IMPACT OF ELECTRONIC-BANKING ON CUSTOMER SATISFACTION IN

SELECTED BANKS IN LAGOS

BY

ARAYEMI SONIA JUMOKE

(BAF/2018/0008)

A RESEARCH PROJECT SUBMITTED TO THE DEPARTMENT OF BANKING AND

FINANCE, FACULTY OF MANAGEMENT SCIENCES, OSUN STATE UNIVERSITY,

OKUKU CAMPUS, OSUN STATE, NIGERIA

IN PARTIAL FULFILMENT OF THE REQUIREMENTS FOR THE AWARD OF

BACHELOR OF SCIENCE (B.Sc) DEGREE (Hons) IN BANKING AND FINANCE

SEPTEMBER, 2022
 CERTIFICATION

This is to certify that this work was carried out and submitted by ARAYEMI SONIA

JUMOKE

With Matric No. (BAF/2018/0008) under my supervision in partial fulfilment of the

requirements for the award of Bachelor of Science (B.Sc.) Degree in Banking and Finance from

the Department of Banking and Finance, Faculty of Management Sciences, Osun State

University, Osogbo, Osun State, Nigeria.

.….…………………………… ….……………………………
PROF. A.O. ADARAMOLA DATE
PROJECT SUPERVISOR

………………………………… ...………………………….....
DR. V.A. OMOTAYO DATE
(HEAD OF DEPARTMENT)

………………………………. ………………………………
EXTERNAL EXAMINER DATE

ii
 DEDICATION

This research is purely dedicated to Almighty GOD for opportunity, grace and privilege to

complete this research. Also for giving me the strength, knowledge and wisdom to accomplish

this study.

iii
 ACKNOWLEDGEMENTS

I acknowledge my creator, who made heaven and earth, who enable me to complete this

programme. To him alone be all the Glory.

My special appreciation goes to my supervisors Prof. A.O. Adaramola for his priceless

suggestions scholastic advice and wealth of wisdom showered on me during the course of study,

irrespective of his tight schedule and other commitments. I appreciate him for his dedicated time

to help and support this project. Only God can reward him.

My appreciation will not be completed without acknowledging the wonderful contributions of all

the lecturers in the Department of Banking and Finance starting from my Head of

Department DR. V.A. Omotayo, Dr. (Mrs.) A.O Ademola, Dr. A.O Gbadebo,

Dr. B.L.O Kazeem, Dr. J.A Adewole, Barrister B. Gbolagun Mr. S.J Sasona, Mrs. A.A.

Ojewande, Mr. A.A Adeyemo, Miss. E.O Adeoye and all others who impacted knowledge to me.

My unending appreciation goes to my ever supporting parents, Mr. and Mrs. Arayemi, and my

wonderful siblings Martins, Kemi, Bola and Lekan for their love and support both financially,

morally and spiritually throughout the course of my programme.

I will not forget the impact of my friends who supported me through this academic journey, the

person of Hannah, Bolu, Ruth and Amanda. Thanks for always been there for me, I am very

grateful. May Almighty God continue to bless you.

iv
 ABSTRACT
The study examined the impact of Electronic-Banking on customer satisfaction in selected banks
in Lagos, Nigeria. The purpose of this study is to determine the impact of electronic- banking
services on customer value in the banking sector, to examine the outcome of electronic banking
on service delivery in the banking sector, examine the influence of service reliability on customer
satisfaction in the banking sector and identify the challenge(s) facing effective implementation of
electronic banking in the Nigerian system. The study was based on Fractional Reserve Theory of
Banking, Credit Creation Theory of Banking and Assimilation Theory. The study descriptive and
explanatory design, for describing the current situation of the electronic banking impact on
customer satisfaction, and primary data was used. The study sample three (3) deposit money
banks in Nigeria. The result showed that 42.7% respondents identified that they are satisfied
with the E-banking service(s) provided by the concerned banks. It signifies that the overall
service of online banking is better than traditional banking service where customers derived
total and optimum satisfaction. It also showed that 49.3% respondents identified that
infrastructural barriers like Low level of internet penetration, weak telecommunication and
frequent power interruption is one of the major sources of challenges faced by electronic
banking. More so, at 0.786 it shows that electronic- banking services does have significant
impact on customer value in the banking sector. Therefore, the respective management bodies of
commercial banks in Nigeria should work more to strengthen these service dimension. Although the
opportunities of e-banking is promising, the fundamental challenging problems faced by commercial
bank in relation to e-banking is infrastructural barriers such as network failure, low level of internet
penetration, unreliable power supply and lack of ICT knowledge from the customer side. The observed
impact was subjected to ANOVA and the results F (1,149) = 397.730, p < 0.05 F showed that
the service reliability does have significant influence on customer satisfaction in the banking
sector. It is concluded that the commercial banks should enhance their internal capacity and work with
the government bodies to acquire modern technological advancement consistently .it is therefore
recommended that banks should design and implement the mechanism of increasing their electronic
banking customers’ confidence, knowledge, and technological skill via sustainable awareness creation
programs of using e- banking service.

v
 TABLE OF CONTENT

TITLE PAGES
Cover Page i
Certification ii
Dedication iii
Acknowledgements iv
Abstract v
Table of Contents vi
List of Tables ix
CHAPTER ONE: INTRODUCTION
1.1 Background to the Study 1
1.2 Statement of the Problem 3
1.3 Research Questions 4
1.4 Objectives of the Study 5
1.5 Research Hypotheses 5
1.6 Significance of the Study 5
1.7 Scope of the Study 6
1.8 Operational Definition of Terms 6
CHAPTER TWO: LITERATURE REVIEW
2.1 Conceptual Review 8
2.1.1 Electronic Banking 9
2.1.1.2 Mobile Banking 10
2.1.1.3 E-Banking in Nigeria 10
2.1.1.4 Benefits of E-Banking
11
2.1.2 Challenges in E-Banking 13
2.1.3 Challenges & Opportunities of E-Banking on Customer Satisfaction 14
2.1.3.1 Challenges in E-Banking 14
2.1.4 Customer Satisfaction 17

vi
2.1.4.1 Customer 17
2.1.4.2 Customer Satisfaction 17
2.1.4.2 Service Quality Dimensions & Customer Satisfaction in Using E- Banking 20
2.1.4.3 Customer Satisfaction in E-Banking 22
2.1.4.4 The Relation between Service Quality & Customer Satisfaction 23
2.1.4.5 Service Quality Dimensions (Service Quality Model) 24
2.2 Theoretical Review 27
2.2.1 The Fractional Reserve Theory of Banking 27
2.2.2 The Credit Creation Theory of Banking 29
2.2.3 Assimilation Theory 32
2.2.4 Contrast Theory 32
2.2.5 Negativity Theory 33
2.2.6 Disconfirmation Theory 33
2.2.7 Innovation Diffusion Theory (IDT) 34
2.2.8 Technology Acceptance model (TAM) 34
2.3 Empirical Reviews 35
2.4 Gaps in Literature 37
CHAPTER THREE: METHODOLOGY
3.1 Research Design 39
3.2 Area of Study 39
3.3 Population of the Study 41
3.4 Sample Size and Sampling Technique 42
3.5 Method of Data Collection 43
3.6 Research Instruments 43
3.6.1 Validity of Research Instrument 43
3.6.2 Reliability of Research Instrument 43
3.7 Ethical Consideration 44
3.8 Methods of Data Analysis 44
3.9 Descriptive Analysis 45
3.10 Pearson Correlation Analysis 45
3.11 Multiple Regression Analysis 45
vii
3.12 Regression Functions 45
3.13 Model Specification 45
CHAPTER FOUR: DATA PRESENTATION AND ANALYSIS
4.1 Demographic Characteristics Analysis of the Respondents 47
4.2 Electronic-Banking and Customer Satisfaction Analysis E-Banking and Customer
Satisfaction Responded by the Respondents 49
4.3 Test of Hypotheses 61
4.4 Discussion of Findings 66

CHAPTER FIVE: SUMMARY, CONCLUSIONS AND RECOMMENDATIONS

5.1 Summary of Findings 68
5.2 Conclusion 69
5.3 Recommendations 70
REFERENCES 72
APPENDIXES 76

viii
 LIST OF TABLES

Table 1: Gender of the Respondent 47

Table 2: Age of the Respondent 47
Table 3 Marital Status 48
Table 4: Working Experience 48
Table 5: I am satisfied with the E-banking service provided by your bank 49
Table 6: I am satisfied with the bank‘s online based service quality 49
Table 7: Over all service of online banking is better than traditional banking service
and my expectation 50
Table 8: I am satisfied e-banking informed me by SMS 50
Table 9: I am satisfied by e-banking give service 24hr in a day and 7 days in a
week‘s including holiday via ATM ,M-banking 51
Table 10: I am satisfied by e-banking to always not to visit bank in urgent case 51
Table 11: The Bank performs its Electronic banking services without errors 52
Table 12: Electronic banking services are performed within the promised time 52
Table: 13 Bank shows sincere concern in solving my problems, related to electronic
banking business operations 53
Table 14: The bank performs electronic banking service exactly as promised. 53
Table 15: Bank quickly respond to my requests on electronic banking service 54
Table 16: The Bank is quick in eliminating potential errors on electronic banking
Operations 54
Table 17: Electronic banking service saved my time via improved Speed and
Efficiency 55
Table 18: Electronic banking has the advantage of decreasing the longer queue
available in the banking hall 55
Table 19: The access and availability of mobile phones with vital functions has
facilitated E-banking system for me 56
Table 20: Electronic banking helped me to transfer of money by using mobile banking
system without going to the branches hall 56
Table 21: E-payment using POS terminals have made me use more cards than
carry cash on hand 57
Table 22: Obtained E-banking service within 24 hours a day and 7 days a week
without interruption 57
Table 23: Social and cultural barriers such as High rate of illiteracy, less awareness
and negative perception 58
Table 24: Infrastructural barriers like Low level of internet penetration, weak
telecommunication and frequent power interruption 59

ix
Table 25: Economic factors such as High cost of internet, low income and heavy
Investment 59
Table 26: Management and banking issues like Resistance to change in technology
among staffs and customers and E-banking possess risks 60
Table 27: Legal and security issues such as Cyber security issues and lack of suitable
legal and regulatory frame works of E-payment 60
Table 28: Knowledge barriers such as Lack of trust by customer, lack of
technological knowledge and language barriers 61
Table 29: Model Summary 61
Table 30: ANOVA a
62
Table 31: Coefficients a
62