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Abdi Kafi THE IMPECT OF INTERENET BANKING ON CUSTOMER SATISFACTION
Abdi Kafi THE IMPECT OF INTERENET BANKING ON CUSTOMER SATISFACTION
By
OF BACHELOR DEGREE OF
OF UNIVERSITY
OF SOMALIA
{UNISO}
JUNE
2021
STUDENT DECLARATION
I declare that this proposal entitled by “The impact of Internet banking on customer
satisfaction” is the result of my own research except as cited in the references. The
proposal has not been accepted for any degree and is not concurrently submitted in
candidature of any other degree.
Signature ____________________
Date: ____/_____/2021
ii
SUPERVISOR APPROVAL
I hereby declare that I have read this senior project and in my opinion, It is sufficient in
terms of scope and quality for the award of Bachelor Degree of Banking and Finance
and I accepted for the submission to the examining panel.
Signature: ___________________________
Date: ____/_______/2021
iii
EXAMINING PANEL APPROVAL
This senior project entitled “the impact of Internet banking on customer satisfaction”
prepared and submitted by: Abdikafi Qasim Sheikh Mohamud partial Fulfillment of the
requirement for the award of Bachelor degree of bank and finance has been examined and
accepted by examining panel.
_____________________________________________________________
_____________________________________________________________
_____________________________________________________________
Date: __________/_________/________________
iv
DEDICATION
I have the honor to sincerely dedicate this work to my beloved parents, and my friends
for their entire efforts and support during my academic career.
v
ACKNOWLEDGMENT
First of all, I would like to say praise is due to Allah that enabled me to complete my
thesis and indeed, throughout my life: I can do everything through him, who gives me
strength,
Secondly, I would like to thank my dear supervisor Pro. Abdullahi Mohamed Mohamud
for his professional guidance, follow up and great support, useful comments, remarks and
engagement through the learning process of this thesis.
Furthermore, I would like to thank my loved friends, who have supported me throughout
entire process, both by keeping me harmonious bank) in my research, who have willingly
shared their precious time during the process of and helping me putting pieces together. I
will be grateful forever for your love. Of course, this thesis would not have been possible
without the participation of the subjects.
Last but not least, I would like to thank my parents and my family for their unconditional
support, both financially and emotionally throughout my degree. In particular, the
patience and understanding shown by my mother, Father, sisters and brothers during the
time of this course, is greatly appreciated. I know, at times, my temper is particularly
trying.
vi
ABSTRACTS
The purpose of this study is to investigate the impact of Internet banking on customer
satisfaction in some selected banks in Mogadishu Somalia. The specific objectives of the
study were “To examine the impact of home banking on customer satisfaction”, to
investigate of the impact of personal computer banking on customer satisfaction of some
selected banks in Mogadishu Somalia”. And to find out the impact mobile banking on
customer satisfaction some selected banks in Mogadishu Somalia”. The sample size of
this study was 67 respondents including offers and staffs targeted including salaam bank
the study was conducted through descriptive research design and used questionnaires as
the main instrument for collecting data. The questionnaire was consisting of structured
with closed End questions. Data was analyzed by assessing the frequency of respondents
per question. Tabulated frequencies analysis was made using Statistical Package for
social science SPSS version 20.0 to present the data analyses. This study found that The
study showed The study found that mean 3.22162 and standard deviation 1.397868 that
there is the impact of home banking on customer satisfaction was very good, the impact
of person computer banking on customer satisfaction with mean 3.31344 and standard
deviation 1.377728 was very good. The impact of mobile banking on customer
satisfaction with mean of 3.36418 and standard deviation of 1.441864 was very good The
study I recommended, study indicated that there is moderate relationship between online
banking and customer satisfaction, so management of the bank should develop and make
strong that relationship. Since ATM banking is more important for bank’s performance,
researcher recommended giving them high effort, and Management of Premier is
encouraged to promote that activity.
TABLE OF CONTENTS
vii
STUDENT DECLARATION.........................................................................................................ii
SUPERVISOR APPROVAL.........................................................................................................iii
DEDICATION.................................................................................................................................v
ACKNOWLEDGMENT................................................................................................................vi
ABSTRACTS................................................................................................................................vii
CHAPTER ONE..............................................................................................................................1
INTRODUCTION...........................................................................................................................1
1.0 INTRODUCTION.....................................................................................................................1
1.1 BACKROUND OF THE STUDY.............................................................................................1
1.2 Problem of the study..................................................................................................................4
1.3 Purpose of the study...................................................................................................................5
1.4 Specific Objectives of the study................................................................................................5
1.5 Research Questions....................................................................................................................5
1.6 the significant of the study.........................................................................................................5
1.7 scope of the study......................................................................................................................6
1.7.1 Content of scope:....................................................................................................................6
1.7.2 Geographical scope.................................................................................................................6
1.7.3 Time of scope.........................................................................................................................6
1.8 Operational Definitions.............................................................................................................6
1.8.1Internet banking.......................................................................................................................6
1.82Online Transactions..................................................................................................................6
1.8.3 Personal computers.................................................................................................................6
1.8.4Customer satisfaction...............................................................................................................7
1.9 CONCEPTUAL FRAMEWORK..............................................................................................7
CHAPTER TWO.............................................................................................................................8
LITERATURE REVIEW................................................................................................................8
2.0 INTRODUCTION.....................................................................................................................8
2.1 theory literature review..............................................................................................................8
2.1.1 CONCEPTS OF INTERNET BANKING..............................................................................8
2.1.2 Home Banking......................................................................................................................11
2.1.3 Personal computers...............................................................................................................12
viii
2.1.4 Mobile Banking....................................................................................................................15
2.2CUSTOMER SATISFACTION...............................................................................................15
......................................................................................................................................................17
CHAPTER THREE.......................................................................................................................19
RESEARCH METHODOLOGY..................................................................................................19
3.0 Introduction..............................................................................................................................19
3.1 Research design.......................................................................................................................19
3.2 Research population.................................................................................................................19
3.3 Sample Size.............................................................................................................................20
3.4 Sampling procedure.................................................................................................................20
3.5 Research instrument.................................................................................................................21
3.6 Research Quality......................................................................................................................21
3.6.2 Reliability.............................................................................................................................21
3.6.1 Validity.................................................................................................................................22
3.7 Collection procedures..............................................................................................................22
3.8 Data analysis............................................................................................................................22
3.9 Limitations of the Study..........................................................................................................23
3.10 Ethical Consideration.............................................................................................................23
CHAPTER FOUR.........................................................................................................................24
DATA PRESENTATION, ANALYSIS AND INTERPRETATION...........................................24
4.0 Introduction..............................................................................................................................24
4.1 Demographic Characteristics of the Respondents...................................................................24
4.1.1 GENDER.............................................................................................................................24
: 4.1.2 Age of the Respondents......................................................................................................25
Table of 4.1.3 MARTIAL ISSUES...............................................................................................26
4.1.4 YOU’RELEVELOFEDUCATION.....................................................................................27
4.1.5 EXPERIENCE.....................................................................................................................28
4.2.1 Home Banking and customer satisfaction...........................................................................29
4.2.2personal computer banking and customer satisfaction.........................................................30
ix
4.2.3 Mobile banking and customer satisfaction..........................................................................31
4.3 CUSTOMER SATISFACTION.............................................................................................32
4.4 Relationships between online banking and customer satisfaction...........................................33
CHAPTER FIVE...........................................................................................................................34
MAJOR FINDINGS, CONCLUSION AND RECOMMENDATIONS.......................................34
5.0 Introduction..............................................................................................................................34
5.1 Major Findings.........................................................................................................................34
5.2 Conclusion...............................................................................................................................35
5.3 Recommendation.....................................................................................................................35
5.4 Areas for Further Research......................................................................................................36
REFARENCES..............................................................................................................................37
APPENDIX (A): QUESTIONNAIRE...........................................................................................40
x
LIST OF TABLES
29
31
32
TABLE OF 4.4 Correlations..............................................................................................33
xi
CHAPTER ONE
INTRODUCTION
1.0 INTRODUCTION
This chapter highlights the following; background of the study, problem statement, significance
of the study, objectives of the study, research questions, and scope of the study, definitions of the
key terms and conceptual framework.
Internet banking is the fastest growing service that banks can offer in order to gain andretain new
customers (Moody, 2002). The rise of Internet Banking is also due to its number of benefits for
both the provider and the customer as well. From the bank‟s perspective these are mainly related
to cost savings (Sathye, 1999; Robinson, 2000) and Internet Banking remains one of the cheapest
and more efficient delivery channels (Pikkarainenet al., 2004). Kim et al. (2006) predicted that
87% of community banks would offer Internet banking in 2003 tomeet consumers‟ needs, and
asserted that, Internet banking has advantages for banks to maintain competition, to save costs, to
enhance mass customization, marketing and communication activities, and to maintain and
attract consumers. On-line, real-time banking services have now become a birth right of the
customer as the customer demands the flexibility of operating an account in any branch of a bank
irrespective of which branch the account was domiciled (Bank Away, 2001).
In Australia all banks are now offering internet banking facilities to all its customers. As
suggested by (Chang, 2003)the evolution of information technology has significantly influenced
the banking industry. Particularly, the advent of the Internet and the popularity of personal
computers have created both an opportunity and a challenge for this industry. In only a decade
Internet Banking has rapidly grown (Ashford, W. 2004). In 2001, the Market Intelligence
Strategy Centre (MISC) reported that approximately 2.8 million people have used Internet
Banking in Australia (Wall, S. , 2001). These figures increase rapidly with each new survey. A
study from Taylor Nelson Sofre in 2002 revealed that 23% of Australians used Internet Banking
12
and the Internet Banking adoption rate in Australia is greater than in the US and Britain. In mid-
2002, the MISC reported that 5 million Australians had used Internet Banking services (Plaskitt,
2002). Recent survey undertaken by the MISC shows that the number of Australians using
Internet Bank had reached 7.7 million in September2003, with an annual growth rate of 113%
(Moullakis, 2004).
In Africa, In Ghana, the phase of the entire banking industry is rapidly changing and the focus is
now on new delivery channels in order to improve customer service delivery and to provide
customers with 24 hours a day access to banking services (Boateng R, 2006). Despite the
adaptation to e-banking by many banks in Ghana in their quest to meet the banking needs of their
customers, the issue of service delivery and customer satisfaction with e-banking service has not
received much attention in literature (Jun M, 2001). In Ghana, e-banking has emerged as a new
medium of delivering banking product/services to customers. This innovation in the Ghanaian
banking industry is intended to provide customers with more valuable services including
convenience and easy access to their money and other banking information they may need. Many
institutions in the Ghanaian banking industry have inclined to e-banking in the broader sense
which includes the use of smart cards for banking, ATMs and tele-banking. However, few banks
have actually adopted the use of the internet channel in their electronic banking systems. This
presupposes that only a few have actually gone beyond the use smart cards, ATMs and tele-
banking in their electronic banking services (Narteh B, 2012).
In Somali, Prior to the collapse of Somali central government in 1991, privately owned
commercial banks had not existed in Somalia but all banks were owned and managed by the
government of Somalia which believed socialism as the best appropriate economic system for
the country (ORRMACS, 2012). However, Somali had two public commercial banks namely
Somali Savings and Credit Bank and Somali Commercial Bank in which they were established
after the nationalization of all foreign commercial banks in 1970 ( Warsame , 2016). Moreover,
loans and other financing resources were also managed by these banks with restricted access by
the ordinary Somalis but only political and business elite closer to the ruling party ( Kacan Party)
had the unlimited access to the resources. In the last decade, the Somali banking industry has
13
witnessed unprecedented changes in the banking industry which led to the opening of number of
banks in Mogadishu, Somalia. More
than three banks including International Bank of Somalia, Premier Bank and Trust African bank
of Somalia were among those recently opened in Mogadishu, Somalia. The major factor that
contributed to the rise in the number of banks in Somalia is the decision taken by some money
transfer agencies (Hawala) to change their money transfer companies to incorporating banks due
to the challenges encountered by Hawala business from foreign countries as result of global fight
against money laundering ( ORRMACS, 2012). Moreover, Somalia is expected to experience
growth and expansion in the financial sector specially banking industry. Theoretically, this study
employs Assimilation theory of satisfaction. Assimilation theory is based on Festinger‟s (1957)
dissonance theory. Dissonance theory posits that consumers make some kind of cognitive
comparison between expectations about the product and the perceived product performance. This
view of the consumer post-usage evaluation was introduced into the satisfaction literature in the
form of assimilation theory. According to Anderson (1973), consumers seek to avoid dissonance
by adjusting perceptions about a given product to bring it more in line with expectations.
Consumers can also reduce the tension resulting from a discrepancy between expectations and
product performance either by distorting expectations so that they coincide with perceived
product performance or by raising the level of satisfaction by minimizing the relative importance
of the disconfirmation experienced.
Conceptually, Arunachala and Siva Subramanian (2007) content that Internet banking is where
customer can access his or her bank account via the Internet using PC or mobile phone and
webbrowser. Ongkasuwan and Tantichattanon (2002) defined Internet banking service as
banking service that allows customers to access and perform financial transactions on their bank
accounts from their Computers with Internet connection.
14
further definedcustomer satisfaction as a result of a cognitive and affective evaluation where
some comparison standard is compared to the actually
perceived performance. If the performance perceived is less than expected, customers will be
dissatisfied. Kotler (2000) defined satisfaction as: “a person‟s feeling ofpleasure or
disappointment resulting from comparing a product‟s perceived performance (or outcome) in
relation to his or her expectations”. Contextually, in my best awareness there is lack of effective
internet banking in Somalia. Therefore, this study attempts to investigate the impact of internet
banking on customer satisfaction in some selected banks in Mogadishu, Somalia.
Without strong government control in the banking, a significant amount of success has been
achieved by the financial sector in Somalia specially banks. Even though these banks provide
limited number of services to its customers, banks such as Premier Bank, Dahabshil Bank and
Salaam Somali launched internet banking services such as ATM, Visa and master cards and
phone banking for the first time in Somalia which helps customers connect with the rest of the
world financially and manage their accounts easily. Yee and Faziharudean (2010) define internet
banking (IB) as delivery of banking services via secure website operated by the bank. Besides
that, banks in Somalia provide short term loan to its clients mainly less than year with Islamic
method of financing (Murabaha). Apart from the success achieved by the banking industry in
Somalia, it is true that banks did not provide yet the necessary services which are vital to the
development of the economy and wellbeing of the society. Such challenge not only faced by
banks in Somalia but it is common in many countries in the continent. Senbet&Otchere, (2006)
as cited in Fosu (2013) argue that there are a lot to be achieved despite the record of success
across the continent and issues such as saving mobilization and credit allocation have not
improved in comparison with the expectations.Banks in Somalia operate as Islamic banks rather
than conventional banks. A study by Warsame (2016) suggests that the introduction of Islamic
Banking in Somalia has long existed due to Somali‟s strong Islamic identity and the fact the only
functioning institutions currently operating in the country are Hawala companies which only
provide money remittance services.
15
In our best awareness there is no effective internet banking in Somalia. Therefore, this study
investigated how internet banking effects on customer satisfaction.
The general Objective of the study is to identify the impact of Internet banking on customer
satisfaction in salaam samoli bank in Mogadishu-Somalia
First the study will be useful for Somali commercial banks in order to see the impacts of
ebanking on customers‟ satisfaction in comparison with the ordinary mortar and brick banking
system. Second it helps in understanding what attitude customers‟ have towards e-banking and
what actions should the banks take in order to benefits from the opportunities and how to
overcome the challenges.Third study can be used by other researcher as a reference who wantsto
study further in this or related areas or to serve as a reading material for anyone who is
interested. Last but not least this research will alert bankerstomorrow‟s problems today in order
to get the intended customers satisfaction as this service can be said it is at infant stage in the
country
16
It is description of the boundary of the study in terms of content, geographical and time in single or
several paragraphs.
1.7.1 Content of scope: The study is concerned Internet banking and customer satisfaction
1.7.2 Geographical scope The was focus on salaam Somali bank in Mogadishu Somalia .
1.7.3 Time of scopeThe study was focus on the period between March, 2021 to July 2021
1.8 Operational Definitions
1.82Home bankingis a service that enables a bank client to handle his accounts from a computer
from a place selected in advance, at home or in the office.
1.8.3 Personal computersThe present invention relates to computer banking systems and,
more particularly, for computer banking systems in which a banking customer requests and
obtains services over a network.
1.84Mobile BankingA very recent addition to the electronic banking products in while is the
mobile banking. Literally this is banking on the mobile phone.
17
Independent Variable Dependent Variable
ONLINE
TRANSACTION
Customer
Personal Computer Satisfaction
Banking
Mobile Banking
18
CHAPTER TWO
LITERATURE REVIEW
2.0 INTRODUCTION
In this chapter, the researcher critically analyzes the related literature reviews to the internet
banking and customer satisfaction. The theoretical review constitutes the theories and concepts
of other experts underlying the relationship between the two variables: internet banking and
customer satisfaction. Additionally, it presents the related literatures along the study objectives.
19
the URL, user name and password of each external account. Once customer logs on to an
account aggregation website, this system automatically logs onto other banks‟ Internet Banking
sites just as if a customer is logged on to them directly. With account aggregation, a customer is
able to access al information from an account held at another bank. This provides customers with
convenience and time saving. Although this has many advantages to the customers, security,
level ofinformation access and legal standards to protect thebanks and customers has led to a
slow adoption (Li, 2001, ). Internet banking will soon become one ofthe key fulcrums in
ensuring that a customer is engaged with the bank and in touch with the changing environment.
From the bank's point of view, Internet banking will become important since it is a window to
reach out to customers, irrespective of their geographical location (Villers, 2012). Internet
banking, both as a mediumof delivery of banking services and as anstrategic tool for business
development has gained wide acceptance internationally and is fast catching up in India with
more and more banks entering the fray. India can be said to be on the threshold of a major
banking revolution with net banking having already been unveiled. At present, the total Internet
users in the country are estimated at above 40 million. Only about 1% of Internet users did
banking online in 1998. This increased to 16.7% in March 2000. The growth potential is,
therefore, immense. Further incentives provided by banks would dissuade customers from
visiting physical branches, and thus get „hooked‟ to the convenience of armchair banking. The
facility of accessing their accounts from anywhere in the world by using a home computer with
Internet connection, is particularly fascinating to Non-Resident Indians and High Net worth
Individuals having multiple bank accounts (Ainin et al., 2005).
20
services and offerings, and this can be achieved through delivering high quality of electronic
service (e-SQ). Most studies in e-SQ researches indicated that e-SQ is strongly correlated with
esatisfaction and e-SQ is significantly and positively affected e-satisfaction 2007). Subsequently,
high e-SQ, with high e-satisfaction will contribute to the customer retention and e-loyalty (Grace
and Sun, 2009). Further, the mediating effect of e-satisfaction on the relationship between e-
ShuQ and loyalty in internet banking has been central study in services marketing .This fact
makes it important for the banks in Malaysia to have a clear view on the impacts of their internet
banking e-SQ and e-satisfaction on e-loyalty.(Caruana, 2002,2009). E-banking is defined as the
use of Internet to deliver banking activities, such as transferring funds, paying bills, viewing
current and savings account balance, paying mortgages, and purchasing financial instruments
and certificates of deposits (Jayshree, 2013; Uduji, 2013). Payment cards have replaced cheques
in some countries. While ATMs have become a source of receiving cash, e-banking has become
a preferred means of paying invoices (Hel, 2006,2009) E-banking provides a lot of benefits to
both customers and banks. For example, e-banking offers customers an opportunity to pay bills
and performing transactions of any kinds electronically. Customers can also make payments of
goods or services without necessarily coming with liquid cash to the bank or other business
places, which reduce the risk of handling large amount of money.
Internet Banking allows account aggregation. Withaccount aggregation, customers can manage
several banking accounts held at different banks via a unique access point. This means that
customers just log on to the Internet Banking websites which support account aggregation enable
customers to access their account held at other banks, including deposit account, credit cards and
award programs (Li, F. 2001). To use account aggregation service, a customer has to give
settings such as the URL, user name and password of each external account. Once customer logs
on to an account aggregation website, this system automatically logs onto other banks‟ Internet
Banking sites just as if a customer is logged on to them directly. With account aggregation, a
customer is able to access al information from an account held at another bank. This provides
customers with convenience and time saving. Although this has many advantages to the
customers, security, level of information access and legal standards to protect the banks and
customers has led to a slow adoption (Li, F. 2001). Internet Banking provides customers with
many services and several facilities to carry out online
21
Banking transactions. The basic services include opening a bank account, printing bank
statement, transferring funds between bank accounts, and paying bills. Other Internet Banking
services comprise of future, dated and recurring bill payments and funds transfers, loan
application, e-trade, fund management, customization of account names, ability to export
banking transactions to popular financial management software packages such as Microsoft
Money or Intuit Quicken [1]. In addition, account aggregation services allow customers to
manage multiple accounts from different financial institutions with a single login. There are
many online financial services but they can be divided into the following categories [18]: (1)
Current account; (2) Insurance-based; (3) Credit-based; (4) Investment-based services. Most
Australian banks provide interactive, extensive and sophisticated Internet Banking services [6].
However, it appears that no empirical study has been conducted to examine whether the Internet
banking services in Australia are satisfactory to customers (Shariq, 2006).
22
b) viewer – can browse through statements and
announcements received.
This system is open and can be expanded in the
The present invention relates to computer banking systems and, more particularly, for computer
banking systems in which a banking customer requests and obtains services over a network.
Personal computers are now commonplace in the home and in the work place. With the advent of
communication service providers, such as Prodigy®, CompuServe®, the Internet and America
Online®, it is now possible for users of personal computers to connect and interact with a variety
of geographically remotely located service providers. In other instances, service providers supply
local access numbers. One area in which such systems are employed is the area of financial
services.(Laforet and Li, 2005).
For example, one such banking system utilizes software designed to run in a Windows®
operating environment on a personal computer. That software utilizes the computer's modem to
dial up an access number maintained by the bank which provides access to the bank's host
computer system. Once such a link is established, the bank customer can perform such routine
banking functions as paying bills, transferring funds between accounts and reviewing account
histories. In addition, such systems enable the banking customer to use the personal computer to
send electronic mail (“e-mail”) messages to customer service representatives to accomplish such
functions as stopping payment on checks, reordering checks and the like (Aladawani AM,
2001).
Usefulness refers to user‟s assessment of the likelihood that the information will enhance their
decision. It is the subjective probability that use of internet in banking transactions would
improve the way a user could complete a given task (Laforet and Li, 2005).
23
Further according to Davis et al., 1992, perceived usefulness refers to consumer’s perception
regarding the outcome of the experience. Mathwick et al., (2001) defined perceived usefulness as
the extent to which a person deems a particular system to boost his or her job performance.
Pikkarainen et al., (2004) found perceived usefulness as a determinant of actual behaviour which
encouraged the users of twenty first century banking to use more innovative and user friendly
self-service technologies that give them greater autonomy in performing banking transactions, in
obtaining information on financial affairs and in purchasing other financial products. Information
technology rapidly changes the fabrics of industrial growth and development these days and thus
internet banking has become more and more diversified and complex. Specializing is unlimited,
speedy and convenient services through internet banking. Moreover traditional banking in many
countries including India has created challenges before the bankers. There are several factors that
predetermine the consumer attitude towards internet banking such as demographic background,
motivation and behaviour towards different banking technologies and individual preferences and
expectations of new technology (Rahmath and Abdullah, 2011).
Customer attitudes towards internet banking are influenced by the prior experience of computer
and new technology and other environmental factors (Davis, 1989). The adoption of internet
banking as a new channel for banking transactions forces customers to consider concerns about
password integrity, privacy, data encryption, hacking and the protection of personal information
(Benmati and Serva, 2007).
In fact perceived usefulness, security and privacy are the main influencing factors to accept
internet banking system to conduct banking transactions (Qureshi et al., 2008). Perceived
usefulness is one of the important components of Technology Acceptance Model (TAM) which
has been widely studied by information system researchers) and found the system enhancing job
performance of users (Alsajjan and Dennis, 2009).
However, Gerrard and Cunningham (2003) noted that the perceived usefulness depends on the
banking services offered such as checking bank balances, applying for a loan, paying utility bills,
A disadvantage with such systems is that the full range of banking services is not communicated
to the banking customer using the personal computer, since the functions which require the
24
sending of electronic mail are not readily displayed. Rather, the banking customer must compose
an appropriate electronic mail message for those services not specifically displayed as options on
the screen face of the personal computer. Furthermore, another disadvantage of such systems is
that they rely upon electronic mail communication which is outside of the host computer system
of the bank. (Davis, 1989.
Accordingly, there is a need for a personal computer banking system in which the entire range of
banking services provided to a customer are communicated to a banking customer and made
available for fulfillment by the sending of requests. There is also a need to provide an integrated
personal computer banking system which does not require electronic mail to convey requests to a
customer service representative (Lichtenstein and Williamson, 2006).
A very recent addition to the electronic banking products in Ghana is the mobile banking.
Literally this is banking on the mobile phone. Mobile banking is a system or platform in which
customers are automatically updated on any changes in their account. These changes are may
come in the form of account debits and credits or any charges to the account. All it needs for
mobile banking is a mobile phone with a well-functioning text messaging system. SMS banking
falls under this category. This system uses short text messaging system to inform customers of
their account (Chovanova, 2006).
The earliest mobile banking services used SMS, a service known as SMS banking. With the
introduction of smart phones with WAP support enabling the use of the , the first European
banks started to offer mobile banking on this platform to their customers (mobile web in 1999).
Mobile banking before 2010 was most often performed via SMS or the mobile
web. Apple's initial success with iPhone and the rapid growth of phones based
on Google's Android (operating system) have led to increasing use of special mobile apps,
downloaded to the mobile device. With that said, advancements in web technologies such
as HTML5, CSS3and JavaScript have seen more banks launching mobile web based services to
25
complement native applications. by Mapa Research suggests that over a third of banks [3] have
mobile device detection upon visiting the banks' main website (recent study May 2012)
A number of things can happen on mobile detection such as redirecting to an app store,
redirection to a mobile banking specific website or providing a menu of mobile banking options
for the user to choose from.
2.2CUSTOMER SATISFACTION
During the recent years, the development of e-channels has dramatically changed the rules and
operation in the banking industry (Gunasegaram A, 1999).
Aladwani mentioned that while the industry has moved instantly to deploy and offer new
banking services via e-channels for customers and in consequence the e-banking services have
boomed promptlyToday, several financial institutions are endeavouring to emphasize customer–
oriented services. For this sake, it is crucial to implement new banking services in order to
develop and keep better relationships with customers. Hence building up competitive
predominance almost depends on customers‟ satisfaction with banking service. It is recognized
that banks gaining higher customer satisfaction will have a conspicuous marketing ascendancy
because the higher customer satisfaction is associated with greater revenues, increased cross-sell
rations, higher customer retention and bigger market share (Gonzalez ME, 2004). A study by
(VM, 2011)on customer Satisfaction towards E-bankingservices of ICICI bank in Chennai [5],
India which considered factors affecting on customers‟ satisfaction: an empirical investigation of
ATMs service and examined that the cost effectiveness of ATM service were core service quality
dimension and it was significantly affecting on overall customer satisfaction in ATM service
26
provided by commercial banks. However, result of factor analysis indicates that cost
effectiveness, easy to use and security and responsiveness were also influence customer
satisfaction. Therefore, banks should concentrate their efforts on these dimensions for cater
better ATM service to satisfy their customers. Kumbhar expressed that today almost all banks
are adoptingICT as means to enhance service quality of banking services. They are providing
ICT based e-service to their customers which is called as e-banking, internet banking or online
banking etc. It brings convenience, customer centricity, enhance service quality and cost
effectiveness in the banking and increasing customer satisfaction in banking services. Even
know, customers are also evaluating their banks in the light of e-service era. Research conducted
in some countries on customers‟ perception and reaction to electronic banking products and
services and others on customer satisfaction concluded that the few E-banks that face liquidity
problems in so called advanced countries as a results of negative perception their customers have
of the services. In fact, in some countries, e-banking products
And services are not very popularbecause customers do not consider them as better alternative
traditional banking service (Balachandher KG, 2001). Another study conducted in one of
Nigerian bank, Unit bank, has shown that an effective electronic banking system has improved
its customer’s relationship and satisfaction (Olorunsegun S, 2010). Ala et al. study results
analysis revealed that there is a variation in the effect of e-banking functionality factors on
satisfaction and empirical evidence in this research suggest that ebanking factors have a
significant degree of influences on satisfaction and outcomes of satisfaction (Eddin A, 2011).In
their study they conclude thate-banking positively influences customer satisfaction in Jordan
commercial banks. The study also found that influence of ebanking on customer satisfaction
would differ according to the personal variable that is gender, age, marital status, educational
level, computer literacy, and internet accessibility. Although waiting for service is a fact of life,
excessive waiting can impair significant satisfaction and economic impacts. Astudy made in
Nigerian banks revealed that there is a significantrelationship between electronic payment and
banking services, direct relation between high level of automation of banking firm services and
improvement of services delivery and it is a must to invest in electronic payment system before it
can compete effectively in the new age as well as increase customer satisfaction (OJ, 2010).
27
2.4 empirical review
Philips in his study of customer satisfaction and e-banking servicein some selected banks of
Ethiopia found out that customer satisfaction in e-banking has significant relationship with
convenience, reasonable and fair fees (charges) during transaction, efficient service of e-banking,
privacy, security, reliability and responsiveness of employees to solve e-banking service failure
and these variable determined 84% customer satisfaction in e-banking (Bambore, 2013). Hasan
et al. in their survey of on relationship between customers, satisfaction and electronic banking
features found that easy access, design, transaction speed, security, information content and
customer support of electronic banking have meaningful and positive relationship with electronic
banking (Darvish H, 2013).
Fenuga in his study the effect of electronic payment on customer satisfaction in Nigerian banks
have also deduced thatelectronic payments have affected an average increased in the
customerservice delivery and customer satisfaction (RR, 2003). Deribe and Deribie in their study
of evaluation of customer satisfaction on bank services in Jimma commercial bank of Ethiopia
found that 25% of their sample responded that there was no any change the benefits they got
from e-banking in comparison to ordinary banking and 17% of their sample respondents replied
that they got best benefits at best level through e-banking banking service than ordinary banking
(Deribe B, 2012). According to TomiukandPinsonneault (2001), it was found that electronic
banking usage had a considerable effect on customer loyalty among the electronic banking users,
while it had a negative impact on non-users. It was concluded thatcustomer care and customer
retention should be taken into consideration, because the convenient, easy and fast banking
services is associated with the human and technology based delivery processes so that they are
linked with the customers' perceptions of how these bank services are delivered to them.
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CHAPTER THREE
RESEARCH METHODOLOGY
3.0 Introduction
This chapter will discuss the methodology of the study. The chapter is organized into several
main parts. The first section presents research design method, the second section focused on
research population including sample size and sampling procedure, the third section provides
research instrument and quality with the validity and reliability of the instrument, the fourth
section will discuss data collection/gathering procedures and data process. And the section five
presented the data analysis and the section six presented limitations of the study and, while the
final section will be the ethical consideration of the study.
This design is considered suitable because is to determine whether and to what degree a
relationship exists between quantifiable variables. So that questionnaire technique will be used in
collecting the primary data. However, this study will be used quantitative approach; Quantitative
is any data collection technique (such as a questionnaire) or data analysis procedure (such as
graphs or statistics) that generates or uses numerical data (Saunders et al, 2009).
29
temporary working at the selected organization. The population stands at over 80 persons. It is
from this population that the sample size will be deriving.
N
error 5 %. n = 1+ Ne 2
80
2
n= 1+ 80 ( 0.05 ) =67
30
3.4 Sampling procedure
The researcher decides to use probability sample technique to make sample frame. For
probability sample the researcher will use purposive sampling the researcher concisely decides
who to include sample. The major purpose of technique will use to collect focused information
from target respondents.
Before data entry into computer a series of pretest were conducted the data scanning and scrutiny
technique were employed from available questionnaires from respondents to examine and
validate the survey instrument so as to ensure content reliability and validity.
3.6.2 Reliability
A reliability test was conduct to evaluate the logic and internal consistency of the items by using
all variables. The reliability of the research instruments concern with the degree to which the
research will give the same result. The reliability of an instrument is the ability of the instrument
to collect the same data consistently under similar conditions.
31
Reliability is trustworthiness of a measuring instrument; it is the degree to which the instrument
consistently measures whatever it is meant to be. The researcher conducts a pilot study before the
final collection of data. Data collection tools are pilot tested in order to ascertain its ability to
solicit the relevant responses to support the study. The justification for establishing the reliability
of the instruments is determined by the consistency, relevancy and clarity of the instruments.
Kothari (2004) defined validity as the degree to which an instrument measures what is supposed
to measure. Gay (1996) defined reliability as the degree of consistency that the instrument
demonstrates. Reliability consists of both true and error scores and it is necessary but not
sufficient for validity.
3.6.1 Validity
Refers to the extent to which data collection method accurately measures what it will intend to
measure or to the extent to which research findings were about what they claimed to be about
(Saunders Lawis&Thornhill, 2009). Generally,
Validity of each question or group of questions assessed rather than of the questionnaire as
whole. In order to increase validity of the questions in this research, the research will utilize
content validity index for the reason that the researcher will be create the questions as clear as
possible, measured only one thing at the time, will be given to the respondents by researcher to
avoid possible different interpretations of the main concept. English been the languages of the
research might have had some influence in decreasing the validity of question; however, a great
care was exercised to reduce the error
32
This study was applied qualitative methods for analysing; the data will be used to present and
analyse the data in appropriate way. The data will make use of Statistical Package for Social
Science (SPSS) is a computer program used for survey authoring, data mining and statistical
analysis. The researcher will use this program because it is convenient and simple tool that is
available for the researcher more over SPSS V.20, as a tool for analysing the data.
The method to analysis the data in this study will be quantities and qualities approach.
Quantitative deals with the numbers and charts. Frequency distribution method will used to
analyze the data which shows the distribution of scores in a sample for a specific variable. This
method gives a record number of times a score or response occurs; also it’s used to represent the
data either with chart or tables.
33
CHAPTER FOUR
34
Female 27 40.3 40.3 100.0
Total 67 100.0 100.0
The above table illustrates 59.7% of the respondents were Male whereas 40.3% of the
respondents were Female so that it is clearly seen that the majority of the respondents were male
20-35 39 58.2
31-40 20 29.8
41-50 5 7.5
above 50 3 4.5
Total 67 100.0
Table: 4.1.2 shows that most of the respondents 39 (58.2%) were 20-35, 20 (29.8%) were 31-40,
5 (7.5%) were 41-50, and 3 (4.5%) were 50 & above. The researcher indicates that majority of
the respondents were 20-35 years old
Single 32 47.8
Married 22 32.8
Valid
Divorced 12 19.4
Total 67 100.0
The above table shows 47.8% of the respondents were single, while 32.8% of the respondents
were married and also other 19.4% of the respondents were divorced, this table shows that most
of the respondents were single.
35
TABLE OF 4.1.4 YOU’RELEVELOFEDUCATION
Frequency Percent Valid Percent Cumul
ative
Percent
Valid Secondary 12 17.9 17.9 17.9
Diploma 16 23.9 23.9 41.8
The above table illustrate that the most of the participants 32 (89.6%) were bachelor, while 16
(41.8%) were diploma, and respondent secondary level is 12(17.9%) the minority of the
respondents were masters 7(10.4%).
36
6month-1year 15 22.4
1-2year 21 31.3
Total 67 100.0
This table shows that most respondents are good working experience of 2 years and above were
20(29,9%) and 1-2 years working experience were 21(31.3%) and fewer respondents were
having less than 6-month experience were respondents of 11 (16.4%).
37
Home banking is providing
banking service up to my 66 3.2424 1.28973
expectation Agree
Home banking can perform
everything to clients as employees 67 3.2836 1.37957 Agree
do
Table shows that most of the respondents have high perception of the all day’s service of Online
banking which an average mean of 3.222162 and average standard deviation of 1.397868 that
indicates the respondents agreed.
38
Personal computer attracts more
clients and generates revenue 67 3.2985 1.35976 Agreed
from service fee
Table shows that most of the respondents have high perception of the convenience of customer
which an average mean of 3.31344 and average standard deviation of 1.377728 that indicates the
respondents agreed that Online banking service is convenient.
39
Mobile banking information
contents and texts are easy to
understand. 67 3.4627 1.37431
Agreed
Table shows that most of the respondents have high perception that the Online banking have
benefits for the travel which an average mean of 3.36418 and average standard deviation of
1.441864 that indicates the respondents agreed that Online banking service is beneficial for the
travels.
40
My expectations before the
use of Internet banking have Agreed
66 3.6364 1.27263
been met with this current
experience
You are satisfied with the
bank’s online based service 66 3.5909 1.28874 Agreed
quality
Overall service of online
banking is better than your 66 3.6970 1.32398 Agreed
expectation
There is time consuming to
66 3.6212 1.42251
use online bank Agreed
Total average 66 3.62552 1.338238
Table shows that most of the respondents have high perception for the customer satisfaction of
Online banking services which an average mean of 3.62552 and average standard deviation of
1.338238 that indicates the respondents have high satisfaction of the Online banking service.
41
Pearson
.510** 1
Online banking Correlation
Sig. (2-tailed) .000
N 67 67
CHAPTER FIVE
5.0 Introduction
Chapter five provides the summary of findings. This has been arrived at using the three study
objectives. In this chapter the conclusion is also provided as well as the recommendations also
followed the three study objectives.
According to Home banking the study shows that most of the respondents have high perception
of the all day’s service of Online banking which an average mean of 3.222162 and average
42
standard deviation of 1.397868 that indicates the respondents agreed. According to personal
computer bankingthe study shows that most of the respondents have high perception of the
convenience of customer which an average mean of 3.31344 and average standard deviation of
1.377728 that indicates the respondents agreed that Online banking service is
convenient.According to mobile bankingthe study shows that most of the respondents have high
perception that the online bankinghave benefits for the travel which an average mean of
3.36418 and average standard deviation of 1.441864 that indicates the respondents agreed that
Online banking the study shows service is beneficial for the travels.According to that most of the
respondents have high perception for the customer satisfaction of Online banking services
which an average mean of 3.62552 and average standard deviation of 1.338238 that indicates the
respondents have high satisfaction of the Online banking service.
43
5.2 Conclusion
This section discovers the research result and findings derived from the distributed
questionnaires. The main objective of this study was to examine “The impact online
banking on customer satisfaction in Mogadishu-Somalia”. The study had three objectives,
the objective one of the study, which is “TO examine the effect home banking on
customer satisfaction” the mean value of the questions was3.22162which indicates Agree
level so this indicates that the answer shows that there is a very good level. The objective
two of this study was “To examine the effect ofpersonal computer banking on customer
satisfaction” the mean value was 3.31344 which indicates agree level so this indicates
that the answer shows that there is a very good level. The objective three of this study
was “TO examine the effect of mobile banking on customer satisfaction.” the mean value
was 3.36418which means strongly agree level so this indicates that the answer shows that
there is a very good level.
Finally, the study indicates the correlation between the two variables which are electronic
banking and bank performance is measured using Pearson's correlation method with two tailed
and the relationship between the two variables were positive relationship with R-value of 0.510
and this information indicates that there is moderate positive significant relationship between
online banking and customer satisfaction
5.3 Recommendation
The researcher suggested the following suggestions to the selected bank “salaam BANK”
Mogadishu-Somalia
Since ATM banking is more important for bank’s performance, researcher recommended giving
them high effort, and Management of Premier is encouraged to promote that activity.
Also, study indicated that there is moderate relationship between online banking and customer
satisfaction, so management of the bank should develop and make strong that relationship.
44
5.4 Areas for Further Research
The researcher found that there is a possible area for further research which enables academic
students to make further research and they are as follows:
Home banking and bank’s customer satisfaction. This area is way can be get new ways
of bank’s performance because clients’ satisfaction brings good performance.
Al researchers can investigate each of dimensions in this study that gives you research
area so.
45
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Pikkarainenet al., 2004.(2012). Electronic banking service and customer satisfaction in the
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Wall, S. , (2001). Electronic Banking and Customer Satisfaction: Empirical Evidence from
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Boateng R, (2006). Impact of Internet Banking on Customer Satisfaction and Loyalty. The
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(Daniel, E. , 1999). A survey on relationship between customer satisfaction and electronic
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48
APPENDIX (A): QUESTIONNAIRE
QUESTIONNAIRE
Dear sir/madam
In this questionnaire is conducting for academic purpose. We are conducting graduation project
You are requested to complete this questionnaire as honestly and objectively as possible. Please
tick in the appropriate box and also fill in the blank spaces provided for those questions where
elaborate answers are required. The content of this data will be for academic purpose only. The
The following questions refer to the demographic profile of the respondents. Please provide the
appropriate information by placing (✔) in the bracket provided to represent your answer.
( ) Female
( ) 20 – 30 years
( ) 31 – 40 years
( ) above 40
( ) Single
( ) Married
( ) Divorced
49
IV Educational Level of the respondents:
( ) Diploma
( ) Bachelor Degree
( ) Master Degree
( ) PhD
( ) Management
( ) Employees
vi. Experience
( ) Less 6months
( ) 6months-1 year
( ) 1 – 2 years
Please (✔) one cell according to the following 5-point Linker scale, with 1-Strongly Disagree and 5-
Strongly Agree that best describe your level of argument with the following statements.
No. Statement SD D N A SA
50
1. There is a direct relationship between Home banking and
customer satisfaction
Please (✔) one cell according to the following 5-point Linker scale, with 1-Strongly Disagree and 5-
Strongly Agree that best describe your level of argument with the following statements.
No. Statement SD D N A SA
Please (✔) one cell according to the following 5-point Linker scale, with 1-Strongly Disagree and 5-
Strongly Agree that best describe your level of argument with the following statements.
No. Statement SD D N A SA
51
1. There is a direct relationship between Mobile banking and
customer satisfaction
Please (✔) one cell according to the following 5-point Linker scale, with 1-Strongly Agree and 5-
Strongly Disagree that best describe your level of argument with the following statements.
No. Statement SA A N D SD
1. You are satisfied with the online services provided by your bank
52