DIGITAL BANKING: ASSESSING ITS EFFECT ON CONSUMER BEHAVIOUR

CHAPTER ONE

INTRODUCTION

Background of the Study

The business landscape has dramatically transformed over the past decade, driven by powerful forces that compel organizations to realign their strategies to survive and thrive in a fast-paced environment. Technological trends and changes in the marketplace, especially in information and knowledge management, are significant contributors to this shift. Information has become voluminous, easily accessible, and complex (Gartner, 2018). Knowledge, now a fundamental societal resource, drives change, innovation, and solutions (Sarkane, 2019). The new digital paradigm affects every aspect of our lives. Computers increasingly influence product stocking decisions, perform services previously handled by humans, and may even drive cars in the future (Satell, 2018). The impact of technology on marketing is profound, reshaping product development, promotion, advertising, distribution channels, and customer relationship management through online platforms, social media, business management applications, and mobile devices (Adams, 2019). Every business sector, regardless of specific functions, is impacted by technological changes from the external environment. The financial services sector, for example, has adapted to technology through online banking, ATMs, credit cards, mobile banking, and payment transfers to meet diverse customer needs (Brown, 2013). digital banking, in particular, is seen as the future of business, driven by the convergence of communications, technology, electronics, and media (Suresh, 2020). The growth of mobile devices is fueled by the demand for mobility from both a customer experience and convergence perspective, leading organizations to adopt mobility solutions for both corporate and individual clients (Suresh, 2020).  Mobile phones have become integral to daily life, and innovations on the mobile platform have the potential to revolutionize financial transactions by offering services that align with consumer lifestyles. Timaru and Buse (2018) define digital banking as providing banking and financial services via mobile telecommunication devices, encompassing bank and stock market transactions, account management, and access to tailored information. They note that many customers are willing to pay extra for mobile banking services. The penetration of mobile devices, a tech-savvy younger generation, increasing consumer mobility, and the convenience of mobile devices contribute to the growth and adoption of mobile banking, offering significant business opportunities for organizations (Timaru & Buse, 2018). Technological changes significantly influence consumer behavior. Schiffman and Kanuk (2019) describe consumer behavior as the actions people take in searching for, purchasing, using, evaluating, and disposing of products, services, experiences, and ideas to satisfy their needs. Technology's influence on this behavior directly impacts how customers seek information, make purchases, use products, and dispose of them. Timaru and Buse (2018) note that the propensity to switch banks without mobile financial services is higher, at 33%, among adults aged 31-40 years. Technology provides consumers with rapid access to vast amounts of relevant data, aiding informed decision-making. In this era, technology-supported access to information makes comparing options more complex but effective (Brown, 2013). Consumers often search for information on their mobile devices, compare options, read online reviews, and share insights via social media before engaging with salespeople or entering stores, posing challenges for marketers relying on traditional communication methods (Brown, 2013). The factors influencing the use and adoption of mobile banking are crucial, especially regarding how these services affect consumer behavior, from recognizing banking needs to accessing information, evaluating options, using the product, and advocating for the brand (Schiffman & Kanuk, 2009). Personal characteristics also play a significant role in how technology and innovation impact consumer purchase and consumption behavior (Schiffman & Kanuk, 2009). Therefore, a survey will be conducted in order to  assess the  effect of digital banking on consumer behaviour.

1.2 Statement of the Problem

 E-commerce has become widely prevalent worldwide. Hamidi (2022) observed that the majority of the rural population does not require a bank account but rather requires access to financial services. Due to the concentration of bank branches in urban areas,digital banking has significantly improved their financial transactions. According to Smadi & Al-jawazneh (2019), mobile transactions have gradually supplanted debit and e-card transactions. Furthermore, technology has significantly simplified people's lives compared to the past, where courier services or personal travel were necessary. The adoption of digital banking has revolutionized the ability to transfer money globally. This enables users to send money to others in different parts of the world without the need for physical movement or geographical constraints. As a result, individuals have greater control over their money and can access it whenever they desire, leading to increased financial flexibility (Wamuyu & Maharaj, 2011). However, it is clear that mobile banking technology significantly influences how individuals manage their finances. When deciding whether to utilize a banking service, customers take into account many criteria. Additionally,a multitude of academics have conducted studies on the influence of digital banking on customer behaviour. Agrawal (2010) found that characteristics such as perceived utility, Hamidi (2022) ease of use perception, Mattila (2016) perceived cost, and Wamuyu & Maharaj (2021) intention for usage and perceived trust are important elements that influence the adoption of mobile commerce. Hence, it is in the light of these that the study seeks to  assess the  effect of digital banking on consumer behaviour.

 1.3  Objectives of the Study

The main purpose of this study is to  assess the  effect of digital banking on consumer behaviour. Specifically, the study will;

To examine the digital banking services used by consumers.

To evaluate the level of consumer satisfaction with digital banking services.

To determine the impact of digital banking services on customer loyalty to their banks.

1.4  Research Questions

The following questions have been prepared for the study:

What digital banking services are used by consumers?

What is the level of consumer satisfaction with digital banking services?

What is the impact of digital banking services on customer loyalty to their banks?

1.5 Research Hypotheses

H0: Digital banking has no significant effect on consumer behavior.

Ha: Digital banking has significant effect on consumer behavior.

1.6 Significance of the Study

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. Additionally, the findings will provide valuable insights for banking institutions, since they reveal customers' experiences and the causal relationships between their activity and their interpretation of the bank's perspective and attitudes. This will assist banking institutes in enhancing their systematic digital initiatives.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  effect of digital banking on consumer behaviour.

1.6 Scope of the study   

The scope of this study is boarded on the effect of digital banking on consumer behaviour. Empirically, this study will to examine the digital banking services used by consumers, evaluate the level of consumer satisfaction with digital banking services and determine the impact of digital banking services on customer loyalty to their banks.

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.

Consumer behavior: refers to the actions, decisions, and processes that individuals undertake when searching for, purchasing, using, evaluating, and disposing of products or services.