ASSESSING THE IMPACT OF DIGITAL BANKING ON TRADITIONAL BANKING SERVICES IN CAMEROON

CHAPTER ONE

INTRODUCTION

Background of the Study

Digital banking services have gained prominence in the financial business in recent times. According to Chikoko and Munongo (2018), digital banking refers to the utilisation of the internet, mobile phones, and other electronic platforms for the provision of banking services. These services include conventional features such as checking account balances, printing statements, transferring funds, and making bill payments. They also offer innovative services like electronic bill presentation and payment, all without requiring a visit to a bank (Ali & Ali, 2019). Furthermore, banks engage in the provision of other services, such as savings, check, and investment accounts. However, digital banking has become increasingly significant as a substitute method for delivering services to customers, thanks to technology progress and innovation. Conversely, traditional banking pertains to the conventional banking paradigm, wherein customers can avail banking services via actual bank branches. This system has endured for centuries and has experienced substantial transformations over its history. Traditional banking includes a variety of services such as deposit-taking, loan provision, credit card issuance, and payment facilitation. Banks offer a variety of financial products and services, including checking and savings accounts, mortgages, personal loans, and business loans. On the other hand, traditional banking has been crucial in facilitating economic expansion and progress by granting individuals and enterprises access to credit and funding (Dobdinga, 2019). Although traditional banking continues to play a crucial role in the financial system, it has encountered substantial obstacles in recent years as a result of the emergence of digital banking and fintech businesses. Traditional banks have been compelled to adjust and introduce new ideas in order to meet evolving client demands and maintain competitiveness in the market. Digital banking encompasses the provision of banking services through digital platforms, including online and mobile channels. It has been a major force for change in the banking industry, revolutionizing the way customers access and engage with banking services. Beyond that, it includes a variety of services such as checking and savings accounts, bill payments, financial transfers, loans, and investments, all accessible through digital platforms (Jean, 2017). It has ushered in a heightened degree of convenience and adaptability for customers, enabling them to get financial services from any location and at any point in time. Furthermore, according to Kumar & Das (2018). digital banking has facilitated the provision of tailored and individualized services by banks to their clientele, resulting in enhanced consumer satisfaction and allegiance. Nevertheless, traditional banks have had to modify and introduce new ideas in order to stay competitive in response to the increasing popularity of digital banking. The use of digital banking has led to substantial transformations in the banking sector, including the rise of new fintech companies and evolving regulatory frameworks. Therefore, a survey will be conducted in order to assess the impact of digital banking on traditional banking services in Cameroon.

1.2 Statement of the Problem

The global financial services sector, particularly in developing nations such as Cameroon, is seeing a significant shift as it progressively embraces digital banking services. These services are specifically created to enhance user convenience, optimise operations, and save costs for commercial banks. While digital banking services offer notable benefits, their precise impact on the functioning of commercial banks remains questionable. A study conducted by Rono (2020) found that commercial banks were obligated to participate in e-banking innovation in order to gain a competitive advantage. This was accomplished by streamlining bank transactions, addressing the problem of overcrowding caused by lengthy waits, making services more accessible to clients to attract and keep them, and ultimately decreasing the cost of service provision while improving financial performance. In their study, Ngango et al (2019) discovered that before the introduction of digital banking, customers of banks faced considerable time inefficiencies caused by lengthy queues and delays in processing cheque payments. This was a result of bank officials awaiting at the clearing house for the settlement of their outstanding debts. The study done by Njogu (2018) found that bank managers are feeling great joy as a result of the deployment of e-banking. This innovation has resulted in the introduction of new market opportunities, increased sales revenue, extended market reach, and enhanced operational effectiveness. Nevertheless, the implementation of information technology was expected to decrease time, distance, space, and expenses, hence enhancing the accessibility of affordable financial services. Electronic banking facilitates the shift of banks from human-assisted traditional channels to self-service digital channels. This change decreases operational costs and improves efficiency and financial results. According to DeYoung (2021), digital banking and other electronic banking services reduce the operational costs of banks that have physical overhead expenses. Hence, it is in the light of these that the study seeks to assess the impact of digital banking on traditional banking services in Cameroon.

 1.3  Objectives of the Study

The main purpose of this study is to assess the impact of digital banking on traditional banking services in Cameroon. Specifically, the study will;

Investigate the extent to which customers have adopted digital banking services in Cameroon.

Assess the impact of digital banking on the operations of traditional banks in Cameroon

Examine how digital banking has affected the financial performance of banks in Cameroon

1.4  Research Questions

The following questions have been prepared for the study:

To what extent have customers adopted digital banking services in Cameroon?

What is the impact of digital banking on the operations of traditional banks in Cameroon?

How has digital banking affected the financial performance of banks in Cameroon?

1.5 Research Hypotheses

H0: Digital banking has no significant impact on traditional banking services in Cameroon.

Ha: Digital banking has significant impact on traditional banking services in Cameroon.

1.6 Significance of the Study

The findings of this research will provide valuable guidance for governing laws concerning digital banking, ensuring that they foster innovation while effectively mitigating risks such as cybersecurity threats and financial crime. Additionally, the  study will assist bank management in developing appropriate training programs and support systems to help employees adapt to the digital transformation. Ensuring that employees are well-equipped to manage and operate digital banking services for maintaining high performance and service quality. Moreover, subsequent researchers will use it as a literature review. This means that other students who may decide to conduct studies in this area will have the opportunity to use this study as available literature that can be subjected to critical review. Invariably, the result of the study contributes immensely to the body of academic knowledge with regard to the impact of digital banking on traditional banking services in Cameroon.

1.6 Scope of the study   

The scope of this study is boarded on the impact of digital banking on traditional banking services in Cameroon. Empirically, this study will investigate the extent to which customers have adopted digital banking services,assess the impact of digital banking on the operations of traditional banks and examine how digital banking has affected the financial performance of banks in Cameroon.

Geographically, the study will be delimited to some selected banks in Baffoussam, Cameroon.

1.7 Limitation of the study

In the course of carrying out this study, the researcher experienced some constraints, which included time constraints, financial constraints, language barriers, and the attitude of the respondents. In addition, there was the element of researcher bias. Here, the researcher possessed some biases that may have been reflected in the way the data was collected, the type of people interviewed or sampled, and how the data gathered was interpreted thereafter. The potential for all this to influence the findings and conclusions could not be downplayed. More so, the findings of this study are limited to the sample population in the study area, hence they may not be suitable for use in comparison to other schools, local governments, states, and other countries in the world.

 1.9 Definition of Terms

Digital banking services: encompass various electronic methods used by customers to conduct banking transactions. 

Mobile Banking: a mobile app to perform banking transactions.

Internet Banking: conducting banking transactions via a web-based platform.