ASSESSING THE CONTRIBUTION OF TECHNOLOGY TOWARDS DEVELOPMENT

OF BANKING SERVICES, A CASE STUDY OF IRINGA MUNICIPAL

CHAPTER ONE

1.0 Introduction
Many of the IT initiatives of banks started in the late 1990’s, or early 2000, with an emphasis
on the adoption of core banking solutions (CBS), automation of branches and centralization
of operations in the CBS. over the last decade, most of the banks completed the
transformation to technology driven organizations (R. Choudhary, 2021). moving from a
manual, scale constrained environment to a global presence with automated systems and
processes, it is difficult to envisage the adverse scenario where the sector was in the era
before the reforms, when a simple deposit or withdraw of cash would require a day. ATM’s
mobile banking and online bill payment facilities to vendors and utility service providers
have almost obviated the need for customers to visit a branch, branches are also transforming
from operating as transaction processing points into relationship management hubs.
1.1. Background of the research problem
Technology is revolutionizing the way that the banking sectors operates, rapidly
accelerating new business proposition, such as crowd-funding, peer to peer lending digital
currencies, mobile banking, online investment and new payment system, technology has
created the massive increase in the availability and use of data and social media shaping
customer expectations and the ability of financial institutions to use customer data to price,
target and market their products and services (L.Frew, 2020).
Predications about the death of banks because of more technologically sophisticated
competitors have been greatly exaggerated. but the growth of technology has help the banks
generate additional revenue, reduce expenses and manage risk exposure in a more proficient
manner, but has also opened the door for a myriad of competitors both large and small, these
competitors are called finch companies, an amorphous catch all terms and that seeks to
generalize the interplay between financial firms and technology, we believe this interaction
between banks and fetches is highly varies depending on the precise type of business that is
being affected ( S. Plesser, D. Aurora, B. Browne, 2019)
The banking sectors uses cutting edge technologies for real time data incorporation rather
than usual slow analysis procedures, with all these things, the banking sectors is undergoing a
massive the technological change right now due to the increasing concern of people towards
digitization, this technology trends also has helped banking experts to deal with cyber
security attacks in the financial service providers, keeping track of all the latest market trends
and efficiently implementing them is crucial, this way you can stay ahead of your
competitors and attract more people towards your banking services ( A. Giggo, 2020) .
Customer today don’t have patient to wait for long hours and get their quires resolved,
instead they demand quick response and effective resolution of their issues Chat bot has
made this possible in banking organization supported by all technology Chabot’s are used by
many finance companies to reduce cost and meet ever changing expectations, now users no
longer depends on traditional methods of two way communication like email, phone,
reported by Gartner states that more than 85% of customer service interactions will be
handled by Chabot’s in 2020 ( A. Hales, 2019).
Technology has immensely transformed business to business and within business and within
business transactions applications are enabling reconfiguration of design production
marketing and service delivery in most business, for instance the design reconfiguration have
allowed for the implementation of online marketplace, mobile business activities such as
mobile banking and better risk assessment in the merging financial markets of Africa
descriptive market innovations and reconstitution and reconstituted value chains have
become key drivers of the growing financial service industry (E.Y, 2018).
Despite the huge financial services providers such as banks, finance companies, microfinance
institutions and insurance must be wary of the new risk and challenges posed by the financial
technologies for a major bank like the standards bank, financial innovations, such E-banking
and mobile banking present both new opportunities and threats to the core businesses
( Mugano and Le Rouv, 2016), in this regards the researcher explores the impact of new
technology and mobile banking in the entire financial sector in Africa (D.Madara, 2019).
self-services technology in Tanzania has witnessed explosive growth in recent times, banking
self- services technology represent the single large investment in electronic channel services
for banks, CRDB set the trends when it set up the firs banking self –services in Tanzania in
1997 and since sight in many meters. banking services have gained prominence as banks
 increasingly deploy self-services to increase facilities a variety of banking transaction for
customers (Matibwa, 2013).
Bank self-services technologies are defined as technologies that allow customers help
themselves to perform task that were previously done by the service provider (Solomon, et al,
2005), self-service technology has so much to do with the efficiency and the effectiveness of
the internet based service providers, Gaitners group had predicted that 70% of all customer
interactions will be automated (Kolsky, 2002), In their colloquium, Zhu and Nakata ( 2003)
talked about the self-service as a necessary factor that can contribution to either the cross or
failure of click and mortal organizations such as banking financial services firms. According
to the author the necessary parts or mediums of the implementation of the self-services
technology are phone based, internet or online based automated teller machine and a
combination of the mentioned services, the arrived of the internet transformed these types of
service to a level unapplied in history.

1.2 Statement of the problem

Tanzania is the one among the developing countries that has the high influence on customers to
use the mobile services, apart from using the mobile banking networks the banks have been
linking with the mobile network operators in order to facilitate the banking activities but the
network providers has seen the opportunities and started to operate themselves as a bank where
as the customers are allowed to save and be able to take loans from their accounts, this is great to
help customers who are living in the area where there are no banks or banks are very far thus it
helps those customers to be able even save their time and money ( Kimenyi et al,2009),

Progressive the financial services companies are looking out for new technologies to improve
efficiency and speed of service, as well as provide better customer experience, the growth in
information technology, has prompted companies to leverage digitization of banking technology
to transform the financial services industry through customer experience management. The
financial services industry is looking at improving online customer services enabled by
competition with consumer brands like Amazon most of financial services executives feed
improving the customer experience to be the top driver of digitization in banking.
The banking sector has embraced the use of technology to serve its clients faster and also to do
more with less, emerging technologies have changed the banking industry from paper and branch
based banks to digitized and networking banking services. unlike before broadband internet is
cheap and it makes the transfer of data easy and first technology has changed the accounting and
management system of all banks and it is now changing the way how banks are delivering
service to their customer, however this technology comes at a cost, implementing all this
technology has technology has been expensive but the rewards are limitless (Karekha Ramey,
2015).

Once a time people have to spend a lot of time to go for bank transaction sometimes cost of
transaction was more than that money deposited or withdrawn, E- banking allows customer to
conducts financial transaction on a secure website, nowadays user friendly technology is
becoming more popular among customers, most of the banking are providing e-banking facilities
today and most of customer increasingly using technological banking provides a convenient and
effective way to manage finance that is certain problem such as lack of knowledge to operate the
technology set up cost, legal issues, lack of relationship among banker and customer, securely
and privacy issues.

Due to the researches that has been conducted concerning the contribution of technology towards
the development of banking services, many research that has been conducted based on the
information technology and not technology exactly and it shows that information technology has
positive impact on the increasing of the market growth of banking system , because now days
information technology has simplify the ways of getting the bank services through different
ways, now the researcher is interesting on knowing the contribution of technology exactly
towards the development of banking services for uneducated customers at Iringa municipal and
its banks which are NMB and CRDB, The aim of the study is to assess the contribution of
technology towards the development of banking services, because I want to know if uneducated
customers of bank adopt the technologies introduced.

1.3 Research Objectives

1.3.1 General Objective

TO assess the contribution of technology towards the development of banking services for
uneducated customers at Iringa municipal.

1.3.2 Specific Objectives

i. To determine the contribution of mobile banking towards the development of

banking services for uneducated customers at Iringa municipal
ii. To determine the contribution of cyber security towards the development of
banking services for uneducated customers at Iringa municipal
iii. To determine the contribution of ATMs towards development of banking services
for uneducated customers at Iringa municipal.

1.3.3 Research Questions

i. To what extent does mobile banking contribute the development of banking

services for uneducated customers at Iringa municipal?
ii. Does cyber security contribute the development of banking services for
uneducated customers at Iringa municipal?

How does using of ATMs contribute the development of banking services for uneducated
customers at Iringa municipal?

1.4 Significant of the study.

Education institutions like universities will benefit from this study’s findings on the basis of
further research. they will use a supportive information tool during their research concerning the
contribution of technology towards development of banking services,

Moreover, institutions like CRDB, NMB will use the findings of this study to evaluate the
contribution of technology (mobile bank, ATM’s, and cyber security). especially for those un-
educated customers.

1.5 Scope of the study

The study will focus on banking institutions (CRDB and NMB) found in Iringa municipal the
study will access the contribution of technology towards the development of banking services
especially to un educated customers, moreover it will investigate only three factors which will be
mobile bank, cyber security and Automated teller machine. The research will use Iringa
municipality as an area of study in order to access data easily as it will assess only banking
institution present in municipal.

CHAPTER TWO

LITERATURE REVIEW

Literature review is made up of a theoretical and empirical review based on the objectives of the
study as explained.

2.1 Theoretical review

2.1.1 A theoretical discussion of the electronic banking in Jordan

Information technology service are the major drive of the changes occurring on the global level,
the shift from traditional banking to electronic banking has been considered to be one of such
changes, and to be significant part of the bank’s strategy of the formulating and a model of
information technology adoption that provides customer services, in the context of Jordan,
although majority of banking have already adopted the internet in providing different customer
service, the understanding of users acceptance of electronic banking is still scarce. added to this,
previous studies in literature concerning e-banking, acceptance have primarily been done in the
developed nations, (M.A. Ahmad, 2016)

So according to this study this theory is related because electronic banking is the one of the
technology appeared in the banking service to simplify the provision of the service, electronic
banking is considered as an innovative service to be examined in light of its acceptance.

2.1.2 Multimedia banking and technology acceptance theory

Multimedia banking channel and the traditional banking channel are not perfect substitutes,
certain banking transactions such as checking and account balance, transferring funds, paying
bills, and applying for credit cards does not require personal contacts or a large physical space
and hence are suited for delivery over the internet, on the other hand setting up new account,
applying for business loan, retirement planning, closing a mortgage, and other complex
transaction require a person communication existence of the bank physical (P. Vijayan, 2000).
This theory is useful in this study because the use of multimedia banking is the one of the
banking technology that we want to, measure its contribution in development of banking services
especially to uneducated customers.

2.1.3 Banking Technology Theory

Technological is changing the way business operates and delivers to consumers in many sectors.
we have alarms that detect poisonous substances in our air, medical equipment that can identify
life threatening conditions before they become an issue or smarter computer software to make
controlling vital equipment easier than ever before an industry that has seen huge innovation in
recently years in the use of technology within the financial world banking was traditionally
something that was done in the non- virtue world. people would go into town to their banks to
withdraw money, transfer fund from one place to another and sort out their finances, you’d speak
to a helpful staff member and interest with people in a brick and mortal getting more and more
sophisticated on a daily basis we can transfer money or pay for goods with just the push of a
bottom (N. Ismail, 2018).

Since their beginning, banks serve to keep our money safe, while preserving our money, they
allow us to take the interest on the money deposited traditional banks have been doing this for
centuries now and our day’s banks are continuing in the same direction, offering traditional
services and new service in different ways. the spread of information technologies and
communications, increased use of personal computers, facilitating internet connectivity as well
as wide spread of mobile phones, they have attracted the attention of banks towards the
possibility of internet banking, another reason that made use of this channels were need to
minimize costs and simultaneously increase the efficiency of banking services (G. Gjino, 2015.
in this way banks used their main characteristics of the internet interoperability developing the
structure of banking services delivery to meet the growing needs of their clients and of the same
time to increase their income. internet banking has a few years in circulation. initially he was
introduced in 80’s however only in the 90’s was widely spread hand has since advanced. internet
banking can define the distance service offered through electronic channels distribution and
communication, products and new service and traditional banking. the advantage and benefits of
the internet banking fulfill many functions in the relationship between the banks and its clients
resides the presentation and knowledge of the banking institution and its initiatives.

2.1.5 The theory of innovation banking system

Electronic business-usually referred to as” e Business” or “e-business” activity can define who
use information and information technologies (ICT) to support all business activities. the Prefix
“e” electronic means. E- Business is the term to describe business that operate on the internet
technologies to improve productivity or profitability of the business. E- business is significantly
change the economic structure, market and industry, market value, products and services and
their turnover, customer profiling customer behavior and labor market (I. Doci, 2009)

A term the “truncated” the definition of e-business is used to describe businesses that operates on
the internet or use the internet technologies to enhance productivity or profitability of the
business. electronic business is the business that uses computer as a key element of its activities,
although this definition is exceeded, the relationship between e-business and ICT is integral, E-
business cannot exist without ICT. one other definition, e-business is the replacement of
transaction based on the use of paper, human intermediaries, or transactions based on phone
transactions through electronic networks (I. Doci, 2009).

2.1.6 banking theory

Banks, together with other financial intermediaries, are essential in the allocation of capital in the
economy. A very powerful tool to explain how banks works is provided by literature on financial
intermediation, this literature is centred on information asymmetries, an assumption that
“different economic agents possess different pieces of information on relevant economic
variables, and that agent will use this information for their own profit” the presence of
asymmetric information leads to adverse selection and moral hazards problems that takes place
before the transaction occurs an it is related to the lack of information about the lenders
characteristics. Moral hazards take place after the transaction occurs, it is related with incentives
by the lenders to behave opportunistically.

recent development in ICT, together with new financial instruments, have lowered information
asymmetries, in this dissertation we use economic concepts in the financial intermediation
literature to explain the observed trends in the banking industry. ( A. Reixach, 2001)
2.2 Empirical review

2.2.1 The contribution of mobile banking towards development of banking service.

S. Becirovic and A. Ljajic, 2011 conducted the research about the role of mobile banking in
enhancing economic development the study found that mobile banking is an efficiency tool,
which can be used to facilitate financial transactions, payment transactions as well as crediting
transactions, in order to enable aa wide use of mobile banking it has to be of easy usage and
applicable of all types of mobile phones. and of course, it has to be cheap for all mobile
subscribed. Also C. Lambert the study use several econometric techniques to investigate mobile
finance and banking benchmarking, determinants and real impacts on inclusive growth in
developing countries in Africa, the statistical benchmarking analysis reveals that there is a
positive link between mobile banking development and economic development by using
different specification and estimation techniques shows the same result a positive impact of
mobile finance and banking development on both pro-poor and inclusive economic growth.

2.2.2 The contribution of ATM towards the development of banking services

Rafiqul et al (2005) conducted study on customer satisfaction with ATM service; a case study of
HSBC ATM, hence the investigated the satisfaction levels of HSBC ATM holders with respect
to various aspects of using HSBC ATM and their opinion on various related issues, the main
objective of their study was to examine the level of satisfaction of staffs and non-staff customers
of HSBC ATM, In their study they categorized the various aspects of HSBC ATM as the
promptness of card delivery, performance of HSBC ATM and the service quality of ATM
personnel. After their survey and analysis of data, the study revealed that the average satisfaction
levels of ATM users are more than that of non-staff ATM users in all aspects or aspects of HSBC
ATM.

Pahwa and Saxeen (2010) also analyzed the satisfaction levels of customers of ICIC bank
holding ATM cards respect to some aspects of ATM service quality in their study of analysis of
customer satisfaction at ICIC bank with special reference to ATM, their study looked at some
aspects such as the service quality of ATM personnel, location, sufficient number of ATM in the
city, the regularity in working of ATMs, their impact of overall performance and their option on
various other related issues, their study revealed that the quality of ATM services provided was
marginally above the average and hence customers satisfaction with the ATM service was also
above average.

2.2.3 The contribution of cyber security towards banking development

Prem Khatri, 2019, analyzed the contribution of cyber security on banking services and he found
that the importance of cyber security in banking sector is to protect customer assets, as more as
people go cashless activities are done through online checkout pages and physical credit
scanners. in both situations, PII can be redirected to other locations and used for malicious
activities.

Also Sara Al Bassam 2019, conducted a research about the significant of cyber security system
in helping managing risk in banking and financial sector. the study found that about 26% of
financial institutions encountered online identified theft, while 23% experienced international
damages to computer system, and 11% faced hacking, the study shows that the enforcement of
security policies, providing security with appropriate funding and mandating security awareness
training is among the most utilized methods by the board of directors and executive managers to
reduce cyber risks.

2.2.4 Contribution of technology towards the developments of banking services

P. Singh, 2019 conducted a research concerning the role of technology in banking industry, he
uses both qualitative and quantitative research, also primary and secondary data were used, he
collected data by using the questionnaire and unstructured interview, he found that technology
led to the development of banking industry because it simplifies the efficiency of banking and
provide security to banking industry.

T. Sreelatha, 2012 conducted a research about the role of technology in Indian banking, he used
qualitative, both primary and secondary data were used to collect data, the key objective in this
research was the same as mine which was automated system, mobile banking and knowledge
management, she found that from enabling banking services to driving transformation in the
industry, mobile banking and internet banking are making indoor in banking sector, even though
IT are complex and sophisticated but they are “ energy guzzlers” , therefore the future of the
banking sector is going to make rapid straights in near future.

A. Arbussa, 2001, the study use both quantitative and qualitative research, also descriptive was
used to see the relationship between information and communication technologies towards
banking sector and payment system, the study was the effects of information and communication
technologies on the banking sector and payment system, she found that the development of in
information management have different effects on wholesale and retail banking activities
because it simplify the running of service and let both customers and workers to do not use a lot
of energy

2.3 Conceptual Frame work

A Conceptual frame work is a diagrammatic research tool intended to assist the research to
develop awareness and understanding of the situation. A conceptual frame work is used in
research to outline possible. courses of action or to present preferred appearance to an idea or
thought. it can be defined as a set of broad ideas and principles than from relevant fields of
enquiry and used to structure a subsequent presentation. An independent variable is the one that
is presumed to affect or determine a dependent variable. it can be change as required, and its
values do not represent a problem requiring explanation in an analysis, but are taken simply as
given.

The research investigates the relationship between development of banking service towards other
independent variables, the development of banking services is dependent variable while mobile
banking, cyber security and ATM’s are independent variables, and the conceptual frame work
discuss the relationship between the independent and dependent variables of the study. so this
means that the development of banking services depends on the technologies used in those banks
in one way or another and in this study those independent are ATM’s, mobile bank and cyber
security.

Independent Variables Dependent variables

Mobile banking
 Development of banking services
ATM’s

CHAPTER THREE
Cyber security
CHAPTER THREE

RESEARCH METHODOLOGY

3.1 Introduction

This chapter provides a detail analysis of the methodology which will be used by a researcher to
collect data, analyze them and presentation. it is an important section as it gives the design of the
study, the description and justification of the area, sampling techniques and procedures, types of
data collection methods, data processing and analysis, ethical consideration and validity and
reliability of the study.

3.1 Area of the study

The research will be conducted at Iringa municipal which is about, the reason to choose this area
Iringa municipal has a lot of banking and its customers are both from town and villages
compared to other areas and it’s the nearest district with researcher.

3.2 Research Approach

There are two major research approaches which are qualitative and quantitative approaches.
According to the nature of the study we will use the quantitative approach, quantitative research
is the numerical representation and manipulation of observation for the purpose of describing
and explaining the phenomena that those observation reflect (Yin, 2006), Qualitative research is
the type of scientific research that seek answers to a question, systematically uses a predefined
set of procedures to answer the question, collect evidence, produces findings that will not
determine in advance and produces findings that are applicable beyond the immediate boundaries
of the study( Creswell,1994) , According to the nature of the study we will use the quantitative
approach because the researcher aim to know the relationship of two variables the banking
technology and development of banking services to Un-educated customers, also we will use
descriptive by using close questionnaires.

3.3 Research design

A research design is basically a chosen plan for achieving a particular study, and its gives a detail
on the type of data collected and the technique will be used in data collection. in fact, the
research design is the conceptual structure within which research conducted, it constitutes the
blueprint for the collection, measurement and analysis of data, furthermore the good research
design is the one that minimized bias and maximized the reliability of the data collection
(Kothari, 2004)

In assessing the contribution of technology on increasing market growth of banking services the
research will use descriptive research design to see the variation between the technology and
development of banking services.

3.4 Targeted population

population means all the individuals or objectives that meets certain requirement for membership
in the overall group (Churchill and Brown, 2007). According to Ngechu (2004), a population is
well defined as set of people, services, elements and events, group of things or households that
are being well investigated, targeted population constitute the entire or totality of the items under
study (Kothari, 2004) The targeted population will be uneducated customers of NMB and CRDB
banks at Iringa Municipal in order to know the banking technology helping them.

3.5 Sampling Techniques

According to Saunders es al (2000) sampling techniques provide a range of methods that enables
the researcher to reduce the amount of data to be collected by considering only data from sub
group rather than all possible cases. in this study I will use simple random sampling to obtain the
accessible information of the areas.

3.5.1 Simple randomly sampling

A random simple is preferential because is free from bias and therefore each unit has a chance to
be included in the sample, simple randomly sampling technique will be used to draw sample,
according to Kothari (1994), random sampling is the method of sample selection which gives
you each possible sample combination an equal probability of being picked and each item in
entire population to have an equal chance of being included in the sample.

3.5.2 Sample size

A sample size is a subset of the population, it comprises of some members selected from it
(Sekaran, 2003) Sekaran (2003) argues that by studying the sample, the research should be able
to draw conclusions that will be able to draw conclusions that would be generalizable to the
population of interest. for this study a sample of 80 respondents will be used to carry out this
research study.

NMB customers CRDB customers

No Sex Sex
20 Female
20 Male
No
20 Female
20 Male

3.6 Types of data and data collection technique

3.6.1 Primary data

These are data collected for the first time and are collected direct from the source, primary data is
obtained by using questionnaires, interview and observation in the study area, also primary data
are those collected afresh and for the first time and thus happened to be original in character
(Kothari, 2004), this type of data will be collected in the current study by the use of
questionnaire

3.6.1.1 Questionnaire
Questionnaire is the method of data collection that used typed questions to interview which
contains several responses and it is easier to collect data as it does as it does not exert pressure to
the respondents, it is cost effective when compared to the other methods, easy to analyze,
familiar to most of people and reduce bias, so in my study I will use the closed questionnaire to
collect data to the NMB’s and CRDB’s customers.

3.6.2 Secondary data

These are data which have already been collected by someone else, and have already been passed
through statistical process (Kothari). The researcher will collect data for this study from review
of documentary, sources in which books, Journals and articles.

3.7 Data analysis

According to Kothari (2004) defined data analysis as the computation of certain measures along
with searching for patterns of relationship that exist among data groups, Researcher will use
descriptive analysis where will explore data from respondent, summarized and describe the data
which will be collected by using SPSS V.20 as an analysis tools. Hence will enable the
researcher to have a rundown on the data and present them.

3.8 Validity and Reliability

the concept of validity and reliability are core issue in determining the quality of a research, in
order for a research to provide sufficiently sound consistent and relevant evidence, the
information it provides must be both valid and reliable (Kirk and Miller, 1986).

3.8.1 Validity

The concept of validity is the extent by which the survey information is relevant to conclusion
being drawn and sufficiently accurate and completed so support the conclusion (Joppe, 2007),
By using the data that will be collected validity of the data will be tested through the use of
Kaiser-Meyer –Oklin(KMO) in order to assure that the questionnaire that will be used in data
collection. in which Kaiser-Meyer-Olkin is a statistic indicates that the proportion of variance in
your variables that might be caused by underlying factors. high value (close 1.0) generally
indicate that the factor analysis may be useful with your data.
3.8.2 Reliability

The researcher will test the consistency and stability of data by carrying out reliability analysis,
using Cronbach’s Alpha test. Chakraborty (2013) explained that reliability measures consistency,
precision, repeatability and trustworthiness of a research data

3.10 Ethical consideration

In this study ethical issue will be considered and the researcher protect the identity of the
respondents during data collection and this will use in order to do not affect the researcher result,
and in addition the respondents will be clearly told about the study and the purpose of conducting
it

Also the permission will be sought from the participants before conducting the study, this will
be done by sending the introduction letters to the management of the selected Banks and their
approval will be received before the commencement of the data collection.

The research study will make sure that the findings are shared to all NMB and CRDB stuffs.
through this, the researcher will be in the position to share the feedback to the findings to the
respondents. High degree of freedom to respondents will be provided to respondents by the
researcher, meaning that respondents will be free to share and free to reject on what they don’t
want to share. respondent will be also free to withdraw themselves from the research study if
they wish to do so.