, it
focuses on; to examine the types of E-banking used by Stanbic Bank. to evaluate the
effectiveness of electronic banking methods employed by Stanbic Bank –Kyambogo Branch,
to establish how E-banking has influenced the financial performance of Stanbic Bank and to
establish the challenges of E-banking in Stanbic Bank and the types of E-banking used in
Stanbic Bank, the influence of E-banking on the financial performance of Stanbic Bank, and
on the challenges of E-banking in Stanbic Bank.

1.6.2. Geographical scope


The study was limited to Stanbic Bank – Kyambogo Branch in Kampala district. This were
due to limited time, resources and logistical problems being faced by the researcher which
could not allow her to carry out the research in all the branches of Stanbic Bank country
wide. Conducting the research in Kampala with quite a good number of clients enabled the
researcher to get better outcomes of the research.

5
1.6.3 Time Scope
The study covered the financial statements of Stanbic Bank for the period 2015 – 2018. This
period was chosen because of electronic payment playing a big role to financial institutions,
there still exists the problem of inefficiency in the proper use of electronic payment systems
which has led to relatively low levels of profit generation to many financial institutions due to
this period.

1.7 Significance of the study


The study may enable Board of Directors of Stanbic Bank to strengthen policies on E-
banking systems so as to earn better profits for business growth.

The study was of great importance to the management of Stanbic Bank in creating an
environment of effective E-banking so as to improve on customer Banking relationships.
These enable customers make faster transactions which will later improve on the financial
position of the bank.

The study will lead to customer satisfaction as it introduces bank customers to modern, safer
and faster processes of Electronic banking for example Electronic billing, Electronic funds
transfer, Direct Credit and Direct Debit among others. It also saves time that can be more
productive and economically utilized by customer, bankers and students.

The research findings may be used in future research on the same or related topics. The
information therein adds to existing knowledge in University libraries to facilitate further
research.

The study findings was useful to a cross section of people and organizations to identify the
areas that were in need of new advancements like the use of smart cards, debit cards and
other electronic tools used in electronic payment.

The study findings was significant to entire nation where findings would be used by
government and financial institutions to design policies that would help to address some of
the challenges facing Electronic payments in Uganda

6
The study is to enable the researcher to be awarded a Diploma in Accounting and Finance up
on completion.

CHAPTER TWO

LITERATURE REVIEW

2.0. Introduction
This section presents a review of the related literature on electronic banking and financial
efficiency in Stanbic Bank as well as their relationship through measuring the magnitude of
their scope.

7
2.1. Electronic banking

2.1.1 Definition of the Electronic Banking


The concept of electronic banking has been defined in many ways. Daniel (1999) defines
electronic banking as the delivery of banks' information and services by banks to customers
via different delivery platforms that can be used with different terminal devices such as a
personal computer and a mobile phone with browser or desktop software, telephone or digital
television. According to Arunachalam and Sivasubramanian (2007), Internet (electronic)
banking is where a customer can access his or her bank account via the Internet using
personal computer (PC) or mobile phone and web-browser. In addition, Ongkasuwan and
Tantichattanon (2002) further defines Internet (electronic) banking service as banking service
that allows customers to access and perform financial transactions on their bank accounts
from their web enabled computers with Internet connection to banks' web sites any time they
wish. Internet banking service also enables bank customers to perform transactions such as
transfer and payments, access of latest balance, statement viewing, account detail viewing,
customization, print, downloading of statements and obtaining a history statement on all
accounts linked to the bank’s customers‟ Auto Bank (ATMs).

According to Khan (2007), Internet (electronic) banking includes the system that enables
financial institution customers, individuals or businesses, access accounts, transact business,
or obtain information on financial products and services on public or private network
including Internet. Internet (electronic) banking is the act of conducting financial
intermediation on the Internet (Kim et al., 2006). It is that process whereby the customer is
able to access, control and use his/her account over the Internet.

According to Burras (1995) electronic banking is characterized by the use of data


communication networks to establish electronic connections between banks and
customers/clients in preparation, management and control of financial transactions. Pardon
(1977) observed that a variety of electronic banking technologies in recent years had
expanded. With financial institutions, technologies like direct deposit, automated teller
machines and credit/debit cards have been the key investments and innovations. He however
observed that these innovations and creations need an environment that is customer friendly
and likely to improve on their satisfaction. He noted that in a clientele world, the customer is

8
the king so if these technologies are meant to improve on service delivery and satisfaction,
electronic banking possess a better future.

E-banking is defined as the automated delivery of new and traditional banking products and
services directly to customers through electronic, interactive communication channels. E-
banking includes the systems that enable financial institution customers, individuals or
businesses, to access accounts, transact business, or obtain information on financial products
and services through a public or private network, including the Internet. Customers access e-
banking services using an intelligent electronic device, such as a personal computer (PC),
personal digital assistant (PDA), automated teller machine (ATM), Kiosk, or Touch Tone
Telephone (E-banking, n.d).

Electronic banking is an umbrella term for the process by which a customer may perform
banking transactions electronically without visiting a brick-and-mortar institution. The
following terms all refer to one form or another of electronic banking: personal computer
[PC] banking, internet banking, virtual banking, online banking, home banking, remote
electronic banking, and phone are banking. PC banking and internet or online banking are the
most frequently used designations. It should be noted, however, that the terms used to
describe the various types of electronic banking are often used interchangeably. Electronic
banking is the wave of the future. It provides enormous benefits to consumers in terms of the
ease and cost of transactions. But it also poses new challenges for country authorities in
regulating and supervising the financial system and in designing and implementing
macroeconomic policy (Saleh & Schaechter, 2002).

What is electronic banking?


E- Commerce
Conducting business through electronic
network.

E- Finance; providing financial E-money ; Stored value or


services through electronic prepared payment mechanism
channels.

E-Banking; Providing banking


The difference between e-money and e-banking is that, with e-money, balances are not kept
in financial accounts with banks.
Source: Saleh & Schaechter (2002).

Electronic banking has been around for some time in the form of automatic teller machines
and telephone transactions. More recently, it has been transformed by the internet, a new
delivery channel for banking services that benefits both customers and banks. Access is fast,
convenient, and available around the clock, whatever the customer’s location (see illustration
above). Plus, banks can provide services more efficiently and at substantially lower costs. For
example, a typical customer transaction costing above $1 in a traditional “brick and mortar”
bank branch or $0.60 through a phone call costs only above $0.02 online.

Electronic banking also makes it easier for customers to compare banks’ services and
products, can increase competition among banks, and allows banks to penetrate new markets
and thus expand their geographical reach. Some even see electronic banking as an
opportunity for countries with underdeveloped financial systems to leapfrog developmental
stages. Customers in such countries can access services more easily from banks abroad and

10
through wireless communication systems, which are developing more rapidly than traditional
“wired” communication networks. (Saleh & Schaechter, 2002).

The flip side of this technological boom is that electronic banking is not only susceptible to,
but may exacerbate, some of the same risks – particularly governance, legal, operational, and
reputational – inherent in traditional banking. In addition, it poses new challenges. In
response, many national regulators have already modified their regulations to achieve their
main objectives: ensuring the safety and soundness of the domestic banking system,
promoting market discipline, and protecting customer rights and the public trust in the
banking system. Policy makers are also becoming increasingly aware of the greater potential
impact of macroeconomic policy on capital movements.

2.2. Types of E-banking systems


For many consumers, electronic banking means 24-hour access to cash through an
Automated Teller Machine (ATM) or Direct Deposit of pay cheques into cheque or savings
accounts. But electronic banking now involves many different types of transactions.
Electronic banking, also known as electronic fund transfer (EFT), uses computer and
electronic technology as a substitute for checks and other paper transactions. EFTs is initiated
through devices like cards or codes that let you, or those you authorize, access your account.
Many financial institutions use ATM or debit cards and Personal Identification Numbers
(PINs) for this purpose. Some use other forms of debit cards such as those that require, at the
most, your signature or a scan. The federal electronic fund transfer Act (EFT Act) covers
some electronic consumer transactions.

Electronic Funds Transfers EFT offers several services that consumers may find practical:
Automated Teller Machines or 24-hour Tellers: are electronic terminals that let you bank
almost any time. To withdraw cash, make deposits, or transfer funds between accounts, you
generally insert an ATM card and enter your PIN. Some financial institutions and ATM
owners charge a fee, particularly to consumers who don’t have accounts with them or on
transactions at remote location. Generally, ATMs must tell you they charge a fee and its
amount on or at the terminal screen before you complete the transaction. Check the rules of
your institution and ATMs you use to find out when or whether a fee is charged.

11
Direct Deposit: Lets you authorize specific deposits, such as pay checks and social security
checks, to your account on a regular basis. You also may pre-authorize direct withdrawals so
that recurring bills, such as insurance premiums, mortgages, and utility bills, are paid
automatically. Be cautions before you pre-authorize direct withdrawals to pay sellers or
companies with whom you are unfamiliar; funds from your bank account could be withdrawn
fraudulently.

Pay-by-phone systems: Let you call your financial institution with instructions to pay certain
bills or to transfer funds between accounts. You must have an agreement with the institution
to make such transfers and Personal Computer Banking; Lets you handle many banking
transactions via your personal computer. For instance, you may use your computer to view
your account balance, request transfers between accounts, and pay bills electronically.

Debit Card Purchase Transactions: Lets you make purchase with a debit card, which also
may be your ATM card. This could occur at a store or business, on the Internet or online, or
by phone. The process is similar to using a credit card, with some important exceptions.
While the process is fast and easy, a debit card purchase transfers money-fairly-quickly from
your bank account to the company’s account. So it’s important that you have funds in your
account to cover your purchase. This means you need to keep accurate records of the dates
and amounts of your debit card purchases and ATM withdrawals in addition to any cheques
you write. Also be sure you know the store or business before you provide your debit card
information, to avoid the possible loss of funds through fraud. Your liability for unauthorized
use and your rights for error resolution may differ with a debit card.

Electronic cheque conversion; Coverts a paper cheque into an electronic payment in a store
or when a company receives your cheque in the mail. In a store, when you give your cheque
to a cashier, the cheque is run through an electronic system that captures your banking
information and the amount of the cheque. You are asked to sign a receipt and you get a copy
for your records. When your cheque has been handed back to you, it should be voided or
marked by the merchant so that it cannot be used again. The merchant electronically sends
information from the cheque (but not the cheque itself) to your bank or other financial
institution, and the funds are transferred into the merchant’s account. When you mail-in a
cheque for payment to a merchant or other company, they may electronically send
information from your cheque (but not the cheque itself) through the system, and the funds

12
are transferred into their account. For a mailed cheque, you should still receive advance
notice from a company that expects to send your cheque information through the system
electronically. The merchant or other company might include the notice on your monthly
statement or under its terms and conditions. The notice also should state if the merchant or
company will electronically collect from your account fee – like a “bounced cheque” fee – if
you have insufficient funds to cover the transaction.

Use of credit cards, the most common method of making payments online is by the use of
credit card, this card is issued to a person to or business organization for goods and services
as well as obtaining cash against the particular work done for the business organization and
these cards are so important to organization because the reduce on the creation of errors and
this is normally done by business organizations and financial institution. (Bailly, 1995).

Debit or pre-paid cards, this method of payment is always issued to person for withdrawing
money from or to a savings or current account. These automatically increase the performance
of the institution leading to easy sourcing by the buying institution.(Intercoms, 2000) and
Digital or electronic cash E-cash, According to Gray (1994) this refers to any of the various
methods that allow a person to buy goods or services by transmitting a number from one
computer to another. The number may be in or of digits issued by the bank to the buying
organization and they use for example digital cash, cyber buck cash and others.

Internet banking, this is also one of the new tools used in electronic payments, it has been
widely been used by different business organizations like banking institutions. They
drastically use this mechanism payment which has led to increased levels of profitability
hence improving the flexibility of the organization and Telephone billing systems, this is a
new approach used by banks; here telephone transactions allow the customer to purchase an
item or service and have the amount billed to his or her telephone. This is mainly used on
items such as down loads; time measured for charitable donation, online for example the use
of phones for banking and saving like MTN mobile money (Telecommunication guidelines
Network Guidelines, 12th Feb.2008)

2.3 Advantages of E-Banking


Kim et al. (2006) asserted that, Internet banking has advantages for banks to maintain
competition, to save costs, to enhance mass customization, marketing and communication

13
activities, and to maintain and attract consumers. Katri (2003) stated that the Internet banks
serve also as gateways offering identification and authorization services to a number of third
party service providers.

Rationale for “banks‟ to provide Internet banking services, Ongkasuwan and Tantichattanon
(2002) indicate that internet banking helps banks in cost saving, increase customer base,
enable mass customization for e-Business services, extend marketing and communication
channel, search for new innovation services, and explore and development of non-core
business. However, customers‟ ability to subscribe to the Internet-based banking services
depend on several factors such as user-friendly interface, level of Internet experience, types
of services provided, (for example e-mail, file transfer, news, online financial services,
shopping and multimedia services), attitude and perception, access and delivery time and
experience with the Internet.

2.3.1 Factors Influencing the Adoption of Electronic Banking


Accessibility: Accessibility defines as the ability of users to access information and services
from the web is dependent on many factors. These include the content format; the user's
hardware, software and settings; internet connections; the environmental conditions and the
user's abilities and disabilities (Godwin-Jones 2001; Hackett and Parmanto, 2009). The term
"web accessibility" generally relates to the implementation of website content in such a way
as to maximize the ability of users with disabilities to access it. For example, providing a text
equivalent for image content of a web page, allows users with some visual disabilities access
to the information via a screen reader.

The techniques and approaches that create more accessible web pages for people with
disabilities also address many other access issues such as download speed and discoverability
(Godwin-Jones 2001; Hackett et al, 2004; Hackett and Parmanto, 2009). Jun et al (1999)
revealed reliable/prompt responses, attentiveness, and ease of use had considerable impacts
on both customers perceived overall service quality and satisfaction. It also indicated that
there is a significant positive relationship between overall service quality and satisfaction.
Yang and Jun (2002) redefined the traditional service quality dimensions in the context of
online services, and suggested an instrument consisting of seven online service dimensions
(reliability, access, ease of use, personalization, security, credibility, and responsiveness).

14
Joseph et al (1999) considered banking service quality with respect to technology use, such as
ATMs, telephone, and the internet and identified six dimensions. They were
convenience/accuracy; feedback/complaint management; efficiency; queue management;
accessibility; and customization. Therefore, it is hypothesized that accessibility has positive
effect on customer satisfaction.

Convenience
E-banking provides higher degree of convenience that enables customers to access internet
bank at all times and places. Apart from that, the ease of access of computers is perceived as
a measure of relative advantage (Daniel, 1999, Black et al, 2001; Polatoglu and Ekin, 2001;
Gerrard and Cunningham, 2003). Johnston (1995) revealed that there are some service quality
determinants that are predominantly satisfiers and others that are predominantly dissatisfies
with the main sources of satisfaction being attentiveness, responsiveness, care and
friendliness. The main sources of dissatisfaction are integrity, reliability, responsiveness,
availability and functionality.

According to Ainscough and Luckett (1996), the provision of customer interactivity is an


important criterion that attracts users in the delivery of e-banking. Gerrard and Cunningham
(2003) also identify other factors of paramount importance in ensuring the success of e-
banking, i.e. the ability of an innovation to meet users' needs using different feature
availability on the web site. For instance, the provision of interactive loan calculators,
exchange rate converters, and mortgage calculators on the web sites draw the attention of
both users and non-users into the bank's web site. A UK study uncovered five key service
quality attributes, such as security related issues, convenience, speed and timeliness of the
service, and product variety/diverse features (White and Nteli, 2004). Therefore, it is
hypothesized that convenience has positive effect on customer satisfaction.

Privacy
Customers have doubts about the trust ability of the e-bank's privacy policies (Gerrard and
Cunningham, 2003).Trust has striking influence on user's willingness to engage in online
exchanges of money and personal sensitive information (Friedman et al, 2000; Wang et al,
2003). Privacy is an important dimension that may affect users' intention to adopt e-based
transaction systems. Encryption technology is the most common feature at all bank sites to
secure information privacy, supplemented by a combination of different unique identifiers,

15
for instance, a password, mother's maiden name, a memorable date, or a few minutes of
inactivity automatically logs users off the account. Besides, the Secure Socket Layer, a
widely-used protocol use for online credit card payment, is designed to provide a private and
reliable channel between two communicating entities; the use of Java Applet that runs within
the user's browser; the use of a Personal Identification Number, as well as an integrated
digital signature and digital certificate associated with a smart card system (Hutchinson and
Warren, 2003). Thus, a combination of smart card and biometric recognition using
fingerprints offers a more secure and easier access control for computers than the password
method. Zeithaml et al (2000) developed e-SERVQUAL for measuring e-service quality,
identifying 11 dimensions: access; ease of navigation; efficiency; flexibility; reliability;
personalization; security/privacy; responsiveness; assurance/trust; site aesthetics; and price
knowledge. Hence, it is hypothesized that privacy has a positive effect on customer
satisfaction

Security
Assurance about security relates to the extent to which the web site guarantees the safety of
customers` financial and personal information, an area which has witnessed a proliferation of
research interest (Kimery and McCord, 2002; Miyazaki and Krishnamurthy, 2002). Security
can be assured by providing a privacy statement and information about the security of the
shopping mechanisms and by displaying the logos of trusted third parties. For example,
displaying trusted third party logo guarantees a certain level of security protection and has
been shown to significantly influence how consumers regard the trustworthiness of e vendors
(Jiang et al, 2008).

Internet banking was made possible by the creation of Web browsers. In this mode of online
banking, consumers do not have to purchase additional software (all they need is the
browser), store any data on their computer, backup any data, or wait for software upgrades or
new versions (Kolsaker and Payne, 2002; Dong-Her et al, 2004). All transactions occur on a
secure server of a bank via the internet. The bank has all of the required data and software to
execute the transactions. Customers go the bank's Web site, log in, and then take advantage
of the bank's internet services. Typical bank services are account access and review, transfers
of funds between accounts, bill payment, and then a widening variety of new services and
products.

16
Security plays an important role in internet banking and so there are several protocols for
internet security of encrypted data packets (Kolsaker and Payne, 2002; Dong-Her et al;
2004). Customers are not aware of the encryption, however, only certain versions of popular
internet browsers are acceptable to some banks due to their security limitations (Kolsaker and
Payne, 2002; Dong-Her et al; 2004). Therefore, it is hypothesized that privacy has a positive
effect on customer satisfaction.

Design
The goal of aesthetic design is to make a web site visually attractive and enjoyable. Proctor et
al (2002, 2003) discussed content preparation in a broad sense and identified its four aspects:
knowledge elicitation, information organization and structure, information retrieval, and
information presentation. During design, and prior to implementation, it is strongly
recommended that users of different ages, and with a range of capabilities and limitations be
engaged to trial the new service and provide feedback. Financial institutions should test
accessibility of their customer websites with both automated tools and user accessibility
trials. Therefore, it is hypothesized that design has a positive effect on customer satisfaction.

Content
Jayawardhena and Foley (2000) and Pikkarainen et al (2004) claim that content on online
banking on the web site is one of the factors influencing online-banking acceptance. On the
other hand, quality designs, graphics or colors and the propensity to portray good image of
the bank would enhance efficient use of navigation. In the context of internet banking, there
is a growing body of research that has looked at influences on customer satisfaction.
Jayawardhena and Foley (2000) illustrated that such web site features as speed , web site
content and design, navigation, interactivity and security all influence user satisfaction
whereas Broderick and Vachirapornpuk (2002) found that the level and nature of customer
participation had the greatest impact on the quality of the service experience and issues such
as customers' zone of tolerance, the degree of role understanding by customers and emotional
response potentially determined, expected and perceived service quality. Yang and Fang
(2004) found that ease of use and usefulness are important factors in evaluating online service
quality. Earlier Doll and Torkzadeh (1988) identified five quality dimensions that have an
impact on “end-user” satisfaction in an online environment: content, accuracy, format, ease
of use, timeliness. Thus, it is hypothesized that content has positive effect on customer
satisfaction

17
Speed
Hoffman and Novak (1996) find that there is a significant correlation between download
speed and user satisfaction. Speed of download depends on the nature of the site downloaded
content, the computing hardware and method of connection used to download information
(Jayawardhena and Foley, 2000). Most sites demonstration is small snapshots, and some
users have to download the program in order to view the demonstration. Most people
perceive downloading may import unwanted viruses, and consume hard disk space. Very
often, slow response time after any e-interaction leads to a delay of service delivery and
makes consumers unsure about whether or not the transaction is completed (Jun and Cai,
2001). Johnston (1997) illustrates that certain actions, such as increasing the speed of
processing information and customers, are likely to have an important effect in terms of
pleasing customers; however other activities, such as improving the reliability of equipment,
will lessen dissatisfaction rather than delight customers and suggests that it is more important
to ensure that the dissatisfiers are dealt with before the satisfiers. Thus, it is hypothesized that
speed has positive effect on customer satisfaction.

Fees and Charges


Service quality attributes in e-banking industry are important since human- internet
interaction is the main service delivery and communication channel. Offering high quality
services to satisfy consumers' needs, at lower costs, are potential competitive advantage of e-
banking. Some studies show that e-banking has successfully reduced operating and
administrative costs (Devlin, 1995; Siriluck and Speece, 2003). Cost savings have helped e-
based banks offer lower or no service fees, and offer higher interest rates on interest-bearing
accounts than traditional banks (Gerlach, 2000; Jun and Cai, 2001). Therefore, it is
hypothesized that fees and charges have positive impact on customer satisfaction.

2.4 Electronic-Banking and Financial Efficiency


From different literatures, electronic banking services like Automated Teller Machines
attracted many people to open up current accounts especially those who prefer convenience.
These machines are located in various places of convenience like shopping malls,
universities, hotels and airports. Their installation in such areas have reduced overcrowding
in the bank’s premise and increased the transactions completed in a day (Baxley, 1987).

18
The installation of various automated teller machines by commercial banks in their branches
is one of the motives to increase customer base and acquire more deposits available to the
bank. This in the long run increases the bank’s revenue that determines the profitability level
and finally the general financial performance (Baxley, 1987).Electronic banking plays a big
role in terms of saving to the bank and the client [reduced costs]. This is as a result of
efficiency and effectiveness maintained by various systems like electronic fund transfer,
personal computer banking and ATMS.

The elimination of paper work would also minimize costs in stationery and also
administrative costs of human tellers and other personnel that would affect such transactions.
As seen from above, the operating costs determine the firm’s profitability and therefore the
application of electronic banking system minimizes the level of such costs hence crucial in
determining the financial efficiency levels of Banks (Onunga, 1998).

The banking sector is considered to be an important source of financing for most businesses.
The common assumption, which underpins much of the financial efficiency research and
discussion, is that increasing financial efficiency will lead to improved functions and
activities of the organizations. The subject of financial efficiency and e-banking into its
measurement is well advanced within finance and management fields. It can be argued that
there are three principal factors to improve financial efficiency for financial institutions; the
institution size, its asset management, and the operational efficiency [e-banking]. To date,
there have been little published studies to explore the impact of these factors on the financial
efficiency, especially the commercial banks (Central Bank of Oman, 2004).

Generally, the financial efficiency of banks and other financial institutions has been measured
using a combination of financial ratios analysis, benchmarking, measuring efficiency against
budget or a mix of these methodologies (Avkiran, 1995). The financial statements of
corporations published should commonly contain a variety of financial ratios designed to give
an indication of the corporation’s efficiency (Ian, 2000).

As it known in accounting literature, there are limitations associated with use of some
financial ratios. Asset management, the bank size, and operational efficiency are used
together to investigate the relationships among them and the financial efficiency. Simply

19
stated, much of the current bank efficiency literature describes the objective of financial
organizations as that of earning acceptable returns and minimizing the risks taken to earn this
return [Hempel G. Coleman, 1986]. There is a generally accepted relationship between risk
and return, that is, the higher the risk the higher the expected return. Therefore, traditional
measures of bank efficiency have measured both risks and returns. The increasing
competition in the national and international banking markets, the changeover towards
monetary unions and the new technological innovations herald major changes in banking
environment and challenge all banks to make timely preparations in order to enter into new
competitive financial environment (Chu Mei, 2001).

(Chiena Ho, and Song Zhu, 2004) showed in their study that most previous studies
concerning company efficiency evaluation focus merely on operational efficiency and
operation effectiveness which might directly influence the survival of a company. By using
an innovative two-stage data development analysis model-in their study, the empirical result
of this study is that a company with better efficiency does not always mean that is has better
effectiveness. A paper in the title of efficiency, customer service and financing efficiency
among Australian financial institutions (Elizabeth Duncan, and Elliott, 2004) showed that all
financial efficiency measures as interest margin, return on assets, and capital adequacy are
positively correlated with customer service quality score.

Generally, the concept of efficiency can be regarded as the relationship between outputs of a
system and the corresponding inputs used in their production. Within the financial efficiency
literature, efficiency is treated as a relative measure which reflects the deviations from
maximum attainable output for a given level of input (English M. and Warng,
1992).Electronic banking (payment) plays an important role in e-commerce because it closes
the e-commerce loop. In developing countries, the underdeveloped electronic banking
[payments] methods are a serious impediment to the growth of e-commerce. In these
countries, entrepreneurs are not able to accept credit card payments over the Internet due to
legal and business concerns. The primary issue is transaction security (Tiwari, 2006).

Financial transaction cards have made great gains in the United States as a means to attract
financial accounts to financial institutions and, in the case of credit cards, as a medium to
create small loans and generate interest income for financial institutions. Maintains customer
contact, the business can maintain customer contact information for follow up sales and

20
marketing purposes, this is where by there will be improved relations interns of strategies for
the organization hence profitability (Gray,1994).Improved sourcing, Electronic banking (
payment) leads to improvement in sourcing for example cards are easy to be sourced by the
buying organization and this gives the organization an extensive base and assists in the
selection of customers than would be done in manual payment exercise (Saunders, 1997).

Reduced duplication, due to use of cards and cheques when paying creates an offer to
customers to obtain alternative credit cards, this helps in branding of products that are used in
banking institutions. Easy distribution, operating a business using Electronic payment has
drastically led to improvement in distribution of goods (Leader, 1997) says that this improves
the flow of information, accuracy and proper movement of goods due to increased use of
computers to computer online payment along the supply line. Transparency, according to
Dobbler and Burt (1996) lament that the visibility of total costs, customers can see the impact
of factors such as e-exercise insurance and carriage on the costs of goods being purchased,
discount points and conditions applied are also clear. Consequently an e-payment system
enables buying to make better decisions leading to increased profitability to financial
institutions.

2.5 Challenges of E-Banking revolution


An extended study conducted by Daft (1982) revealed that the introduction of E-banking may
be a good idea but on the part of customers, they are keener to risk associated with the
particular type of innovation. Daft identified what he described Strategic Risk by inference a
financial institution’s board and management should understand the risks associated with E-
banking services and evaluate the resulting risk management costs against the potential return
on investment prior to offering E-banking services.

Poor E-banking planning and investment decisions can increase a financial institution’s
strategic risk. On strategic risk E-banking is relatively new and, as a result, there can be a
lack of understanding among senior management about its potential and implications. People
with technological, but not banking, skills can end up driving the initiatives. E-initiatives can
spring up in an incoherent and piecemeal manner in firms. They can be expensive and can
fail to recoup their cost.

21
The start-up costs of an e-bank are high. Establishing a trusted brand is very costly as it
requires significant advertising expenditure in addition to the purchase of expensive
technology (as security and privacy are key to gaining customer approval). Perhaps one of the
greatest barrier to customers by embracing to electronic businesses has to do with risk arising
from fraud, processing errors, system disruptions, or other unanticipated events resulting in
the institution’s inability to deliver products or services. This risk could exist in each product
and service offered (Earl, 2000).

Earl further commented that banking activities has the likelihood of increasing the
complexity of the institution’s activities and the quantity of its transaction/operations risk,
especially if the institution is offering innovative services that have not been standardized.
Since customers expect E-banking services to be available 24 hours a day, 7 days a week,
financial institutions should ensure their E-banking infrastructures contain sufficient capacity
and redundancy to ensure reliable service availability. Even institutions that do not consider
E-banking a critical financial service due to the availability of alternate processing channels,
should carefully consider customer expectations and the potential impact of service
disruptions on customer satisfaction and loyalty.

Another security issue associated with E-banking as introduced by the Economist journal
(1999) recounts that E-banking potentially expose hitherto isolated systems to open and risky
environments. Security breaches essentially fall into three categories; breaches with serious
criminal intent (fraud, theft of commercially sensitive or financial information), breaches by
‘casual hackers’ (defacement of web sites or ‘denial of service’ - causing web sites to crash),
and flaws in systems design and/or set up leading to security breaches (genuine users seeing /
being able to transact on other users’ accounts). All of these threats have potentially serious
financial, legal and reputational implications.

Other challenges in E-banking spans from technology selection, adoption, implementation


and lack of knowledge, also, Earl, (2002) furthermore identified that while managers
typically have a high-level understanding of their business and operational processes, they
often lack employees with the experience and skills necessary to adopt software technologies
and educate customers.

22
According to Saleh and Schaechter (2002), this changing financial landscape brings with it
new challenges for bank management and regulatory and supervisory authorities. The major
ones stem from increased cross-border transactions resulting from drastically lower
transaction costs and the greater ease of banking activities, and from the reliance on
technology to provide banking services with the necessary security.

Regulatory risk: Because the Internet allows services to be provided from anywhere in the
world, there is a danger that banks will try to avoid regulation and supervision. What can
regulators do? They can require even banks that provide their services from a remote location
through the Internet to be licensed. Licensing would be particularly appropriate where
supervision is weak and cooperation between a virtual bank and the home supervisor is not
adequate. Licensing is the norm, for example, in the United Stated and most of the countries
of the European Union. A virtual bank licensed outside these jurisdictions that wishes to offer
electronic banking services and take deposits in these countries must first establish a licensed
branch (Saleh and Schaechter, 2002).

Determining when a bank’s electronic services trigger the need for a license can be difficult,
but indicators showing where banking services originate and where they are provided can
help. For example, a virtual bank licensed in country X is not seen as taking deposits in
country Y if customers make their deposits by posting cheques to an address in country X. If
a customer makes a deposit at an automatic teller machine in country Y, however, that
transaction would most likely be considered deposit taking in country Y. regulators need to
establish guidelines to clarify the gray areas between these two cases (Marhar, 2003).

Legal risk: Electronic baking carries heightened legal risks for banks. Banks can potentially
expand the geographical scope of their services faster through electronic banking than
through traditional banks. In some cases, however, they might not be fully versed in a
jurisdiction’s local laws and regulations before they begin to offer services there, either with
a license or without a license if one is not required. When a license is not required, a virtual
bank-lacking contact with its host country supervisor – may find it even more difficult to stay
abreast of regulatory changes. As a consequence, virtual banks could unknowingly violate
customer protection laws, including on data collection and privacy, and regulations on
soliciting. In doing so, they expose themselves to losses through lawsuits or crimes that are
not prosecuted because of jurisdictional dispute (Saleh and Scheachter, 2002).

23
Money laundering is an age-old criminal activity that has been greatly facilitated by
electronic banking because of the anonymity it affords. Once a customer opens an account, it
is impossible for banks to identify whether the nominal account holder is conducting a
transaction or even where the transaction is taking place. To combat money laundering, many
countries have issued specific guidelines on identifying customers. They typically comprise
recommendations for verifying an individual’s identity and address before a customer
account is opened and for monitoring online transactions, which requires great vigilance
(Kwan, 1992). In a report issued in 2000, the organization for economic cooperation and
Development’s Financial Action Task Force raised another concern. With electronic banking
crossing national boundaries, whose regulatory authorities will investigate and pursue money
laundering violations? The answer, according to the task force, lies in coordinating legislation
and regulation internationally to avoid the creation of safe havens for criminal activities.

Operational risk: The reliance on new technology to provide services makes security and
system availability the central operational risk of electronic banking. Security threats can
come from inside or outside the system, so banking regulators and supervisors must ensure
that banks have appropriate practices in place to guarantee the confidentiality of data, as well
as the integrity of the system and the data. Banks’ security practices should be regulatory
tested and reviewed by outside experts to analyze network vulnerabilities and recovery
preparedness. Capacity planning to address increasing transaction volumes and new
technological developments should take account of the budgetary impact of new investments,
the ability to attract staff with the necessary expertise, and potential dependence on external
service providers. Managing heightened operational risks needs to become an integral part of
banks’ overall management of risk, and supervisors need to include operational risks in their
safety and soundness evaluations (Saleh and Scheachter, 2002).

Reputational risk: Breaches of security and disruptions on the system’s availability can
damage a bank’s reputation. The more a bank relies on electronic delivery channels, the
greater the potential for reputational risks. If one electronic bank encounters problems that
cause customers to lose confidence in electronic delivery channels as a whole or to view bank
failures as system wide supervisory deficiencies, these problems can potentially affect other
providers of electronic banking services. In many countries where electronic banking is

24
becoming the trend, bank supervisors have put in place internal guidance notes for examiners,
and many have released risk-management guidelines for banks (Saleh and Schaechter, 2002).

Security risks: Also stem from customer misuse of security precautions or ignorance about
the need for such precautions. Security risks can be amplified and may result in a loss of
confidence in electronic delivery channels. The solution is consumer education – a process in
which regulators and supervisors can assist. For example, some bank supervisors provide
links on their websites allowing customers to identify online banks with legitimate charters
and deposit insurance. They also issue tips on internet banking, offer consumer help lines,
and issue warnings about specific entities that may be conducting unauthorized banking
operations in the country (Saleh and Schaechter, 2002).

2.6. Conclusion of literature review


The fundamental characteristics of E-banking (and e-commerce more generally) posed a
number of risk management challenges. The speed of change relating to technological and
customer service innovation in e-banking is unprecedented. E-banking increases banks’
dependence on information technology, thereby increasing the technical complexity of many
operational and security issues and furthering a trend towards more partnerships, alliances
and outsourcing arrangements with third parties, many of whom are unregulated. This
development has been leading to the creation of new business models involving banks and
nonbank entities, such as internet service providers, telecommunication companies and other
technology firms. Therefore, e-banking significantly magnifies the importance of security
controls, customer authentication techniques, data protection, audit trail procedures and
customer privacy standards for effective bank financial efficiency.

CHAPTER THREE

METHODOLOGY

3.0 Introduction
This chapter presents the methodology that was used in the study; it gives a description of the
study area and the methods that were used to collect data from the field. It gives a summary
of the research design, sample population and size, data collection instruments, data type,
data processing and presentation and the problems encountered during the process of data
collection and analysis.

25
3.1 Research Design
The study used cross-sectional survey design using Stanbic Bank - Kyambogo Branch as a
case study. During the study, both qualitative and quantitative methods were the main
methods used. Under qualitative, the researcher used responses from respondents. However
for quantitative method, the qualitative research design was descriptive in nature and this
enabled the researcher to meet the objectives of the study. A statement was used to assign
variables that were not adequately measured using numbers and statistics. The quantitative
research design was used in form of mathematical numbers and statistics assigned to
variables that may not be easily measured using statements or theme.

3.2 Study Population


This section included a collection of study units for which samples of interest were possibly
determined. The study population was; the study population which consisted across section of
the finance, administration, disposal unit, data and information department of the institution.
The study population comprised of 50 representatives of Stanbic Bank of Kyambogo branch,
including bank manager & bank top administrators, banking officers, account& finance
department and bank customers. These were chosen because these are the people who offer,
receive and manage the services respectively.

3.3 Sample size


By using judgmental analysis, a sample size of 50 people / respondents was used for the sake
of obtaining accurate data. Whereby 10 of these were from information and data management
Stanbic Bank employees, 20 respondents from administration, 05 respondents from stores
and 15 respondents from finance and accounting department.

3.4 Sampling Techniques


This involves selection of people who took part in research. The following sampling
procedures were used.

3.4.1 Purposive Sampling.


Purposive sampling involved selecting a certain number of respondents based on the nature
of the office. This method was appropriate because it enables selection of informed persons
who possessed vital data that is comprehensive enough to allow gaining a better insight into
problem. In the study respondents were contacted in person, as the researcher wanted first-
hand information from them and the study was keenly inquires respondents’ views on the

26
subject under study. This required the researcher to sample with a purpose in the researcher
mind whereby she had to seek specific pre-defined groups of people for instance users of
electronic systems like tellers, information and data sources and other staff.

3.4.2 Random Sampling


Random sampling method involved selecting respondents from the study population by
chance. In this way every respondent had an equal chance of being included in the sample.
This method was used to select customer respondents from Stanbic Bank Kyambogo branch.
This was used to avoid bias in obtaining samples. This was achieved by getting a list of
employees from the managing director and then a sampling interval was established by
random method to select the respondents consistently.

3.5. Source of Data

3.5.1 Primary Data


Primary data was gathered from respondents at Stanbic Bank Kyambogo branch management
who assumed to give first-hand information on the subject under study.

3.5.2 Secondary Source


Secondary data was got from sources like; Annual reports, Journal articles, internet,
magazines, newspapers and books related to the subject of the study and these were consulted
at length to extract the information required to support the findings from the study
respondents.

3.6 Data Collection Methods


The study incorporated the use of various methods in the process of data collection in a bid to
come up with sound, concrete and credible research findings. The researcher therefore
amalgamated the use of questionnaire, interviews and documentary analysis in the process of
collecting primary data.

3.6.1 Interviewing
The researcher used formal interviewing as a method of data collection and the interviews
were offered a chance to explore topics in depth and allowed interaction between the
researcher and the respondents such that any misunderstanding of the questions and answers
provided could easily be corrected. The researcher interviewed the respondent of the Stanbic

27
Bank Kyambogo branch using the interview guide. This was used to tap the vital information
that may not be collected using the questionnaires from the Stanbic Bank Kyambogo branch
employees, manager & administrators.

3.6.2 Instruments of data collection


Self-administered questionnaire was used to collect primary data where by both open and
closed questions were designed to collect data from the study respondents. The respondents
were filled by the questionnaire themselves. This questionnaire tool was used to collect data
from Stanbic Bank employees. The method was used since it provided high level of
confidentiality as the study respondents were answering the questions at their convenient
time.
In depth interviews were conducted on the Bank Clients. Here, an interview guide was
written to help the researcher to obtain more information relevant to the study variables
during data collection. Clients of the bank were approached and interviewed during the data
collection time.
Interview guide; an interview guide was also drafted with a set of questions that the
researcher asked during an interview and this was structured (close ended) in nature. The
researcher personally recorded the provided responses as per the study respondents during the
process of carrying out an interview. This tool was used to collect information from
respondents selected from Stanbic Bank Kyambogo Branch

Documentation/ secondary data: Secondary data was also used in this study as; the
researcher was to collect secondary information from different sources like; text books,
internet, newspaper, magazines, journals among other sources. This information will be
reviewed by visiting places like libraries and internet cafes.

3.7 Research Procedure


The study observed all those procedures followed in research. Using the letter of introduction
obtained from Management Training and Advisory Centre-Nakawa, the researcher was
introduced to every respondent reached at, fully explaining the purpose of research. After
getting their consent, the researcher conducted the research. The researcher also built the
confidence of the respondents by assuring them that their views were confidential and was
only used for academic purposes.

28
3.8 Data Presentation and Analysis
Data analysis; both quantitative and qualitative methods were used during data analysis.
Quantitative data involved use of frequencies, tables against their percentages, that is pie
chart and this showed values that aided in data interpretation. Qualitative data was presented
in writing useful information from the respondents as presented in relation to the study
variables. After collecting all the necessary data, these data was coded and edited, analyzed
and rephrased to eliminate errors and ensure consistency. Both qualitative and quantitative
data analysis was used. Qualitative data was analyzed in the field as it is being collected
(verbatim reporting) using coding sheets while quantitative was analyzed by using computer
programs like Microsoft word and Microsoft excel. Also under qualitative analysis, thematic
analysis was used and in quantitative data analysis; graphs, tables and pie charts were used
for data analysis and presentations of findings.

Data Editing: The collected data was edited for accuracy, completeness. Editing was done to
find out how well the answered questionnaires were done in line with consideration paid to
questions and responses from interview guide answered by the study respondents.

Data Coding: The edited data was coded. Coding involved assigning numbers to similar
questions from which answers were given unique looks to make the work easier. In this case
computer Package was used to analyze the code data.

Data presentation; After the data , was edited, it was presented inform of frequency and
tables after which the data was analyzed in form of pie-charts which may be developed using
Microsoft Word and Microsoft Excel, this was done to only quantitative edited data.
Quantitative data will be grouped and statistical description such as tables showing
frequencies and percentages and pie- charts as well as graphs for better interpretation.
However, qualitative data was analyzed in a way of identifying the responses from
respondents that are relevant to the research problem. Mainly such data was analyzed by
explaining the facts collected from the field under which the researcher was able to quote
respondents’ responses.

3.9 Ethical Consideration


Before commencing the research, an introductory letter from the institution (MTAC) was
sought and the purpose of the study was explained to the authorities to avoid inconveniences

29
and misunderstandings about the purpose. The information collected was kept highly
confidential.

3.10 Limitations of the study


The study involved the following constraints;
Time: The time allowed to do this research was not being enough to allow exhaustive study
and obtain all the essential information for much more suitable conclusions. The problem was
minimized by putting much effort on this research so as to meet the deadline.

Financial Constraints: The Researcher was limited by financial resources such as the
transport costs and stationery to carry out her research effectively. In an effort to mitigate this
shortcoming, the researcher sourced for funds from a few sponsors.

Slow or non- response: Since the researcher does not know the kind of respondents to deal
with, some of them failed to respond or delay to do so. The researcher made convenient
appointments with the respondents and encouraged them to respond and give true information
in time.

Due to the sensitivity of the study, the respondents might refuse to give some data to the
researcher citing the reasons behind the study. The researcher however overcame this by
showing an introductory letter acquired from the faculty fully explaining the purpose of the
research. The researcher also assured respondents that their ideas were treated with utmost
confidentiality.
Bureaucracy might delay the study. From all the procedures, getting data from management
takes time. However, the researcher took time and appealed to the bureaucrats for data.
The limitation of the research may be due to lack of primary data collection due to difficulty
in getting appointment with senior top officials in Stanbic Bank Kyambogo Branch.

Time and resources constraints restricted the scope of the research. Despite the researcher’s
effort to expand the scope of the research by getting into more in-depth study of cash
management, it may not materialize due to the practical difficulties faced during the work.

30
CHAPTER FOUR

PRESENTATION, DISCUSSION AND ANALYSIS OF FINDINGS

4.0 Introduction
The following chapter reports on the findings of the study that was carried out to examine the
types of E-banking used by Stanbic Bank, to evaluate the effectiveness of electronic banking
methods employed by Stanbic Bank –Kyambogo Branch, to establish how E-banking has
influenced the financial efficiency of Stanbic Bank and to establish the challenges of E-
banking in Stanbic Bank. The study was carried out in Stanbic Bank, Kyambogo branch as
was deemed one of the giant financial institutions in Uganda sharing a wide coverage and
perhaps largely preferred various organizations and individuals as regards transacting
businesses. The chapter also presents the biographic characteristics of respondents.

4.1 Demographic characteristics of respondents


This includes mainly background information of the respondents. Among the cranial socio-
demographic characteristics considered in the research study included Sex Distribution, Age
differences, sex distribution, Time spent working with Stanbic Bank (U) Limited bank,
Position held / responsibility, educational levels, as well as Department of the respondents.
The biographic data of respondents which is in the research study is presented as below. –

4.1.1 Sex of respondents


The researcher was interest in knowing the gender of the respondents. In this section, the
gender of respondents is presented.

Table 1: Showing the sex of respondents


Personal Characteristic Response Frequency Percentage
Male 30 60.0
Female 20 40.0
Sex Total 50 100
Source: Primary Data

The sex of the respondents show that those of male were 30 (60%) while female were 20
(40.0%). those between 29 and 32 had 4 (11.1%). The findings disclosed that the male

31
were the majority in the organization.
Figure 1: Showing gender of respondents

Source: Primary Data

Considering the gender of respondents as shown in Table 2, findings indicated that male
respondents were 58%) while 42%) were female. The findings disclosed that the male were
the majority in the organisation.

4.1.2 Age of respondents


In this section, the age of respondents is presented.
Table 2: Showing the age of respondents
Personal Characteristic Response Frequency Percentage
15-30 20 40.0
31-40 20 40.0
Age 41 and above 10 20.0
Total 50 100
Source: Primary Data

32
Source: Primary Data

From the study findings, the study population was mainly composed of people from
different age groups. Respondents aged between 15 – 30 years comprised of forty percent
(40%), those aged between 31 – 40 years comprised of slightly over forty percent (40%)
where as those aged forty years and above comprised only twenty percent (20%). As
indicated above, the variations in age structure were pointed out as a result of various
factors, the major one being the fact that people lying in the age bracket of 15 – 30 are the
youth who nowadays largely engage in high / advanced institutions of learning awarding
them satisfying qualifications alongside fresh brains thus are largely opted for by such
efficiency yearning financial institutions. This thus explains why those falling between 15 –
30 years and many compared to the rest. Others in the bracket of 31 – 40 and above were
fewer because these qualified earlier thus cannot easily cope up with the ever increasing
modern systems of finance handling especially due to current usage or utilization of modern
information and technology equipment and methods.

33
4.1.3 Time spend working with Stanbic Bank (U) Limited Bank
In this section, time spend working with Stanbic Bank (U) Limited Bank of the respondents
is presented.
Table 3: Showing the education background of respondents
Personal Characteristic Response Frequency Percentage
1 Month – 1 Year 05 10.0
1- 2 10 20.0
Time spend working 2–3 15 30.0
3 and above 20 40.0
Total 50 100
Source: Primary Data

Source: Primary Data

From the above table, Respondents were asked about their duration of stay/work in the study
area that is Stanbic Bank. It was hoped that the workers / respondents time of the stay on
work influenced their impact in the area. Those who had stayed longer in the study area were
further believed to have witnessed several changes, trends and patterns of work / services
offered by the institutions to its clients (10%) slightly low ten percent had stayed / worked
Stanbic Bank for a period of only 0ne month to one year. Only twenty percent (20%) of the
respondents had worked with Stanbic Bank for a period of 0ne - two years while the rest of
the respondents (30%) and 40% had worked / stayed with Stanbic Bank for a period of two
to three year and three and above years respectively. Hence those over two years were more

34
knowledgeable than those below two years.

4.1.4 Position in the company


In this section, the duration of respondents in the company is presented.
Table 4: Showing the duration of respondents in the company
Personal Characteristic Response Frequency Percentage
Sales officer 25 50.0
Position the company Loan officer 10 20.0
Tellers 05 10.0
Customer advisors 08 16.0
Accountant 02 04.0
Total 50 100
Source: Primary Data

Source: Primary Data

As indicated from the above table, among the background characteristics of respondents that
were noted by the researcher was the position of responsibility, respondents held in the area
of study. Slightly less than a half of the total number of respondents 25 (50%) were working
as sales officers, 05 (10%) worked as tellers/ cashiers, 0ther 02(4%) were working as
accounts, 10 (20%) were also working as credit/ loans officers, and 08(16%) were also
working as customer advisors/ front desk attendants/ assistant administrators.

35
4.1.5 Duration of adoption of mobile banking
In this section, the duration of adoption of mobile banking in the company is presented.
Table 5: Showing the duration of adoption of mobile banking
Characteristic Response Frequency Percentage
1 year to 2 years 05 10.0

2 year to 3 years 15 30.0


Adoption of mobile banking 3 year to 4 years 05 10.0
4 year to 5 years 25 50.0
6 year to 7 years 00 00.0
Total 50 100
Source: Primary Data

Source: Primary Data

As indicated from the above table, the bank has adopted mobile banking for 4 – 5 years
(50%) as the majority rating, 30% said it is for 2 – 3 years, 10% said 2 – 3years while another
10% said it is for 1 – 2yeaers. This implies that the bank has adopted mobile banking for a
good time now.

36
4.2 Methods or Types used in Electronic payment

4.2.1 Meaning of electronic payment

Response Frequency Percentage (%)


YES 35 70

NO 15 30
Total 50 100
Source: Primary Data

Source: Primary Data


From the table above, the findings reveal that the majority of the respondents 35 (70%) know
the meaning of electronic payment while 15(30%) did not know. This implies that the bank
uses different types in electronic payment.

4.2.2. Does Stanbic Bank (U) Limited takes part in the use of electronic system?
Response Frequency Percentage (%)
YES 30 60

NO 15 30
NOT SURE 5 10
Total 50 100
Source: Primary Data

37
Source: Primary Data

As shown in the table above, the majority of respondents 30 (60%) agreed that the Stanbic
bank takes part in the use of electronic system whereas 30% disagreed to that. This implies
that the bank uses electronic systems.

4.2.3 Different types/ methods used in electronic payment

Response Frequency Percentage (%)


Debit cards Services 10 20
Credit cards Services 5 10
Real Time Gross Settlement 5 10
Electronic Funds Transfer 12 24
Telex Transfer 8 16
ATM Services 10 20
Total 50 100
Source: Primary Date

38
Source: Primary Data

The table above demonstrates that the majority of respondents say that the most type of
electronic payment used at the bank is Electronic Funds Transfer (24%), Debit cards Services
(20%), ATM Services (20%), telex transfer (16%) and both real time gross settlement and
credit card service at 10%. This gives the implication that the bak uses EFT, debit and ATM
services mostly.

4.2.4 Length of Stanbic Bank (U) Limited using Electronic payment

Response Frequency Percentage (%)


1-5 5 10

6-10 45 90
10 and above 0 0
Total 50 100
Source: Primary Data

39
Source: Primary Data

As shown in the table above, the majority of respondents say that Stanbic Bank (U) Limited
using Electronic payment for a length of 6 -10yeaers (90%) while other say between 1 –
5yeaers (10%). This implies that the bank relies on electronic funds transfer.

4.3 Impact of electronic banking methods on financial performance

4.3.1 Opinion if the bank is in a good financial position

Response Frequency Percentage (%)


YES 35 70

NO 15 30
Total 50 100
Source: Primary Data

40
Source: Primary Data

In the table above, 70% of respondets agree that the bank is in a good financial position
whereas 30% say it is not in a good financial position. This implies that the bank position is
good.

4.3.2 Rating of the financial position of the bank on a rate of 1 – 10, 10 being the highest

Response Frequency Percentage (%)


1-3 5 10

4-7 25 50
8-10 20 40
Total 50 100
Source: Primary Data

41
Source: Primary Data

The table reveals that the majority rating for the financial position of the bank was 4-7 on the
scale of 10 that 50%, 40 %(8-10) and 10% for 1-3. This implies that the bank genrally has a
good financial position.

4.3.3 Rating of the use of electronic payment

Response Frequency Percentage (%)


Relatively high 25 50

Average 20 40
Relatively low 5 10
Total 50 100
Source: Primary Data

42
Source: Primary Data

The table above shows that the bank’s use of electronic payment is generally high as shown
by the majority rating (50%), average was 40% and 10% said it was low. This means that the
bank generally uses electronic payments.

4.3.4 Major benefits of electronic payment to Stanbic Bank (U) Limited

Response Frequency Percentage (%)


Reduced manual labour force 15 30
Reduced paper ink 5 10
Maintenance of customer contact 10 20
Improved sourcing 12 24
Reduced duplication 8 16
Total 50 100
Source: Primary Date

43
Source: Primary Data

In the table above, the findings reveal that the biggest benefit of electronic banking is reduced
manual labour force (30%), Improved sourcing (24%), Maintenance of customer contact
(20%), reduced duplication (16%) and reduced paper ink (10%). This implies that electronic
payments reduced on labour costs.

4.3.5 Influence of electronic banking to the profitability of the bank

Response Frequency Percentage (%)


YES 45 90

NO 5 10
Total 50 100
Source: Primary Data

44
Source: Primary Data

As shown in the table above, electronic banking influences the profitability of the bank as
revealed in the majority ratings (90%). Then 10% said it has no influence on the profitability
of the bank. This implies that it is crucial for profitable operations of the bank.

4.3.6 Electronic banking is convenient to the customers thus more transactions for the
bank

Response Frequency Percentage (%)


YES 35 70

NO 15 30
Total 50 100
Source: Primary Data

45
Source: Primary Data

As demonstrated in the table above, the majority of respondents (70%) agreed that electronic
banking is convenient to the customers thus more transactions for the bank while 30%
disagreed that Electronic banking is convenient to the customers thus more transactions for
the bank. This implies that it makes banking convenient for customers.

4.3.7 Electronic banking reduces number of manual tasks thus reduces labour expenses

Response Frequency Percentage (%)


YES 45 90

NO 5 10
Total 50 100
Source: Primary Data

46
Source: Primary Data

As shown in the table above, 90% of the respondents show electronic banking reduces
number of manual tasks thus reduces labour expenses while 10% disagreed that electronic
banking reduces number of manual tasks thus reduces labour expenses. This implies that
electronic banking reduces number of manual tasks thus reduces labour expenses.

4.3.8 Electronic banking bring services closer to the client

Response Frequency Percentage (%)


YES 30 60

NO 20 40
Total 50 100
Source: Primary Data

47
Source: Primary Data

In the table above, 60% of the respondents said that electronic banking bring services closer
to the client while 40% disagreed that electronic banking bring services closer to the client.
This implies that Electronic banking bring services closer to the client.

4.3.9 It is easy to deposit and withdraw money from any ATM branch

Response Frequency Percentage (%)


YES 49 98

NO 1 2
Total 50 100
Source: Primary Data

48
Source: Primary Data

From the table above, 98% of the respondents agree that It is easy to deposit and withdraw
money from any ATM branch while 2% disagrees that It is easy to deposit and withdraw
money from any ATM branch. This implies that It is easy to deposit and withdraw money
from any ATM branch.

4.3.10 The electronic systems in Stanbic bank are timely and adequate according to the
customer emergency needs

Response Frequency Percentage (%)


YES 33 66

NO 17 34
Total 50 100
Source: Primary Data

49
Source: Primary Data

As highlighted in the table above, 66% of the respondents agreed that the electronic systems
in Stanbic bank are timely and adequate according to the customer emergency needs whereas
34% disagreed that the electronic systems in Stanbic bank are timely and adequate according
to the customer emergency needs. This implies the electronic systems in Stanbic bank are
timely and adequate according to the customer emergency needs

4.3.11 The ATM cards are renewed on time and the customers get informed on time to
acquire them

Response Frequency Percentage (%)


YES 40 80

NO 10 20
Total 50 100
Source: Primary Data

50
Source: Primary Data

As indicated in the table above, 80% of the respondents said yes that the electronic systems
in Stanbic bank are timely and adequate according to the customer emergency needs while
20% disagreed that the electronic systems in Stanbic bank are timely and adequate according
to the customer emergency needs.

4.3.12 The E banking systems are strong with electronic passwords that are hard to be
penetrated by the hijackers so as prevent fraud

Response Frequency Percentage (%)


YES 31 62

NO 19 38
Total 50 100
Source: Primary Data

51
Source: Primary Data

As revealed in the findings above, 62% said that yes the E banking systems are strong with
electronic passwords that are hard to be penetrated by the hijackers so as prevent fraud while
38% the E banking systems are strong with electronic passwords that are hard to be
penetrated by the hijackers so as prevent fraud. This implies that The E banking systems are
strong with electronic passwords that are hard to be penetrated by the hijackers so as prevent
fraud.

4.3.13 There is an increase in new customers as well as sustaining the royal customers at
the same time due to the presence of adequate electronic systems in Stanbic bank

Response Frequency Percentage (%)


YES 29 58

NO 21 42
Total 50 100
Source: Primary Data

52
Source: Primary Data

As demonstrated in the table above, 58% of the respondents agree that there is an increase in
new customers as well as sustaining the royal customers at the same time due to the presence
of adequate electronic systems in Stanbic bank while 42% said otherwise. This implies that
there is an average impact in this regard.

4.3.14 Stanbic Bank information systems are regularly updated to avoid unnecessary
breakdowns to inconvenience customers

Response Frequency Percentage (%)


YES 30 60

NO 20 40
Total 50 100
Source: Primary Data

53
Source: Primary Data

The above table, the majority (60%) believe that Stanbic Bank information systems are
regularly updated to avoid unnecessary breakdowns to inconvenience customers while 40%
did not agree with it. This implies that the Bank information systems are regularly updated to
avoid unnecessary breakdowns to inconvenience customers.

4.3.15 Stanbic Bank has issued out credit cards to their customers to enable quick
purchase of commodities from supermarkets, malls etc.

Response Frequency Percentage (%)


YES 40 80

NO 10 20
Total 50 100
Source: Primary Data

54
Source: Primary Data

As shown in the table above, 80% of the respondents agreed that Stanbic Bank has issued out
credit cards to their customers to enable quick purchase of commodities from supermarkets,
malls etc. whereas 20% said otherwise. This implies that is has eases the bank in this area.

4.3.16 Stanbic Bank is partnering with other service providers to ease the payment of
utility bills by accepting deposits from its clients, thus more revenue for the bank.

Response Frequency Percentage (%)


YES 45 90

NO 5 10
Total 50 100
Source: Primary Data

55
Source: Primary Data

The majority respondents (90%) said that Stanbic Bank is partnering with other service
providers to ease the payment of utility bills by accepting deposits from its clients, thus more
revenue for the bank, while 10% disagreed in this regard. This implies that these systems ease
payment thus more revenue for the bank.

4.4 Challenges in in using electronic banking

4.4.1 Does the bank face any challenges in using electronic banking?
The researcher was interested in finding out challenges in using electronic banking.
Response Frequency Percentage (%)
YES 39 78

NO 11 22
Total 50 100
Source: Primary Data

56
Source: Primary Data

In the table, 78% agreed that the bank face some challenges in using electronic banking while
22% said no there are no any challenges in using electronic banking. This implies that the
bank faces some challenges.

4.4.2 Challenges facing Stanbic Bank (U) Limited in electronic payment

Response Frequency Percentage (%)


Channel conflict 10 20
High cost of machine maintenance 20 40
Economy cash based 8 16
Skilled and experienced technical ICT 12 24
staff.
Total 50 100
Source: Primary Date

57
Source: Primary Data

From the table above, 40% said that high cost of machine maintenance is the major
challenge, 24% said it is skilled and experienced technical ICT staff, 20% said it is channel
conflict, 16% said it is economy cash based. This means these challnges like cost affect the
use of the systems.

4.4.3 Impact of challenges on profitability of Stanbic Bank (U) Limited

Response Frequency Percentage (%)


YES 35 70

NO 10 20
NOT SURE 5 10
Total 50 100
Source: Primary Data

58
Source: Primary Data

From the table above, 70% agreed that there is an impact of challenges on profitability of
Stanbic Bank (U) Limited while 20% said no and 10% were not sure. This implies that these
challenges affect the profitability of the bank.

59
CHAPTER FIVE

SUMMARY, CONCLUSIONS AND RECOMMENDATIONS

5.0 Introduction
In the previous chapter, the study dealt at length with the evolution of the information
technology in regards to efficiency of financial institutions in Uganda -Case study Stanbic
Bank (U) Kyambogo Branch. This chapter will however, present the summary of findings
and draws conclusions and recommendations on the study.

5.1 Summary of major findings


The research study aimed at assessing the effect of electronic banking on financial efficiency
of Stanbic Bank using Kyambogo branch and the objectives are to examine the types of E-
banking used Stanbic Bank, to analyze how E-banking has influenced the financial efficiency
of Stanbic Bank and to establish the challenges of E-banking in Stanbic Bank

5.1.1 Findings on the types of electronic banking on financial efficiency of Stanbic Bank
With respect to the type of electronic payment method used by customer, majority of
respondents agree that the bank uses mostly uses Electronic Funds Transfer (24%), Debit
Cards Services (20%), ATM Services (20%), telex transfer (16%). The results of the study
generally indicate that, these these electronic channels have contributed positively to the
provision of banking services and on service delivery in general (Rose, 1999).

Findings from the study indicated that Stanbic Bank has adopted electronic payment for a
length of 6 -10 yeaers (90%) as a business strategy in response to customer needs and the
changing marketing trends in the banking industry. Also the bank adopted e-banking due to
the tremendous benefits e-banking provides. Stanbic Bank offers numerous e-banking
services to its customers. Stanbic Bank offers e-banking services such as ATM, POS, Visa
Cards, Master Cards, Internet Banking, SMS Banking, Email Transaction Notification, and
Statement by email, Stanbic Bank Automated Payment System, Cheque Writer and Mobile
Money. Additionally, it was found that the bank has been using electronic banking for 1- 5
years as indicated by the majority responses. This implies that Stanbic bank has adopted the
latest forms of banking worldwide. These findings agree with those of Saleh & Schaechter
(2002).

60
5.1.2 Impact of electronic banking methods on financial performance
The findings of the study revealed that there is an impact of electronic banking methods on
financial performance. For instance, majority ratings for the financial position of the bank
were 4-7 on the scale of 10 that implied that the bank generally has a good financial position.
Also findings showed that the bank’s use of electronic payment is generally high. This
means that the bank generally uses electronic payments. In findings of the study above, it was
revealed that the biggest benefit of electronic banking is reduced manual labour force (30%).
Moreover, it was demonstrated that electronic banking influences the profitability of the bank
as revealed in the majority ratings (90%). Respondent findings also disclosed that (70%)
agreed that electronic banking is convenient to the customers thus more transactions for the
bank. Also, 90% of the respondents show electronic banking reduces number of manual
tasks thus reduces labour expenses. 98% of the respondents agree that it is easy to deposit
and withdraw money from any ATM branch. This implies the electronic systems in Stanbic
bank are timely and adequate according to the customer emergency needs. As revealed in the
findings, 62% said that yes the E banking systems are strong with electronic passwords that
are hard to be penetrated by the hijackers so as prevent fraud. As shown in the table above,
80% of the respondents agreed that Stanbic Bank has issued out credit cards to their
customers to enable quick purchase of commodities from supermarkets, malls etc. This
implies that is has eases the bank in this area. The majority respondents (90%) said that
Stanbic Bank is partnering with other service providers to ease the payment of utility bills by
accepting deposits from its clients, thus more revenue for the bank, while 10% disagreed in
this regard. This implies that these systems ease payment thus more revenue for the bank.
Hence, these findings are in line with those of scholars like Ian (2000) and Tiwari (2006) as
seen in literature.

5.1.3 Challenges in in using electronic banking


From the study finding 78% asserted that the bank faces any challenges in using electronic
banking. The challenges that were revealed include; channel conflict 20%, High cost of
machine maintenance 40%, economy cash based 16% and skilled and experienced technical
ICT staff 24%. This means that the biggest challenge is cost of maintenance of the system.
More responses from respondents 20% revealed that the effective and efficient electronic
payment methods, it requires skilled and experienced technical ICT staff which is
experienced in terms of maintenance and repairing thus these experienced staff require/
demand high salaries. Moreover, 705 of the respondents said that these challenges have an

61
impact of challenges on profitability of Stanbic Bank (U) Limited In the study, it had been
discovered that sustained competitive advantage is obtained through the capacity of financial
institutions to exploit information technology on continuous basis which means that the IT
and the financial institutions are integrated however challenges hinder this (Henderson and
Venkatraman, 2003).

5.2 Conclusions
Basing on data analysis and discussion that mentioned, hence this study can be concluded
that the responses of respondents on electronic banking variable is positive; majority respond
are agree and strongly agree to the effects of electronic banking methods employed at Stanbic
Bank – Kyambogo Branch, the service is quick, easy to use, easy to transfer money from one
account to another electronically. The insufficient number of ATM booths and the customer
representatives for on-line services fairly respond to clients queries on a timely fashion, were
the major factors negatively affecting electronic banking methods employed at Stanbic Bank
–Kyambogo Branch. Findings reveal that Electronic Banking has satisfied most of people
banking needs, most bank clients enjoy using e-Banking, this results into a high level of
satisfaction. The few break downs in ATM machines and the long queues lowers the level of
satisfaction. Findings revealed that there is a weak positive relationship between Electronic
banking and financial efficiency. Finally , the study concludes that electronic payment
methods contributes significantly to clients and Stanbic Bank in terms of effectiveness in
service provision and rising profitability respectively. Therefore, it would be a kind of
transformation and growth in terms of finance handling services and relevant institutions if
such methods are incorporated.

5.3 Recommendations
The suggestions for the findings from the study are as follows:
Banks investment in technology solutions should not be “half-hearted”. The banks have a
duty to ensure customer confidence in the electronic banking services they provide and assure
them of the security and privacy they need to patronize these services. For instance banks
issuing Magnetic Stripe Cards need to migrate to Chip technology in order to protect
themselves as well as their customers from fraudulent skimming and usage of their cards.

62
Government support by way of legislations and infrastructure provision is essential for
creating the enabling environment for electronic banking to thrive in the country.

Banks’ staff and officials should be adequately trained in e-banking products and services to
be able to address customers’ needs and challenges.

Banks need to well package and market E-banking Products and services effectively to
customers to close the seemingly knowledge gap that exists among the populace with regard
to the benefits that can be derived from the services.

Massive sensitization campaigns to enrich the public about the existing electronic payment
methods in financial institution since the public seem not to be aware of electronic payment
methods that exist in these financial institutions and how significant they are in business
transaction.

More comprehensive research and in this case it should be a survey where several institutions
should been included in the survey to bring more insights about the phenomenon. Topics
such as the impact of use of electronic payment methods on business should be conducted
and this should be by the help of financial institution to support such research project
financially. Purchase of more modern electronic payment machines to increase on the speed
and efficiency. Besides this would control / avoid channel conflict since it affects clients
business transaction.

There is need for the government to revisit the economy from being cash based to electronic
systems where business transaction would be done by use of cards like smart cards to buy a
commodity or service which is later paid by the financial institution on behalf of their client.
This would enhance profitability in financial institutions at the sometime improve commerce
and trade.

Introduction of more electronic payment methods to increase preferences and choice of their
clients since clients seem to be limited with few electronic methods currently being used.
New electronic payment methods like use of electronic telephone need to be introduced. For
effectiveness and efficiency in use of electronic payment, there is need for the management
of financial institutions to hire the skills of well competent labor force since inefficiency in

63
service delivery seems to affecting the level of profitability that would be accruing from
electronic payment methods.
Finally financial institutions need to establish more electronic payment facilities for instance
banks should install more ATM cards machines to improve the effectiveness of credit cards
since it’s the most / common payment method preferred by clients. Similarly internet
facilities should be extended to both branches in upcountry stations.

The different levels of complexity associated with certain areas involving security operations
planning and monitoring have caused many national banks to outsource all parts of internet
banking operations. Banks should periodically reassess their sources of technology support to
determine whether a given solution continues to fit their business plan and is flexible enough
to meet anticipated future needs.

Regardless of whether the technology service provided in house or through a third party
services, National banks need to have a strong link between their technology provider and
their strategic planning process. This will enable the bank to link new products and services
with the existing technology and products mix.

The bank should rectify the issue of unreliable internet connectivity so that the network is
ever constant to enable its customer’s access of any information they need from the system
without unwanted delay and Servicing of the hardware should be a constant activity in order
to maintain the quality and efficiency of service delivery.

The researcher recommend further area of research Due to the limited time frame, which did
not allow the researcher to cover the wider data intended, the researcher recommends that in
future an extensive research be conducted on:-the overall efficiency of financial institutions,
the attitude of Financial Manager towards modern information technology, Whether the
information technology has fulfilled the use for which it was introduced.

There is a need to increase on the number of ATM Booth of Stanbic Bank.-Kyambogo


Branch; this would eliminate the problem of long queues in the bank and at the ATM
machines. The presence of adequate number of ATM machines will increase the level of
customer satisfaction hence building a stronger positive relationship between electronic
banking and customer satisfaction.

64
There is a need for the customer representatives for on-line services to improve on the
response to clients queries on a timely fashion; results indicated that customer representatives
for on-line services fairly respond to clients queries on a timely fashion. The fair timely
fashion response affects negatively the methods of electronic banking employed at Stanbic
Bank.-Kyambogo branch, for example telephone banking and internet banking is affected
negatively. Therefore, if the improves on the timely fashion response, customers will be
replied in time, get their services in time and this will increase their level of satisfaction
hence building a stronger positive relationship between electronic banking and customer
satisfaction.
Stanbic Bank.-Kyambogo today have no other choice than to adopt EBS in order to enhance
customer service delivery through the advancement in ICT if they are to remain key players
in the global banking system. This therefore requires banks to forge partnership agreements
with renowned ICT institutions in Uganda and abroad in improving on the state of ICT in the
industry and the economy at large.

As the level of literacy increase over the years, more people will find it difficult to ignore the
services offered by banks through this delivery channels. Management of banks should
ensure and continue to encourage the idea of computerizing Uganda and Ugandans. Stanbic
Bank.-Kyambogo in conjunction with Omatek, Del, Compaq, IBM computers, can agree to
support as part of efforts to computerize Uganda and Ugandans. The idea will be an initiative
in the provision of efficient and higher quality service and also ensure the availability of rapid
access to accurate, timely and current information.

Lastly, as customer is the essence of any business being, the development of these new
electronic banking services (EBS) should be customer-centric (Customers’ needs should be
the watchword right from idea of conception, development and use of the services).

5.4 Areas for Further Research


Future researchers can consider the following study areas:
Electronic banking and customer adoption
Customer satisfaction and its implications on bank efficiency
Electronic banking and customer loyalty

65
REFERENCES
Aly, H.Y. and Rangan, N. (1990), “Technical Scale and A locative efficiencies in US
Banking.
An empirical investigation, “Review of economics and statistics, Vol. 72 ppp 211-218.

Arzu Tektas, and Gokhan Gunay, (2005), “Asset and liability management in financial
crisis”.The Journal of Risk Finance, Vol. 6, No. 2, pp 135-149.

Avkiran, N.K. (1995), “Developing an instrument to measure customer service quality in


Branch banking”, International Journal of Banks Marketing, Vol. 12 No. 6, pp.
10 – 18.
Baxley J.B (1987) Banking Management a guide to more profitability banking (1st edition)
Subject publications New Delhi.

Central Bank of Oman, Annual Report, 2004, P. 12.

Chu Mei Liu (2002), “An assessment of banking operation strategies of private banking
Institutions in the Philippines”, Asia Pacific Journal of Marketing and
Logistics, Vol. 13, No. 1 pp 57 – 71.

Elliot and Suzan S (1998) Business information technology systems, theory and practice (1st
Edition) Hudson Wesley, Longman New York.

Elizabeth D., Grey Elliot (2004), “Efficiency, customer service and financial efficiency
among Australian Financial Institution”, International Journal of Bank
Marketing, Vol. 22, No. 5, pp. 319-342.

El-Markazi Journal, Central Bank of Oman, April/May issue, 2005, p. 13.

Hempel, G., Coleman, A. and Smon, D. (1986), Bank management text and cases, Wiley
New York.

Ian Caddy (2000), “Intellectual capital: recognizing both assets and liabilities” journal of

66
Intellectual Capital, Vol. 1, No. 2, pp. 129-146.

Kwan, S., Eisenbeis R., (1992), “An analysis of inefficiencies in banking: a stochastic cost
frontier approach” FRBSF Economic Review.

Mazhar M. Islan, (2003), “Development and efficiency of domestic and foreign banks in
GCC countries” Managerial Finance, Vol. 29, No. 2, pp 42 – 71.

Pandey I, M (1999) Financial Management (8th edition) viskas publishing house Pvt ltd New
Delhi.

Peter S. Rose (1997) Money and capital markets financial institutions and instrument in
global markets (6th edition) Irwin Berks in France.

Saleh M. Nsouli and Andrea Schaechter (2002) Challenges of E-Banking Revolution, retrieve
from, http://www/imf.org/external/pubs/fandd/2002/09/nsouli.htm.

67
APPENDICES

Appendices: Questionnaire
QUESTIONNAIRE FOR STANBIC BANK EMPLOYEES
Dear Respondent,
I am AURUGA EDITH LUCY a student of Management Training and Advisory Centre-
Nakawa, Department of Business and Finance conducting a research on,
‘The Effect of Electronic Banking on Financial Efficiency of Commercial Banks.’ A case
study of Stanbic Bank (U) Limited, Kyambogo Branch. As someone who is knowledgeable
about this area, you have been selected to participate in the study. The information obtained
therefore will be used purely for academic purposes and will be treated with confidentiality.
Tick where applicable.
SECTION A: Background of the respondent
1. Name of respondent………………………………………………….…………Optional
2. Sex
a. Male b. Female
3. Age of respondent
a 15-30 b 31-40 c 41 and above

4. Time spend working with Stanbic Bank (U) Limited bank


a. 1 year b. 2 years (c) 3 years
d. 4 years
Any other, (specify)……………………………………………………………………..
5. Position held / responsibility…………………………………………………………
6. Department
a. Procurement b. Information and stores
c) Administration d) Sales

7. How long had the bank adopted Mobile banking?


a. 1 year to 2 years b. 2 year to 3 years c. 3 year to 4 years
d. 4 year to 5 years e. 6 year to 7 years

68
SECTIONB: METHODS / TYPE USED IN ELECTRONIC PAYMENT
8. Do you know the meaning of electronic payment?
a) Yes b) No

9. Does Stanbic Bank (U) Limited takes part in the use of electronic system?
a) Yes b) Now c) Not sure

10. If yes, what are the different types/ methods used in electronic payment by Stanbic Bank
(U) Limited?
a) Debit cards Services
b) Credit cards Services
c) Real Time Gross Settlement
d) Electronic Funds Transfer
e. Telex Transfer
f. ) ATM Services

11. For how long has Stanbic Bank (U) Limited been using Electronic payment?
a) 2-5 years b) 6-10 years

SECTION C: IMPACT OF ELECTRONIC BANKING METHODS ON FINANCIAL


PERFORMANCE
12. In your opinion is the bank in a good financial position?
a) Yes b) No
13. Rate the financial position of the bank on a rate of 1 – 10, 10 being the highest?
a) 1-3
b) 4-7
c) 8-10

14. As an employee to Stanbic Bank (U) Limited, how do you rate the use of electronic payment?
a) Relatively high b) Average c) Relatively low

15. If yes, what could be the major benefits of electronic payment to Stanbic Bank (U) Limited?
a) Reduced manual labour force b) Reduced paper ink
c) Maintenance of customer contact d) Improved sourcing

69
e) Reduced duplication

16. In your opinion has the adaptation of electronic banking been of any influence to the
profitability of the bank.
a) Yes b) No

17. For the statements below, tick where appropriate


YES NO

Electronic banking is convenient to the customers thus more


transactions for the bank
Electronic banking reduces number of manual tasks thus
reduces labour expenses
Electronic banking bring services closer to the client

It is easy to deposit and withdraw money from any ATM


branch
The electronic systems in Stanbic bank are timely and
adequate according to the customer emergency needs
The ATM cards are renewed on time and the customers get
informed on time to acquire them
The E banking systems are strong with electronic passwords
that are hard to be penetrated by the hijackers so as prevent
fraud
There is an increase in new customers as well as sustaining the
royal customers at the same time due to the presence of
adequate electronic systems in Stanbic bank
Stanbic Bank information systems are regularly updated to
avoid unnecessary breakdowns to inconvenience customers
Stanbic Bank has issued out credit cards to their customers to
enable quick purchase of commodities from supermarkets,
malls etc.
Stanbic Bank is partnering with other service providers to ease
the payment of utility bills by accepting deposits from its

70
clients, thus more revenue for the bank.

SECTION D: CHALLENGES IN USING ELECTRONIC BANKING


18 Does the bank face any challenges in using electronic banking?
a) Yes b) No

19. If yes, what do you think are the challenges facing Stanbic Bank (U) Limited in electronic
payment?
a) Channel conflict b) High cost of machine maintenance
c) Economy cash based d) Skilled and experienced technical ICT staff.
Any other, (specify)
i)……………………………………………………………………………………………..
ii)…………………………………………………………………………………………….
20. According to you, do you think the above factors mentioned in 19) impact on profitability
of Stanbic Bank (U) Limited.
a) Yes b) No c) Not sure

THANK YOU

71