THE IMPACT OF ELECTRONIC BANKING ON CUSTOMER SATISFACTION IN

COMMERCIAL BANKS IN UGANDA.

A CASE STUDY OF CENTENARY BANK, KAWUKU BRANCH

BY

KYOMUGISHA MECHOLUS

2020/AUG/BBA/B227106/DAY

A RESEARCH PROPOSAL SUBMITTED TO THE SCHOOL OF BUSINESS

ADMINISTRATION IN PARTIAL FULFILLMENT FOR THE

REQUIREMENT OF THE AWARD OF BACHELOR

DEGREE IN BUSINESS ADMINISTRATION

OF NKUMBA UNIVERSITY.

OCT, 2024
 DECLARATION
I, Kyomugisha Mecholus, declare that this proposal entitled “impact of electronic banking on
customer satisfaction in commercial banks with centenary bank, Kawuku branch” is my own
original work, and it has never been presented to any University or Institution for the award of
any academic qualification.

SIGN: …………………………… DATE: ………………………………

KYOMUGISHA MECHOLUS

2020/AUG/BBA/B227106/DAY

i
 APPROVAL
This is to certify that this proposal entitled “impact of electronic banking on customer
satisfaction in commercial banks with centenary bank, Kawuku branch” has been submitted
with my approval as university supervisor.

SIGN…………………………………………DATE…………………………………

MADAM VIOLA ASIIMWE

(SUPERVISOR)

ii
 DEDICATION
This piece of work is dedicated to my beloved parents Mr. Abainomugisha Ambrose and Mrs.
Nyakakye Stella my elder sister Ainembabazi Doreen and siblings Twinomugisha Catherine,
Byamugisha Jordan, Agaba Victor and Abaho Ignatius for their great encouragement and support
towards my studies.

iii
 ACKNOWLEDGEMENT
Above all, I give Honour and Glory back to God the Almighty who gave me the wisdom and
strength to carry out all the required tasks of the study. I wish to acknowledge all those persons
who in one way or the other assisted me to complete this study. My special appreciation goes to
Madam viola, for her personal commitment and effort to speedily comment on my drafts; and
other lecturers from the School of Business administration.

Special thanks are extended to my course-mates for their support, academic ideas and
encouragement which contributed greatly to the completion of this work. Special thanks also go
to my family members and friends. I wish to thank my sisters, brothers and my entire family.

iv
 TABLE OF CONTENTS
DECLARATION..............................................................................................................................i
APPROVAL....................................................................................................................................ii
DEDICATION...............................................................................................................................iii
ACKNOWLEDGEMENT..............................................................................................................iv
LIST OF TABLES.......................................................................................................................viii
LIST OF FIGURES........................................................................................................................ix
CHAPTER ONE..............................................................................................................................1
INTRODUCTION...........................................................................................................................1
1.0 Introduction................................................................................................................................1
1.1.1 Historical background.............................................................................................................1
1.1.2 Theoretical perspective...........................................................................................................3
1.1.3 Conceptual perspective...........................................................................................................5
1.1.4 Contextual perspective............................................................................................................7
1.2 Problem statement.....................................................................................................................8
1.3 Purpose of the study...................................................................................................................9
1.4 Objectives of the study..............................................................................................................9
1.5 Research questions.....................................................................................................................9
1.6 Scope of the study......................................................................................................................9
1.6.1 Content scope..........................................................................................................................9
1.6.2 Geographical scope...............................................................................................................10
1.6.3 Time scope............................................................................................................................10
1.7 Significance of the study.........................................................................................................10
CHAPTER TWO...........................................................................................................................12
STUDY LITERATURE................................................................................................................12
2.0 Introduction..............................................................................................................................12
2.1 Literature survey......................................................................................................................12
2.2 Theoretical review...................................................................................................................14
2.2.1 Social construction theory....................................................................................................14
2.2.2 Theory of Financial Innovations...........................................................................................16
2.2.3 Innovation Diffusion Theory................................................................................................17
2.3 Literature review......................................................................................................................17
2.3.1 Effect of automated payment system on customer satisfaction in commercial banks..........17

v
2.3.2 Impact of automated delivery channel on customer satisfaction in commercial banks........19
2.3.3 Impact of automated information sourcing service on customer satisfaction in commercial
banks..............................................................................................................................................21
2.3.4 Customer Satisfaction...........................................................................................................23
2.4 Conceptual framework.............................................................................................................25
CHAPTER THREE.......................................................................................................................26
RESEARCH METHODOLOGY..................................................................................................26
3.1 Introduction..............................................................................................................................26
3.2 Research design.......................................................................................................................26
3.3 Target population.....................................................................................................................26
3.4 Sample Size.............................................................................................................................27
3.5 Sample Size Determination.....................................................................................................27
3.6 Sampling techniques................................................................................................................27
3.6.1 Random sampling.................................................................................................................28
3.6.2 Purposive sampling...............................................................................................................28
3.7 Data Collection Procedures.....................................................................................................28
3.8 Sources of data collection........................................................................................................28
3.9 Data Collection Methods.........................................................................................................29
3.9.1 Questionnaire Method..........................................................................................................29
3.9.2 Interview Method..................................................................................................................29
3.10 Data Collection Instruments..................................................................................................29
3.10.1 Self-Administered Questionnaires......................................................................................30
3.10.2 Interview guide...................................................................................................................30
3.11 Validity and Reliability of Instruments.................................................................................31
3.11.1 Validity of the Instrument...................................................................................................31
3.11.2 Reliability of the Instrument...............................................................................................31
3.12 Data Processing and presentation..........................................................................................31
3.13 Data Analysis.........................................................................................................................32
3.13.1 Qualitative analysis.............................................................................................................32
3.13.2 Quantitative analysis...........................................................................................................32
3.14 Ethical Considerations...........................................................................................................32
3.15 Anticipated limitations to the study.......................................................................................32
References......................................................................................................................................34

vi
APPENDIX 1: QUESTIONNAIRE FOR LOW LEVEL MANAGERS AND CUSTOMERS....40
APPENDIX II: INTERVIEW GUIDE FOR TOP MANAGEMENT...........................................43

vii
 LIST OF TABLES
Table 3.1: Distribution of the study population and sampling techniques

viii
 LIST OF FIGURES
Figure 2.1:Conceptual framework

ix
 CHAPTER ONE

INTRODUCTION

1.0 Introduction
The study will be about the impact of electronic banking on customer satisfaction in commercial
banks in Uganda with Centenary bank, Kawuku branch as the case study. In this study,
Electronic banking will be treated as the independent variable, while customer satisfaction will
be treated as the dependent variable. This chapter will present the background to the study,
statement of the problem, purpose of the study, objectives, research questions, scope of the
study, significance and operational definitions of terms.

1.1.1 Historical background

According to World Payments Report (2016) on a global perspective, the banking industry came
to realize unexpected outcomes that came with associated post-crisis in the era of 2012 to 2015.
This kind of scenario led the banking industry to undergo a period of foremost disturbance to
realize trust from their clientele that was greatly affected by the negative financial crisis. The
growth of industries experienced a slowdown in development possibly by the effects emanating
from the growth rate of the top 1000 banks worldwide (World Payments Report, 2016). This
stunt growth of the banks was projected to be at 2.7% which saw a double slump before the crisis
during the years of 2014 to 2016. Another issue noted was the involved and associated risks that
would affect profitability that required mitigation and management to ensure recovery. The risk
management enabled stability in the pre-crisis era which registered a growth of 3.8% in the era
of 2007 to 2010 (World Payments Report, 2016). This therefore brought about confidence
among the bank clientele that demanded the rather effective financial services. Globalization and
its advantages that involve the use of technology especially Information Technology (IT) met
swift meeting of clientele needs and timely accuracy in the global banking operations. The
introduction and utilization of IT in the global banking operations enabled the realization of the
3.8% in the era of 2009-2013 that realized profits of $63.6 billion (World Payments Report,
2016).

1
Globally, internet banking is heavily used by commercial banks to efficiently serve their
customers and increase profit margins (World Bank, 2016). In 2012, India witnessed the changes
in the payment system. During that period digital growth was witnessed where internet banking
was seen growing very fast. This growth was necessitated by the government regulations,
availability of internet, Mobile phones, mobile applications and technological advancements
(Mishra, 2019).

In Africa, internet banking has grown exponentially. For instance, the growth of internet banking
in South Africa has have been accelerated by technological advancement, friendly government
regulations, banks investing more on technology, good network and availability of affordable
mobile phones. In East Africa internet banking has grown despite challenges like poor network,
illiteracy where people do not have the knowledge to use digital platforms, lack of mobile
phones among other factors. In Tanzania, use of mobile money have experienced explosive
growth since the service was introduced in 2008. With several providers competing for market
share, a range of new use cases have been introduced, including digital credit, savings, and bill
payments. In 2017, nearly a decade after the first mobile money deployment launched, 60
percent of Tanzanians had used mobile money (CGAP, 2018).

In Uganda, the innovation (electronic/automated) banking was tested and adopted by the bank
users in the year 1993 and later adopted by majority of the players in the banking industry. This
was aided by the diffusion of information through the existing IT systems in the banking sector
(Kasita, 2004). Standard Chartered Bank announced its Auto Teller Machine in the year 1997
hence leading other players in the market/banking sector (Standard Chartered Bank Profile,
2004). By 2001, there was continued progress being made in Uganda in the use of ATMs in
Kampala City due to ATM establishments. It was hoped that the risk of money transfer from
location to location would be reduced. It was hopefully thought by many in the banking sector
and banking industry users that the VISA credit cards would find their way in the market to
facilitate easy access to transactions (Kakembo, 2001). The “Bankom” interconnection electronic
system was introduced in Uganda in the year 2004 to facilitate the local banks utilize the IT
systems. This enabled the mobile phone subscribers use phones to transact businesses with the
banking systems (Kanyegirire, 2004).

2
According to Mwebya, as reported by Ssettumba (2004), a payment system in which the transfer
of funds is done electronically was introduced in Bank of Uganda in 2004. In Centenary Bank,
Internet banking was introduced in 1998 and was restricted to people with basic knowledge of
computers and the Internet, technical difficulties and connectivity problems, proxy websites, and
security problems such as the problem of electronic bank fraud. It was from such basis that
triggered the frequency of internet banking embracement in Centenary Bank to be very low since
it is so much in ancient customers. The notable incident was the realization of efficiency in
Centenary Bank after the introduction of internet banking though it registered a low utilization at
30%, 40% less than the prediction by 2010 (East African Business Week, 2010, Namirembe
2009).

1.1.2 Theoretical perspective

This study will be grounded on social construction theory. This theory was advanced by Collins
(1975); Pinch (1977,1986); and Pickering (1984).

This theory argues that technology does not determine how people receive and use mobile
technology but that people determine how and in what ways technology is used. The theory
posits that the use of a technology cannot be understood without understanding how it is socially
integrated within society. Within different social contexts, technology can take different
meanings and adoption depends on how society views the technology.

Under this theory, the adoption of a technology is not only due to its technical superiority but due
to social factors as well. In the context of this study, mobile phone technology and specifically
mobile phone financial services having been driven by both business factors and social networks
related to business and family. The decomposition theories of planned behavior not only keep the
theory of planned behavior principles but also add important value of the original theory, as it
adds a bigger number of beliefs and constructs to the models (Vankatesh, Davis and Morris,
2007). The theory of planned behavior is used in this study to explain how electronic banking is
adopted and how it influences profitability of commercial banks.

The study also will be based on Theory of Financial Innovations. The proponent of this theory
was Silber (1983) and it was based on the notion that money can be increased if the drivers of
expanding the money can be increased. According to (Li &Zeng, 2010) this theory demonstrates

3
the new innovations in the finance sector that are aimed at filling the gaps in the money related
business sector which include the expenses and the exchange costs. Błach (2011) noted that the
theory of financial innovation has brought about new way of doing business and this has helped
to meet the customer needs and hence enhancing the firms’ level of liquidity as well as
expanding quantity new applicants, due to their qualifications on the situation. The theory
emphasizes that financial innovation is a critical motivating force of the financial systems that
aims at bringing better economic competence and enhancing competitiveness in the finance
sector.

Sekhar (2013) noted that financial innovations have redefined financial developments by coming
up with new ways of production, technological solutions, creating better return rates hence
boosting the Uganda’s economy in general. The theory posits that the innovativeness improves
the firms’ competitive edge of a corporate and generates more earnings to the investors.
Innovation is a tool used to solve, manage and transfer the entire extra burden. The application of
innovations promotes growth of financial entities through improved allocation, efficiency and a
reduction of financial and administration costs. The weakness of this theory is, this theory
requires the banks to adopt a high technological framework which is a costly affaire to most of
the banks. Another weakness is, the theory assumes that all the targeted customers have the
capability of using the technology available to increase their operations. The theory also assumes
that all those seeking financial services have the required digital knowledge to enhance their
utilization of the technology. Despite the above weaknesses, the theory of financial innovations
will enable the researcher to access the digital innovations (internet Banking) to the extent to
which it contributes to profitability of commercial banks in terms of revenue. This theory
therefore calls for an understanding of what is expected to ensure that the targeted customers
have the ability to apply the required technology for service delivery. The theory will be
applicable to this study as it will provide a good basis for understanding how internet banking
will improve the financial sector in Uganda.

The third theory taken into consideration is the Innovation Diffusion Theory (IDT) that explains
individuals’ intention to adopt a technology as a modality to perform a traditional activity. The
theory is developed by Roger’s (1983). The critical factors that determine the adoption of an
innovation at the general level are the following: relative advantage, compatibility, complexity,

4
trial ability and observability. (Rogers, 1995). Researchers such as Tan and Teo (2000), Gerrard
and Cunningham (2003) and MdNor and Pearson (2008) had tested the theory on the e-banking
adoption. The nominalized factors are complexity, triability and observability.

The underpinning theory employed in this work is a theory arising from the decomposed theory
of planned behaviour. This theory considers that the use of technology is influenced by attitude,
subjective norm and perceived behavioural control. The theory argues that the lesser the ratio of
currency outside banks to broad money supply the higher the intermediation efficiency and vice-
versa. This suffices that when the currency outside banks diminishes as a result of the increase in
the use of electronic forms of payment, particularly ATM and other e-card products, as well as
banking habits, the intermediation efficiency will be positive, otherwise it will be negative.

1.1.3 Conceptual perspective

According to Basel Committee on banking supervision, (1998 and 2003) E-banking is defined as
the provision of retail and small value banking products and services through electronic
channels. Such products and services can include deposit taking, lending, account management,
the provision of financial advice, electronic bill payment, and the provision of other electronic
payment products and services such as electronic money. The term "electronic banking" or "e-
banking" covers both computer and telephone banking. It refers to the use of information and
communication technology by banks to provide services and manage customer relationship more
quickly and most satisfactorily (Charity-Commission, 2003). Burr (1996) describes it as an
electronic connection between the bank and the customer in order to prepare, manage and control
financial transactions.

The term e-banking is technically and intricately complex to define as it may be interpreted
differently from different accessing viewpoints. The versatility of e-banking as delivery
multichannel increases the intricacy of being precisely defined in the literature. Nonetheless,
several attempts have been made to offer succinct and all-inclusive meaning of e-banking (Furst
et al, 2000; Basel Committee Report on Banking Supervision, 1998; Kricks, 2009; Auta 2010).
For example, Furst et al (2000) viewed e-banking or internet banking as the employment of a
remote delivery channel in performing banking services; Kricks (2009) termed e-banking as
automated delivery of new and conventional banking products and services directly to customers
through electronic, interactive channels.

5
Delgado (2004) describes e-banking as the provision of banking services to customers through
the internet. Electronic banking is defined to include the provision of retail and small value
banking products and services through electronic channels as well as a large value electronic
payment and other wholesale banking services delivered electronically. Alsmadi and Alwabel
(2011) expressed that the definition of electronic banking varies among researchers partially
because electronic banking refers to several types of services through which bank customers can
request information and carry out banking services. Almost all banks in Nigeria offer online,
real-time banking services. Banks that are not able to brace up to this new development are
rapidly losing their customers. Online, real-time banking system has now become commonplace
as customers are offered the ease of operating an account in any branch of their bank’s network.

In addition, e-banking is viewed as the process by which a customer carries out banking
transactions electronically without going to a brick-and-mortar institution (Simpson, 2002). In
this case, e-banking is defined from the state of branchless or virtual banking indicating that
geographical location in banking sphere seems to be less important as banks continue to adopt e-
banking. However, the most commonly accepted definition of e-banking is the one given by
Basel Committee Report on Banking Supervision (1998). The committee defined e- banking as
“the provision of retail and small value banking products and services through electronic
channels”. In this paper, e-banking is defined as the use of intelligent devices through internet to
effect banking operations. Such intelligent devices may be mobile or immobile.

Customer satisfaction is the degree to which customers are happy with their purchase or
experience with a company (Robertson, 2019). It indicates the fulfillment that customers derive
from doing business with a firm. In other words, it is how happy customers are with their
transaction and overall experience with a company. Customers derive satisfaction from a product
or a service based on whether their need is met effortlessly, in a convenient way that makes them
loyal to the firm. In the views of Paulet al., (2010), customers’ satisfaction is a measure of how
products and services supplied by a company meet or surpass customer expectations. It is 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. In a competitive
marketplace where businesses compete for customers, customers’ satisfaction is seen as a key
differentiator and increasingly has become a key element of business strategy. According to

6
Bernazzani (2018), customer satisfaction is a metric used to quantify the degree to which a
customer is happy with a product, service, or experience. Prakash and Mohanty (2012) view
customers’ satisfaction as the degree to which products or services provided.

Customer satisfaction means undertakings by a company/an organization to meet the client’s

needs and expectations of its goods/services utilized by the client (Stoner, 2003). Customer
satisfaction creates a basis for businesses to become innovative and match their services to win
clients’ loyalty (Schneider et al, 2006). For purposes of this study, customer satisfaction will be
looked at basically from the four perspectives of customer referrals, repurchases, word of mouth
and customer loyalty. According to Li, (2002), Customer retention, means the level at which
customer remains in centenary bank; for referrals, Schneider et al, 2006 defines this as the ability
for customers to refer other customers to the bank and repurchases, refer to the ability of
customers to keep on coming and coming back to the bank (Wayne, 2002) and word of mouth,
according to Li, (2002) refers to the customer’s ability to sweet talk about the bank’s services.

1.1.4 Contextual perspective

The Ugandan banking sector experienced some significant revolution and intensified its services
in the late 1990s and early 2000s. This saw an evolvement of numerous local commercial banks
coming in and out of the market as per the regulation of the central bank (Bank of Uganda).
Some the banks that saw exit in the banking industry in Uganda in the same era (1990s and early
2000) included among others; Teefe Bank Gold, Trust Bank, Uganda Cooperative Bank,
Greenland Bank and International Credit Bank that were resolved. Uganda Commercial Bank
was privatized by selling its mainstream shares and it turned out to be the Standard Bank of
South Africa that took over its management (Kakembo, 2005).

Since the introduction of electronic banking in 1993 by the bank of Uganda, most of the
commercial banks adopted electronic banking in the service provision in the virtue of improving
their customer satisfaction, financial performance and service delivery (Kakembo, 2005).
Particularly, Centenary Bank is reported as among the frontline banks in Uganda to introduce
electronic banking in their service provision eyeing for improving customer satisfaction.
Centenary bank introduced pre-fabricated ATMs to reduce the queues at their access points
(Nabayunga, 2006) as well as introduction of ATMs, debit and credit cards, telephones, mobile
phones and web sites. All these were done to improve its customer satisfaction while curbing

7
bank fraud, making accounts secure and be accountable to people they serve. However, it is
reported that the customer satisfaction of the bank is still indulged in a number of problems and
financial errors.

Centenary Bank was founded in 1983 as a credit trust, Centenary rural development trust
(CRDT). In 1985, centenary rural development trust began to provide financial services to the
public. Centenary Bank became fully licensed commercial bank in 1993, after receiving a
banking license from the central bank of Uganda. On 26-03-2007, Centenary rural development
rebranded and trimmed its name to just Centenary Bank.

Centenary bank is now Uganda’s largest indigenous bank with over 37 branches.
(www.centenarybank.co.ug). As of April 2010 Centenary bank is the 5th largest commercial
bank in Uganda with an asset of US 306.7 million representing approximately 7.4% of the all
banks assets in the country, (www.centenary bank.co.ug) the Banks stock is owned by the
following corporate entities and individuals. Despite all efforts of centenary Bank to provide
efficiency, effectiveness and quality services through electronic banking majority of the users of
the systems are ignorant which has left the problem of long queues in centenary bank halls
unsolved many customers have lost their money under this system (Byarugaba 2001).

1.2 Problem statement

The emergence of electronic banking had a significant influence to its adoption by commercial
banks worldwide. Centenary Bank in Uganda was among the first banks to adopt electronic
banking in form of ATMs, telephones, debit cards and websites (Mugambi, 2011). These were
adopted in the view of improving a number issues including customer satisfaction that is in form
of improving customer referrals, customer excitement, customer delight and customer repeat
patronage. However, this has not been the case, a high degree of customer dissatisfaction is still
manifested in Centenary Bank in form of increased queues in the banking halls, increased
customer complaints’, theft on Automated Teller Machines, congestion among other indicators
of customer dissatisfaction.

In 2013; Centenary Bank was reported to have lost over UGX 800million shillings for its clients
which was swindled using ATMs (New Vision, March, 23, 2013). In addition, UGX 200million
shillings were embezzled from the bank from outsiders who by all means acquired Pin codes and

8
the bank was made to pay for the losses (Centenary Bank annual report, 2010). In 2012,
criminals harked into the bank’s records and created records showing that sh10billion was
transferred electronically from several customers’ accounts to a particular single account at the
Iganga Centenary Bank branch (East African Business Week, 29, 2010). In further confirmation
of the problem, complaints can still be heard from customers about increased lines/queues,
disappointments due to networks breaks and poor response rate on their queries. These are all
indicators of low customer satisfaction (Daily Monitor, 2nd September, 2016). In an effort to
address this problem, Centenary Bank launched a mechanism to curb complaints and improve
efficiency; however, the problem has persisted. Thus, if this problem is not checked, it would
result in reduction of customers using Centenary Bank and was directly the bank’s revenue and
profitability levels. Hence, it is as of this circumstantial that the researcher selected attention to
investigate whether electronic banking in one way or the other is linked to customer satisfaction
and profitability in Uganda’s commercial banks using Centenary Bank as a case study.

1.3 Purpose of the study

The purpose of this study will be to examine the impact of electronic banking on customer
satisfaction in commercial banks in Uganda with centenary bank as case study.

1.4 Objectives of the study

i. To examine the effect of automated payment system on customer satisfaction in
centenary bank, Kawuku branch.
ii. To examine the impact of automated delivery channel on customer satisfaction in
centenary bank, Kawuku branch.
iii. To find out the impact of automated information sourcing service on customer
satisfaction in centenary bank, Kawuku branch.

1.5 Research questions

i. What is the effect of automated payment system on customer satisfaction in centenary
bank, Kawuku branch?
ii. What is the impact of automated delivery channel on customer satisfaction in centenary
bank, Kawuku branch?

9
 iii. What is the impact of automated information sourcing service on customer satisfaction in
centenary bank, Kawuku branch?

1.6 Scope of the study

1.6.1 Content scope

The study will focus on relationship between electronic banking and customer satisfaction
commercial banks in Uganda basically looking at automated payment system, automated
deleivery channel and automated information sourcing service as independent variables and
customer satisfaction inform of customer referrals, customer delight, customer excitement and
customer repeat patronage as dependent variables.

1.6.2 Geographical scope

The study will be conducted in Kampala at two branches of Centenary Bank that is the head
offices (Mapera House) and Kawuku Branch. The head offices will be chosen because this is
where the key documents/records on electronic banking are kept and it is where the key
managerial decisions are taken.

1.6.3 Time scope

The study will focus on the period 2019 to 2023 because this is the period when the customer
satisfaction of Centenary Bank has been characterized by massive inefficiencies. It was reported
that the improvement in the utilization of electronic banking at Centenary Bank rose from 12-
17% from the same period (Centenary Bank annual performance report, 2015).

1.7 Significance of the study

To commercial banks; The results will help in providing information on the extent to which
electronic banking has affected customer satisfaction. It will further suggest alternative ways
through which customer satisfaction can be ensured.

Managers of commercial banks; The finding of the study will be of great importance to
managers of commercial banks in Uganda as they will understand the effect of electronic
banking on customer satisfaction of commercial banks in Uganda, this will assist them in making
decision on whether to adopt electronic banking or not and the expected results of electronic
banking adoption to their banks profitability.

10
Policy makers; The study finding will enlighten the policy makers in the banking industry on the
expected effect of electronic banking on banks profitability; this will assist them in designing
appropriate policy for electronic banking adoption by commercial banking in Uganda.

Academicians: It is expected also that the study may add knowledge to the existing body of
research literature relating to electronic banking and customer satisfaction in Uganda and other
similar developing economies in Africa and the world at large.

Researcher: It is further anticipated that stakeholders and new Remittance Service Providers
(RSPs) will use the findings from this study as a basis for taking decisions in investing or
engaging electronic banking services in relation to its effect on customer satisfaction.

11
 CHAPTER TWO

STUDY LITERATURE

2.0 Introduction
This section presents the related literature on empirical and theoretical studies. The literature in
this study will be reviewed basing on empirical works and studies by other research scholars
regarding electronic banking and customer satisfaction of commercial banks.

2.1 Literature survey

Senoga (2018) conducted a study to examine the relationship between electronic banking and
customer satisfaction in Centenary Bank. The following objectives were aimed at: to establish
the relationship between e-funds transfer and customer satisfaction of Centenary Bank; to
examine the relationship between telephone banking and customer satisfaction in Centenary
Bank and to assess the relationship between internet banking and customer satisfaction in
Centenary Bank. The study used a correlation research design employing both quantitative and
qualitative approaches. A total of 215 participants were sampled to select 172 respondents. The
study findings revealed a significant relationship between E-funds transfer banking and customer
satisfaction in Centenary bank (r=0.669, P=0.022). Secondly, a significant relationship between
telephone banking and customer satisfaction in Centenary bank was found out (r=0.544,
P=0.039). Lastly, findings indicated that internet banking has a negative relationship with
customer satisfaction of Centenary Bank (r= -0.276, P=0.041). It was concluded that there is a
significant relationship between a combination of E-funds transfer, telephone banking, internet
banking and customer satisfaction at Centenary Bank. The study was about E-funds transfer,

12
telephone banking and internet banking while the current study will be about automated payment
systems, automated delivery channels and automated information sourcing services.

Njogu (2014) conducted a study on the effect of electronic banking on profitability of

commercial banks in Kenya. The study objective was to determine the effects of electronic
banking on profitability of commercial banks in Kenya. These data were collected from the
Central Bank of Kenya and Commercial banks. Regression analysis was done for the period to
determine the effects of electronic banking on profitability of commercial banks in Kenya. The
study covered a period of 5 years from year 2009 to 2013. The findings on the coefficient of
determination, the study found that major changes in the financial performance of commercial
banks in Kenya could be accounted to changes in internet banking, point of sales, automatic
teller machine, mobile banking and size of the bank at 95% confidence interval. The study found
that there was a strong positive relationship between financial performance of commercial banks
and electronic banking, as it was found that there was a strong relationship between financial
performance of commercial banks and electronic banking. Size of the bank was also found to
positively influence the financial performance of commercial banks in Kenya. Electronic
banking has helped the commercial banks to lower their cost of banking, through technology
which has created greater opportunities to the banks to offer great flexibility to the customers,
this has enabled commercial banks to be very fast in adopting electronic banking which has
enabled commercial bank to be ubiquity in coverage, flexibility, interactivity, and with greater
accessibility compared to conventional banking channels such as Automated Teller Machine
(ATM),Point of Sale Mobile banking and internet banking which influence the financial;
performance of the bank . Electronic banking service provides convenience and promptness to
customers along with cost savings, banks are also interested in expanding their market through
internet services. The study further revealed that the P-value were less than 0.05 in all the
variables, which shows that all the independent variables were statistically significant. The study
was carried out in commercial banks in Kenya and also the dependent variable was about
profitability of commercial banks while the current study will be about customer satisfaction and
will be carried out in Centenary bank, Kawuku branch.

Makuei (2018) conducted a study on the relationship between electronic banking and customer
satisfaction in selected commercial banks in Juba, South Sudan. The purpose of the study was to

13
establish the relationship between electronic banking and customer satisfaction in selected
commercial banks in Juba, South Sudan. The problem in this study was to establish the role of e-
banking in enhancing customer satisfaction with major consideration on the use of technology,
improved bank network and the use of ATM machines to improve bank service delivery. The
objectives of the study were: to examine the relationship between online banking and customer
satisfaction, to determine the relationship between ATM services and customer satisfaction, and
to examine the relationship between mobile banking and customer satisfaction in Juba, South
Sudan. This study was guided by descriptive correlational designs with qualitative and
quantitative approaches. The sample size was 144 done at the two commercial banks in the
country by purposive sampling method, using closed ended questionnaires. Data analysis;
frequency and percentage distribution were used to determine profile of the respondents. Data
gathered were corrected and encoded in computer and statistically treated using the statistical
package for social sciences (SSPS). The mean was used to measure electronic banking and
customer satisfaction in Juba, South Sudan. Pearson’s product moment correlation was used to
establish the relationship between electronic banking and customer satisfaction in Juba. The
study findings indicated that electronic banking influences highly customer satisfaction as shown
by r-value of 0.663 implying a positive relationship between the two variables. Conclusion;
customers are the major aspects of improving customer satisfaction. The electronic banking
systems enhance user access to information and therefore efficiency and effectiveness is
evidently realized. The study was carried out in Juba, South Sudan while the current study will
be carried out in commercial banks in Uganda.

2.2 Theoretical review

Some of the theories relating to this study are discussed in this section, namely social
construction theory, theory of financial innovations and innovation diffusion theory.

2.2.1 Social construction theory

The theoretical framework for this study was derived from the theory of social construction of
technology. This theory was advanced by Collins (1975); Pinch (1977,1986); and Pickering
(1984). This theory is based on four main assumptions. First, the theory assumes that any
technological innovation must have an interpretive flexibility if customer satisfaction is to be
achieved. The second assumption is that the any new technological innovation must be relevant

14
to the targeted social group (Bijker 1995). The third assumption of theory is related to closure
and stabilization. The last assumption under which this theory is built is wider context.

This theory has three main strengths. The first one lies in assuming interpretative flexibility. This
means that each technological artifact has different meanings and interpretations for various
groups (Bijker and Pinch, 1987). This means that the adoption of electronic banking can be
enhanced if clients flexibly interpret the technology as ease to use. The second strength lies in
involving relevant social groups. The theory agitates that the most basic relevant groups are the
users and the producers of the technological artifact, but most often many subgroups can be
delineated-users with different socioeconomic status, competing producers, etc. Sometimes there

are relevant groups who are neither users, nor producers of the technology, for example,
journalists, politicians, and civil organizations should be included in promotion of the technology
and in this case electronic banking technology if customer satisfaction is to be met (Trevor,
2009).

The third strengths are with design flexibility. Just as technologies have different meanings in
different social groups, there are always multiple ways of constructing technologies. A design is
only a single point in the large field of technical possibilities, reflecting the interpretations of
certain relevant groups. Therefore, understanding the design by users can always have a
significant impact on their satisfaction.

Despite the strengths of the theory in explaining the role of technology in improving customer
satisfaction, it has some limitations or weaknesses in social constructivism. The theory explains
how technologies arise, but ignores the consequences of the technologies after the fact. This
results in a sociology that says nothing about how such technologies matter in the broader
context (Trevor, 2009). Secondly, the theory examines social groups and interests that contribute
to the construction of technology, but ignores those who have no voice in the process, yet are
affected by it. Likewise, when documenting technological contingencies and choices, it fails to
account for those options that never made it to the table. According to Winner (2007), this results
in conservative and elitist mentalities that affect the usage of any new technology. Third, the
theory is superficial in that it focuses on how the immediate needs, interests, problems and
solutions of chosen social groups influence technological choice, but disregards any possible
deeper cultural, intellectual or economic origins of social choices concerning technology that

15
may affect satisfaction of the user community. The last weakness of this theory lies in actively
avoiding taking any kind of moral stance or passing judgment on the relative merits of the
alternative interpretations of a technology. This indifference makes it unhelpful in addressing
important debates about the place of technology in human affairs.

In this study therefore, this theory presupposes that if electronic banking is to be adopted in
commercial banks, there is a 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 e-funds money transfer, telephone banking and
internet 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.

2.2.2 Theory of Financial Innovations

The proponent of this theory was Silber (1983) and it was based on the notion that money can be
increased if the drivers of expanding the money can be increased. According to (Li & Zeng,
2010) this theory demonstrates the new innovations in the finance sector that are aimed at filling
the gaps in the money related business sector which include the expenses and the exchange costs.
Błach (2011) noted that the theory of financial innovation has brought about new way of doing
business and this has helped to meet the customer needs and hence enhancing the firms’ level of
liquidity as well as expanding quantity new applicants, due to their qualifications on the
situation. The theory emphasizes that financial innovation is a critical motivating force of the
financial systems that aims at bringing better economic competence and enhancing
competitiveness in the finance sector.

Sekhar (2013) noted that financial innovations have redefined financial developments by coming
up with new ways of production, technological solutions, creating better return rates hence
boosting the Uganda’s economy in general. The theory posits that the innovativeness improves
the firms’ competitive edge of a corporate and generates more earnings to the investors.
Innovation is a tool used to solve, manage and transfer the entire extra burden. The application of
innovations promotes growth of financial entities through improved allocation, efficiency and a
reduction of financial and administration costs.

16
The weakness of this theory is, this theory requires the banks to adopt a high technological
framework which is a costly affaire to most of the banks. Another weakness is, the theory
assumes that all the targeted customers have the capability of using the technology available to
increase their operations. The theory also assumes that all those seeking financial services have
the required digital knowledge to enhance their utilization of the technology.

Despite the above weaknesses, the theory of financial innovations will enable the researcher to
access the digital innovations (internet Banking) to the extent to which it contributes to
profitability of commercial banks in terms of revenue. This theory therefore calls for an
understanding of what is expected to ensure that the targeted customers have the ability to apply
the required technology for service delivery. The theory was applicable to this study as it
provided a good basis for understanding how internet banking has improved the financial sector
in Uganda.

2.2.3 Innovation Diffusion Theory

The third theory taken into consideration is the Innovation Diffusion Theory (IDT) that explains
individuals’ intention to adopt a technology as a modality to perform a traditional activity. The
theory is developed by Roger’s (1983). The critical factors that determine the adoption of an
innovation at the general level are the following: relative advantage, compatibility, complexity,
trial ability and observability. (Rogers, 1995). Researchers such as Tan and Teo (2000), Gerrard
and Cunningham (2003) and MdNor and Pearson (2008) had tested the theory on the e-banking
adoption. The nominalized factors are complexity, triability and observability.

The underpinning theory employed in this work is a theory arising from the decomposed theory
of planned behaviour. This theory considers that the use of technology is influenced by attitude,
subjective norm and perceived behavioural control. The theory argues that the lesser the ratio of
currency outside banks to broad money supply the higher the intermediation efficiency and vice-
versa. This suffices that when the currency outside banks diminishes as a result of the increase in
the use of electronic forms of payment, particularly ATM and other e-card products, as well as
banking habits, the intermediation efficiency will be positive, otherwise it will be negative.

2.3 Literature review

This will be in line with research objectives

17
2.3.1 Effect of automated payment system on customer satisfaction in commercial banks
Automated payment system is an innovative banking system that enables customers to make
payments for products and services purchased remotely without having to visit a physical bank
(Mamudu, 2021). According to Aprigliano et al. (2019), automated payment system is an
electronic system that allows customers with a bank account to initiate and execute payment
operations via the internet or any other electronic device. These systems take away the risk of
moving physical cash around by customers to meet their needs; instead, they enable customers to
make a variety of payments in several currencies to recipients nationally and internationally.
Under the spectrum of automated payment systems used by Nigerian commercial banks include
ATM (automated teller machine) service, internet mobile payment, POS (point of sale) kiosk,
bank card payment, among others. In the view of Nguyen (2020), moving toward the goal of a
cashless and digital global economy, financial service institutions around the world are rolling
out automated payment systems that enable customers to make payments to whomever in
virtually every corner of the world even without leaving their homes.

The prominence of automated payment system has resulted in the emergence of several
automated payment networks around the globe such as Paypal, WePay, Amazon Pay, Stripe and
among others. These companies exist primarily to enable bank customers to make payments to
recipients across the world (Nguyen, 2020). In Nigeria, commercial banks have created systems
such as ATM service, internet mobile systems, POS (Point of sale) kiosks and debit/credit cards
designed to enable customers to make automated payments. Through such a system, customers
do not have to undergo much stress to make payments for goods and services, thereby enhancing
their access to banking services capable of satisfying their banking needs. The foregoing
viewpoint suggests that automated payment system enhances customer satisfaction in
commercial banks.

Adeoti (2011), stressed that the use of ATM is safe and convenient. The ATM has made
settlement of bills in the Ugandan banking system easy and saver. These benefits have resulted
into phenomena growth in number of ATMs in Hoima district. The growth of ATMs in Ugandan
banks has risen from 83% in 2006 to 289% in 2007 (Adeoti, 2011). Almost all banks introduced
the ATM in their bank premises in 2007.

18
ATM cards are speedy to replace dazing withdrawal machines as an accommodation way to get
cash from banks (Tillya, 2013). Banks have ATM networks that help clients to get service
simply and manage their accounts. Banks would obtain benefits such as reserve funds, efficacy,
more noteworthy buyer inclusion, client satisfaction, and loyalty if they provide quality services
through electronic managing account networks such as ATM (Al-Hawari and Ward, 2006). ATM
has the advantage of transferring money from one account to another (Khan, 2010), in addition
to the convenience of withdrawing money wherever the customer is located.

In today’s business environment, globalization and international experience has become

critically important, hence, Ayo et al. (2011) posited that the banking industries can no longer get
away with operating loosely connected groups of businesses that happen to be located around the
world, but must tactically synchronize their operations. Ramas (1998) added that only the banks,
businesses, industries, and any segment of the community that clearly understand the new rules
of doing business in a global business economy will succeed. In view of this, global competition
in the banking sector has forced management and executives to recognize that they must think
differently about banking and management operations. Studies have shown that universal
banking operation needed that the only avenue to prosper is to develop an effective global bank
management mechanism with staffs with the ability to structure multinational business
techniques through the adoption of modern technology such as automated teller machines
(Mahmood et al., 2014; Pavlou, 2003; Ramas, 1998). The automated teller machine (ATM), also
regarded as automated banking machine (ABM) or cash machine (CM) and by several other
names, is a computerized technology infrastructure that provides clients of financial institutions
with access to financial transactions in a public space without the need for human personnel.
Characteristically, a user inserts into the device a special plastic card that is encoded with
information on a magnetic strip. The strip contains an identification code that is transmitted to
the bank’s central computer by modem. To prevent unauthorized transactions, a personal
identification number (PIN) must also be keyed in by the user with the aid of a keypad.
However, after this operation, the computer permits the machine to complete the transaction
(Okwute, 2007; Solomon and Ajagbe, 2014; Anup, 1997). In most cases, the device can dispense
cash, accept deposits, transfer funds, and provide information on account balances. Solomon and
Ajagbe (2014) stressed that banks have formed national and global linkages that enable them
universally serve their customers better. These linkages are multiplied when banks share their

19
ATMs by allowing customers of other banks access their account through other partner bank’s
automated teller machines (Anderson, 1993; Msheliza, 1996; Ajagbe, 2014). Though every
commercial bank’s activity requires certain degree of technology adoption, researchers differ on
the terms of the relationship between the level of ATMs adopted, and the value of the increase in
efficiency of the banking services. Nonetheless, they are unanimous on the essentials of ATMs
for the development of the banking industry, but some of them have found lack of
proportionality between increase in the scale of technology utilization and the increase in banks
profitability.

2.3.2 Impact of automated delivery channel on customer satisfaction in commercial banks

Automated delivery channel is a network of electronic modes through which commercial banks
deliver banking services to customers regardless of their physical location (Mamadiyarov, 2021).
It is an electronic system that enables commercial banks and other financial service institutions
to deliver financial services to customers through the internet or other electronic devices such as
smartphones, personal computers, tablets and ipads. In the view of Haralayya (2021), automated
delivery channels are electronic platforms developed by commercial banks to facilitate
customers’ access to banking services remotely in their homes or places of work. This entails
that with the aid of automated delivery channels, customers can use their electronic devices such
as mobile phones and personal computers to contact banks, carry out transactions and satisfy
their banking needs even without physically visiting bank branches. To deliver banking services
to customers, Nigerian commercial banks have deployed the following automated delivery
channels, among others: internet banking, mobile banking, chat banking, and video banking.

In the face of overpopulation of banking halls, increased customers’ pressure for delay-free
service access, and developments in modern financial technologies, deposit money banks are
increasingly automating their processes of banking services delivery to customers (Haralayya,
2021). Instead of requiring customers to physically locate and visit a physical bank branch to
carry out financial or non-financial bank transactions, commercial banks are rolling out
innovative technologies that enable customers to carry out secure transactions from the comforts
of their residences or places of work without the stress of physical movement. Using these
technologies, customers can carry out a whole range of financial and non-financial transactions,
such as account enquiry, wireless money transfer, cash withdrawal, utility bills payment and a

20
host of others. As such, automated delivery channels have enabled commercial banks to provide
services to customers regardless of their physical location to satisfy their banking needs. The
foregoing viewpoint suggests that automated service delivery channels enhance customer
satisfaction in commercial banks.

Mols (2000) argued that customer acceptance of new automated channels of service delivery in
banks may bring a dramatic change in the way retail banks build and maintain close relationships
with their customers. The introduction of new automated channels of service delivery has made
customer participation more widely possible (Dabholkar, 1994) and researchers therefore need to
adopt new ways to conceptualize automated service quality, taking into consideration the
attributes of all electronic delivery channels (Dabholkar, 1996; Meuter et al., 2000; Szymanski
and Hise, 2000). A number of marketing scholars identify ATM, internet and telephone banking
as the principal automated delivery channels for retail banking (Joseph and Stone, 2003; Joseph
et al., 1999; Radecki et al., 1997).

In the banking sector, customers tend to use these three different automated service delivery
channels in a complementary way (Dabholkar, 1996). Consequently, building a relationship with
the customer can be developed using any one of them, but more likely in combination (Lang and
Colgate, 2003; Patricio et al., 2003; Ramsay and Smith, 1999). Customer evaluation of
automated service options and their intention to use a particular option are directly affected by
perceptions of the attributes associated with a particular option (Dabholkar, 1996). Each channel
has its own attributes, which differ from the others. The quality of each automated delivery
channel shapes customers’ overall perception of automated service quality; therefore, each
delivery channel has been considered as a factor in the proposed automated service quality
construct rather than an aggregated measurement.

From a customer perspective, price is the most important motivation for engaging in online
purchases and is the most critical comparison element (Surjadjaja et al., 2003). Price is
considered as one of the most important determinants of automated service (Iqbal et al., 2003).
Furthermore, research reveals that online consumers are more price-sensitive than offline
consumers. In the sphere of banking, pricing problems associated with perceptions of unfairness
and non-competitiveness, such as fee charges and interest rates, contribute to bank switching
behaviour by consumers (Colgate and Hedge, 2001; Keaveney, 1995). Consequently, price has

21
been incorporated as an additional factor that could influence overall customer perceptions of
automated service quality.

2.3.3 Impact of automated information sourcing service on customer satisfaction in

commercial banks
Automated information-sourcing service is a service that uses digital technologies to deliver
information on customers’ banking activities to customers for informed decision- making
(Nogalski & Hiep, 2022). It is an electronic system that delivers banking information to
customers through the internet or any other electronic devices such as smartphones, personal
computers, tablets and ipads. With an automated information- sourcing system, customers do not
need to bear the stress to locate and visit a bank branch just to obtain information about their
bank transactions or banking products/services they wish to patronize. Rather, customers can use
the internet or other electronic devices to request information (such as account enquiry, bank
statements, and utility bills details) from their banks remotely and have such information
delivered to them almost instantly (Chaimaa et al., 2021). Under the spectrum of automated
information-sourcing services offered by Nigerian commercial banks include the following,
among others: mobile application software, email, USSD (unstructured supplementary service
data) service, and IVR (interactive voice response) service.

Information is critical when it has to do with digital banking, because without information,
customers will not understand how electronic banking systems operate and how to utilize them
for banking operations. This is why deposit money banks around the world are creating
innovative channels such as websites, text messages, emails and social media platforms in order
to convey timely and valuable information to customers to enlighten and enable them make
informed financial transactions and decisions, even without visiting a physical bank (Abdullahi
et al., 2019). In doing so, commercial banks are able to cut out the delay and stress customers
could have encountered in locating a physical brand and accelerate access to banking services to
customers to satisfy their banking needs. The foregoing viewpoint suggests that automated
information-sourcing channels significantly enhance customer satisfaction in commercial banks.

As customers become more sophisticated, it becomes essential to consider the use of technology
to respond to their continuously changing needs. Banking is an industry which is highly involved
with the customers. Customers in developing economies seems to keep the “technological

22
factors” of services as the yardstick in differentiating good and bad services and the human
factor – the employees seem to play a lesser role in discriminating the quality of service for
banks. The variation in services offered by the banks develops the excellence for service quality.
Banking is no longer regarded as a business dealing with money transaction alone, but it is also
seen as a business related to information on financial transaction (Padwal, 1995). Customers
whether at the corporate level or at retail level have always been important for the banks. As SST
is becoming more prevalent, so level of customer satisfaction is also changing the scenario of
technological environment. SST plays a significant role in providing better services at lower
cost. Several innovative SST such as Automated Teller Machine (ATM), Internet banking, Smart
cards, Credit Cards, Mobile banking, anywhere-anytime banking have provided number of
convenient services to the customer. So as the service quality improves, the probability of
customer satisfaction increases which in turn increases the mutual understanding, customer
retention and a bond of trust between customer and bank. The banks which are providing these
services at large extent to customers are more reputed in the eyes of customers.

2.3.4 Customer Satisfaction

Customer satisfaction is defined as an evaluation of perceived discrepancy between prior
expectations and the actual performance of the product (Oliver, 1999). Customer satisfaction is
how customers evaluate the ongoing performance (Gustasson et al., 2005). Customer satisfaction
is a customer’s reaction to the state of satisfaction, and customer’s judgment of satisfaction level
(Kim et al., 2004). The concept of customer satisfaction and service quality is interrelated with
each other, moreover satisfaction of customer depends upon service quality and service quality is
increasingly offered as a strategy by marketers to position themselves more effectively in the
market place (Parasuraman et al., 1988; Cronin and Taylor, 1992). Therefore, customer
satisfaction can be studied with the service quality in mind since level of customer satisfaction is
the function of customer expectation level and service quality level provided by the organization.

Customer satisfaction is a result of cognitive and affective evaluation, where some comparison
standard is compared to the actual perceived performance. If the perceived performance is less
than expected customer will be dissatisfied and vice varsa. If the perceived expectations are met
with performance, customers are in an indifferent or neutral state. In general, increased customer
satisfaction leads to higher customer retention rate, increases customer repurchase behavior and

23
ultimately drive higher firm profitability (Egan, 2001). As a result, any business is likely to lose
market share, customers and investors if it fails to satisfy customers effectively and efficiently as
its competitors is doing (Anderson et al., 2004).

Kim et al. (2004) argues that service providers should provide customer oriented service in order
to heighten up customer satisfaction. It was also found that customers get satisfied with the brand
more if they get all they needed accumulated in that very brand (Ah et al., 2006). Researchers
have examined how customer satisfaction is affected by service quality but all agree that the
relationship between the two is a subject of contention. Satisfaction is an antecedent of service
quality, and this view is seen a global perception (Bitner, 1990; Bolton and Drew, 1991).
Consequently, Cronin and Taylor (1992) and Spreng and McCoy (1996), state that service
quality is the cause of customer satisfaction. Cronin and Taylor (1992), Woodside Frey and Dale
(1989) also believe that consumer satisfaction is a cause of purchasing intentions. Therefore,
assessing overall satisfaction, it is important to identify the key drivers of this satisfaction
assessment as they enable managers to ascertain the relative importance of different components
of the service (Garbarino and Johnson, 1999).

Relationship stuck between satisfaction and service quality is the key to measure user
satisfaction (Pitt et al., 1995). The customer judgment of overall excellence about service quality
of a service sector is termed as perceived service quality (Parasuraman et al., 1988). This
judgment is based on difference that what a customer expects from his service provider and what
the actual service he receives from it (Parasuraman et al., 1988). For the measurement of impact
of e-banking on service quality, a model named SERVQUAL was developed by Parasuraman
(1988). The model consists of ten components. SERVQUAL provides a technology for
measuring and managing service quality (SQ). When the technology was first published, its
innovators Parasuraman, Zeithamal and Berry have further promulgated and promoted the
technology through a series of publication (Parasuraman et al., 1994). SERVQUAL fills a gap
between what the customer expects, by way of SQ and what he is actually getting. SQ is
presented as a multi-dimensional construct. In the original formulation Parasuraman et al. (1985)
identified ten components of SQ. In their 1988 work, these ten dimensions were reduced to five
dimensions namely; Tangibility, Reliability, Responsiveness, Assurance and Empathy. The
Tangible elements deal with the availability of physical facilities, equipment and personnel.

24
Reliability is the ability of the service provider to perform a service dependably and accurately.
Responsiveness is concerned with the willingness of service provider to assist customers and
deliver prompt services. Assurance means that customers can put their trust in service provider
employees and Empathy is individualized care and attention that customer receives from service
provider (Parasuraman et al., 1988).

The quality of the services that a bank provides is related to the satisfaction of customers and it is
estimated by dissatisfying and satisfying the service provided by the bank over time. The
perceived service quality has positive effect on satisfaction of customers. Previous studies have
revealed that perceived service quality has positive effect on satisfaction of customers in banking
(Cronin and Taylor, 1992). Bei and Chiao (2006) also reported positive influence of perceived
service quality on three service providers i.e. petrol station, automobile repair and banking.
Significant correlations have been found between overall customer satisfaction and service
quality dimensions (Aldaigam and Buttle, 2002). The service quality in banking industry relates
to assurance, empathy, responsiveness and reliability (Johnston, 1995). Reliability and assurance
has strong influence on banking sector service quality and customer satisfaction (Zhou, 2004).

2.4 Conceptual framework

Conceptual framework is a presentation of how the independent and dependent variables are
related. It therefore, specifies the working definition of a variable and enables a simple
explanation of the flow of theoretical framework used by the study (Mugenda and Mugenda,
2003).

Independent Variables Dependent Variables

Electronic banking Customer satisfaction
 Automated payment systems  Customer delight
 Automated delivery channels  Customer excitement
 Automated information sourcing  Customer repeat patronage
services  Customer retention

Intervening Variable

 Technology advancement
 Education levels
 Economic conditions
25
Figure 2.1: Conceptual framework

Source: Adopted from the literature (Josephet al,2023) and modified by the researcher (2024)

The conceptual framework above shows the relationship between the independent variable,
which is ‘electronic banking and customer satisfaction as the dependent variable. electronic
banking, which consists of automated payment system, automated delivery channels and
automated information sourcing services; while the dependent variable customer satisfaction is
measured in terms of; customer delight, customer excitement, customer repeat patronage and
customer retention. It assumes that once the dimensions of the independent variable mentioned
above are in place, then the outcome will be better customer satisfaction. However, the study
recognizes that there are variables such as government regulations that intervene in electronic
banking, thereby affecting customer satisfaction in terms of high taxes and regulations.

CHAPTER THREE

RESEARCH METHODOLOGY

3.1 Introduction
This Chapter presents the research methodology that will be adopted by the study for the impact
of electronic banking on customer satisfaction in commercial banks in Uganda. Some of the
issues that will be captured include the research design that will be employed; the target
population for the study; the different techniques that will be employed to arrive at the sample
size for the study; the type of data collection methods and the techniques that will be adopted in
analyzing the data that will be collected.

3.2 Research design

The research design is a conceptual structure in which research is conducted and finally
concluded. It lays down rules for the selection of the data, collection of data and treatment of the
findings. The choice of research design depends on the nature of the problem on which the study
is being undertaken and the scope of the study (Creswell & Plano Clark, 2007). The research
design of this study is a descriptive one as the researcher will be seeking to ascertain and
describe the characteristics of the financial performance given the level of loans portfolio

26
management in commercial banks in Uganda. According to Ngechu (2002), descriptive studies
are more formalized and typically structured with clearly stated hypotheses or investigative
questions. This research design has been chosen as it will enable the researcher to achieve the
goal of describing the relationship between the chosen two variables from an industry oriented
perspective in the Ugandan context.

3.3 Target population

The population is defined as a large group of people from which a number of individuals are
selected for the study (Mugenda, 2008). It is also a group where the researcher sampled from and
was interested to generalize to (Manfreda, 2008). It is therefore essential to identify the
population precisely and accurately because inferences have to be made about the elements in the
population. The researcher will use a study population of 90 staff of Centenary bank. These will
be consisted of 4 administrative bank managers and 15 lower bank officials using Kawuku
branch and 71customers. The administrators will be chosen because they have the responsibility
of overseeing the implementation of the electronic banking in the bank. The lower bank officials
will be chosen because the will be aware of what will be taking place in the bank and the impact
of the electronic banking on the bank performance. The customers will be selected because they
will be expected to express their taste and experiences of using electronic banking at Centenary
Bank.

3.4 Sample Size

The sample of 73 respondents will be selected, from a population of 90 respondents. The
distribution of the respondents is as shown in the table 3.1 below:

Table 3.1: Distribution of the study population and sampling techniques

Category Population Sample Sampling technique
Size
Branch managers 4 4 Purposive sampling
Low bank officials 15 10 Purposive sampling
Customers 71 59 Random sampling
Total 90 73
Source: Primary Data, 2024

3.5 Sample Size Determination

The sample size of respondents is 73 as calculated using Neumann (2000) formula as follows.

27
 n = N

1+ N (e2)

Where: n = sample size, N = target population

e = level of significance = e = 0.05 = e2 = (0.05)2 =0.0025

n=90/ (1+90(0.05)

n=90/1+90(0.0025)

n=90/1.275

n=73

3.6 Sampling techniques

According to Maree (2006), sampling refers to the process of selecting a population for the
study. Manfreda (2008) defines sampling technique as a description of strategies which the
researcher uses to select representative respondents from the target population. Sampling is the
process of selecting elements from a population in such a way that the sample elements selected
represent the target population. Selecting a sample is a very important step in conducting
research, particularly for quantitative research. This study will use purposive and random
sampling techniques only. According to Manfreda, (2008), purposive sampling gives the
researcher prior judgement about the samples. Kathuri (2007) adds that purposive sampling
means a sampling technique in which a researcher uses his or her own knowledge of the
population and selects the knowledgeable sample for the research study.

3.6.1 Random sampling

Random sampling will involve selecting respondents from the study population by chance. In
this way every respondent has an equal chance of being included in the sample. Random
sampling technique will be used to select other employees like customers since it gives all
participants equal opportunities to be selected for the study.

3.6.2 Purposive sampling

Purposive sampling will involve selecting a certain number of respondents based on the nature of
their knowledge in credit management. This method will be used to select respondents from the

28
loan department. This method will be appropriate because the sample selected comprises of
informed persons who possess vital data that will be comprehensive to allow gaining a better
insight into the problem. Therefore, purposive sampling in this study will be used to select the
branch managers and low bank officers of centenary bank since they have the main role of
implementation of electronic banking.

3.7 Data Collection Procedures

This being an academic research, the researcher will look for a supportive letter explaining the
objectives of the research signed by the Dean of School of Business Administration (SBA)
before distributing the self-administered questionnaires and interview guides to the respondents.
Respondents will be asked to present their data confidentially and anonymously.

3.8 Sources of data collection

Both primary and secondary data collection methods will be used to collect relevant data to the
study. Data collection methods that will be considered in such a way that relevant information is
collected as much as possible with little inconvenience to respondents. Primary data means to
first hand data. It will be collected from the respondents through interviews, and self-
administered questionnaire. Primary data will be important in answering questions about
electronic banking, and their effects on customer satisfaction in commercial banks. Secondary
data means to second-hand data. This will be obtained from recorded documents, earlier studies
and some publications on electronic banking. Other information will be obtained from the
internet.

3.9 Data Collection Methods

The study will use both questionnaires and interview guides for data collection.

3.9.1 Questionnaire Method

Questionnaires will be designed in view of the research questions to solicit relevant information
from the respondents in centenary Bank. This method will help to delimit the perceptions and
sentiments of the respondents that could have consequences to the subject under study. Close
ended questionnaires will be used in order to supplement each other. The close ended
questionnaires will be used to get information that is definite on the impact of electronic banking
on customer satisfaction in commercial banks in Uganda.

29
3.9.2 Interview Method
Interview means face to face interaction between the interviewee and the interviewer. The
interviews will be held with those respondents such as managers identified purposely crucial to
the provision of explanations to the topic under study. The interview method will help the
researcher to collect additional views from respondents on impact of electronic banking on
customer satisfaction in commercial banks in Uganda. The questions will be filled on spot and
the respondents will be interviewed from their offices to save time. The interviews will help to
supplement the answers given in the questionnaires. Interviews will enable the researcher to get
more elaborate and candid responses as opposed to the questionnaires. Interviews of half an hour
to one hour will be conducted at the work place and the researcher will rely on a note book to
store the data from the interviewees.

3.10 Data Collection Instruments

Data will be mainly collected through the use of questionnaires and interview guide.

3.10.1 Self-Administered Questionnaires

A questionnaire is a research instrument of a set of standardized printed or written questions with
a choice of answers, devised for purposes of a survey or statistical study (Trochim, 2007). He
further defines structured questionnaire as a document that consists of a set of standardized
questions with a fixed scheme, which specifies the exact wording and order of the questions for
gathering information from respondents. The researcher will use a structured questionnaire as a
primary data collection instrument. The questionnaire will be considered appropriate because it
is more convenient to administer and to collect data to enable the achievement of the objective of
the study. The primary data collected in the study will include data on impact of electronic
banking on customer satisfaction in commercial banks in Uganda. The questionnaire will contain
closed-ended questions and open-ended questions and will have various sections. The first part
will contain questions on the bio data of the respondent and the other sections will contain
questions on the specific objectives of the study. A “drop-and-pick later” approach will be
employed in administering the questionnaire and helping the researcher in assisting the
respondents in case of any issues in filling the questionnaires and to ensure maximum or high
response rates. The questionnaires will target the employees. The questionnaires will undergo a
test run to ensure effective data capture and reliability before the official rollout. The closed-

30
ended items will be on a 5-point Likert scale due to its simplicity and ease in answering, coding
and analysis. The response modes will be: 1-Strongly agree, 2-Agree, 3-Neutral, 4-Disagree, 5-
Strongly disagree.

3.10.2 Interview guide

According to Kahn and Connell (1957), in Marshall (1995), interviews are a conversation with
purpose and therefore data is collected easily. Interviews also have greater flexibility and
opportunity to restructure questions (Kothari, 2004). An interview guide will be prepared to
assist the researcher to collect data through face-to-face interviews that will be conducted with
the administrators of centenary bank. The purpose of the interviews will be to solicit views
concerning impact of electronic banking on customer satisfaction in commercial banks in
Uganda. Interview guides will be used because they assist the interviewer to remain focused
during probing time for deeper information.

3.11 Validity and Reliability of Instruments

The validity and reliability of the research instruments are important considerations when
conducting research. Hopkins (2010) defines validity as how well a variable measure what it is
supposed to measure; while reliability tells one how reproducible measures are in a retest.
(Edwards and Talbot, 2014) suggest that the validity of information is based on the extent to
which the methods measure what they are expected to.

3.11.1 Validity of the Instrument

Patton, (2000) explains validity as the extent to which a test accurately measure what is intended
to be measured. It has to do with how accurately the data in the study will represent its variables.
Validity of the instrument will be determined, where the data obtained will be checked against
the objective of the study.

3.11.2 Reliability of the Instrument

A reliable instrument produces the expected results when used more than once to collect data
from the same subjects randomly drawn from the population (Njunji, 2009). Test-retest method
will be used to determine the reliability of the questionnaire. The instruments will be
administered randomly to the selected respondents of Equity bank. Mugenda and Mugenda

31
(2007) explained that validity will enhance reliability of an instrument. Hence, a valid instrument
is reliable but a reliable instrument may not be valid.

3.12 Data Processing and presentation

Data processing will be done through different stages. The data will be collected from different
questionnaires and interviews will be organized so that order can be created. Editing and cross
checking will be done so that errors can be detected and corrections made. This will help to find
out completeness in the questionnaires. After editing the data, coding will follow. This involves
assigning of symbols to answers so that data can be categorized for example by age, level of
education and job title. Quantitative data will be summarized and presented in frequency tables
to generate descriptive statistics. These will aim at enabling quick reading and understanding of
the data.

3.13 Data Analysis

Data will be analyzed using various statistical techniques. Descriptive analysis will be carried out
using the statistical package for social science (SPSS) in order to test the relationship between
the loans portfolio management and financial performance of commercial banks.

3.13.1 Qualitative analysis

This study will use content analysis to analyze qualitative data into meaningful shorter sentences.
This type of analysis will be preferred when qualitative data has been collected in textual format
such as data collected using face-to-face interview, as suggested by Sekaran (2009). A thematic
approach will be used to analyze qualitative data where themes, categories and patterns will be
identified. The recurrent themes that emerged in relation to each guiding objective from the
interviews, will be presented in the results, with selected best quotes that emerged from
participants.

3.13.2 Quantitative analysis

Quantitative data will be coded and later entered into SPSS for analysis. The relationship
between: electronic banking and customer satisfaction in commercial banks in Uganda will be
established using the Pearson correlation co-efficient. Correlation coefficient and the level of
significance at 5% will be reported.

32
3.14 Ethical Considerations
The participation of respondents will be voluntary. All respondents will be required to sign an
informed consent form to show that their participation will be voluntary and have not been
forced to participate in the study. This study will ensure that respondents will not be asked to
reveal information that will embarrass them or endanger their home life, friendships or jobs.
Since the participants will be required to fill in the questionnaire, it will be expected that they
will not be exposed to physical harm.

3.15 Anticipated limitations to the study

The limitation to this study may come from the inability of respondents to complete and submit
questionnaire on time for data to be analyzed.

The research may be limited by financial constraints due to the extent of the scope of the study
and the period of investigation.

Confidentiality: Also, some respondents most especially the managerial members of centenary
Bank, deliberately will reject and resist to participate in this study claiming that they may be
accused of releasing confidential information to the public.

33
References
Abdullahi, M. S., Shehu, U. R., & Usman, B. M. (2019). Impact of information communication
technology on organizational productivity in the Nigeria banking Abdullahi industry:
Empirical evidence. Noble International Journal of Business and Management Research, 3(1),
1-9.

Ajagbe, A. M. (2014). Funding Criteria in Technology Based Firms. An Unpublished Thesis

submitted to Universiti Teknologi Malaysia in partial Fulfilment of award of Doctoral Degree
in Management.

Al–Hawari, M., Ward, T., 2006. The impact of automated service quality of financial
performances and the mediating role of customer retention. J. Financ. Serv. Market. 10 (3),
228–--243.

Anderson, P. E. (2003). The Computer as a medium. London Cambridge University Press. Pg.
516.

Anup, K. G. (1997). Securing E-commerce: A systematic Approach. Journal of Internet Banking

and Commerce, 2(4); 15-24.

Aprigliano, V., Ardizzi, G., & Monteforte, L. (2019). Using payment system data to forecast
economic activity. International Journal of Central Banking, 8(2), 78- 90

Auta, M. E. (2010). E-banking in Developing Economy: Empirical Evidence from Nigeria.

Journal of Applied Quantitative Methods. 5(2), 23-56.

Ayo, C. K., Adewoye, J. O and Oni, A. A. (2011). Business to Consumer e-commerce in

Nigeria: Prospects and challenges. African Journal of Business Management, 5(13), 76-86

34
Basel Committee on Banking Supervision, (1998). Risk Management for Electronic Banking and
Electronic Money Activities. Journal of Small Business Management, 4(2), 51- 840.

Basel Committee on Banking Supervision, (2003). Risk Management Principles for Electronic
Banking. Bank for International Settlement, Journal of Business, 18 (5), 93-147.

Bernazzani, S. (2018). What is customers’ satisfaction? Retrieved form:

https://blog.hubspot.com/service/what is customer satisfaction.

Blach, S. W. (2011). Board of director determinants of voluntary audit committee disclosures:

Evidence from Singapore. Singapore Management University.

CGAP Report. (2018), A digital credit Revolution Insight from Borrowers of Kenya and
Tanzania. CGAP working paper, Washington DC.

Chaimaa, B., Najib, E., & Rachid, H. (2021). E-banking overview: Concepts, challenges and
solutions. Wireless Personal Communications, 117(2), 1059-1078.

Colgate, M. & Hedge, R., (2001). An investigation into switching process in retail banking
service. International Journal of Bank Marketing, 19(5), 201-212.

Dabholkar, P. (1996). Consumer evaluations of new technology-based self-service options: an

investigations of alternative models of service quality. International Journal of Research in
Marketing, 13(1), 29-51.

Dabholkar, P., (1994). Technology based service delivery. Advances in Service Marketing and
Management, 3(1), 241-271.

Delgado, J., Hernando, I. and Nieto, M. J. (2004). Do European primarily internet banks show
scale and experience efficiencies? Working Paper No. 0412, Banco de Espana, Madrid.

Furst, K., Lang, W. W. and Nolle, D. E. (2000a), “Who offers Internet Banking?” Quarterly
Journal, Office of the Comptroller of the Currency, 19(2), 27-46.

Furst, K., Lang, W. W. and Nolle, D. E. (2000b), “Internet Banking: Developments and
Prospects”, Economic and Policy Analysis, Working Paper No. 2000-9, Office of Comptroller
of the Currency, September.

35
Haralayya, B. (2021). How digital banking has brought innovative products and services to
India. Journal of Advanced Research in Quality Control and Management, 6(1), 16-18.

Iqbal, Z., Verma, R. & Baran, R., (2003). Understanding consumer choices and preferences in
transaction- based e-service. Journal of Service Research, 6(1), 51-65.

Joseph Y. (1997), Service quality in education: a student perspective, Quality Assurance in

Education, Vol. 5 No.1, pp.15-21.

Joseph, M., & Stone, G., (2003). An empirical evaluation of US bank customer perceptions of
the impact of technology in service delivery in the banking sector. International Journal of
Retail & Distribution Management, 31(4), 190-202.

Joseph, M., McClure, C. & Joseph, B., (1999). Service quality in the banking sector: the impact
of technology on service delivery. International Journal of Bank Marketing, 17(4), 182-191.

Kakembo J. (2001), Service quality in the banking sector: the impact of technology on service
delivery, International Journal of Bank Marketing, Vol. 17 No.4, pp. 182-91.

Kakembo J. (2001), Service quality in the banking sector: the impact of technology on service
delivery, International Journal of Bank Marketing, Vol. 17 No.4, pp. 182-91.

Kasita, J.F. (2004), Internet technology and customer linking in Nordic banking, International
No. 5: 45-47, 2001.

Keaveney, S. (1995). Customer switching behaviour in service industries: An exploratory study.

Journal of Marketing, 59(2), 71.

Khan, M.A., 2010. An empirical study of ATM service quality and customer satisfaction in
Pakistani banks. Eur. J. Soc. Sci. 13 (3), 333–343

Krick, T. (2009). CARTA & Caribbean Group of Banking Supervisors. IT Workshop for
Regional Bank Examiners. International Journal of Small Business Management, 4(10), 51-
84.

Li, M. V., & Zeng, M. (2010). Financial modeling and actuarial valuation. New York: Springer.

Mahmood, M. A., Bagadu, K. and Ford, T. C. (2014). Online Shopping. Behaviour: Cross
Country Empirical Research. International Journal of Electronic Commerce, 9(1), 930.
36
Mamadiyarov, Z. (2021). Analysis of factors affecting remote banking services in the process of
bank transformation in Uzbekistan. Financial and Credit Management Journal, 1(36), 14-26.

Mamudu, Z. U. (2021). Electronic banking payment system and its impact on the Nigerian
economy. Journal of Emerging Trends in Economics and Management Sciences, 12(1), 8-26.

Measurement and Evaluation of Satisfaction Process in Retail Setting. R Oliver. Journal of

Retailing 1981. 57 p. .

Meuter, M.L. and Bitner, M.L. (1998), “Self-service technologies: extending service frameworks
and identifying issues for research”, AMA Winter Educator’s Conference Proceedings:
Marketing Theory and Applications, Vol. 9, pp. 12-19.

Mishra, R. (2019). Making Smartphones Last Longer with Code Offload. In Proceedings of the
8th international conference on Mobile systems, applications, and services (pp. 49- 62).

Mols, N. (2000). The internet and service marketing-the case of Danish retail banking. Internet
research: Electronic Networking Applications and Policy. 10(1), 7-18.

Msheliza, S. K. (1996). Lecture Material on: The Nigerian Financial System. Bus 310 Financial
System.

Mugambi D. (2011), A survey report of Internal Service Delivery Systems in Kenya Commercial
Bank.

Nguyen, O. T. (2020). Factors affecting the intention to use digital banking in Vietnam. The
Journal of Asian Finance, Economics and Business, 7(3), 303-310.

Njogu J. (2014), The effect of electronic banking on profitability of commercial banks in Kenya,
unpublished dissertation.

Nogalski, B., & Hiep, P. M. (2022). ICT application in commercial banks in the post-Covid-19
economy in Vietnam. International Research Journal of Management, 2(1), 25-38

Okwute, A. P. (2007). Lecture Material on: Office Automation BUS 420 Advance Management
Theory.

Paul, W., Neil, T., Bendle, E., Phillip, E., & David, J. (2010). Marketing metrics: The definitive
guide to measuring marketing performance (2nd Ed.). New Jersey: Pearson Education, Inc.
37
Pavlou, P. A. (2003). Consumer Acceptance of Electronic Commerce: Integrating Trust and Risk
with the Technological Acceptance. International Journal of Electronic Commerce, 7(3), 98-
122.

Pickering, Andrew .1993. The mangle of practice: Agency and emergence in the sociology of
science.” American Journal of Sociology 99 (3): 559-89.

Pickering, Andrew. 1984.Constructingquarks—A sociological history of particle physics.

Chicago: University of Chicago Press.

Pickering, Andrew.1995. The mangle of practice: Time, agency, and science. Chicago:
University of Chicago Press.

Pinch, Trevor, and WiebeBijker. 1987.Thesocialconstruction of facts and artifacts: Or how the
sociology of science and the sociology of technology might benefit each other.

Pinch, Trevor. 1977.Whatdoesaproofdoifitdoes not prove? A study of the social conditions and
the metaphysical divisions leading to David Bohm and John von Neumann failing to
communicate in quantum physics.

Prakash, A. & Mohanty, R. (2012). Understanding service quality. Production Planning and
Control, 21(3), 1-16.

Radecki, L., Wenninger, J. & Orlow, D., (1997). Industry structure: Electronic Delivery's
Potential Effects on Retail Banking. Journal of Retail Banking Service, 19(4), 57-63.

Ramas, W. S. (1998). Identifying customers for online Financial Services. Journal of Internet
Banking and Commerce, 3(2), 45-46.

Ramas, W. S. (1998). Identifying customers for online Financial Services. Journal of Internet
Banking and Commerce, 3(2), 45-46.

Robertson, E. (2019). What is customers’ satisfaction? Retrieved form:

https://www.myaccountingcourse.com/accounting-dictionary/customer- satisfaction

Rogers, E.M. (2003). Diffusion of innovations (5 th ed.). New York: Free Press.

Satisfaction: A Behavioural Perspective on the Consumer, R Oliver. 1997. New York, McGraw
Hill.
38
Senoga M. (2018), electronic banking and customer satisfaction in Centenary Rural
Development Bank, Uganda.

Silber, E. M. (1983). A prospective and retrospective look at the financial innovation theory.
Journal of health communication, 9(S1), 13-19.

Simpson, J. (2002). The Impact of the Internet in Banking: Observations and Evidence from
Developed and Emerging Markets. Telematics and Informatics, 19, 315-330.

Solomon, O. and Ajagbe, A. M. (2014). Internet Banking Adoption in Nigeria: A Literature

Review. 2014 International Conference on Computer, Intelligent Computing and Education
Technology, March 28th, Hong Kong. Published by Taylor and Francis Group.

Solomon, O., Shamsudeen, E., Wahab, Ajagbe, A. M. and Wallace, E. I. (2014). A Study of E-
Commerce Adoption Factors in Nigeria. International Journal of Information Systems and
Change Management, 6(4), 295-315.

Surjadjaja, H., Ghosh, S. & Antony, J., (2003). Determining and assessing the determinants of
eservice operations. Managing Service Quality, 13(1), 39-53.

Szymanski, D. & Hise, R., (2000).e-satisfaction: an initial Examination. Journal of

Retailing,76(3), 309-322.

Tillya, J.J., 2013. A Dissertation Submitted in Partial/Fulfillment of the Requirements for the
Award of Master’s Degree of Science in Accounting and Finance of. Mzumbe University,
Mzumbe, Tanzania.

World Payments Report 2016, Capgemini, http://www.capgemini.com/ insights-and-

resources/by-publication/world-payments-report-2015/, accessed on 10th May 2016

39
APPENDIX 1: QUESTIONNAIRE FOR LOW LEVEL MANAGERS AND CUSTOMERS
Dear respondent,

I am, Kyomugisha Mecholus, undertaking a research on impact of electronic banking on

customer satisfaction in commercial banks in Uganda with Centenary bank, Kawuku branch
as the case study. As a requirement for a Bachelor’s degree in business administration of
Nkumba University please help me answer the questions below. All information provided will be
kept confidential.

I humbly request you, to participate in this study by filling in this questionnaire. All answers that
you will provide shall be treated with the confidentiality they deserve, and will be used for only
academic purposes.

SECTION A: BASIC DEMOGRAPHIC DATA (PLEASE TICK WHERE

APPROPRIATE)

1. Gender

Male Female

2. Age of respondents (Years)

21-30 31-40 41-50

3. Highest Level of Education

Certificate Diploma Bachelor Degree Master’s Degree Others (please

specify)

4) Number of years’ respondent has worked at centenary bank

Less than one year 1-5 years 6yrs and above

40
For Section B, C and D, tick the selected alternatives and tick as to where you: 1. Strongly Agree
(SA), 2. Agree (A), 3. Not Sure (N), 4. Disagree (D) or 5. Strongly Disagree (SD)

SECTION B: Effect of automated payment system on customer satisfaction in centenary

bank, Kawuku branch
Statement SD D N A SA
5 Centenary Bank has enough ATMs that can serve all clients
6 Centenary Bank has e-cheque services available to all customers
in this branch
7 Cashless banking is part of the arrangements in Centenary Bank
8 Inter-banking technology of Inter-switch is very efficient,
effective and convenient to all customers
9 Customers do not have to undergo much stress to make
payments for goods and services
10 ATM has made settlement of bills in the Ugandan banking
system easy and saver
11 I.T Security at Centenary Bank is not comprised by E-funds
transfer

SECTION C: Impact of automated delivery channel on customer satisfaction in centenary

bank, Kawuku branch
Statement SD D N A SA
12 A customer can now easily check his/her bank account using
his/her phone
13 A customer can now withdraw his/her finances using his/her
phone from the bank
14 A customer can easily know every kind of information he/she
needs by merely calling in the bank especially if he/she has the
bank codes
15 The bank provides information update about the bank through
SMS
16 Tele-banking in Centenary Bank allows customers to pay all their
monthly bills
17 Interactive Voice Response is part of the banking services in
Centenary Bank
18 Centenary Bank has in place mobile banking for distant and busy

41
 customers

SECTION C: Impact of automated information sourcing service on customer satisfaction

in centenary bank, Kawuku branch
Statement SD D N A SA
19 Customer can now print their account statement online
20 The bank provides information update about the bank through
email alerts to its customers
21 Centenary Bank also allows to download account transactions
using your email
22 It is easy to make third party payments and others bills online in
Centenary Bank
23 There are no problems in networks regarding internet banking
24 The bank’s website is operational 24hrs a day
25 Centenary Bank Allows intra-Banks Account to Account Transfer
using internet

SECTION D: Customer satisfaction

Statement SD D N A SA
26 Centenary Bank clients are very much determined to stay banking
with the bank
27 I have been banking with centenary for a relatively longer period
of time
28 The clientele of centenary bank has been increasing each and
every year
29 Due to the services offered, are you willing to continue using the
e-banking services?
30 A number of referrals from old clients have been witnessed in
centenary bank
31 Does the bank ensure that customer needs and expectations are
met?
32 Are you satisfied with the information about e-banking and are
they available?
THANK YOU FOR YOUR TIME

42
 APPENDIX II: INTERVIEW GUIDE FOR TOP MANAGEMENT
1.Position in the Centenary bank…………………………………………………………………

2. Department ………………………………………………………………………………..

3a). Does Centenary bank have an e-fund transfer system?

b) If yes, what forms of e-fund transfer system are installed in Centenary bank?

c) Has e-fund transfer system improved customer satisfaction in Centenary bank?

4)Does Centenary bank have internet banking?

b) If yes, how does internet banking used in Centenary bank?

c) Has internet banking improved on customer satisfaction in Centenary bank?

5)Do you know what Electronic banking services offered by Centenary bank Limited is?

6). How did you know about Electronic banking services of Centenary bank Limited?

7). What is your general opinion about electronic banking services of Centenary bank Limited?

i. Do you think Electronic banking services is one of the means for Centenary bank Limited
to meet its customers' needs and satisfaction?
ii. Do you think that Centenary bank Limited should use Electronic banking services?

8). Do you listen to banking advertisements only when you need or want or you prefer being
informed about banks on a current basis?

9). What makes you keep on using Electronic banking services of Centenary bank Limited and
not any other bank?

43
10). How would you rate this Electronic banking services of Centenary bank compare to the
other banks?

44