ELECTRONIC BANKING AND CUSTOMER SATISFACTION: A CASE OF

CENTENARY BANK, MASAKA BRANCH

BY

NAMUBIRU SONIA MITCHELL

2018-B181-10027
 CHAPTER ONE

GENERAL INTRODUCTION

1.0 Introduction

The chapter assessed the electronic banking on customer satisfaction in Uganda using a case
study of centenary bank Uganda limited. Chapter one presents the background information of the
study, statement of the problem, research objectives and research questions. It further highlighted
the significance of the study, clarifies the scope of the study as well as organization of the study.

1.1 Background of the study

Bebli, (2010) argues that for the modern home electronic banking services was the distance
banking services over online media from the early 1980s. The term online became popular in the
late 80s and referred to the use of a terminal, keyboard and television or monitor to access the
banking system using a phone line. Home banking can also refer to the use of a numeric keypad
to send tones down a phone line with instructions to a bank. online started in New York in 1981
when four of the city’s major banks offered home banking services never became provider and
the UK where the use of videotext was subsidized by the telecom provider and he UK where the
Prestel system was in Uganda electronic banking become very popular in 21 centuries were
commercial banks are in stiff competition (Nazaritehrani & Mashali, 2020).

Because of high competition arising within the financial institutions in Uganda, electronic
banking is now thought to hold the promise of a new commercial revolution by offering an
inexpensive and direct way to exchange information and to sell or buy products and services
(Rowan et al., 2020). This revolution in the market place has set in motion a revolution in the
banking sector for the provision of a payment system that is compatible with the demands of the
online market place. Online-commerce in Uganda is an embryonic stage. However, one area of
online commerce that has proven successful in Uganda is electronic banking (E-banking)
(Gilbert, 2018). The term electronic banking OR E-banking covers both computer and telephone
banking. It refers to the use of information and communication technology by bans to provide
services and manage customer’s relationship more quickly and most satisfactorily (Almatarneh,
2011). The theory of diffusion of innovation could be considered as one of the earliest theories
that have attempted to explore factors that may influence an individual to adopt an innovation or
anew technology (electronic banking). Individuals will gather and synthesize information about
technology (electronic banking) (Meshkany & Hashemi, 2013). The result of this process is
beliefs about using the internet banking. These beliefs then cause the individuals to accept or
reject the technology (Saputro & Achmad, 2015).

Chang & Cheung, (2020) describes that electronic banking is an umbrella term for the process by
which a customer may perform banking transactions online ally without visiting a bank mortar
institution. Meshkany & Hashemi, (2013) describes electronic banking as a variety of the
following platforms. Internet banking telephone banking TV based banking online phone
banking and pc banking. For the purpose of this research, we define electronic banking as the
delivery of banking services and products through the use of online means or internet means
irrespective of place, time and distance. Such products and services can include depositing
lending, account management, the provision of financial advice, online bill payment, and the
provision of other online payment and services such as online money.

The benefits of this 21stcentury banking are numerous. its banking is numerous (Podder, 2010).
Its introduction would increase the potential of business to attain productivity and profitability as
trading ad transacts, which would be carried out vial communication networks would be a lot
faster and distance would no longer be barrier to effective transactions (Rubatsimbira, 2020).
Occasionally, many of the customers out of frustration and unnecessary delays do complain of
the bank’s operations. Some customers who are out of the customers out of frustrate and
unnecessary delays do complain of the banks for other banks which the usually described as
providing fast track banking services. Its operational challenges in the form of delays in delivery
made the bank unattractive to the public. In response to this concern, banks have begun
automation in other to remain competitive (Kharchenko, 2011).

Technology is making a tremendous impact upon banks in general and the financial Services
sector is no exception (OECD, 2020). The application of information and communication
Technology concepts, techniques, policies and implementation strategies to banking Services
have become a subject of fundamentals importance and concerns to all banks. As a result of this
technological improvement business environment in financial sector is extremely dynamic and
experience rapid changes and demands banks to serve their Customer through the use of internet
(Podder, 2010).
 Globally, the evolution of internet banking started from the use of automatic teller machine
(ATM) and Finland is the first country in the world to have taken a lead in interest banking (S.
Khan, 2007). Technological banking has widely used in used developing economies; however,
the spread of technological banking is much limited. As of today, most banks are enhancing
service quality of banking services (OECD, 2020)

In Uganda, people now using internet banking services as a competitive strategy (Meshkany &
Hashemi, 2013). The competitiveness in the banking Industries have called for the need to
improving on board the electronic platform into industries around the world. Banks chose to
implement, investigate, analyze and endeavor to present internet banking service to decrease
holding up time, lapses, costs, and enhance customer service support (Rubatsimbira, 2020). Their
technology records clients to access and query about their own particular accounts and perform
basic transactions by means of the internet from their PCs and smart phones at their workplace
and home whenever the timing is ideal time.

Customer satisfaction is amount of how products and services provided by a company meet or
exceed customer anticipation. It’s also defined as the degree to which customers are happy with
the products and services shaped and presented by the bank (Mulat, 2017). It’s not straight
forward service however, as customer satisfaction will vary from person to person, depending on
a whole host of variables which may both psychological and physical. The usual measure of
customer satisfaction involves a survey with a set of statement using a Likert technique or scale
(Westbrook, 1980).

Customer satisfaction is defined as the number of customers, or percentage of total customers,

whose reported experience with a firm, its products or its services (ratings) exceeds specified
satisfaction goals (Farris et al., 2010). Customer satisfaction is a person’s feelings of pleasure or
disappointment resulting from comparing a products perceived performance or outcome in
relation to his or her expectations (Konečnik Ruzzier et al., 2014). Based on this study, customer
satisfaction will be defined as the measure of how a product or service given to a customer meets
the expectations of that particular customer.

Customer satisfaction is a psychological concept that involves the feeling of wellbeing and
pleasure that results from obtaining what one hopes for and expects from an appealing product
and/or service (Mulat, 2017). Konečnik Ruzzier et al., (2014)conceptualizes customer
satisfaction as an individual’s feeling of pleasure (or disappointment) resulting from comparing
the perceived performance or outcome in relation to the expectation. According to Noone et al.,
(2012), customer satisfaction is a consumer’s post-purchase evaluation and affective response to
the overall product or service experience . Satisfaction can be determined by subjective (e.g.
customer needs, emotions) and objective factors (e.g. product and service features). Customer
satisfaction is perceived as a cumulative and 4 transactional. On the one hand from a
transactional-specific perspective, customer satisfaction is based on a one-time, specific post-
purchase evaluative judgment of a service encounter (Konečnik Ruzzier et al., 2014)

On the other hand, in the cumulative customer satisfaction perspective, it is conceptualized as an

overall customer evaluation of a product or service based on purchase and consumption
experiences over a time period (Noone et al., 2012). No one argue that since cumulative
satisfaction is based on a series of purchase and consumption experiences, it is more useful and
reliable as a diagnostic and predictive tool than the transaction perspective that is based on a one-
time purchase and consumption experience. Expectation influences customer satisfaction through
market communication, image, word of mouth and customer needs. Customer satisfaction is an
important element that drives customer retention, loyalty and post-purchase behavior of
customers (Tsiotsou & Wirtz, 2012).

1.1.1 Background to Centenary Bank

Centenary Bank is a commercial bank in Uganda owned by Roman Catholic dioceses of Uganda,
Uganda Roman Catholic secretariat, stitching Hivos Triodos Fonds, SIDI and Ugandan
individuals with a shareholding of 39%, 31%, 18%, 11% and 0.1% respectively. The bank was
founded in 1983 as a credit trust, centenary Rural Development Trust (CRDT) by someone
Lutaakome, High Francis Pulled, Paul kateregga, Vincent Kirabokya Maria, Emmanuel Mpande
and John Ogutu (1985); CRDT began to provide financial services to the public. The bank
became a fully licensed commercial bank on 1993 after receiving a license from the Bank of
Uganda. It is licensed by the Bank of Uganda, the central bank and national banking regulator.
The bank is a large financial service provider in Uganda. It is primarily involved in the
promotion of development through loans to rural farmers, processors of agricultural produce,
small traders, small manufacturers, importers and exporters (Centenary, 2020). While engaged
on all areas of commercial banking, the bank has a significant portion of its portfolio in the
microfinance arena in an attempt to meet the needs of the many individuals and business entities
with limited means. The researcher decided to use this branch because of the same problems that
are also faced in this specific bank.

1.2 Statement of the problem

E-banking was adopted by banks so as to advance their services transfer, decongest queues in the
banking halls, enable customers withdraw cash 24/7, aid international payment and remittance
track personal banking transaction, requests for online statement, or even transfer deposit to a
third-party account (Alnaas, 2022). Governor David Opio the former Bank of Uganda Deputy
said that one can access his bank account and carry out a number of transactions even when he or
she is out of the country (Simiyu, 2018). Electronic banking is convenient because you can
transact business anytime of your convenience.

Since the evolution of electronic banking technologies most of the banks in developed countries
have improved their financial performance at least by 30% (Almazari and Siam, 2008). This has
been through the mobile banking, internet banking, agency banking and the ATM banking.
Centenary bank has embraced this E-banking in different ways. For example, with the agency
banking, it has over 400 approved agents where the customers are able to go and carry out bank
transactions such as cash deposit, cash withdrawal, school fees payments and many others. With
the mobile banking, centenary bank has come with the cente-mobile application where one can
easily transact and access banking services using the mobile phone or device anywhere.
Centenary bank has further introduced the Automated Teller machine known as the ATMs and
with over 172 ATM machines around, the customers are able to carry out their banking
transactions such as deposits, withdrawal and many others (Podder, 2010)

Despite the adoption of E-banking, banks are met with complaints from customers as regards
malfunctioning of automated teller machines (ATMS), network down time on financial services,
increase in cybercrime and lack of the available online products (Alnaas, 2022). More so, most
of the clients have not yet delighted in using digital technologies such as agent banking and only
20% people use mobile banking here in Uganda (John & Rotimi, 2014). Therefore, this study
seeks to unravel the relationship between electronic banking technologies and customer
satisfaction.
1.3 Research objectives

1.3.1General objective

To examine the relationship between electronic banking and customer satisfaction in centenary
bank Masaka branch.

1.3.2 Specific objectives of the study.

1. To investigate the relationship between ATM banking and customer satisfaction

2. To establish the relationship between mobile banking and customer satisfaction

3. To assess the relationship between agency banking and customer satisfaction

1.4 Hypothesis of the study

Electronic banking has a positive and significant relationship with customer satisfaction.

1.5 Scope of the Study

1.5.1 Content scope

The study is limiting its self to examining the relationship between electronic banking and
customer satisfaction of commercial banks. Electronic banking in this study has the dimension
of ATM banking, mobile banking and agency banking while customer satisfaction is limited to
customer retention, continuous purchases and customer preference feedback.

1.5.2 Geographical scope

This study will be carried out at centenary Bank Masaka branch located in Masaka city located in
Buganda region of Uganda west of Lake Victoria. The bank is located Edward Avenue road as
you are in the Masaka town.

1.5.3 Time scope

The study was based on a period of the years. This was from (2019-2021) Basing on the period
of the three years the data within the three years was reliable enough for the study. The study
was done in a period of six months where the researcher prepared a research proposal, collected
data and prepared a full research report.
1.6 Significance of the study

Outcome of this study will be of great importance to managers of commercial banks will
understand the relationship between electronic banking and customer satisfaction in Ugandan
banks. The result of the study may be useful in improving the efficiency, effectiveness, value for
money and timeliness in banking sectors that is to say centenary bank.

It will also serve as a resource base to other scholars and researchers interested in partaking
further research in this area of study or to serve as a reading material for anyone interested.

The study may help the customers within commercial banks to realize the services offered by
electronics banking system. This will help them to conveniently access the services without
going to the bank premises hence time saving and cost reduction in terms of transport.

The study may also help banks to realize the effect of electronic banking on customer
satisfaction. This will enable banks to dedicate resources towards improving electronic banking
among customers.

1.7 Justification of the study

Prior studies have been conducted on electronic banking and customer satisfaction of
commercial banks in Uganda. However, there is still a lot of unpopularity of electronic banking
methods among commercial banks and increased complaints from customers. Thus, the rationale
behind the choice of this study is to find out the level at which Electronic Banking is portrayed
and its impact on customer satisfaction in commercial banks.

1.9 Conceptual Framework

According to Mulat, (2017) conceptual framework can be referred to as a visualization of

theoretical threads leading to the diagrammatic representation of interrelatedness. The conceptual
framework explains the relationship between the independent variables and the dependent
variable.

Noone et al., (2012) asserts that for improved customer satisfaction in commercial banks, it is
imperative that banks have in place electronic banking devices and among these he mentioned
 mobile banking, agency banking and e funds transfer. According to Tomiuk and Pinsonnault
(2001) and it was found that electronic banking usage had a considerable effect on customer
loyalty among the electronic banking users, while it had a negative impact on non-users. It was
concluded that customer care and customer retention should be taken into consideration, because
the convenient, easy and fast banking services is associated with the human and technology-
based delivery processes so that they are linked with the customers' perceptions of how these
bank services are delivered to them. Also John & Rotimi, (2014) note that on average highly
committed customers use more products or services and also give more referrals are much less
likely to switch to another bank compared with customers who have lower commitment levels.
Tsiotsou & Wirtz, (2012) notes that loyalty equated to a willingness to sacrifice on the part of
the customer that is to say a loyal customer may forego a lower cost solution from a competitor
or give you time to improve your capabilities because they value other aspects of doing business
with you,.

Figure 1.1 Conceptual Framework

Independent Variable Dependent Variable

Customer satisfaction
Electronic banking Customer commitment
ATM banking Loyalty
Mobile banking Customer retention
Agency banking Referral or recommendation of service
Moderating variables

Staff involvement
Government policies
Source: adapted and modified from Bakabulindi (2006), Power and Associates (2009) and
modified by the researcher.

From the conceptual framework, the independent variable will be measured in terms of ATM
banking, mobile banking and agency banking and the dependent variable will be measured in
terms of customer retention, customer commitment, customer loyalty and customers referring or
recommending the services to other people. The frame work shows that there will be moderating
factors that influence the outcome of the relationship between electronic banking and customer
satisfaction. These were staff involvement and Government policies. Noone et al., (2012) found
that government policies play an important role in the growth of mobile telephony. They noted
that an effective government policy creates an enabling environment for the growth of mobile
telephony by encouraging effective competition, pricing control, easing spectrum licensing and
removal of industry entry barriers. Simiyu, (2018) states that high-involvement practices may
influence organizational performance and that employees’ involvement in problem-solving and
self-directed teams may increase autonomy and satisfaction. According Alnaas, (2022), workers’
participation creates an atmosphere in which employees have an impact on decision and events
that affect their jobs.

1.10 Definition of Key Terms

Banking

Banking, this refers to the service of saving, transfer and getting of funds from a financial
institution, particularly a bank. It enhances safety to customers’ deposits (Alnaas, 2022)

Automated Teller Machine (ATM):

Automated Teller Machine (ATM) refers to a machine that acts as a bank teller by receiving an
discussing money to and from the Automated Teller Machine account holders/users. The
evolution of Automated Teller Machine was not in isolation, rather as a result of the general
global wave in the technological revolution (Onyesolu et al., 2016) .

Customer’s Satisfaction:
This defined as the degree to which a customer exhibits repeat purchasing and price tolerance
behaviour to a service provider, and possesses a positive attitudinal and cognitive disposition
(Meshkany & Hashemi, 2013)

1.11 Conclusion

The study, problem statement, general objectives, specific objectives, research questions,
research hypothesis, justification, significance of the study, justification of the study and the
conceptual framework, operational definition of key terms and concepts.
 CHAPTER TWO

LITERATURE REVIEW

2.0 Introduction

This chapter provides a review of literature on Electronic banking and customer satisfaction in
commercial banks in Uganda. Boyle, (1987) define a literature review as a systematic, explicit
and reproducible method for identifying, evaluating and interpreting an existing body of
recorded work that was produced by researchers’ scholars and practitioners. The literature is
presented in relation to the objectives that will guide this proposed study and these include; ATM
cards and machines, Agency banking and Internet banking.

2.1 Theoretical framework

The theoretical framework for this study was derived from the theory of social construction of
technology (Klein & Kleinman, 2002). This theory was advanced by (Fulk & Connie Yuan,
2017). This theory was based on four main assumptions. The first is that the theory assumes that
any technological innovation must have an interpretative flexibility if customer satisfaction is to
be achieved. Alavi & Leidner, (2001) postulates that technology design is an open process that
can produce different outcomes depending on the social circumstances of development.
Therefore, he argues that there is a need for technologies to be rooted from intergroup
negotiations over the interpretation of observations if future customer satisfaction is to be
enhanced (Pinch 1996). The second assumption is that any new technological innovation must be
relevant to the targeted social group. This is because targeted or relevant social groups are the
embodiments of particular interpretations, thus multiple groups may have different definitions of
a working technology, so introduction of new technological development requires to be
implemented until when all groups come to a consensus that their common artifact works (Fulk
& Connie Yuan, 2017). The third assumption of the theory is related to closure and stabilization.

Klein & Kleinman, (2002) agitates that multiple groups of people must be involved in the
continued design of the new technology to avoid conflicting images and this should continue
until when all conflicts are resolved and the artifact no longer poses a problem to any relevant
social group. The last assumption under which this theory is built is wider context. According to
Uddin et al., (2016) the new technological advancement must be welcomed and fully integrated
in the wider socio-cultural and political milieu in which artifact development takes place. This
will be realized widely.

In this study therefore, this theory presupposed that if electronic banking is to adopted in
commercial banks, there is need to ensure that all customers have the same interpretive
flexibility, relevant to all of them, all people targeted or customers are involved in designing the
design and fully welcomed by the entire community, if customer satisfaction is to be achieved.
This thus form the research assumption that ATM banking, Mobile banking and Agency banking
can have an effect on customer satisfaction if customers have the same interpretive flexibility,
relevant to all of them, involved in designing the design and fully welcomed by the entire
community, Therefore, this study intended to assess the relationship between electronic banking
and customer satisfaction of commercial banks in Uganda using Centenary bank.

2.2Over view on Electronic Banking

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 (Keivani et al., 2012). However,
Mathias, (2017) defined electronic banking as a 24 hour access to cash through an automated
teller machine(ATM) with Personal Identification Number (PIN) or direct deposit of pay checks
into checking or saving accounts. Insely Mulat, (2017) say that electronic banking is an umbrella
term for the process for which a customer may perform banking transactions electronically
without using a brick and mortar institution. Meshkany & Hashemi, (2013) argue that Electronic
Banking is a product of e-commerce in the field of banking and financial services. Kaabachi et
al., (2017) summarizes it all and defines it as an integrated system that can provide customers
flexible, convenient and inexpensive platform with integrated services of online personal
banking products including online checking and saving accounts, money market accounts,
certificate of deposit, credit cards, home equity loan, home mortgage, insurance, investment
services, portfolio management and other related financial services. Therefore, using internet
banking, bank customers can conduct the same banking transaction provided by brick and mortar
branch at any time and any place through a simple and user-friendly browser (Keivani et al.,
2012).

Majority of banks in the developed world and some in the developing world are now offering E-
banking services with various degrees of complexities (Ayinla, 2018). This gives the indication
that E-banking is gradually taking the place of traditional banking services even in developing
countries like India, Malaysia, Nigeria and Ghana (Keivani et al., 2012). In developing countries
some banks have adopted E-Banking as a way of communicating to customers with regards to
issues concerning bank statements while other banks use internet banking services to allow
customers to allow customers to access their bank accounts and perform other banking
transactions. In Ghana ,the phase of the entire banking industry is rapidly changing and the focus
is now on new delivery channels in order to improve customer service delivery and to provide
customers with 24 hours a day access to banking services-Banking gives customers the
opportunity to access banking services from the comfort of their homes and offices and also be
able to do most of the transactions which would have been done in the banking halls (Kaabachi
et al., 2017).The study focuses on ATM banking, Mobile banking as well as Agency banking as
indicators of electronic banking.

2.2.1 ATM banking

Automated teller Machine (ATM) banking is a popular access channel to banking products and
services behind branch banking. Banks have been offering more access points to newer ATM
technologies that are faster secure and with a wide range of services that include cash depositing
to achieve competitive advantage through the ATM banking (Mwatsika, 2016a). When few
banks offered ATM banking technologies, ATMs were a strategic tool that offered competitive
advantage as they helped decongestion of banking halls and cutting down of operational costs
(Kaabachi et al., 2017). Banks with ATM technology were able to reduce the number of tellers
required in the banking halls. ATM technology offered competitive advantage as they provided
24 hour access to cash and customers’ account information, facilitated speed of transactions and
saved customers time (Ayinla, 2018).

According to Peter & Kalu Emenike, (2016) among the development in the banking service
delivery is the introduction of Automated Teller Machine (ATM) that intends to decongest the
banking halls as customers can now go to any nearest ATM outfit to consummate their banking
transactions such as cash withdrawal, cash deposit, bill payments and transfer of funds between
accounts. In a similar study, Peter & Kalu Emenike, (2016) is of the view that Automated Teller
Machine (ATM) among others was one of the services introduced by banks with the objective of
providing customers quick access to their finances as well as to reduce the cost of such access.
According to Mwatsika, (2016) ATMs are placed not only near or inside the premises of banks
but also in locations such as shopping centers/malls, airports, grocery stores, petrol/gas stations,
restaurants or anyplace large numbers of people may gather. These represent two types of ATM
installations, on and off premises. On premises, ATMs are typically more advanced,
multifunction machines that complement an actual bank branches capability and thus more
expensive. Off premise machines are deployed by financial institutions and also independent
sales Organizations (ISOS) where there is usually a straight need for cash.

Centenary bank has over 172 ATMs where by some of these banks are located just outside the
banks of different branches and others are located in different malls and centers. And for one to
use their ATMs, they have to have their Visa debit card. And the requirements for the Cente Visa
card are National ID, Driving permit or passport. Also, those with old ATM cards can exchange
them for new ones. Among the benefits of the ATM machines is that one can access hard cash
anywhere and anytime. Also, a wide range of services can be offered such as cash deposits,
balance inquiries and many others (https://www.centenarybank.co.ug/)

2.2.2 Mobile Banking

Ma et al., (2014) defined telephone banking as a service which the customer can use to give
instructions and get information by speaking to bank staff by telephone. In respect to this
research telephone banking technology means availability, accessibility and sage of
telephones(wired or wireless telephones) to engage in cash deposit, withdrawal and account
balance inquiry by users in the bank industry. Several initiatives have emerged for initiating e-
payment from mobile phones by using short messages (SMS) or phone calls. These have also
been referred to as m-payment Mkpojiogu & Asuquo, (2018). Mkpojiogu & Asuquo further
indicates that most m payments initiatives follow a simple model which the customer (Payer)
first identifies him/herself to the merchant by providing his or her phone number or by calling
the merchant. The merchant then forwards the payment and customer information to the payment
service provider through mobile network. The service provider then presents the payment
information to the payer for confirmation between the customer and the payment provider and
/or merchant can take place through phone call and or short message.

Similarly, Ma et al., (2014) notes that mobile phone and other wireless communication devices
offer way to access accounts and to use payment services. Payments made via mobile phones can
be conducted to pay for digital goods delivered over mobile phone, for foods ordered via internet
and goods or services bought in the physical world. He further noted that mobile phones can also
be used to initiate payment to be debited from the mobile phone holders credit/debit card or
directly from his/her phone or bank account. Also, certain functions of mobile money may be
subsumed under m payment for instance credit transfer that is initiated via mobile devices.
However, this group could also be regarded as mere distribution channels for banking services
that address specific customers.

With mobile banking in centenary bank, a cente mobile banking platform that enables you to
transact and access banking services using your mobile phone or device anywhere, anytime as
long as there is network coverage has been introduced (Mkpojiogu & Asuquo, 2018). The
service targets the mass market as well as middle to high income segments. The transaction tool
is usually the customers’ mobile phone or device and the transaction alerts are generated for each
transaction. But for one to use this, they are supposed to have an account with centenary bank,
they are supposed to be registered on the cente-mobile banking platform and must have a
network coverage. One of its benefits is the 24-houraccess, its simplicity to use and also instant
transactions from anywhere and anytime. (https://www.centenarybank.co.ug/.)

2.2.3 Agency Banking

Agency banking refers to the delivery of financial services outside conventional bank branches
often using non-retail outlets that rely on technologies such as point -of-sale (POS) devices or
mobile phones for real transaction processing (Kharchenko, 2011). Globally, retailers and post
offices are increasingly being utilized as important distribution channels for financial institutions.
The points of service range from post offices in the Outback of Australia where clients from all
banks can conduct their transactions, to rural France where the bank Credit Agricole uses corner
stores to provide financial services, to small lottery outlets in Brazil where clients receive their
social payments and access their bank accounts (Meshkany & Hashemi, 2013). In Malaysia, as at
2012, during the pilot run of agency banking, more than one million transactions worth more
than Malaysian Ringgit (RM) 190 million had been conducted through 2,322 agency banking
outlets.

In India, under the Business Correspondent model, banks are entitled to engage intermediaries to
disburse small value credits, recover principal and interest payments, collect small value
deposits, sell micro insurance or pension products and receive or deliver small value remittances
(Mohapatra, 2014). In Bangladesh, the Central Bank has provided 10 licenses to banks to offer
the full range of mobile financial services. In Ghana, up to 11% of the clients who use banking
services, do not have accounts with the financial institutions and instead use agency banking
facilities to transact their payment services (Mohapatra, 2014). According to Khan, (2012) of
Mexico and the Alliance for Financial Inclusion (2012), the agency banking model is one in
which banks provide financial services through nonbank agents, such as grocery stores, retail
outlets, post offices, pharmacies, or lottery outlets. This model allows banks to expand services
into areas where they do not have sufficient incentive or capacity to establish a formal
bran564ch, which is particularly true in rural and poor areas where as a result a high percentage
of people are unbanked. Owing to the successes of agency banking in Brazil, in Africa, agency
banking is used to enhance greater performance across the continent.

Agency banking was implemented in South Africa in 2005 after amendment of the Bank Act
giving banks the green light to contract nonbank third parties to collect deposits, money due to
the bank or applications for loans or advances, or to make payments to such clients on the banks’
behalf (Kiragu et al., 2013). In Ghana, agency banking was introduced in 2008 allowing for a
bank-based model of branchless banking using nonbank retail agents (Mkpojiogu & Asuquo,
2018).The Parliament of the Republic of Uganda passed the Financial Institutions (Amendment)
Act,2016 which makes provisions for Agent Banking. Agent banking governed by the Agent
banking regulations 2017 now enables financial institutions enter into Digital financing space to
drive financial inclusion and increase access to financial/banking services to a range of under-
served and unbanked population segments.

Banks in Uganda through their umbrella body Uganda Bankers Association(UBA) have
approached Agent Banking through a shared interoperable technology platform and agent
network management framework to harness the benefits that accrue from
collaboration/convergence (Alliance for Financial Inclusion, 2012). The roach is meant to enable
all agents provide agent banking services to customers of all/any bank as the individual banking
institutions continue to drive the recruitment of customers and marketing of their own products
and services. Through this shared platform, banks will use Agent banking services to foster
financial inclusion and deepen the financial infrastructure and financing lower levels of the
economy helps families of any social and economic status to create wealth.

Agency banking at centenary bank is where customers are able to carry out bank transactions
with any of the contracted cente-agents (Kiragu et al., 2013). They are selected and appraised by
centenary bank and approved by bank of Uganda. When they are approved the bank signs
contracts with them, trains them and brands their premises prior to carrying out transactions. The
Cente agents can either be sole proprietorships, partnerships, limited liability companies or any
other entity which the central bank may deem fit. And in order to access the service, one is
required to hold an account with Centenary bank and should register for Agent banking by
dialing *211# or using the Cente Agent Application on google store. The services offered by
these agents include Cash withdrawal, Cash deposit, mini/full statements, school fees collections
and others. Some of the benefits of the Agency banking is Improved customer service through
extended banking services and increasing accessibility in the rural areas through increased
outreach (https://www.centenarybank.co.ug/)

2.3 Overview on Customer Satisfaction

Customer satisfaction is the customers overall feeling of a content in a business interaction (John
& Rotimi, 2014). Customers satisfaction is defined as a measure of how products and services
supplied by an organization meet or surpass customers satisfaction. According to Onyesolu et al.,
(2016), Customer satisfaction is defined by the use of 10 dimensions of satisfaction which
include quality, value, timeless, efficiency, ease of access of the environment, inter departmental,
team work, frontline service behavior commitment to customers and innovation. Satisfaction
may develop quickly or it may be cultivated over a period. It’s the overall pleasant experience
after consuming of the product or service and therefore customers satisfaction is the state of
mind that customers have about the company when their expectations have been met or exceeded
over the life of the product or service.

Satisfaction has been considered as one of the most important theoretical as well as practical
issues for most marketers and customer researchers (Alnaas, 2022).Satisfaction reflects a pot-
purchase evaluation of product quality given pre-purchase expectations (Boyle, 1987).On one
hand, within literature on services marketing, satisfaction has traditionally been defined as a
cognitive-based phenomenon (Simiyu, 2018).Cognition has been studied mainly in terms of
expectations /disconfirmation paradigm; also known as the confirmation/disconfirmation
paradigm, which states that expectations originate from the customers beliefs about the level of
performance that a product /service would provide (Tsiotsou & Wirtz, 2012)

Many marketing scholars Khan, (2007) indicate that customer satisfaction is related to the size
and direction of disconfirmation which is defined as the difference between the post purchase
and post usage evaluation of the performance of the product/service and the expectations held
prior to the purchase (Noone et al., 2012).On the other hand, other, other studies(Dube-
Rioux,1990;Homburg et al,2006) have recognized that the effect experienced during the
acquisition and consumption of the product or service can also have a significant influence on
satisfaction judgments (Rubatsimbira, 2020).

Customer satisfaction is an ambiguous and abstract concept and the actual manifestation of the
state of satisfaction will vary from person to person and product/service to product/service
(Nabatanzi, 2021). The state of satisfaction depends on a number of both psychological and
physical variables which correlate with satisfaction behavior such as return and recommend rate;
the level of satisfaction can also vary depending on other options the customer may have other
products against which the customer can compare the organizations products. Organizations of
all types and sizes have come to realize that their main focus must be to satisfy their customers
(Alliance for Financial Inclusion, 2012).

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

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

If the performance falls short of the expectations, the customer is dissatisfied. And when the
performance exceeds expectations, the customer is highly dissatisfied or delighted (Kiragu et al.,
2013). Many companies are aiming for high satisfaction because customers who are just satisfied
still find it easy to switch when a better offer comes in. Customer satisfaction does not only
result from providing excellent service, but from customers perceiving that a company delivers a
service that is unique. Achieving this quality of service takes a serious commitment from every
employee in the organization through providing excellent service that exceeds customers’
expectations to the extent that they are willing to tell others about their experience. Yuksel,
(2008) found that disconfirmation can affect customer satisfaction. Positive disconfirmation
(perceived performance above the expectation) increased consumer satisfaction and while
negative disconfirmation (perceived performance below expectation) decreases consumer
satisfaction.

Customer care services; While carrying out online transactions there many instances when the
banker might need help of a representative, from the bank. The brick and mortar banks have
customer care representatives who are easier to talk to, butin case of online banking, in which the
banks provide customer care numbers, the bankers find it difficult to get their problems solved
(Peter & Kalu Emenike, 2016).Sometimes there is congestion in the network and they have to
wait for some time, in order to talk to the banks representative at the other end. Once the line is
put through, one may either get somebody helpful and knowledge able or May not, leaving him
in a baffled and confused situation. Although online banking involves risks and imposes certain.
The study focuses on customer commitment, loyalty, customer retention and referrals as
indicators of customer satisfaction.

2.3.1 Customer commitment

According to Fruchter & Sigué, (2004) commitment is defined as an exchange partner who has
confidence that an ongoing relationship with another is important to warrant maximum efforts at
maintaining it. Another scholar defined commitment as a continuing desire to maintain valued
relationships with their clients (Yuksel, 2008). Meshkany & Hashemi, (2013) described
commitment as a psychological motivation emphasizing an individual to remain in the
relationship with a specific objective. This definition is also based on emotional bonds
(Moorman et al, 1992; Morgan and Hunt, 1994) with an expectation of receiving greater
advantage of staying in the relationship.

According to Fruchter & Sigué, (2004) this concept will reflect the different fundamental
psychological conditions regarding committed to maintain a long-term relationship with service
providers. Therefore a firm should build the foundation of mutual commitment and emphasize
their capacity in maintaining the relationship with their customers to develop firms shared values
(Anderson and Weitz; Curras-Perez and Sanchez-Garcia,2015).Previous studies have
emphasized that there a number of different types of commitment in service relationships
(Correspondents et al., 2010; Fruchter & Sigué, 2004; Kharchenko, 2011; Nabatanzi,
2021).These are expected to play a significant different role in the development of mutual
relationships between firms and customers. In financial services industries, most of the scholars
have conceptualized commitment expanding. Khalip, (2016) theory consisting three constructs;
effective, calculative and normative commitment (Nabatanzi, 2021). Effective commitment
refers to customers who have positive psychological attachment for a partner to remain in the
relationships (Fruchter & Sigué, 2004). The commitment relationship will increase emotional
bonds between customers and firms because both parties have a feeling of the equality of
relationships (Ma et al., 2014). In this framework ,Tabrani et al., (2018) argue that customers are
effectively committed to remain with this commitment because they have a strong bonding and
honesty in the building the relationships. In Islamic banking relationships, Sumaedi et al (2015)
highlight that the greater the customers effective commitment, the greater the customers
emotional bond with their bank.

Calculative commitment is defined as the extent to which the exchange partner perceives the
need to maintain a relationship to anticipate the termination of switching costs (Meshkany &
Hashemi, 2013), although most of the customers will remain with this commitment if they
consider the switching cost is high (Meshkany & Hashemi, 2013; Mulat, 2017; Nabatanzi, 2021;
Tabrani et al., 2018). However , if the banks customers perceive that these relationships will not
be profitable enough for the customers ,this will encourage customers to switch their banks
(Mkpojiogu & Asuquo, 2018).For this reason Thuy et al,2016 suggest that when customers
discontinue from this relationship, they are not only spending money, effort and time but also
suffer from emotional psychological stress of the break up relationships. Normative commitment
is defined as the extent to which customer normatively commits to remain with these
relationships because they ought to (Alavi & Leidner, 2001; Fulk & Connie Yuan, 2017; Klein &
Kleinman, 2002) In Islamic banking contest, Sumaedi et al ,(2015) argue that customers
commitment to remain in the relationship with Islamic banking is because of customers
obligation to do so (Valette-Florence & Valette-Florence, 2020). Centenary Bank currently
serves 1.4M customers, which is a third of the country’s banking population, and is running a
financial inclusion drive to serve more which serves that people are committed to using the bank
(Baydas et al., 1997). And also of these many have started up saving accounts for their children
using the bank.

2.3.2 Loyalty
Customer loyalty is one of the most popular constructs that have been studied in business
relationships marketing and there have been a number of scholars who defined the typologies of
customer loyalty across industries and countries. For example (Costabile, 2010) divided
customer loyalty into two definitions; behavioral and attitudinal loyalty. Behavioral loyalty refers
to a customer’s behavior to repurchase because they like a particular brand or service (Baydas et
al., 1997). In this definition, Meshkany & Hashemi, (2013) argue that this approach does not
provide any accurate description of the existence of loyalty because of relatively objective
measurement of customer loyalty. Attitudinal loyalty reflects the emotional and psychological
desire of the customer to repurchase and to recommend to other people (Fruchter & Sigué,
2004).This concept involves deeply customers and advocacy to re patronize and willingness to
more for a preferred product or service consistently in the future (Tabrani et al., 2018), although
situational influences and marketing efforts have the potential to cause switching behavior line
with this concept.

Valette-Florence & Valette-Florence, (2020) describe that loyalty intentions are indicated by an
inclination to perform and to enhance an ongoing relationship with the service provider,
including repeat buying and greater share of wallet. The reference levels in e banking are
practices in centenary bank are very efficient in allowing transactions from one account to
another and this influences the level of customer loyalty in the bank and that the bank uses its e
banking platforms to take loan applications (Neij & Mårtensson, 2013). This influences the level
client loyalty and levels of references.

2.3.3 Customer retention

Customer retention is defined by different studies in different ways (Oliver, 1980). They stated
that customer retention is the continuity of the business relations between the customer and
company. Customer retention is more than giving the customer what they expect; it is about
exceeding their expectation so that they become loyal advocates for your brands. Retention and
attraction of new customer are used as drivers for increasing market share and revenues (Rust, et
al 1995). In the retention of customers, it is important for firm to know how to serve their
customers because post sales services are the important drivers for customer retentions (Saeed, et
al 2005). Jacobsen et al., (2004) observe that financial service institutions like the banking sector
are focusing on retaining their existing customers and in doing this, they work on the services
provided, develop smarter use of technological use e.g. ATM etc revisit processes to improve the
customer experiences and ensures that the organizational culture supports retention. The sole
purpose of a business according to (Oliver, 1980) isto create a customer. However, keeping the
customer has become regarded as equally, if not more important, since Dawkins and Reichheld
(1990) reported that a 5 per cent increase in customer retention generated customer net present
value of between 25 per cent and 95 per cent across a wide range of business environments. Gets
and Thomas (2001) state that customer retention occurs when customer purchase a product or
services again and again, this phenomenon is called customer retention over an extended period
of the time. Huit (2000) defined customer retention as the process by which consumers interpret
price and attribute value to a good or service.

Odunlami, (2015) opine that customers who are willing to pay higher prices for a product or
service tend to be brand conscious and prestige sensitive. Odunlami, (2015) define customer
satisfaction as reliance on or confidence in the person or process services are acts, deeds or
performance. Buttle (2004) defines customer retention as the number of customers doing
business with a firm at the end of a financial year expressed as a percentage of customers that
were active at the beginning of the year. Customer retention has been shown to be a primary goal
in firms that practice relationship marketing. While the precise meaning and measurement of
customer retention can vary between industries and firms there appears to be a general consensus
that focusing on customer retention can yield several economic benefits (Buttle, 2004). As
customer tenure lengthens, the volumes purchased grow and customer referrals increase.
Building long-term relationship with customers is considered an essential precondition for the
economic survival and success of most service firms today (Jacobsen et al., 2004).

Nyam & William-west, (2014) said that the identification and satisfaction of customer needs
leads to improved customer retention. Valette-Florence & Valette-Florence, (2020) Customer
retention is potentially one of the most powerful weapons that companies can employ in their
fight to gain a strategic advantage and survive in today’s ever- increasing competitive
environment. It is vitally important to understand the factors that impact on customer retention
and the role that it can play in formulating strategies and plans. Centenary bank has adequate
ATMs across the country that are very efficient and this has helped to ensure customer retention
at the bank. This implies that when there are efficient ATMs the number of loyal customers is
likely to increase with increased customer satisfaction to the bank. Also, efficient and reliable
electronic funds transfer which the bank has improves the client loyalty and satisfaction levels of
e banking.

2.3.4 Referrals

In recent years, referral programs have gained popularity in many industries especially the
banking sector as a viable means for customer acquisition likewise referral programs have
attracted considerable scholarly interest. Previous studies provide insights on, for instance
optimal reward designs (Schmitt et al., 2011). One of the most significant contributions in that
context was that customers from referral reward programs are more loyal and more valuable than
those acquired through other marketing channels.

In centenary bank, a cente Junior account which is an innovative children’s savings account and
is operated by the child’s parent or guardian has been introduced. It is specifically targeted at
children from the early age of toddlers up to a maximum of 17 years. The cente junior account
provides a child’s parent or guardian with an opportunity to start saving early for the benefit of
securing the financial future of their children. And one of the requirements for this is that it has
to be a referral by a centenary bank customer or any reputable person in society therefore
increasing the number of people using the bank.

2.4 ATM banking and Customer satisfaction

Tabrani et al., (2018) examine the factors that influence customer’s satisfaction about ATM
service quality. These factors include costs involved in the use of ATM. Baydas et al., (1997)
through Focus group study in the United states found that easy access to location, user friendly
ATM and security are important factors that influence majority of banks customers perception of
ATM service quality. In other study in Bangladesh Shamsdouha, Chowdhury and Ahsan (20050
found that 24 hours service, accuracy, and convenient locations are the main predictors of
customer satisfaction. The study also indicates lack of privacy in executing the transaction, fear
of safety and complexity of the machine as the major cause of concern for the customers.
Fruchter & Sigué, (2004) examines the relationship between the dimension of usage rate and
performance expectation with customers prolonged satisfaction with ATM services. The results
indicate that usage rate has a negative association with customers perceived prolonged
satisfaction whereas performance expectations are found to have positive and significant effects
on customers prolonged satisfaction.

Mkpojiogu & Asuquo, (2018) notes that the dissatisfaction among customers is associated with
frequent interruption and breakdown of ATM. Intense competition and technology based new
services are shaping customers loyalty. These have resulted into switching of banks by customers
based on competitive service (Peter & Kalu Emenike, 2016). Kiragu et al., (2013) found that
location of ATMs, increasing number of ATMs and diversified service offering are associated
with switching of banks. ATM is one type of innovation that can mechanically accept deposits,
issue withdrawal, transfer funds between accounts, and collect bills. It has highlighted the
relationship between banks and their depositors, as well as the level of quality of banking
services (Mohapatra, 2014). Mwatsika, (2016b) conducted a research and find out that secure
and convenient location, adequate number of ATM ,user friendly system and functionality of
ATM play important role in customer satisfaction.Dilijoans,Krikscuiunen,Sakalauskas and
Simutis (2009) on the other hand mention that adequate number of ATMs, convenient and secure
location and user friendly system, speed, minimum errors ,high uptime, cash backup, cost and
service coverage are essential service quality aspects of ATM service.

According to John & Rotimi, (2014) while investigating the level of ATM usage and customers
satisfaction in Nigeria using comparative analyzes of three banks in Ogun State Metropolis of
Nigeria. The study employed primary data, sourced through questionnaires which were
administered to a total of 200 respondents, cutting across the three banks. The data were
analyzed using the Chi square statistical tool, the study thus revealed that there is a positive and
significant relationship between ATM usage and customers satisfaction. Alex (2014) examined
the impact of E-Banking on customer services and profitably of banks in Ghana. The random
sampling technique was used to select ten banks and two hundred and fifty customers all in
Accra for the study. The study found that E-Banking has impacted positively on customer
service and profitability of banks, though the study identified a number of challenges, it thus
recommended among others that there should be 24/7 monitoring of ATMs so that any failure is
addressed as soon as possible to guarantee customer retention. Onyesolu et al., (2016) also
examined the impact of electronic banking on satisfaction of corporate bank customers in
Nigeria. Data were collected with a structured questionnaire and also analyzed with descriptive
statistics while the hypothesis of the study was tested using the Chi-square technique. The study
revealed that there is a significant relation ship between electronic banking and customers
satisfaction and also suggested that critical infrastructure like power, security and
telecommunication should be strengthened to ensure the application of electronic banking in
Nigeria and optimum satisfaction on the part of customers.

2.5 Mobile banking and customer satisfaction

Mobile banking is a process of no branch banking which provides financial services to un

banked communities in both urban and rural areas at affordable costs. The aim of the service is
not to destroy branch banking, but to consider those people under the umbrella of banking
service that are far away from banking facilities. The Government thinks it has a great prospect
as it is a new technology in Digital Bangladesh. Through Mobile banking one can avail various
services i.e. utility bill payment, funds transfer, Shopping, withdrawal from selected ATM or
Cash point and many more exciting facilities, but in Bangladesh, many people think traditionally
because they cannot think it has any facility to use of mobile banking (John & Rotimi, 2014)

Recently, mobile banking has proven to be a significant factor to bring customer satisfaction for
banking services (Alnaas, 2022). Service quality is an essential consideration for organizational
growth and success and is of great strategic importance for management (Sahny et al,2008). For
identifying the quality of services in any sector, Customer satisfaction is an important casual
factor. In case of banking sector, it is the principal factor in the success (Karim and
Chowdhury,2014). The study found that reliability, tangibility, assurance responsiveness and
positive consumer attitudes in terms of satisfaction are crucial for private commercial banking
sectors in Bangladesh. The study of (Konečnik Ruzzier et al., 2014) applied the SERVQUAL
model to identify the relationship between customer satisfaction and whole banking services.
Researchers examined that; reliability, empathy, responsiveness and tangibility are positively
correlated with customer satisfaction whereas the factor assurance has no relation.

Noone et al., (2012) showed in a study in E-banking ,perceived value, customers brand
perception, user easiness ,cost effectiveness ,ability of handling problem, security and assurance
and responsiveness are important factors in customer satisfaction .So other factors for
influencing customer satisfaction on mobile banking are identified as usefulness, relative
advantages, easiness of use, risk perception and lifestyle and present need of customer .Similarly
according to (Simiyu, 2018), mobile banking services have provided numerous benefits for both
banks and customers. The first benefit for the banks offering mobile banking services is better
branding and better response to the market. Those banks that would offer such services would
offer such services would be perceived as leaders in technology implementation. As a result, they
would enjoy a better brand image. The other benefits are possible to measure in monitory terms.
The main goal of every company is to maximize profits for its owner and other stakeholders.
According to Khan, (2007), an estimated cost of providing the routine business of a full-service
branch in USA is $1.07 per transaction as compared to 54 cents for telephone banking. On the
other hand, the advantage of the customer is significant time saving and reduced costs in
accessing and using the various banking products and services. Increased comfort and
convenience (Athuman, 2014)

2.6 Agency banking and customer satisfaction

A commercial bank agent can be defined as a non-bank correspondent or commercial business

that provides financial or banking services on behalf of a formal commercial bank. Agents are
required to operate a business in a fixed establishment and must meet certain minimum
conditions for them to be granted the opportunity to operate (Konečnik Ruzzier et al., 2014).
Agents perform on behalf of banks, cash disbursement and cash repayment of loans, cash
payment of bills, cash payment of retirement and social benefits, cash payment of salaries,
transfer of funds, balance Enquiry, generation and issuance of mini bank statements, collection
of documents in relation to account opening, loan application, credit and debit card application,
collection of debit and credit cards, cheque book request, cheque book collection by customers
and collection of bank mail/correspondence for customers (Dias & McKee, 2010).

Agency Banking can significantly reduce set-up and delivery costs, offering a range of financial
services to customers who usually feel more comfortable banking at their local merchants than at
traditional bank branches (Kaabachi et al., 2017). The popularity of banking agents is evident in
most countries around the world. In Mexico alone, more than nine thousand banking agents were
established by commercial banks in the year 2010. Other countries such as Brazil, Columbia and
Peru have a higher number of 3 agents than Mexico. In Africa countries such as Kenya who
implemented agency banking in 2010 have more than 10,000 banking agents affiliated to various
commercial banks in the country. The increase in the use of agents by commercial banks can be
attributed to financial sector reforms that have been made by various countries around the globe
(Ayinla, 2018). Agency banking was introduced in India in 2006 when banks were allowed to
appoint Micro Finance Institutions (MFIs) and post offices as business correspondents for inter
alia small deposit-taking. Elsewhere, agency banking refers to the points of service ranging from
post offices in the outback of Australia where clients from all banks can conduct their
transactions, to rural France where the bank Credit Agricole uses corner stores to provide
financial services, to small lottery outlets and clients can receive their social payments and
access their bank accounts (Porteous, 2006).

The recent developments in technology have made it possible for agent banking to be possible.
For instance, the mobile phone technology has significantly contributed to the current
development in agent banking. It has made it not only possible for commercial banks to practice
financial inclusion but also to provide a forum of convergence for both bank and non-banking
institutions in order to provide low cost financial services (Jayanty, 2011). Despite the
achievements made by other countries in the implementation of the agency banking model, the
concept still remains new in most African countries due to lack of appropriate banking reforms
that can support the use of agents to provide financial services. The countries that have adopted
agency banking in Africa within the last one decade include Kenya, South Africa and Ghana.
The South African regulatory framework gives wide discretion to banks to use nonbank third
parties to offer banking services beyond their traditional branch network, either as agents or
through outsourcing arrangements. The Banks Act allows a bank to contract agents to receive on
(the bank’s) 4 behalf from its clients any deposits, money due to it or applications for loans or
advances, or to make payments to such clients on its behalf (Ayinla, 2018).

Several Ugandan commercial bank records increased uptake of Agency banking models. Banks
have located their agents every where from towns to rural areas, this providing the opportunity to
access financial products and services at a location nearest to the customers thus breaking down
certain barriers to financial inclusion such as cost of accessibility. The consumers are therefore
able to reach banking Agents whenever they have issues relating to financial problems. With the
desired manner of accessibility to financial products banks are able to enhance highest
satisfaction on customer. Nowadays customers don't want to strain accessing goods and services
and therefore it's the duty of service provider to bring agents closer to consumers. Indicators of
customers satisfaction from accessibility of banking agency is consistency in using agency
banking, convenience in terms of distance, availability of suitable products.

2.7 Moderating variables

About this, bank staff perception of and expectations towards banking technologies are a crucial
element in the development of successful e banking implementation projects (John & Rotimi,
2014) .If bank staff primarily consider e banking as a self-service and convenient channel that
decrease costs and if its adoption will not affect their positions ,then they will adopt it (Mathias,
2017). However if they perceive e banking as a threat to their job prospects and a way to lose
customers, then they will be likely to resist its adoption to keep customers in the branches and
their jobs (Mols, 2001).Bank staff resistance to technology adoption is a common problem in the
banking sector (Alavi & Leidner, 2001).

Keivani et al., (2012) argue that the introduction of new technology is bound to cause a
disturbance within organizations and to individuals within these organizations as older
technologies and systems are displaced by new ones. Kaabachi et al., (2017) also state that
successful implementation/adoption of any new technology are principally determined by
organizational users’ attitudes; employees and managers build up an attitude and feeling about
the new technology, and that feeling could direct them to the adoption or rejection of the
proposed technology. Attitude can be a very powerful enabler or a barrier towards the adoption
of the new technology. Ajzen and Fishbein (1980) defines the term ‘attitude’ as a complex
conundrum of feelings, desires and fears that create a state of readiness to act within a person.

Some of the government policies that influence e banking are the fiscal policies and these affect
the banks in such a way that decisions by parliament to raise taxes and reduce budget deficit
normally lead to decreases in treasury borrowings and eventually push interest rates lower.
Private sector incomes, bank deposits and loan demands are likely to fall. Also increase in
government spending usually leads to increase in business and household incomes which
increase both bank deposit and loan demand, eventually accelerating the pace of economic
activity and perhaps inflation as well.

2.8 Conclusion
In conclusion, according to (Kaabachi et al., 2017), online banking ensures customer satisfaction
as it extends financial services to customers outside the banking hall. Similarly, E-Banking has
provided banks with a large customer base as it has resulted in increased customer loyalty and
satisfaction (Neij & Mårtensson, 2013).
 CHAPTER THREE

METHODOLOGY

3.1 Introduction

This chapter presents the research methodologies which the researcher used to collect, analyse
and interpret data. This chapter includes the research design, study area. Study population,
sample size, sampling techniques, data sources, data collection instruments, quality control,
measurement of variables, data analysis and presentation of results, ethical issues and study
limitations.

3.2 Research design

Research design provides the bond that holds the research project together. It attributes the kind
of data collected; the nature and pattern the research will follow. Magout, (2020) defines a
research design as the conceptual structure within which the research is conducted. Both
qualitative and quantitative methods were used. The researcher will use a case study research
design because it helps the researcher to concentrate on a single locality hence enabling him/her
to deeply investigate the variables under study thus collecting the most up-to-date data in a
relatively short period of time. The other reason is that case study design suited for both
qualitative and quantitative approaches (mixed methods).

Mixed research methods is defined as an evolving method of investigation that uses methodical
mixing of measureable and thematic information inside one scientific research (Wisdom and
Creswell, 2013) and these methods aid triangulation of results that helps in strengthening
research findings (Almalki, 2016). Merging figures with thematic methods avoids too much
reliance on the previous and captures important views and familiarities (Alasmari, 2020;
Almalki, 2016; Wisdom and Creswell, 2013). The weakness in one research method can easily
be got rid of the other method and on an extra thinking level, diversified approaches of research
syndicates standards, letting study from both the inductive and deductive viewpoints, and so
enabling investigators to associate philosophy invention and proposition testing in on research
study (Malina et al., 2011; Regnault et al., 2018)

3.3 Area of study

The study will be carried out in centenary bank, Masaka branch in Masaka city. Masaka is a city
in the Buganda Region of Uganda, west of Lake Victoria. The city is the headquarters of Masaka
District. Masaka is approximately 132 kilometres (82 mi) to the south-west of Kampala on the
highway to Mbarara. The city is close to the Equator. In 2020, UBOS estimated the mid-year
population of Masaka City at 116,600 people. The population agency calculated the population
growth rate of the town to average 2.11 percent, between 2014 and 2002

3.4 Study Population

Target population is defined as a compute set of individuals, cases/objects with some common
observable characteristics of a particular nature distinct from other population. According to
Islamia, (2017), a population is a well-defined or set of people, services, elements, and events,
group of things or households that are being investigated. This will be composed of the
customers and employees of the case study who will actually answer the questioners and the
information generated as a result of electronic Banking. Since it is difficult to come up with the
actual number of customers of the bank due to the daily increase and decrease in the number of
customer. The bank serves about 2.4 million customers with 80 branches countrywide and this
means on average each branch serves about 30,000 customers
(https://www.centenarybank.co.ug/index.php/about-us)

3.4 Sample Size

The sample size will be calculated based on Krejcie and Morgan Table 1970 and using an
estimated population of customers of 30,000. Using the Table as indicated in appendix 2 the
sample size that correspond to this population is 379 customers

3.5 Sampling Techniques

Sampling technique, according to Taherdoost, (2016) is a scientific or rather statistical method of

selecting the sampling units that would offer the requisite estimates with their related margins of
uncertainty; this would emerge from the probe of only part (sample) and not the whole
population. Therefore simple random sampling technique will be used where customers visiting
the bank at the time of the research will be selected based on chance. This technique will be used
as it eliminates bias and aid in generalization of findings from a random sample of bank
customers because the random sample is believed to represent all the customers
3.6 Data collection Sources

3.2.1 Primary data sources

Primary data can be defined as the data generated from the field by the research herself and it is
the first of its kind and has never been collected before. Primary data sources for this study will
be obtained through conducting of surveys by administering questionnaires to employees of the
centenary bank Masaka branch. The collected data type will be quantitative in nature. The use of
primary data is important in that it allows easy data handling because the data collected is only
specific to the research problem unlike secondary data where data cleaning is needed because
some data is not relevant to the present research problem (Curtis, 2014).

3.2.2 Secondary data sources

Secondary data refers to the data collected earlier before and stored for future use. Secondary
data is collected by someone else rather than the primary user. Secondary data to be used will be
from Centenary bank annual reports and other previous studies relating to electronic banking and
customers satisfaction; majorly qualitative data shall be collected from these reports and
researches and discuss our research findings in relation to previous research findings so as to
make informed recommendations

3.7 Data collection methods and tools

3.7.1 Questionnaires

According to Delİce, (2001), a questionnaire is a list of questions that have been prepared for the
respondents to answer. Questionnaires will be used for questions seeking the extent of perception
of the respondents about various aspects concerning the Electronic banking and the performance
of commercial banks in Uganda. A questionnaire will be used because it allows in-depth
research, to gain first hand information and more experience over a short period of time
(Kharchenko, 2011). The researcher will choose to use the questionnaire survey because it is
practical; a large amount of information can be collected from a large number of people in a
short period of time. The questionnaires were cheap and fast to administer.

3.8 Quality Control

3.8.1 Reliability

Reliability will be ascertained to measure the degree to which the instrument was the same if put
under the same conditions. Reliability refers to the consistency or repeatability of the measure
Miller (2008). To ensure reliability, the research instruments will pre-tested to selected
respondents to ensure consistency and comprehensiveness. Further, consultations with other
researchers, supervisors and peers will be reviewed by the research instruments. Cronbach alpha
values range from 0 to 1 and according to (Bonett & Wright, 2015) Cronbach alpha of 0.7 and
above is considerable acceptable reliability

3.8.2 Validity

Validity is the extent to which the instrument measures what it purports to measure Miller
(2008). Ensuring validity, the researcher will seek the opinions of the research supervisor and
other research experts concerning that the chosen data collection tool before proceeding to
collect the data. The formula for calculating Content validity index is stipulated below and when
the tools’ CVI is 0.7 and above is said to be inacceptable ranges (Dash, 2017)

3.9 Measurement of Variables

Quantitative data collected on variables will be measured on a five point likert scale as indicated
in Table 1

Table 1 Quantitative variables measurement scale

1 2 3 4 5

Strongly disagree Disagree (D) Neutral (N) Agree (A) Strongly

(SD)
agree (SA)

3.10 Data management

The researcher will collect data using questionnaires and data from interviews will be organized
properly according to the objectives. The processing of data will involve editing; re-writing,
summarizing and data coding that ensures that better quality report is made. The responses will
be categorized under sub headings and respondents’ views were analyzed under them by tallying
the responses from the questionnaires. Simple descriptive statistics like mean and standard
deviations will be generated thus tables were used in data presentation. The information from the
respondents’ reactions will be used to answer the research questions.

3.11 Data Analysis

Data will be analyzed using the two principal methods which include qualitative and quantitative
data analysis methods. Simple descriptive statistics like mean and standard deviations will be
generated hence the tabulation method. The information sought from the respondents’ reactions
reflected the objectives and research questions (Taherdoost, 2016).Correlation and regression
analyses will be conducted to meet the research objectives of this study

3.12 Ethical considerations

According to Al-Amad, (2017), ethics in research involves; honesty, objectivity, integrity,

carefulness, openness, respect for intellectual property, confidentiality, responsible publication,
responsible monitoring, respect for colleagues, non-discrimination, legality, and human subject
protection.

The researcher sought permission from top management, particularly the branch manager of the
bank, before using it as a case study. This was done through a personal introductory letter
requesting for permission to carry out research in the institution; with a copy of the research
proposal, identification card and a letter of introduction from Uganda Martyrs University
attached to it.

The researcher was guaranteed confidentiality of the respondents before requesting them to
participate in the study. Additionally, the consent of the respondents and key informants were
first of all being sought before they were filled in any questionnaires. Anyone unwilling was not
forced to fill in the questionnaires.
Before filling in the questionnaires, the respondents first of all clearly understood that no form of
payment was accorded to them and that the purpose of the study was purely for academic
purposes which were evidenced by the letter of introduction obtained from the faculty of
Business Administration of Uganda Martyrs University. The information that will be used in this
research proposal is original and not plagiarized and the researcher will endeavor to cite all the
ideas that have been borrowed from other authors.

3.13 Study anticipated limitations

i) I anticipate a challenge of bias from the respondents to simply fill the questionnaires to please
the researcher. This will be solved by emphasizing that the respondents to fill the questionnaire
with trust and honesty

ii).I anticipate a challenge of delays in responses because basing on the limited time which the
researcher had to conduct the study, respondents might suspect that the research findings will to
be used for other purposes other than academic while others might delay with the questionnaires
because of busy schedules. Here the researcher will use a cover letter from the university to
mitigate the outcome.

iii).Fear of giving confidential information as viewed by the organization they work for. Here the
researcher assured them of at most good faith with supporting documents for undertaking the
study.

3.14 Conclusion

This chapter was discussed on research design, area of study, study population, sample size,
sampling techniques, data collection methods and instruments, quality control methods, data
management and processing, data analysis, ethical considerations and limitations of the study as
above was followed by the researcher to minimize errors and bias, and ensured that the study
was objective and in accordance to the principles of research.
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Appendix: Questionnaire

Dear respondent, I am NAMUBIRU SONIA MITCHELL a student pursuing a Bachelor’s of

Science in accounting and finance under the Faculty of Business Administration and
Management (BAM) at Uganda Martyrs University Nkozi. I am conducting research on the
“electronic banking and customer satisfaction: a case of centenary bank, Masaka branch”. You
have been selected to respond to these questions because of your central role in the bank. The
information given will be kept confidential and for only academic purposes. I request you to
please fill this questionnaire.

1. Gender:

Male Female
2. Age (Years):

18-30 31 – 40 41 – 50 Above 50
3. Highest level of Education

Professional Master’s Degree Bachelor Degree Diploma

Certificate Any other please specify …………………

4. Position in the Bank

- Top level management

- Senior bank staff
- Junior bank Staff
- Accounting and Finance
- IT officer
5. Length of service at the Bank.

Less than one year 1 – 3 years 4 – 6 years above 6 years

In this section the researcher seeks relationship between electronic banking and customer
satisfaction in centenary bank Masaka branch. Please Tick the appropriate alternative

Key; where 1-Strongly Disagree, 2- Disagree, 3-Neutral, 4- Agree, 5- Strongly Agree

 ATM banking

Statements 1 2 3 4 5

EB1 The Bank offers ATM banking services

EB There are ATM machines throughout the

2 country branches and convenient locations

EB
3
EB
4
EB
5
BP
6
EB We can even open a bank account on the
7 phone for centenary bank

EB Customers can withdraw or deposit money

8 over their phones or computers

EB Centenary bank customers can check their

9 balances over their phones or computers
 Mobile banking

Statements 1 2 3 4 5

MB1 I can conduct transactions over my phone

anytime anywhere

MB I can conduct transactions on my account

2 over my personal computer installed with a
web browser

MB We receive messages for any transaction that

3 takes place over the Centenary bank account

MB We can even open a bank account on the

4 phone for centenary bank

MB Customers can withdraw or deposit money

5 over their phones or computers

MB Centenary bank customers can check their

6 balances over their phones or computers
 Agency banking

Statements 1 2 3 4 5

AB Centenary bank has agency banking services

BA We carry out budget implementation

2 monitoring and evaluation

BA Budget implementation activities follows a

3 specific schedule and timelines

BA Relevant stakeholders including funders,

4 employees are involved in budget approval
and implementation

BA We conduct trainings regularly related to

5 budget implementation

BA Departmental managers are engaged in

6 budget approval and implementation

BA Budget approval and implementation is based

7 on the needs of each department

BA Budget implementation monitoring and

8 evaluation report is always produced and
communicated to the stakeholders

BA Each stakeholder reserves the duty to access

9 the budget report