1

ELECTRONIC BANKING AND CUSTOMER SATISFACTION IN COMMERCIAL

BANKS
CASE STUDY CENTENARY BANK UGANDA



BY
NAMUGERWA ROSE
09/U/13292/EXT
0783-405224


SUPERVISOR: DR MUYINDA PAUL BIREVU


A Dissertation Submitted to the Department Of Distance Education in Partial Fulfillment
of the Requirements for the Award of the Degree of Bachelor of
Commerce of Makerere University.



AUGUST, 2013


i

DECLARATION

I.., do solemnly declare that to the best of my
knowledge, wisdom and belief, the work am presenting is entirely mine, from my sweat, the
scope of the dissertation and its contents are truly from my efforts and has never been submitted
for the award of any degree in any University or Institution.
Signature .. Date, ..//..
NNAMUGERWA ROSE





ii


APPROVAL

I certify that Ms........................................................................... carried out this research under
my supervision and is submitted with my approval.


........................................................................ ..............................................................
Dr. Muyinda Paul Birevu Date
Supervisor









iii


DEDICATION

I dedicate this book to all readers and researchers, that with great pleasure I truly appreciate
those who gave in their time to read and also extract all the data. This report is dedicated to my
beloved Family, Friends and Relatives who have tirelessly and generously supported me
financially and morally from childhood all through life.





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ACKNOWLEDGEMENTS

It is with deep gratitude that I thank God for giving me the life, strength and wisdom i needed to
accomplish this report. First and foremost I give thanks to my supervisor Dr. Muyinda Paul
Birevu for the guidance, support and the supervision that enabled the successful completion of
this report. Special thanks go to my beloved mum and dad Mr. and Mrs. Charles Tamale for all
the financial and moral support that they have given me, Mr and Mrs Kajjumbi Steven,May the
Almighty God reward them tremendously. Special gratitude also go to all my dear friends who
have supported me in one way or another all through the compilation of this report, most
especially Patrick, Alex, Lukwango, Nobert, Fabio, Mercy, Monica ,Zulpher and others for their
endless love, support, and encouragement all through my student life at campus. May your lives
always be as rich, warm and loving and may your income, peace, joy and satisfaction increase
every day. I thank my sisters and brothers that is to say, Brian, Angella, Immy for the financial
support, the love and the positive influence towards my life, and finally to my dear aunt
Nantongo. Am forever grateful to everyone who contributed towards the successful completion
of this project. May the good Lord bless you abundantly.











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TABLE OF CONTENTS
Page
DECLARATION ............................................................................................................................. i
APPROVAL ................................................................................................................................... ii
DEDICATION ............................................................................................................................... iii
ACKNOWLEDGEMENTS ........................................................................................................... iv
LIST OF TABLES ........................................................................................................................ vii
ACRONYMS ............................................................................................................................... viii
ABSTRACT ................................................................................................................................... ix

CHAPTER ONE ........................................................................................................................... 1
1.0 INTRODUCTION .................................................................................................................. 1
1.1 Background ............................................................................................................................... 1
1.2 Statement of the Problem .......................................................................................................... 5
1.3 Purpose of the Study ................................................................................................................. 5
1.4 Objectives ................................................................................................................................. 5
1.5 Research Questions ................................................................................................................... 5
1.6 Scope of the study ..................................................................................................................... 5
1.6.1 Geographical scope ................................................................................................................ 5
1.6.2 Content / Variable Scope. ...................................................................................................... 6
1.6.3 Time Scope ............................................................................................................................ 6
1.7 Significance of the Study .......................................................................................................... 6

CHAPTER TWO .......................................................................................................................... 7
2.0 LITERATURE REVIEW ......................................................................................................... 7
2.1 Introduction ............................................................................................................................... 7
2.1.0 Electronic Banking................................................................................................................. 7
2.1.1 Electronic Banking or Electronic Fund Transfer Services available in Banks ...................... 8
2.2 Customer Satisfaction ............................................................................................................. 12
2.2.1 Introduction .......................................................................................................................... 12
2.2.2 Definition ............................................................................................................................. 12
2.2.3 Determinates of Customer Satisfaction ............................................................................... 13
2.3 Electronic Banking and Customer Satisfaction in Commercial Bank .................................... 17
Conclusion .................................................................................................................................... 18

CHAPTER THREE .................................................................................................................... 19
3.0 METHODOLOGY ................................................................................................................. 19


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3.1 Introduction ............................................................................................................................. 19
3.2 Study Design. .......................................................................................................................... 19
3.3 Area of study ........................................................................................................................... 19
3.4 Population ............................................................................................................................... 19
3.5 Sample Size and Selection Method......................................................................................... 19
3.6 Data collection tools and methods .......................................................................................... 20
3.7 Data Management ................................................................................................................... 20
3.7.1 Data Processing .................................................................................................................... 20
3.7.2 Data Analysis ....................................................................................................................... 20
3.8 Limitations of the Study.......................................................................................................... 20

CHAPTER FOUR ....................................................................................................................... 22
4.0 PRESENTATION, INTERPRETATION, AND DISCUSSION OF FINDINGS .................. 22
4.1 Introduction ............................................................................................................................. 22
4.2 Characteristics of respondents ................................................................................................ 22
4.2.1 Gender .................................................................................................................................. 22
4.2.2 AGE ..................................................................................................................................... 23
4.2.3 Education Level ................................................................................................................... 24
4.2.4 Period of banking with the organization .............................................................................. 24
4.2.5 Accounts held....................................................................................................................... 25
4.3 Electronic banking services .................................................................................................... 26
4.3.1 Knowledge about e-banking services .................................................................................. 26
4.3.2 Availability of Electronic banking services ......................................................................... 30
4.4 Customer satisfaction determinates ........................................................................................ 31
4.4.1 Determinates of customer satisfaction ................................................................................. 31
4.5 Relationship between electronic banking and customer satisfaction ...................................... 35

CHAPTER FIVE ........................................................................................................................ 36
5.0 SUMMARY, RECOMMANDATIONS, AND CONCLUSION ........................................... 36
5.1 Introduction ............................................................................................................................. 36
5.2 Summary of findings............................................................................................................... 36
5.2.1 Findings on the availability of Electronic banking services in Centenary bank .................. 36
5.2.2 Findings on determinants of customer satisfaction .............................................................. 36
5.2.3Findings on the relationship between Electronic banking and customer satisfaction .......... 37
5.3 Conclusions ............................................................................................................................. 37
5.4 Recommendations ................................................................................................................... 38
5.4 Areas for further study ............................................................................................................ 38

REFERENCES ............................................................................................................................ 39
APPENDICES .............................................................................................................................. 42


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APPENDIX I: QUESTIONNAIRE .............................................................................................. 42

LIST OF TABLES
Page
Table 1: Showing ownership of centenary bank in percentage ...................................................... 4

Table 4.1: Showing respondents by gender ................................................................................ 22
Table 4. 2: Showing age distribution of respondents ................................................................... 23
Table 4. 3: Showing distribution of respondents according to level of Education ...................... 24
Table 4. 4: Shows the period of banking with the bank .............................................................. 25
Table 4.5: Shows the accounts held by the respondents .............................................................. 25
Table 4. 6: Show knowledge about e-banking services ............................................................... 27
Table 4. 7: Shows the availability of E-banking services ............................................................ 30
Table 4.8: Shows customer satisfaction determinates .................................................................. 32
Table 4. 9: Relationship between Electronic banking services and Customer satisfaction ........ 35










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ACRONYMS

ATM - Automated Teller Machine
CS - Customer satisfaction
DD - Direct Deposit
E-Commerce - Electronic Commerce
E-B. - Electronic banking
EBS.. - Electronic Banking Services
E-Water - Electronic Water payment system
NWSC - National Water and Sewerage Corporation
NSSF - National Social Security Fund
OTC - Over The Counter
PIN - Personal Identification Number
PC - Personal Computer
SMS - Short Messaging Systems



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ABSTRACT

The study was on Electronic Banking and Customer Satisfaction and was conducted from
Centenary Bank, Kampala branches. The objectives of the study were to find out the electronic
banking services, to find out the determinates of customer satisfaction and the relationship
between Electronic banking and customer satisfaction. The study adopted an exploratory
research design and a cross-sectional research design. The study population included both staff
and customers of Centenary Bank. A total of 40 respondents participated in the study. Thirty
were customers while Ten were bank staff. The study used both primary and secondary sources
of data, primary data was collected using questionnaires and it was presented in tables. The
relationship was measured using Pearson rank correlation. It was found out that Electronic
banking services affected customer satisfaction. However, some other factors were instrumental
in achieving customer satisfaction such as sensitizing customers on the benefits of the services,
advertising and teaching most of them how these services work, providing a satisfying provision
that these services are secure and low fradulental activities. The relationship between Electronic
Banking and customer satisfaction indicated a 0.0875 which is a very weak positive relationship.
The weak relationship was attributed to the insecurity of the services, time taken when making
any transaction that is to say many of the users were iliterate with using computers and
management does not always care about those needs and requirements of their customer.
It s therefore concluded that the management of centenary bank should allocate resources on
customer sensitization and education about all services that show a slow adoption by customers
like PC, SMS banking , electronic payment systems and direct deposits to increase on customer
satisfaction and they had also to take care of factors which satisfy their customers.



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CHAPTER ONE

1.0 INTRODUCTION
During the last years, the banking industry around the world has been undergoing a rapid
transformation. The deepening of information technology has facilitated better tracking and
fulfillment of commitments, multiple delivery channels for online customers and faster
resolution of issues has developed noticeably. The financial services industry is altering rapid
and visible. Previous ways of doing business are fading fast. Together with this fast transition is
also the rising competition among banks. One of the greatest influences behind all of this is the
growing development in information technology. Because of this, costumers have not been
familiar with the ways of electronic banking services and its systems. Therefore, it is due to this
that the research focused on the impact of Electronic Banking on customer satisfaction in
commercial banks. To add on that, this chapter will show the background, problem statement,
purpose of the study, study objectives, research questions, and the scope of the study in terms of
geography, variable, time, and the significance of the study.
1.1 Background
Technological developments particularly in the area of telecommunications and information
technology are revolutionizing the banking industry. With the development of this technology,
electronic commerce is now holding a promise of new revolution. A number of studies have
examined the development of electronic banking and its operations. It is widely believed that the
impact of e-commerce enables banks to provide an inexpensive and direct way of exchanging
information and to sell or buy products and services. Today, financial sector firms are competing
to increase their profit share in the market. Among these firms, banks have radically shifted from
traditional banking to branchless mode of banking. Adoption of latest technology has enabled
banks to extend their customer base, where electronic banking has proved to be the chief
advancement. There fore with globalization, Ugandan banks have no choice but to adopt
electronic banking services to enhance effective service delivery that transcends to customer
satisfaction, if they really want to stay in the business race, to be profitable (Madureme, 2009).


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According to Swaminathan J and Ananth A (2010) Electronic banking is the automated delivery
of new and traditional banking products and services directly to the customer through the
electronic communication like computers, ATMs and internet websites. It is further means the
provision of retail and small value banking products and services through electronic channels.
Pahnila and Pikkarainen (2004) further define Internet banking as an Internet portal, through
which customers can use different kinds of banking services ranging from bill payment to
making investments. With the exception of cash withdrawals, Internet banking gives
customers access to almost any type of banking transactions at the click of a mouse.
However, Electronic banking is a 24-hour access to cash through an automated teller machine
(ATM) with Personal Identification Number (PIN) for the purpose (Marsh, 2005) or direct
deposit of paychecks into checking or saving accounts. However internet banking includes the
systems that enables financial institutions customers, individual or businesses access accounts,
transact business or obtain information on financial products and service on public or private net
work including internet while it is further defines internet banking as the act of conducting
financial intermediation through the internet. Many banks worldwide including developing
countries like Uganda use computers and computerized equipment like ATMs which is the
perfect example for such equipments whose purpose is to provide banking services to customers
at there convenience and such banking service include cash withdraws, balance enquiries, mini
bank statement and many others, (Kateeba,2001)
The use of the Internet as a new alternative channel for the distribution of financial services has
become a competitive necessity instead of just a way to achieve competitive advantage with the
advent of globalization and fierce competition ( Flavin, and Torres,2012). There is little
doubt that the proliferation of, and advancements in, Internet-based technologies have resulted in
fundamental changes in how companies interact with their customers (Ibrahim et al, 2006;
Bauer et al., 2005; Parasuraman and Zinkhan 2012). However, Thomas (2002) explains that
since the rise of the internet the way business interact with people and other businesses has
changed and banks have benefited with the advantages associated with the electronic banking
services. The benefits banks derive from electronic banking products and services delivery are
improved efficiency and effectiveness of their operations so that more transactions can be
processed faster and most conveniently, which will undoubtedly impact significantly on the
overall performance of the banks, (Suresh Padmalatha 2011)


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According to Edfy (2000) customer satisfaction is the process through which businesses ensure
customer loyalty and non defection of customers to the competitors. Customer satisfaction has
business leaders attention, as it is the basis for ensuring sustainability in a business. Nigell Hill
et al (2008) defines it as a measure of how products and services supplied by a company meet or
surpass customer expectation and there for in a competitive market place where businesses
compete for customers, customer satisfaction is seen as a key differentiator and increasingly has
become a key element of business strategy
According to Hesket et al (2011) the concept that the customer is important in achieving business
success dates back to about fifty years ago when business management studies recognized
marketing as an essential discipline.
But according to the recent research and reports customers are still un aware of these services
and they have not taken time to look at them as a solution, that is why most of them are still
crowding banks for withdraws, deposits and this make the researcher to wonder and try to find
out the cause of this.
Commercial banks in Uganda have valued the importance of electronic banking in improving
their organization performance and profitability
According to Mutebile (2007) Ugandan bank customers have shown a low adoption rate to
internet banking which means that they are dissatisfied with them. Most banks in Uganda have
registered few customers using the service. Baraghani (2007) further says that, consumers go
through a process of knowledge, persuasion, decision, implementation, and confirmation before
they are ready to adopt a product or service and get used to the service.
Internet banking adoption common concerns include the performance and security of banking
transactions as well as the confidentiality of personal account data and therefore these concerns
increase the level of perceived risk which is further exacerbated by declining levels of trust in
banks thus leading to low levels of internet banking adoption. Its asserted that Ugandan bank
customer have adopted internet banking at a very slow rate. She identifies security concerns to
increase the customers risk leading to distrust of internet banking leading to customers not being
satisfied and thats why customers prefer to use cash to electronic means of payment because
they dont find these electronic means to be important and not easy to use


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In addition, Topisita (2006) says that customers are not satisfied with the services provided by
commercial banks in Uganda. She reveals that customers raise a number of complaints to include
breakdown in the system, unavailability of conformation receipts for withdraw among others. It
is based on these developments in the industry that the study will seek to empirically examine the
impact of Electronic Banking Service (EBS) on customer satisfaction in the Ugandan banking
industry.
Centenary back was founded in 1983 as a credit trust, centenary rural development trust (CRDT).
In 1985, centenary rural development trust began to provide financial services to the public.
Centenary bank became a fully licensed commercial bank in 1993, after receiving a banking
license from the bank of Uganda. On 26-03-2007 centenary rural development bank re-branded
and trimmed its name to just centenary bank. Centenary bank is now Ugandas largest
indigenous bank with over 37 branches.(www.centenary bank.co.ug). As of April 2010 centenary
bank is the 5 largest commercial bank in Uganda with an asset base of US 306.7 millions
representing approximately 7.4% of the all banks assets in the country. (www.centenary
bank.co.ug) the banks stock is owned by the following corporate entities and individuals,

Table 1: Showing ownership of centenary bank in percentage
Rank Name of Partner Percentage ownership
1 Roman catholic dioceses of Uganda 39.00
2 Uganda roman catholic secretariat 31.00
3 Stitching Hivos Triodos Fonds 18.00
4 SIDI 11.00
5 Ugandan individuals 01.00
Total 100
Source: www.centenary bank .co.ug
Despite all efforts of Centenary Bank to provide efficiency, effectiveness and
quality services through electronic banking, majority of the users of the system are ignorant
which has left the problem of long queues in Centenary Bank halls unsolved many customers
have lost their money under this system (Byarugaba 2001).


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1.2 Statement of the Problem
Since e-banking service adoption by banks, customers seem not willing to adapt to these services
and this is evident by increased queues in the banking halls, customers are still carrying large
amount of cash, which points to their being dissatisfied with the services. However, banks have
tried to improve their systems by building more infrastructures and new services like Cente
mobile to increase customer satisfaction but the problem has persisted. This is probably due to
the increasing problems associated with e-banking systems. This is asserted by Bwonditi (2010)
who observed that several complaints by customers about these services mostly the ATMs, that
stopping a payment, reversing a transaction and refund is not possible and hardly do people talk
about these services. Therefore, that is why the researcher wants to find out the impact of
electronic banking on customer satisfaction in Centenary Bank.
1.3 Purpose of the Study
The purpose of the study is to establish the contribution of electronic banking on customer
satisfaction in Ugandan commercial banks using Centenary Bank as a case study.
1.4 Objectives
i. To find out the different e- banking services in commercial banks.
ii. To find out the determinants of customer satisfaction
iii. To establish the relationship between electronic banking and customer satisfaction
1.5 Research Questions
i. What are the different e-banking services in commercial banks?
ii. What are the determinants of customer satisfaction at centenary bank?
iii. Is there any relationship between e- banking and customer satisfaction?
1.6 Scope of the study
1.6.1 Geographical scope
The study will cover Centenary Bank at different branches in Kampala that is to say Nakivubo
road branch, Entebbe Road Branch, Namirembe Branch and Mapera Main Branch.


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1.6.2 Content / Variable Scope.
The study is to look at electronic banking services like ATMs and how it is linked to customer
satisfaction variables like disconfirmation in Centenary bank.
1.6.3 Time Scope
This study is to cover a period from 2000 to 2013 this is the period when most people started
using ATMs and other electronic banking services as expected by banks.
1.7 Significance of the Study
To commercial banks, the results will help in providing information on the extent to which
electronic banking has affected customer satisfaction.
It will further suggest alternative ways through which customer satisfaction can be ensured.
To the researcher, it will act as a par fulfillment for the award of a bachelor of commerce degree
from Makerere University.
To scholars and other researchers the finding will act as a yardstick for them to use when
carrying out research in relation to this topic such that it can widen their knowledge about the
problems and various solutions.









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CHAPTER TWO

2.0 LITERATURE REVIEW
2.1 Introduction
This chapter contains salient issues in the existing published literature on the effect of electronic
banking on customer satisfaction in commercial banks in Uganda. It has been carefully selected
from published journals on the internet, text books and other relevant presentations made outside
Uganda.
2.1.0 Electronic Banking
This is where a customer can access his or her bank account via the internet using personal
computer (PC), or mobile phone and web browser However Marsh (2005) defined electronic
banking as a 24 hour access to cash through an automated teller machine (ATM) with Personal
identification Number (PIN) or direct deposit of paychecks into checking or saving accounts.
Insely and Fleming (2000) say that electronic banking is an umbrella term for the process for
which a customer may perform banking transactions electronically without visiting a brick and
Mortar institution. Bhattacherjee (2001) summarizes it all and defines it as an integrated system
that can provide customers flexible, convenient and inexpensive platform with integrated
services of online personal banking products including online checking and saving accounts,
money market accounts, certificate of deposit, credit cards, home equity loan, home mortgage,
insurance, investment services, portfolio management and other related financial services.
Therefore using internet banking, bank customers can conduct the same banking transaction
provided by brick and mortar branch at any time and any place through a simple and user-
friendly browser Polatoglu and Ekin (2001).
Through Internet banking, you can check your transactions at any time of the day, and as many
times as you want to. In a traditional method the banks customer gets quarterly statements from
the bank. If the fund transfer has to be made outstation, where the bank does not have a branch,
the bank would demand outstation charges. Whereas with the help of online banking, it will be


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absolutely free for you. Recently Centenary bank offers a number of electronic banking services
and lets go a head and elaborate on these services.
2.1.1 Electronic Banking or Electronic Fund Transfer Services available in Banks

Automated Teller Machines (ATMs)
These are electronic terminals that let you bank almost virtually any time. For customers to
withdraw cash, make deposits, or transfer funds between accounts, they generally insert an ATM
card and enter their PINs. ATMs have a positive response. Since the introduction of the first
cash dispenser 30 years ago, ATM technology has gradually become the electronic face for most
bank customers. They are 24 hours around the clock electronic cashiers which provide access
into customers account by use of ATM cards on the banks ATM machine located on site in all
branch offices and off site in strategic places in the main towns around the country. Uganda now
has a good network of these ATM machines in most of the important business towns which are
also VISA electronic enabled and thus you can withdraw cash for your use locally. Wakefield
J.(2010).
According to Morris,c. (2004), ATMs have extended banking services to the remote areas
depositing and withdrawing of funds can be carried out thus yielding positive results. Looking at
the service range of ATM as reported by Chattered Institute of bankers journal (1995) and Peter
Wandri of Daily Monitor, include, cash withdraws, school fees payment, balance inquiry,
ordering of financial statements, topping up air time, and also paying credit and utility bills to
mention but a few. ATMs come with advantages like, they save time, one does not need to come
to the bank and wait in a cue or fill some paper work every time one wants to withdraw cash.
Ramsay (2000) in his managerial auditing journal says that ATMs are also easy to use and the
machine guides the customer through each step. All what the customer has to do is to follow the
instruction appearing on the screen.

E-Water Payments
This is a flexible and convenient water bill payment method for all customers
through all Centenary Banks branches and service centers. These services are offered free of


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charge, instant confirmation of the customers payment is done through your phone and to use
this service the customer must have a National Water and Sewerage Corporation Water bill or a
NWSC customer reference number and a mobile phone number. Benefits of the services to the
customers are ease of making your water bill payment in a secure environment, ability to make
your water bill payment in over 39-service locations countrywide, flexibility of payment (cash,
draft, standing order, or cheque) and many others.
Cente Mobile
Cente Mobile is a 24/7 full banking service that allows Centenary Bank customers to perform
financial transactions and access banking information using their mobile phones anytime and
anywhere, here a customer can see his balance, mini statement, fund transfer, Airtime purchase
and bill payment using your phone. Benefits of this service to the customers include a 24/7
banking at your fingertips, convenience- allows transactions from anywhere, anytime, simple to
use, instant services received like airtime, transfer of money.

SMS Banking
SMS banking uses short text messages sent through the clients mobile phone. SMS text
messages are used for both passive and active operations similarly as with classic telephone
banking. A client can automatically receive information about his account balance the message is
sent to the client immediately after a certain operation is performed, or on request: a client sends
the bank a correctly formatted message, which processes it and answers the clients request by
SMS. Information sent on request mostly concerns current interest rates or currency exchange
rates. Providing these is simple for the bank because this is publicly accessible information that
needs no protection. A client however can request information about the balance in his account,
which is not public information and must be protected when it is provided. Passwords are used
for this purpose or technologies based on the principle of an electronic key. A client however is
required to know the code of every transaction including constant and variable symbols.

Direct Deposit
Another E-banking service is the direct deposit and these let you authorize specific deposits like
paychecks, Social Security checks, and other benefits to your account on a regular basis. A


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customer may pre-authorize direct withdrawals so that recurring bills like insurance premiums,
mortgages, utility bills, and gym memberships are paid automatically. Bank customers should
also be cautious before they pre-authorize recurring withdrawals to pay companies they are not
familiar with, funds from their bank account can be withdrawn improperly. Therefore, customers
should make sure that direct recurring payments take place and are for the right amount.

Mail Banking
Mail banking is another electronic banking service that makes it possible to communicate with
the bank by electronic mail or e-mail. The most frequently used service is sending account
statements at agreed periodicity to the clients mailbox. E-mail are not used for operations that
are more complex. Payment Instruments and Self-Service Zones Apart from those already
mentioned, there are other more or less widely known forms of electronic banking, including a
payment card.
An electronic wallet represents a chip card similar to a payment card that\contains a record of a
financial sum that is available to its owner. A self-service zone is a fully automated alternative
work place of a bank with terminals and devices that clients can use to get various bank services.
It enables active and passive operations offered by the bank to be made without the presence of a
bank employee. Devices are constructed for very easy use with simple intuitive controls (user
friendly).

NSSF Payments
The Bank on behalf of the National Social Security Fund accepts payments from organizations
that have registered to remit their employees social contributions. The cash for the contributions
is credited directly to NSSFs Collection and there is no need for customers to go to NSSF
premises.

Personal Computer Banking
PC banking helps customers to handle many banking transactions using their personal
computers. For example, you may use your computer to request transfers between accounts and


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pay bills electronically. Customers can get a number of benefits that 24 hours availability of the
services, hassle free and no queues.


Debit Card Purchase or Payment Transactions
A payment card is currently one of the most widely used payment instruments designated for
authorized holders through which they can perform non-cash payments or cash withdrawals from
an extensive network of automated teller machines. These let you make purchases or payments
with a debit card, which also may be your ATM card. Transactions can take place in-person,
online, or by phone. The process is similar to using a credit card, with some important
exceptions. A debit card purchase or payment transfers money quickly from your bank account
to the company's account, so you have to have sufficient funds in your account to cover your
purchase. This means you need to keep accurate records of the dates and amounts of your debit
card purchases, payments, and ATM withdrawals.

Telephone banking
Africa has experienced an incredible boom in mobile phone use over the past decade. Today
there are more than 500million mobile users and in Uganda alone over 10 million people or
about 30% of the population own mobile phones, and the number is growing rapidly every day.
In respect to this research, telephone-banking technology means availability, accessibility, and
use of telephones (wired or wireless telephones) to engage in deposits, withdrawals and account
balance inquiry by users in the industry.

Electronic Check Conversion
This service converts a paper check into an electronic payment in a store. When the customer
gives her check to a cashier in a store, the check is ran through an electronic system that captures
the customers banking information and the amount of the check. The customer signs a receipt
and gets a copy for her records. When the check is given back to her, it should be voided or
marked by the merchant so that it cannot be used again. The merchant electronically sends


12

information from the check (but not the check itself) to the customers bank or other financial
institution, and the funds are transferred into the merchant's account.
The success of electronic banking, as agued by many researchers, depends probably on bank
service quality, customer preferences, and satisfaction. Recent studies found that consumer
behavior is changing partly because of more spare time. The way of use of financial services is
characterized by individuality, mobility, independence of place and time, and flexibility (Seitz
and Stickel, 2004).Despite the fact that banks have taken this innovative step in adding value to
customers, some environmental factors are affecting banks in achieving the desired level of their
intentions. Financial institutions on a global scale have lost over 650 billion ($5 billion) to
internet banking fraud from 2005 to 2007. He further stressed that, when such losses are
incurred, banks are very fast in passing the bill to the final consumer (bank customers) which
does not create any value to them. This situation heightens fear amongst consumers of this very
product/service

2.2 Customer Satisfaction
2.2.1 Introduction
Businesses always start and close with customers and hence customers must be treated as the
King of the market. All the business enhancements, profit, status, image etc of the organization
depends on customers. Hence, it is important for all the organizations to meet all the customers
expectations and identify that they are satisfied.
2.2.2 Definition
Customer satisfaction is the customers overall feeling of contentment in a business interaction
(Elaine 2005). Customer satisfaction is defined as a measure of how products and services
supplied by an organization meet or surpass customer satisfaction. According to Berry (2000)
customer satisfaction is defined using 10 dimensions of satisfaction which include quality, value,
timeless, efficiency, ease of access, environment, interdepartmental team work, frontline
services, behavior, commitment to the customer and innovation. Satisfaction may develop
quickly or it may be cultivated over a period. It is the overall pleasant experience after
consuming a product or service. Therefore, customer satisfaction is the state of mind that


13

customers have about a company when their expectations have been met or exceeded over the
life time of the product or service.
The international consortium,(2005) spells out the ability to be flexible in managing customers
enables the business to reap the benefits of good customer satisfaction and this is because
customer satisfaction is closely linked to quality in recent years. The achievement of customer
satisfaction leads to company loyalty and product repurchase. Clearly defining and
understanding customer satisfaction can help any company identify opportunities for product and
service innovation and serve as the basis for performance appraisal and reward systems. Only
customers can evaluate service in light of their unique expectations. Consequently, responsibility
for measuring and demonstrating continuous service improvements should focus to the service
professional. Only when service teams are actively involved in every facet of the service
business, including measurement of quality, can organizations capture the enthusiasm needed to
radically enhance service delivery.
2.2.3 Determinates of Customer Satisfaction
Consumer satisfaction can be determined by a number of factors that is to say customer
expectations, fees and charges, quality, customer care, and many others as discussed below.

Product perceived performance and expectations,
If the performance falls short of the expectations, the customer is dissatisfied. And when the
performance exceeds expectations, the customer is highly satisfied or delighted (Ulrich 1999).
Many companies are aiming for high satisfaction because customers who are just satisfied still
find it easy to switch when a better offer comes in. Customer satisfaction does not only result
from providing excellent service, but from customers perceiving that a company delivers a
service that is unique. Achieving this quality of service takes a serious commitment from every
employee in the organization through providing excellent service that exceeds customers
expectations to the extent that they are willing to tell others about their experience. Oliver (1980)
found that disconfirmation can affect customer satisfaction. Positive disconfirmation (perceived
performance above the expectation) increased consumer satisfaction and while negative
disconfirmation (perceived performance below expectation) decreases consumer satisfaction


14




15


Customer Service
Employees should answer the phone with a smile. A smile can be "heard" in someone's voice.
Nothing frustrates customers more than being served by an employee who feels the customer is a
waste of their time. According to Craig C (2003) improving an organizations customer service
requires commitment and consistence effort from every one in the organization. They advanced
10 fundamentals that will help create a culture of continuous service improvement. Companies
need to define success for every one in the organization as continually improving everything
everyday. Customer service improvement is the cumulative effect of thousand small
improvement made daily at every level in the organization. It often requires changing the culture
from one that accepts the status quo to one that is excited about change and constant
improvement. Listening is the foundation of all good relationship and pre-requisite to business
success, but surprisingly, few companies systematically listen to customers, suppliers,
employees, and competitors. The radical service improvements needed to sustain a competitive
advantage, require better customer information systems. The more the organization knows about
customers business and needs, the easier for it to form strategic partnership with in them.

Service Quality
Service quality or perceived service quality is a determinant of customer satisfaction. Some
researchers state that service quality and satisfaction measure the same underlying concept and
therefore are the same. Other authors argue that satisfaction with a specific transaction precedes
the perception of the overall quality of the firm and therefore is the antecedent of perceived
quality. Finally others suggest that the concept of satisfaction and quality are different and that it
is the perceived service quality that will affect customer satisfaction. Fornell (1992) finds that as
a general psychological phenomenon, satisfaction is primarily a function of customers quality
experience with a product or service. So over all it is expected that the greater the perceived
quality, the higher the level of customer satisfaction.



16


Needs and desires of the customers.
This is one of the determinants of customer satisfaction (Grigoroudis 2010). In order for a
business to meet the needs and desires of customers, the business must know the needs and
desires of the customers. This information is vital not only for successful business but also for
understanding and improving customer satisfaction. This important component helps to set the
standards and components of satisfaction from the perspective of the consumer.

Value of Products and Services
According to SwaminathanJ & Ananth A (2010) perceived value of the product is one of the
determinants of customer satisfaction. Customer satisfaction depends greatly upon receiving a
quality product with the expected value attached and service at a competitive price. Not only is
the customer looking for the right product or service, he is looking for someone who is
knowledgeable about the product or service as well.

Product ambiguity
Clarity of issues is also determines customer satisfaction. Product experience can often be
ambiguous, such as when the guilty of a product is difficult to evaluate. The difficulty may arise
when a product for example clothes or insurance cannot be judged based on objective criteria, or
when a product for example diamond may have many credence qualities or subjective attributes,
Alternatively, there might be a potential for multiple interpretations of product quality
Sometimes it is difficult to determine what is acceptable, desired, or valued from product. If the
product is difficult to evaluate or ambiguous, consumers are likely to lack confidence about the
performance ratings.

Fees and Charges
Service quality attributes in e-banking industry are important since human-internet interaction is
the main service delivery and communication channel. Offering high quality services to satisfy
consumers' needs, at lower costs, are potential competitive advantage of e banking. So me
studies show that e-banking has successfully reduced operating and administrative costs (Speece,
2003). Cost savings have helped e-based banks offer lower or no service fees, and offer higher


17

interest rates on interest-bearing accounts than traditional banks (Gerlach et al 2000). Therefore,
it is hypothesized that fees and charges have positive impact on customer satisfaction.
2.3 Electronic Banking and Customer Satisfaction in Commercial Bank
Electronic banking is linked to customer satisfaction through globalization. He explains that this
has not only brought the world closer together, but it has allowed the worlds economy to become
a single interdependent system. This means that local and international business can easily share
information quickly and efficiently.
Lenart .S. (2012) argues that customer satisfaction for financial institutions and banking Website
display positive growth in 2010 and nearly two thirds of online financial customers now use bill
pay across,credit cards and third party websites.
Electronic banking has drown attention of many banks to application of various technology
devices in promoting or achieving better customer service delivery that guaranteed customer
satisfaction that translates into increased profitability and higher return on investment.
Electronic banking services and customer satisfaction have a positive relationship, which has
afforded banks the opportunities to impress customers, which eventually encourage them to keep
coming back. Today it would be difficult to see any bank in the country that doesnt render one
form of electronic banking service or the other, even banks in the most remote parts of the world.
Vaidya (2011) argues that emerging technology would enable to create new ways of lead
generation, prospecting as well as developing deep customer relationship and electronic banking
would achieve superior customer experience with bi-directional communications. In his view ,
ascertains that access to basic financial services, ability to save, transfer and also invest small
amounts of money can make a huge difference to people around the world.
The other linkage between electronic banking and customer satisfaction as revealed by (Barney
2006) is cost effectiveness. He explains that information technology has helped to computerize
the business process thus streamlining businesses to make extremely cost effective money-
making machines.



18

Barney (2000) also adds on the fact that electronic banking has created more time for businesses.
This is so in that electronic banking has made it possible for business to open 24/7 all over the
globe. This means that a business can be opened any time anywhere, making purchase from
different countries easier and more convenient. It also means that you can have your goods
delivered right to your doorstep with having to move a single muscle.
Conclusion
In conclusion, it can be noted that not much scholarly work exists about electronic banking in
Uganda and how it affects customer satisfaction. This is due to the fact that Electronic Banking
is just a new initiative in the banking sector. However a few scholars have come up to raise their
views about electronic banking and how it relates to customer satisfaction particularly in
unpublished work like dissertation, concepts paper and proposal, articles from World Wide Web
(internet), in journals and chapters in un edited books. Therefore, the area continues to be a
researchable zone for the current researcher this is mainly because most research is done on case
study basis and there is always a feeling that information collected is inadequate.



19


CHAPTER THREE

3.0 METHODOLOGY
3.1 Introduction
This chapter entails the description of how the research was conducted. It includes the area of
study, the research design, the type of correspondents, and the research tools used, procedures for
data collection, and methods of data analysis applied in the study.
3.2 Study Design.
The researcher used an exploratory research design to generate basic knowledge, clarify relevant
issues and to break grounds about the characteristics and nature of the problem and also to
uncover the variables associated with the problem and the researcher used a cross sectional
design in addition so as to establish the relationship between electronic banking and customer
satisfaction
3.3 Area of study
The area of study was centenary bank branches in Kampala Central because its strategically
located and the researcher can easily get access to the many customers who are using these
electronic banking services offered.
3.4 Population
The population in the study involved centenary bank staff who attend to most customers and
finally a number of accessible Centenary customers.
3.5 Sample Size and Selection Method.
The researcher used a non-random sampling design to focus on the few elements in the
population selected properly with some prior knowledge and because of limited resources
particularly time, wide dispersal of the population and absence of the sampling frame from
which samples were selected. The sample size constituted 40 respondents. The formula below


20

was used to determine the size. N-n whereby N represents the population and n represents the
sample population. Therefore we assume N=100 60 = 40.
The sample size distribution
Respondents Number of respondents
Bank staff 10
Customers 30
Total 40
3.6 Data collection tools and methods
The data was collected by use of questionnaires, documents review which entailed reading,
interpreting and analyzing the information in the documents. The questions in the questionnaire
were closed-ended. For close-ended questions, respondents were offered a set of answers and
were asked to pick one that closely represents their views.

3.7 Data Management
3.7.1 Data Processing
Data processing involved scrutiny of the responses put on the questionnaires. Then the data was
sorted, edited, and interrelated. Finally, coding and tabulation of the data obtained followed.
3.7.2 Data Analysis
The data collected from questionnaires where summarized in light with the objectives and the
research questions of the study. The answers where translated into numeric data, tabulated with
percentages and figures obtained for understanding and presentation of the data.
3.8 Limitations of the Study
The researcher encountered a number of problems
There was lack of comprehension of some questions especially where the respondents selected
had little knowledge about a particular question.


21

Financial problems in gathering data about the institution and it was common with customers
who do not want to share their experiences without a fee. In addition, expenses related to
transport to and from the bank premises and all other related expenses such as stationary,
photocopying and printing.
Time period provided was very short, so the researcher had to minimize whatever had to be done
in order to be on time and do the needful. Therefore, the researcher had to do everything as quick
as possible


















22

CHAPTER FOUR

4.0 PRESENTATION, INTERPRETATION, AND DISCUSSION OF FINDINGS
4.1 Introduction
This chapter presents the analysis of data collected from the field. Findings are presented on the
respondents characteristics, that is to say age, gender, education level, period of banking with the
organization and accounts held by the respondents. They also show the knowledge respondents
know about the electronic banking services, their availability at the bank and finally the
determinates of customer satisfaction in Centenary Bank.
4.2 Characteristics of respondents
This sub-section presents staff and customers bio-data by gender, age, education level, duration
of banking with the organization and type of account held by the sample population.

4.2.1 Gender
In order to establish the gender which frequently uses Electronic banking services, the
respondents where asked to state their sex. The results are as presented in table 4.1 below.
Table 4.1 Showing respondents by gender
Gender Frequency Percent
Female
22 55.0
Male
18 45.0
Total
40 100.0
Source: Primary data
The table above shows female customers where more than male.
This is attributed to the fact that female customers love direct contact with some one. It was also
found out that they like to deal with tellers for any of there transactions such that they know that
their money is safe rather than dealing with machines. To use an ATM to deposit money they


23

consider it very insecure that is why they continue to use banking halls than males who are very
bold and they can use EB service with out feeling insure.
4.2.2 AGE
The age of the respondents was relevant to establish the age bracket, which used the EBS in most
banking halls. The results are as in the table below.

Table 4.2 Showing age distribution of respondents
Frequency Percent
Below 25 5 12.5
26-30 14 35.0
31-35 13 32.5
36-40 5 12.5
41 & Above 3 7.5
Total 40 100.0
Source: Primary data

Table 4.2 shows that most of the people who use EBS in Centenary Bank are in the brackets of
26-30 and 31-35.
Due to the advancement in technology, most of the things change as technology changes.
Therefore its found out that people in the age group of 26-30 always try to find out the
advancement and its very clear they always like using the new technology. It is also revealed that
using the EBS is not the problem but banks do not put in a lot of effort to advertise these services
which creates that gap of usage. Recently most of the people in this age group own atleast
computers so they can use the services however, they say that they also fill insecure due to the
internet fraud associated with the EBS.


24


4.2.3 Education Level
In order to find out the knowledge respondents may have about these services, they were asked
to state their education level. The results are as below

Table 4. 1: Showing distribution of respondents according to level of Education
Education level Frequency Percent
O' Level 5 12.5
A 'level 3 7.5
Degree 19 47.5
Diploma 7 17.5
Post graduate 6 15.0
Total 40 100.0
Source: primary data
Results show that most of the respondents where degree holders, which indicated that
information was obtained from well educated respondents as well as the Centenary bank staff is
well educated. The respondents are familiar with the use of the computers and its very easy for
most of them to use the EBS services. If the person is not a computer irritrate, it is very easy for
them to operate these services hence increasing the usage, but most of them use ATMs and keep
on ignoring the other services.
4.2.4 Period of banking with the organization
In order to ascertain how long these respondents shared a number of issues with the bank and
how they rate this organization to others, they where asked to state the period they have banked
with the organization. The results are as shown in table 4.4



25


Table 4. 2: Shows the period of banking with the bank
Period of banking with the bank Frequency Percent
less than 3years
7 17.5
3-6years
14 35.0
7-9years
9 22.5
More than 9year
10 25.0
Total
40 100.0
Source: primary data
Table 4.4 shows that most of the respondents have banked with the organization for more than 3
years. Customers show that they have banked with the organization for along period of time and
this is attributed to the good and excellent work done by the organization. According to the
respondents, the bank has tried to carter for their needs that is to say, they have opened up more
branches to help them ease their banking. They have opened up over 100 ATMs such that
customers save time with out going to banking halls, E- water payment systems to help them pay
their pills in time and they have kept on introducing a number EBS services to help them with
their banking needs like the introduction of Cente Mobile by the bank. There is a lot of
confidence they put in their bank and tell that they can be royal to the bank.
4.2.5 Accounts held
In order to establish how frequently they use the electronic banking services, customers where
asked to state the accountants they hold with the bank. Results are as shown in table 4.5 below.

Table 4.3: Shows the accounts held by the respondents
Accounts held Frequency Percent
current account
17 42.5
fixed deposit account
5 12.5
savings Accounts
18 45.0


26

Total
40 100.0
Source: primary data
Results indicate that customers held saving accounts and current accounts with the bank. The
respondents said that most of them opened those accounts in order to receive their money
electronically and easily. They could easily make transfers to other accounts locally and
internationally through online banking anywhere, anytime and it is supported by (Moriss.c 2004)
that the electronic banking services have extended banking to even remote areas. They also said
it was very easy to view their account balance with the new services like Cente Mobile. It only
works if you hold a saving or current account with the bank. Making payments also becomes
very easy and messages are sent to each customer once a transaction is made.
4.3 Electronic banking services
This section presents findings on the knowledge and availability of electronic banking services at
centenary bank.

4.3.1 Knowledge about e-banking services
To establish the wide experience and involvement of the respondents with Electronic banking
services, they where asked on the knowledge they had about EBS.



27


Table 4. 4: Show knowledge about e-banking services
Electronic banking N Minimum Maximum Mean
Sig. (2-
tailed)
Std.
Deviation
I understand what is meant by
electronic banking
40 1.0 5.0 2.075 0.000 1.1410
Customers know the
electronic banking services
available
40 1.0 5.0 2.450 0.008 1.2393
Electronic banking is the
cheapest way of making
transactions
40 1.0 5.0 2.500 0.015 1.2403
There is flexibility while
using electronic banking
systems
40 1.0 5.0 2.175 0.000 1.1522
I consider human tellers more
important despite the
emergency of electronic
banking
40 1.0 5.0 2.350 0.003 1.3117
Statement and account
balance enquiries are carried
out electronically
40 1.0 5.0 2.150 0.000 1.1668
Source: primary data
Results from table 4.6 show that a number of respondents understand what e- banking means. It
was found out that when customers enter the banking halls, they only know a few banking
services. They also said that they knew ATMs very well and in their statements, they were not
aware of how they can use them while depositing and making other specific transactions.
With the availability of the Electronic banking services, results show that customers knew the
services available. Findings revealed that respondents knew a few of the EBSs like ATMs, PC
banking, Western Union however, while they were asked apart from knowing them, how often
they used them, they were very clear that most of them used ATMs and the reason for not using
others was that they did not own computers and internet is another problem.
Results on whether EB was the cheapest way of making transactions revealed that they agreed to
the statements. While interacting with the respondents, results revealed that ATM withdraws,


28

were very cheaper than OTC transactions it is supported by (bhattacherjee 2001) who says that
the EBS are very cheap. They also said that the bank charges 500# per withdraw via the ATM
and over the counter you will be charged 1000#. They continued to say that due to the
introduction of the Cente Mobile the OTC transactions are now charged 2000 such that they
discourage people from using them, however many have not cared about the increment or they
are still un aware of the increment, they still go ahead to use them.
Results on whether customers knew the electronic banking services available revealed that the
respondents knew the services. Findings show that most of the respondents were aware of the
availability of the ATM services, SMS banking, direct deposit, transfers and the newly
introduced Cente Mobile and the E-water and E-NSSF payment system. They did not know
about the other services and they often used them.
Results on electronic banking being the cheapest way of making transactions were a good
number supported the question. Findings show that most of the respondents agreed to the
question. They mostly compared ATM services to the OTC transactions. Its revealed that ATM
services are cheaper and fast (Ramsay 2000) also says they are the cheaper ways to make
transactions, there is no need to hustle with people in a queue. You also do not get to cooperate
or react with those faces of the tellers.
Further, more in table 4.6, respondents supported the question on the flexibility while using
electronic banking services. In our discussions, respondents said that there is flexibility.
However many of them said that the problem is with ATMs as asserted by Topista that stopping
an instruction is not very easy while using them.
On the question of considering human tellers more important despite the emergency of the
electronic banking services was also very supported and according to the results its revealed that
many consider them more important. This would show that bank customers in Uganda do value
the importance of the personal touch in the banking services. In fact observation in the banking
halls of the most banks reveals that although relationship offices encourage customers make
inquires directly through telecommunication means available, it amazes one to see that many
customers prefer coming physically to the bank to make inquires. They say one can not ask a
machine to do for him or her any transaction but for a person it is very easy to interact with them


29

and ask them what you want to do. For any ;error in any nothing it wouldnt be your fault but the
tellers fault and they will have to do everything in their favour to electrify the mistake but when
you do a mistake will using the a machine you have to waste time such that they can help you
out. That why most of them are still using banking halls than the EBS.
Most of the respondents agreed that statements and account balance inquires are carried out
electronically. Findings show that statements and accounts opening are done electronically
though the customers have to first fill papers. This part has to be revised atleast they remove that
process of the paper work and they do every thing electronically such that the process is
simplified.


30


4.3.2 Availability of Electronic banking services
In order to establish how respondents were well conversant with EB services, respondents where
asked whether they knew the EBS available at Centenary Bank. The results are shown in table
4.7.
Table 4. 5: Shows the availability of E-banking services
Electronic banking services N Minimum Maximum Mean Std.
Deviation
Sig. (2-
tailed)
Electronic payment systems are
available at centenary bank
40 1.0 5.0 2.225 0.000 1.0497
I can access electronic banking services
at any time
40 1.0 5.0 1.750 0.000 .9268
Personal computer banking is available
at the bank
40 1.0 5.0 2.450 0.009 1.2598
ATM services are available at
centenary bank
40 1.0 5.0 1.975 0.000 1.0250
E-tax payment systems are available at
centenary bank
40 1.0 5.0 2.900 0.634 1.3166
E-bill payment system are available at
the bank
40 1.0 5.0 2.550 0.043 1.3578
SMS banking services are available at
centenary bank
40 1.0 5.0 3.000 1.000 1.1094
Cente Mobile is available at centenary
bank
40 1.0 5.0 2.250 0.000 1.2352
E-NSSF system is available at
centenary bank
40 1.0 5.0 3.125 1.560 1.3433
Direct deposits are available at
centenary bank
40 1.0 5.0 2.475 0.012 1.2606
Source: primary data


31


From table 4.7, respondents agreed that electronic payments systems, easy access of the EBS, PC
banking, ATM services, E-Tax payment systems, E-bill payment systems, Cente Mobile and
Direct deposit were available at Centenary Bank. However, they were not sure of the SMS
banking and E-NSSF systems availability at the bank. Findings on the availability of these
services at the bank was very critical, respondents believed that the services were available
although their use was very slow. The respondents were very sure of the availability though they
were not sure of whether they could use them with out any guidance from the bank. They were
familiar with ATMs, they only use the machines for withdrawing, and they did not use the
ATMs for any other transaction because they did not trust the machine like with depositing. The
bank also should try to make them aware that the services are safe but if that fails people will not
vacate banking halls for taking deposits.
On the other hand, with E-NSSF and SMS banking respondents said they should be sensitized of
their availability and advantages one can achieve with the use of the services
4.4 Customer satisfaction determinates
Customers have a number of determinates organizations have to consider such that they are
satisfied. Therefore, under this subsection we will determine whether Centenary Bank meets the
customers needs such that they are satisfied with the services offered
4.4.1 Determinates of customer satisfaction
In order to establish whether customers were satisfied with the services offered by the bank, they
were asked whether what they consider their satisfaction determinates are fully met by the bank
and the results are as follows.


32


Table 4.6: Shows customer satisfaction determinates
Customer satisfaction
determinates
N Minimum Maximum Mean
Std.
Deviation
Sig.(2-
tailed
Electronic banking affects the
attainment of customer
satisfaction
40 1.0 5.0 2.175 0.000 1.2380
Management understands
customers needs which satisfy
them
40 1.0 5.0 3.925 0.730 1.3660
The bank offers good quality e-
banking services
40 1.0 5.0 2.700 0.220 1.5225
Management offers serious
attention to its clients
40 1.0 5.0 3.711 0.176 1.2926
Customer requirements and
needs are satisfied in centenary
bank
40 2.0 5.0 4.30 0.025 0.0087
Customer problems are
promptly responded to by staff
40 1.0 5.0 3.200 0.372 1.3996
Electronic banking facilities
are reliable to customers
40 1.0 5.0 4.667 0.556 0.000
The banking system of the
organisation is computerized
40 1.0 5.0 2.175 0.000 1.1742
There is effective
communication with customers
40 1.0 5.0 2.737 0.244 1.3692
There is a conducive working
environment in the
organization
40 1.0 5.0 2.550 0.040 1.3388
Internal processes in the
organization are reviewed
regularly
40 1.0 4.0 2.650 0.065 1.1668
The variety of products offered
are charged fairly
40 1.0 5.0 2.541 0.030 1.2382
Management focuses on the
needs, desires and customer
values
40 1.0 5.0 4.550 0.537 0.000
Source: primary data



33

Respondents where asked how EB affects the attainment of customer satisfaction. According to
results in table 4.8, they agreed that EB affects customer satisfaction. Findings show that
customers are satisfied with things which do offer them care but dealing with machines can not
help them in anyway or another.
Results show that respondents did not agree that management understands their needs. Its very
clear that most of them did not support the question and they had to say that its very rear to get
management attention towards your needs unless many of you shut it loud and throw your query
at their faces. After that reaction atleast after some time, some one has to respond to the needs of
the customers but they do not consider them their first priority. There fore you find it very
difficult for the customers to use these electronic banking services in that for any mistake you
dont get care immediately, they take a long time to work on ATMs when there is a breakdown
in the network, when a customers losses his or her ATM card replacement is also a problem.
The respondents agreed that the bank offers good quality Electronic Banking services as seen
from the results above in table 4.8.
Customers revealed that the services offered are of a good quality such as SMS banking. They
agreed that whenever a deposit or withdraw are made, an SMS is sent to the owner of the
account, one can easily know the balance on his or her account hence they consider them to be of
good quality. Respondents that use EB products and services are satisfied with the quality of the
products and efficiency of delivery. This calls for concern. Banks therefore, need to intensify
effort in seeing that customers are not satisfied but also delighted with electronic banking.
Results also show that respondents were not sure that management pays attention to its clients.
They say that these people seem to be having a lot of work at they do not immediately give
attention any query made by the customer. Therefore, customers do not also mind to get to know
the EBS available because when they try to consult some one tells you little about the specific
service and yet to use some thing new one has to be with the necessary information about the use
of the service.
Basing on the results in table 4.8, it shows that customer requirement and needs are not satisfied
in Centenary Bank. Findings revealed that customers have no say the bank sets the rules and then
the customers follow. Therefore, Centenary Bank should consider involving their customers in
some decisions made.



34

Results show that also customers were not sure that their problems where responded to promptly.
Most of them said that whenever you want to know something you are given a few minutes yet
some of them take long to understand. Therefore, the bank customers request s that staff should
always listen to the customers and give them time to solve their problems.
Results show that most of the respondents did not support they said that these services are not
reliable. Findings show that these services have many problems like insecurity. Network brake
downs, delays, misstatements and others. Therefore, they do not think that they can trust these
machines with their money.
Respondents agreed that the banking system of the organization is computerized. This is as
shown above in table 4.8. Most of the things are done with the computers like E-Tax, E-NSSF
systems an d accounts opening even they take your passport photo using their electronic
machines, therefore no need for the already made photos as well as bank statements are got
electronically. Customers can see balances via phone or PC and transfers are done with
computers.
Results show that there is effective communication with customers at Centenary Bank.
Customers need attention to every query they have, that is, one has to make sure that they are
satisfied with what they need. Staff has to be able to spend some time explaining to them on
what they need and always be friendly each time one sees a customer.

There is a conducive working environment in the organization. This is revealed by the results in
table 4.8 where respondents agreed to the statement. This shows that Centenary bank satisfies
customers with their working environment. Most of them agreed that Centenary Bank offers a
good working environment. The place is well aerated, drinking water is provided in plastic
containers to cool the customers down, and seats are provided to the customers. This shows that
the customers are satisfied with the working environment in the Bank.

Internal processes in the organization are reviewed regularly. Results show that the respondents
were sure that the organization reviews internal processes regularly. While in the banking halls,
most of the staff is change regularly. A person does not spend a month working at that specific
branch, and staff is changed regularly such that customers get to interact with new faces when
they arrive at the bank.


35

Results show that the respondents agreed that the products are charged fairly. Centenary bank
offers low charges on the ATM withdraws and nothing is charged while a person is depositing
money and this really satisfies customers because no one can love banks charging a lot of money
via transactions made. Therefore, most of the transactions are done at affair price and with
accounts opening nothing is charged however, one is charged for getting an ATM, the bank
charges like 10000 for it.

4.5 Relationship between electronic banking and customer satisfaction
In order to establish how Electronic banking services and customer satisfaction affected each
other, we had to evaluate the relationship between the two variables.

Table 4. 7: Relationship between Electronic banking services and Customer satisfaction
Variable
Customer satisfaction
Correlation
Coefficient Sig. (2-tailed) N
Electronic banking services at centenary
bank
0.0875 0.628 40
Source: primary data
Findings revealed that there is an insignificant positive relationship between Electronic banking
and customer satisfaction (0.0875), this is due to the number of weaknesses associated with the
Electronic banking such as network break downs, insecurity/ fraud, hackers on the computers,
internet breakdown and illiteracy. Therefore the availability of the electronic banking systems
like ATM services, Cente mobile, SMS banking, personal computer banking, direct deposit and
others have not led to customer satisfaction. This means that customers are still not satisfied with
the services. Therefore, Centenary bank should always devise means of improving on the
electronic banking services such that they can increase customer satisfaction. They should also
continue to make customers aware of these service, look at the determinates of customer
satisfaction and they provide the services such that they can figure out a way they can try to
provide the services in order to satisfy their customers.



36

CHAPTER FIVE
5.0 SUMMARY, RECOMMANDATIONS, AND CONCLUSION
5.1 Introduction
This chapter highlights discussion and summary of major findings, the researcher also made
conclusions based on the conclusions in chapter four and recommendations on the possible way
forward to improve Electronic banking and customer satisfaction and areas of further study. The
discussion was based on the study objectives and research questions as shown below;
5.2 Summary of findings
5.2.1 Findings on the availability of Electronic banking services in Centenary bank
It was found out that ATM services, direct deposits, personal computer services, cente mobile, E-
bill payment systems are available at centenary bank since they registered the highest number of
respondents who agree on their availability. Most of the respondents supported their availability
however; respondents did not talk about their usage. This was due to some reasons like
insecurity, reliability, inflexibility, lack of internet protocols, most of them where computer
illiterate and it was also found out that its not easy to get ATM cards because processing it takes
a good period of time and fear of losing the cards or being stolen.
Most of them said they could not use them because they do not own personal computers and its
not very easy to make transactions in an internet caf in town.
Results further confirmed that the respondents had some knowledge about these services at
Centenary bank and they could explain what they meant and how one uses them. However
analysis revealed some of them did not know that SMS banking, E-NSSF and E-tax payment
systems where available at the bank
5.2.2 Findings on determinants of customer satisfaction
It was discovered that service quality, customer needs, flexibility, good working environment,
and effective communication highly determine customer satisfaction and are crucial in order to
make customers come the next time. Further analysis showed that Centenary bank has some
weaknesses during service encounters for example, management does not focus on the
customers needs, and requirements, failure to understand customers or users needs and their


37

services are not reliable. This implies that, customer expectations and needs are not recognized
yet this is critical in customer satisfaction.
5.2.3Findings on the relationship between Electronic banking and customer satisfaction
The findings revealed that there exists a weak positive relationship between electronic banking
and customer satisfaction. Furthermore, the relationship in these two variables was tested using
Pearsons correlation coefficient, which was 0.0875 and showed that there was 95% insignificant
positive relationship between electronic banking and customer satisfaction. This shows that
customers are not satisfied with the electronic banking services. Therefore there is a lot of work
needed to do about these services such that customers can really adjust and love them as they try
to meet their satisfaction.
5.3 Conclusions
After carrying out a close analysis of the study findings, it is evident that Centenary bank
customers have a lot of knowledge about the electronic banking services available at the bank for
example Phone banking, Personal computer banking, ATM services, and E-NSSF payment
systems
It follows from the above findings that many potential problems associated with customers not
being satisfied are because of poor communication with staff, management does not focus on
customers needs and requirements, product ambiguity, and management do not know and
understand customer expectations and needs.
Finally, results confirmed existence of a weak insignificant positive relationship between
electronic banking and customer satisfaction in Centenary bank, thus customers are not yet
satisfied with the e-banking services offered by the bank.


38


5.4 Recommendations
Basing on the study findings the researcher recommends the following:-
The bank should consider customer sensitization about the E-banking services that is to say how
to use the services, ensure their security, reliability of the services and clear operation of these
services at the bank premises.
The bank should continue advertising their services that is to say though many agreed to their
existence they cannot tell you how to use them, how important these services can be. They
should try to make the population aware of the advantages of the services.
The organization needs to look at the customer satisfaction determinates such that they know
clearly what they have to do to make their potential customers satisfied for example,
understanding customer needs, Value and expectations because if expectations are not reached,
then the organization will not ever satisfy their customers
In order to improve on customer satisfaction, management should always consider the customer
as first priority at their premises, they should not look at customers stuck, and they continue
doing their own things because if that happens then customers will never be satisfied. A
customer loves it when she is cared for, she cannot regret ever making you his or her bank
5.4 Areas for further study
Although this study was on electronic banking and customer satisfaction, it could not exhaust all
the researchable aspects concerning the above. Therefore, further research should be carried out
on:-
Electronic banking and customer adoption
Impact of ATM services on customer satisfaction
Service quality of banking services and customer need satisfaction
Security, responsiveness and reliability of electronic banking and customer satisfaction


39

Mobile banking and organization performance

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APPENDICES

APPENDIX I: QUESTIONNAIRE

This questionnaire is designed to generate information on the impact of electronic banking and
customer satisfaction. (Case study of Centenary Bank Nakivubo branch)
Dear respondents,
The researcher is a student of Makerere University carrying out research on the topic, electronic
banking, and customer satisfaction. The research is purely academic and the information
obtained will be used strictly for academic purposes, and will be handled with utmost
confidentiality.
The researcher therefore is kindly requesting you to spare some of your time and provide
answers to the questions below.
PART ONE: Background information
(Please tick where appropriate)
1. Gender.
(i) Female (ii) Male
2. Age
(i) Below 25 years (ii) 26-30 years
(iii) 31-35 years (iv) 36-40 years
(v) 41and above
3) Education level
(i) O Level (ii) A level








43

(iii) Diploma
(iv) Degree (v) Post graduate
4). How long have you worked with this bank?
(I) Less than 3 years (ii) 3-6 years
(ii) 7-9 years (iv) More than 9 years
5).Which type of account do you hold with this Bank?
i) Current Account ii) savings account iii) Fixed deposit account
PART TWO: Electronic banking services at Centenary Bank
Please choose and tick the most appropriate option using the scale; 1=strongly agree,
2 = Agree, 3=Not sure, 4= Disagree and 5=strongly disagree.
Opinions 1 2 3 4 5
6) I understand what is meant by electronic banking
7) Customers know the electronic banking services available
8) Electronic banking is the cheapest way of making transactions
9) Electronic payment systems are available at Centenary bank
10) I can access electronic banking services at any time
11) There is flexibility while using electronic banking systems
12) Personal computer banking is available at the bank.
13) ATM services are available at Centenary bank.
14) I consider human tellers important despite the emergency of
electronic banking

15) E-tax systems are available at centenary bank.
16) E- bill payment systems are available at the centenary bank










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17) Statement and bank balance enquiries are carried out
electronically.

18) SMS banking services are available at centenary bank
19) Cente Mobile is available at centenary bank
20) E-NSSF system is available at centenary bank
21) Direct deposits are used at centenary bank

PART THREE: Customer satisfaction determinates.
Opinions 1 2 3 4 5
22) Electronic banking affects the attainment of customer satisfaction
23) Management understands customer needs which satisfy them
24) The bank offers good quality services to customers
25) Management offers serious attention to its clients
26) Customer requirements are satisfied in Centenary bank
27) Customer problems are promptly attended to
28) Electronic banking services are often reliable
29) The banking system of the organization is computerized
30) There is effective communication between customers and staff
31) There is a conducive working environment in the bank
32) Internal processes are reviewed regularly
33) The variety of products are charged fairly
34) Management focuses on the needs, desires and customer values



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Thanks for your cooperation