E-Banking Service Innovations and Customer Loyalty in the Banking Industry: a Case Study of Centenary Bank

Abstract

This study explored the contribution of E-Banking Service Innovations towards Customer Loyalty in the Banking industry. The major objective of the research was to establish the relationship between e-banking service innovations and customer loyalty in Centenary Bank-Uganda Ltd. Specifically; the study examined the relationship between Automated Payment Systems, PC Banking services and Point of Sale services, and Customer Loyalty in Centenary Bank. The study was guided by the Davis’ (1989) Technology Acceptance Model which deals with the prediction of the acceptability of an information system (i.e. innovation adoption). The study adopted a case study research design and a mix of research approaches was employed. Overall, 264 respondents from different related study populations participated in the study. Data collection was done using questionnaires and interviews. The results indicated that the that APS users appreciated the ATM services for being easily accessible in making withdrawals, cash deposits and obtainance of bank statements at their convenience. They were, however, constrained to effect internal transfers and payment of utilities across the ATM. Mobile phone linkage with account innovations was most appreciated APS as majority used it to effect utility bills payment, transfer payments and load airtime with accurate transactions reflected on their accounts. The study found a high and positive significant relationship (r = 0.607** and p = 0.000) between APS innovations and customer loyalty suggesting that the efforts to use self-serving technologies of ATM and mobile phone enabled transactions to effect payment significantly contributed to customer loyalty in the bank. The study also found out that a low level of rolling out of PC banking services innovations to corporate entities as they could only access prompt and accurate bank statements but could not affect supplier, salary and NSSF payment using PC banking at their premises. The study found no significant relationship (r = - 0.002 and p = 0.986) between PC banking and customer loyalty implying that an increase in the prevailing status of PC banking self-serving technologies would contribute negatively towards targeted PC customer loyalty. Further, the study found out that POS users could easily operate the POS device which offered them flexibility, relived them of burden to of carrying cash and charges were accurate and affordable. The Centenary POS system was, however, not regularly used to effect payments for goods or services or cash withdraws in the areas it was deployed. The study found a high positive significant relationship (r = 0.651** and p = 0.000) between POS innovations and customer loyalty suggesting that the efforts to use POS if rolled out expeditiously will significantly contribute to customer loyalty in the bank. The study concluded that the e-banking innovations where they have significantly been rolled out like in areas of APS and POS have been instrumental in contributing to customer loyalty in Centenary Bank. Efforts directed to expeditious rolling out and strengthening of the e-banking platform will significantly enhance customer loyalty in the indigenous bank. The study observes that there was a significant low use of ATM services to effect internal transfers and payment of utilities, low level of rolling out PC banking and distribution of POS to high potential areas of use. It is on this basis that this study recommends that the management of the bank should engage the e-banking technology providers to expedite the rolling out process of the PC and POS self-servicing technologies for enhanced customer loyalty. Additionally, the e-banking unit in liaison with internal and external stakeholders should undertake development of rollout work plans, their monitoring and reporting for management action.

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