TECHNOLOGICAL INNOVATIONS IN BANK OF AFRICA (UGANDA):

healthyapricotΜηχανική

5 Νοε 2013 (πριν από 4 χρόνια και 3 μέρες)

119 εμφανίσεις


1

TECHNOLOGICAL INNOVATIONS IN BANK OF AFRICA (UGANDA):

AN EVALUATION OF CUSTOMERS’ PERCEPTION

Musa Moya

Senior Lecturer/ Head of Department Business Computing

musamoya@yahoo.com

Makerere University Business School


Rehema Nanvuma

rehmashan@yahoo.com

Buganda Land Board


Akodo Robinah

arobinah@yahoo.com

Makerere University Business School


Abstract


This study set
s

out to
ascertain cu
stomers’ perception on the effect of IT innovations or
electronic delivery channels in
Bank of Africa (U) Ltd.
The study specifically, examined the
extent of bank’s innovativeness in information technology in B.O.A; the level of service delivery
in B.O.A i
n relation to IT innovations and the employees’ perception of the effects of IT
innovations on service delivery in B.O.A



A d
escriptive cross sectional survey was used. In the study, quantitative techniques were
employed in the data collection process, an
alysis, presentation and discussion of findings.
The
data used in this study was primary, collected from the IT employees and customers in selected
branches of B.O.A using self
-
administered structured questionnaires and oral interviews.


The results of t
he study generally indicate that, technological innovation or electronic
delivery channels have contributed positively to the provision
of
banking services in Bank of
Africa particularly ATMs and internet banking.


Therefore, for banks to remain competiti
ve there is considerable need to be innovative by
adopting and diffusing various IT innovations. The study recommends increased investment in
IT innovations in Bank of Africa and other banks in Uganda in order to be competitive.

Keywords:

IT, Innovations,
Service delivery


Introduction


The integration of world economies has opened an array of business opportunities as well
as challenges for firms. Increased standardization activity reflects, among other factors, demand
by consumers for safer and higher qua
lity products, technological innovations, the expansion of
global commerce and the increased concern by many governments to societal and welfare issues.
Firms in service sectors such as banking are under constant pressure to perform better, cheaper
and fas
ter. The developments in information and communication technology (ICT) are radically

2

changing the way business is done. Electronic commerce is now thought to hold the promise of a
new commercial revolution by offering an inexpensive and direct way to exc
hange information
and to sell or buy products and services. This revolution in the market place has set in motion a
revolution in the banking sector for the provision of a payment system that is compatible with the
demands of the electronic marketplace (Ab
or, 2005).


To fully satisfy the diversifying requirements of customers, many banks in Uganda have
continuously adopted information or automation technologies. Many studies have found that
innovation is the most important tool for enterprises to keep their

competitive advantage
(Damanpour and Evan, 1984; Kimberly and Evanisko, 1981). Indeed, many banks
like Bank of
Africa
are making what seem like huge investments in technology to maintain and upgrade their
infrastructure, in order not only to provide new e
lectronic information
-
based services, but also to
manage their risk positions and pricing. At the same time, new off
-
the
-
shelf electronic services
such as online retail banking are making it possible for very small institutions to take advantage
of new tec
hnologies at quite reasonable costs. These developments may ultimately change the
competitive landscape in the financial services (Abor, 2005).


While a number of studies have concluded that IT has appreciable positive effects on
bank productivity, cashier
s’ work, banking transaction, bank patronage, bank services delivery,
customers’ services and bank services (Abor, 2005; Yasuharu, 2003). Few studies have
examined their effects by analyzing the perceptions of the bank employees. This study evaluates
the
perceptions of banking employees regarding the effect of technological innovations on
banking services in Uganda.

Information technology and IT innovations in banking sector


Information Technology (IT) is the automation of processes, controls, and inform
ation
production using computers, telecommunications, software and ancillary equipment such as
automated teller machine and debit cards (Khalifa 2000, Agboola, 2004). It is a term that
generally covers the harnessing of electronic technology for the inform
ation needs of a business
at all levels. Innovations in information processing, telecommunications, and related
technologies


known collectively as “information technology” (IT)


are often credited with
helping fuel strong growth in the many economies (C
oombs
et al, 1987
). IT is defined as the
modern handling of information by electronic means, which involves its access, storage,
processing, transportation or transfer and delivery (Ige, 1995). According to Alu (2002), IT
affects financial institutions by
easing enquiry, saving time, and improving service delivery. In
recent decades, investment in IT by commercial banks has served to streamline operations,
improve competitiveness, and increase the variety and quality of services provided.


According to Yas
uharu (2003), implementation of information technology and
communication networking has brought revolution in the functioning of the banks and the
financial institutions. It is argued that dramatic structural changes are in store for financial
services ind
ustry as a result of the Internet revolution; others see a continuation of trends already
under way.


In a study conducted by Irechukwu (2000) in Nigeria, he lists some banking services that
have been revolutionized through the use of ICT as including acc
ount opening, customer account
mandate, and transaction processing and recording. Information and Communication Technology
has provided self
-
service facilities (automated customer service machines) from where
prospective customers can complete their accoun
t opening documents direct online. It assists

3

customers to validate their account numbers and receive instruction on when and how to receive
their chequebooks, credit and debit cards (Agboola, 2004). The ICT products in use in the
banking industry in many

developing and developed include Automated Teller Machine, Smart
Cards, Telephone Banking, MICR, Electronic Funds Transfer, Electronic Data Interchange,
Electronic Home and Office Banking (Agboola, 2002).


Why does
n’t

everybody innovate is a common questi
on in business literature? It is
widely recognized that innovation is key to the economic performance of firms. Innovative firms
grow faster in terms of employment and profitability.

An innovation is an idea, practice, or
object that is perceived to be ne
w by a person or adopting entity. The innovation is not seen as
something periodical that happened by accident nor something that results from the action of an
individual agent. Innovation is seen as the result of an interactive and non linear process betw
een
the firm and the environment. When an innovation emerges, diffusion unfolds which entails
communicating or spreading of the news of the innovation to the group for which it is intended
(Okunoye et al, 2007). Adoption however is the commitment to and co
ntinued use of the
innovation. The diffusion of innovations theory provide explanations for when and how a new
idea, practice or newly introduced information and communication medium is adopted or
rejected over time in a given society (Okunoye et al, 2007)
.


Innovation is the generation, acceptance and implementation of new ideas, processes,
products or services. This study is concerned with product innovation, i.e., new products and the
organizational processes that precede their launch. What is then to be

considered ‘new’? When is
it ‘new enough’ to be considered an innovation? The literature provides several frameworks to
classify product newness, e.g., from incremental to radical innovations. This study, however, is
concerned with product innovation as a

phenomenon, rather than with product innovations with a
certain degree of newness. This includes significant improvements in technical specifications,
components, and materials, incorporated software, user friendliness, or other functional
characteristics
. Product development is used as a term for the span of innovation activities
leading to, or that are intended to lead to, product innovation.



According to Agboola (2004), the application of information and communication
technology concepts, techniques,

policies and implementation strategies to banking services has
become a subject of fundamental importance and concerns to all banks and indeed a prerequisite
for local and global competitiveness. ICT directly affects how managers decide, how they plan
and

what products and services are offered in the banking industry. It has continued to change
the way banks and their corporate relationships are organized worldwide and the variety of
innovative devices available to enhance the speed and quality of service
delivery (Agboola,
2004, 2001).


However, most research about innovation focused on manufacturing industries though
increasing attention has been paid to innovation in service industries recently (Gallouj, 2002;
Howells and Tether, 2004; Miles, 2004). The
survival of an enterprise in the age of knowledge
-
based economy depends on how to improve their organizational innovation capability.
Technological innovation is the key variable and means of differentiation between logistics
service providers. Commercial
banks can increase their performance by employing new
technologies. They should employ new information technologies to raise their service capability
in the e
-
commerce age (Agboola, 2001).

IT innovations in Uganda banking sector


4


In the Ugandan’s banking

industry due to competition, IT investments and adoption has
become a very important component in achieving organizational. In recent past therefore,
e
lectronic and communications technologies have been used extensively in banking for many
years to advanc
e agenda of banks. The earliest forms of electronic and communications
technologies used by the banks were mainly office automation devices. Telephones, telex and
facsimile were employed to speed up and make more efficient, the process of servicing client
s.

However, with coming of new partners in banking industry, competition intensified and
the personal computer (PC) got proletarian, Uganda banks begun to use them in back
-
office
operations and later tellers used them to service clients. The advancements
in computer
technology have led to application and adoption new IT investments that have changed the
banking landscape in the country.


Arguably, the most revolutionary electronic innovation in this country has been the ATM.
In Uganda, banks with ATM offer
ings have them networked and this has increased their utility to
customers. The ATM has been the most successful delivery medium for consumer banking in
this county. Others technological innovations in banking sector include internet banking,
telephone ban
king, Electronic funds transfer, among others.


Forms of IT innovations and their effects on service delivery

The following are the different forms of IT in banking sector.

Automated Teller Machines (ATMs)


Rose (1999) cited by Abor, describes ATMs as fo
llows: “an ATM combines a computer
terminal, record
-
keeping system and cash vault in one unit, permitting customers to enter the
bank’s book keeping system with a plastic card containing a Personal Identification Number
(PIN) or by punching a special code
number into the computer terminal linked to the bank’s
computerized records 24 hours a day”. Once access is gained, it offers several retail banking
services to customers. They are mostly located outside of banks, and are also found at airports,
malls, an
d places far away from the home bank of customers. They were introduced first to
function as cash dispensing machines. However, due to advancements in technology, ATMs are
able to provide a wide range of services, such as making deposits, funds transfer be
tween two or
accounts and bill payments. Banks tend to utilize this electronic banking device, as all others for
competitive advantage.


The combined services of both the Automated and human tellers imply more productivity
for the bank during banking hour
s. Also, as it saves customers time in service delivery as
alternative to queuing in bank halls, customers can invest such time saved into other productive
activities. ATMs are a cost
-
efficient way of yielding higher productivity as they achieve higher
pro
ductivity per period of time than human tellers (an average of about 6,400 transactions per
month for ATMs compared to 4,300 for human tellers (Rose, 1999). Furthermore, as the ATMs
continue when human tellers stop, there is continual productivity for the
banks even after
banking hours.

Telephone Banking


“Telebanking (telephone banking) can be considered as a form of remote or virtual
banking, which is essentially the delivery of branch financial services via telecommunication
devices where the bank custom
ers can perform retail banking transactions by dialing a touch
-
tone telephone or mobile communication unit, which is connected to an automated system of the
bank by utilizing Automated Voice Response (AVR) technology” (Balachandher
et al
, 2001).


5


According

to Leow (1999), telebanking has numerous benefits for both customers and
banks. As far as the customers are concerned, it provides increased convenience, expanded
access and significant time saving. On the other hand, from the banks’ perspective, the cost
s of
delivering telephone
-
based services are substantially lower than those of branch based services.
It has almost all the impact on productivity of ATMs, except that it lacks the productivity
generated from cash dispensing by the ATMs. For, as a deliver
y conduit that provides retail
banking services even after banking hours (24 hours a day) it accrues continual productivity for
the bank. It offers retail banking services to customers at their offices/homes as an alternative to
going to the bank branch/AT
M. This saves customers time, and gives more convenience for
higher productivity.

Personal Computer Banking


“PC
-
Banking is a service which allows the bank’s customers to access information about
their accounts via a proprietary network, usually with the h
elp of proprietary software installed
on their personal computer”. Once access is gained, the customer can perform a lot of retail
banking functions. The increasing awareness of the importance of computer literacy has resulted
in increasing the use of pers
onal computers. This certainly supports the growth of PC banking
which virtually establishes a branch in the customers’ home or office, and offers 24
-
hour service,
seven days a week. It also has the benefits of Telephone Banking and ATMs (Abor, 2005).

Inte
rnet Banking


The idea of Internet banking according to Essinger (1999) is: “to give customers access to
their bank accounts via a web site and to enable them to enact certain transactions on their
account, given compliance with stringent security checks”.

To the Federal Reserve Board of
Chicago’s Office of the Comptroller of the Currency (OCC) Internet Banking Handbook (2001),
Internet Banking is described as “the provision of traditional (banking) services over the
internet”.


Internet banking by its natu
re offers more convenience and flexibility to customers
coupled with a virtually absolute control over their banking. Service delivery is informational
(informing customers on bank’s products, etc) and transactional (conducting retail banking
services).

As

an alternative delivery conduit for retail banking, it has all the impact on productivity imputed
to Telebanking and PC
-
Banking. Aside that it is the most cost
-
efficient technological means of
yielding higher productivity. Furthermore, it eliminates the b
arriers of distance / time and
provides continual productivity for the bank to unimaginable distant customers.

Branch Networking


Networking of branches is the computerization and inter
-
connecting of geographically
scattered stand
-
alone bank branches, in
to one unified system in the form of a Wide Area
Network (WAN) or Enterprise Network (EN); for the creating and sharing of consolidated
customer information/records (Abor, 2005).

It offers quicker rate of inter
-
branch transactions as the consequence of dis
tance and time are
eliminated. Hence, there is more productivity per time period. Also, with the several networked
branches serving the customer populace as one system, there is simulated division of
labour

among bank branches with its associated positive
impact on productivity among the branches.
Furthermore, as it curtails customer travel distance to bank branches it offers more time for
customers’ productive activities.

Electronic Funds Transfer at Point of Sale (EFTPoS)


6


An Electronic Funds Transfer at

the Point of Sale is an on
-
line system that allows
customers to transfer funds instantaneously from their bank accounts to merchant accounts when
making purchases (at purchase points). A POS uses a debit card to activate an Electronic Fund
Transfer Proces
s (Chorafas, 1988).


Increased banking productivity results from the use of EFTPoS to service customers
shopping payment requirements instead of clerical duties in handling cheques and cash
withdrawals for shopping. Furthermore, the system continues after
banking hours, hence
continual productivity for the bank even after banking hours. It also saves customers time and
energy in getting to bank branches or ATMs for cash withdrawals which can be harnessed into
other productive activities.


As the importance
of innovation in developing countries increases, so does the need

for
research on the subject. Evidence from the literature reviewed above shows that existing
discourse on diffusion of IT innovation in banking sector has failed to focus much attention on
r
apid changes in IT development and its corresponding effect on service provision in developing
countries like Uganda. The available evidence from African countries has been in Nigeria. This
study therefore close
s

this gap by presenting the effects of It in
novations on service delivery
drawing from a least developing country, Uganda.


Statement of the problem

The information and communication technologies are revolutionizing the banking sector over the
years. The rapid development and commercialization of In
formation and Communication
Technologies (ICTs) banking industry has prompted banks to increasingly adopt these
technologies. This is based on the expectation that the new ICT based technologies and processes
would lead to an improvement in their operating

efficiencies and customer service levels.
Bank
of Africa since its merger in October 2006, a number of investments have been instituted and
implemented to improve serve delivery. That is to say, the bank’s asset footing increased by 21%
to Shs 102 billion

(BOA Annual report,
2
007). Despite these investments,
there are no
research
studies
investigating the
impact of these developments particularly IT investments

on service
delivery.

Purpose of study

The main objective of this study was to ascertain the IT

innovations BOA has implemented since
it merged with Bank of Africa group and how these has impacted service delivery.

Objectives of the study


(i)

To examine the extent of bank’s innovativeness in information technology in B.O.A

(ii)

To examine the level of serv
ice delivery in B.O.A in relation to IT innovations

(iii)

To examine the employees’ perception of the effects of IT innovations on service
delivery in B.O.A


7


METHODOLOGY


Scope of the study


The study was carried out in Bank of Africa in Kampala city. The bank
joined the Bank
of Africa group in October 2006 with the acquisition of the 77.8% Banque Belgolaise sharing
holding by BANK OF AFRICA, Aureos East Africa Fund LLC and Central Holdings Ltd. The
study chose this bank because since acquisition, total assets
have grown by 20% and has
streamlined a number of strategies to improve it’s the services. Thus it is good case to see
whether these changes have brought significant improvement on service delivery. The study
covered Jinja Road branch, Equatorial branch, N
deeba branch and Park branch.



Research design


A descriptive cross sectional survey
was

used. According to Amin (2005) this is one of
the most commonly used research method in social sciences and is used to gather data from a
sample of a population at a

particular time. In the study, both quantitative and qualitative
techniques
were

employed in the data collection process, analysis, presentation and discussion of
findings.

Study Population and Area


The study
was

limited to Kampala

city and
cover
ed

four

Bank of Africa branches
.
The
study
population was

customers and IT employees of selected
Bank of Africa

branches.

Sample Size determination


Selecting an appropriate sample size is a critical aspect in research with particular
reference to this study. Sin
ce the banking customers are so many,
a sample of 130 is convincing
enough as a true representative and this
was

considered for the purpose of this study.

Sample
size of 130 is in conformity with Bailey (1994)
indicates that sample size of 100 is sufficie
nt
and
Roscoe’s

(1975) rule of thumb, sample size between 30 and 500 being sufficient.

Sample procedure and Sampling techniques


The sample of Information technology employees and banking customers
were

selected
using purposive and
‘grab sampling’/convenie
nce sampling techniques respectively.
Information
technology
employees in selected brabhes

were

purposely selected and purposive sampling is
chosen because it can be very useful for situations where you need to reach a targeted sample
quickly and where sam
pling for proportionality is not the primary concern.

The grab sampling
technique is to take a relatively small sample over a very short period of time.

Sources of data


The data
use
d

in this study
was

primary, collected from the IT employees and customers

in selected branches of B.O.A using self
-
administered structured questionnaires and oral
interviews.

Data collection method


A survey research method of data collection adopted in this
were

questionnaires and
interview

guide
. The questionnaire
was
select
ed to collect data for the research because it
ensure
d

quantifiable responses for the same items from all respondents. Furthermore, it save
d

both time and cost to distribute and analyze.
Interviews
were

arranged for bank managers and IT
executives to prov
ide a deeper understanding of the issues being investigated, and to complement
and provide deeper insights into the findings of the quantitative analysis.

The research instruments


8


The questionnaires
were

designed to ascertain customers’ perceptions on th
e effect of IT
innovations or electronic delivery channels on the banking services in Uganda. The responses
were

measured with a five
-
point Likert
-
type rating scale, where strongly Agree (SA) = 5; Agree
(A) = 4; Neutral (N)=3; Disagree (SD) = 2; Strongly D
isagree (D) = 1.

An interview
guide was

designed for IT employees. The researcher interview
ed

IT employees to
ascertain the form of IT innovation introduced by their respective banks.

Validity and reliability of the instruments.


Validity being the approp
riateness, meaningfulness and usefulness of specific inference
made from test scores, instrument validity
was

ascertained in a number of ways which include
d
,
discussing the questionnaire with the colleagues in the department, there after adjustments
were

d
one before submission to the supervisor who assess
ed

the face validity. The instruments
were

then pre
-
tested after which the content validity
was

measur
ed (James Key, 1997). This
help
ed

to
assess the appropriateness of sentence construction, comprehensiven
ess of instruments and
language clarity. Comments
were

received on the acceptability of the instrument vis
-
à
-
vis, length
and the privacy of respondents. These comments
were
helpful in designing the final instrument
that will be used to generate data. To me
asure the validity of variables, content validity index
was
calculated.

CVI
for expert 1 was 0.7832 and for expert 2 was 0.7649 implying that the
questions were valid for the study variables.


Reliability of an instrument being the consistency of an instru
ment in measuring what it
is intended to measure, it
was

established by first using internal consistency approach followed
by carrying out pilot study. The pilot study
was

conducted among 20 respondents purposively
chosen and reliability w
as

tested using a

Cronbach’s alpha.

Table 3.
1
: Reliability test

Variables

Cronbach alpha coefficient

IT Innovations

0.6928

Service delivery

0.7192

Source: Primary data


All Cronbach alpha coefficients were above 0.60 indicating that the scales used to
measure study var
iables were consistent and therefore reliable.

Ethical consideration


To be ethical is to conform to accepted professional practices (Webster’s Dictionary,
1968). Before interviews the researcher fully explain
ed

the objectives of the study to all the
respo
ndents. In addition, their consent
was
sought and their right to confidentiality assured
before interviewing them. F
urthermore, the researcher
fully observe
d

their right to privacy and
anonymity.

Data collection procedure


The research
was

conducted using
the following procedure:

The researcher obtain
ed

an introductory letter from the Makerere University Business School
that help
ed
to conduct the study. Using the letter, permission
was

sought from the each
respective branch
manager
to conduct the study. T
he researcher
then

circulate
d

the questi
onnaire
and data collection which

last
ed

for three weeks.

Data management and analysis


After data collection, data
was

edited and entered using a Statistical Package for Social
Sciences (SPSS

version 17
). Data ana
lysis
was

quantitative. Quantitative data
was

analyzed
using percentages and frequencies. D
escriptive statistics
were

employed in the presentation and
analysis of results.
F
actor
analysis was

used to examine the IT Innovations and extent of service

9

deliver
y. Spearman correlation and regression analysis were used to determine the degree of
relationship between IT Innovations and service delivery.


Findings


Sample characteristics

Table
4.
1: Background information of respondents

Attributes

Respondents

Perc
entage

Education Level of the respondent

Secondary

43

36

University

77

64

Total

120

100.00

Sex of respondent

Fem
ale

51

43

M
ale

69

57

Total

120

100.00

Age of respondents

18
-
25

12

10

26
-
32

40

33.3

33
-
39

30

25

40
-
46

37

30.8

Above 46

1

0.8

Tota
l

120

100.00

Source: Primary data

The important trends from table
4.
1 are summarized as follows. The respondents were
predominantly
male

with the majority being graduates. The ma
jority of respondents are 26 years
and above.


Survey
Results

IT Innovativene
ss

Table
4.2
:

Type of IT Innovations Used by Customers in BOA

Electronic Delivery Channel

Frequency

Percentage

ATMS

100

83.3

Telephone Banking

-

-

Electronic banking

20

16.7

Electronic Funds transfer

-

-


10

Total

120

100
.00

Source: Primary data


With r
espect to the type of IT innovations used by customers, ATMs appear to be the
most widely accepted and highly used electronic delivery tool

in Bank of Africa indicating
83.3
% of the total respondents
. This is followed by
Internet

banking
representing 16.7%
.

Telephone banking and Electronic Funds Transfer were not indicated as IT innovations
used in B.O.A.

Th
is
may be because these innovations have been re
cently introduced in banking
industry in Uganda than the other IT innovations.
Interviews with IT Empl
oyees reveal that
the
bank has three electronic banking products: BOA On Line, B
-
Web and SESAME ATM Card.
They further revealed that
while Bank is aware of other IT innovations available such as PC
banking technology, the bank as not fully acquired these t
echnologies mainly because they are

in
the process re
-
integration since joining the BANK OF AFRICA group in 2006. However, they
noted that the bank is committed to elevate the bank to the next level in terms of quality of
service, and innovative products w
hich will ultimately require IT innovations.

It was also
revealed of IT employees that ATMS are spread in BOA branches.


ATMs are the widely accepted and highly utilized delivery channel

from the results
above
, it is important at this point to ascertain th
e f
requency of it usage among bank
customers,
the

results are summarized

in table 4.3

below.

Table 4
.3
: Frequency of ATM Usage

Number of Usage per
Month

Frequency

Percentage

Once

12

12

Twice

2
1

21

Thrice

1
1

1
1

Four or more

46

4
6

Total

100

100

Source:

Primary data


Table 4.3

shows results on the frequency of ATM usage among bank customers. The
results show that customers frequently used the ATMs for bank transactions such as cash
transfers, depositing money, checking account balance and printing mini s
tatements.
4
6
,
representing 4
6
% of respondents who use ATMs indicated that, they visit ATM points about four
or more times in a month. However,
12%, 21
% and
11
% of respondents pointed out that, they
visit ATM points once, twice and thrice respectively ever
y month.


11

Table 4.
4
: Frequency of Bank Visits

Number of Visits per Month

Frequency

Percentage

Never

10

8.3

Once

26

21.7

Twice

33

27.5

Thrice or more

51

42.5

Total

120

100

Source: Primary data



The frequency of customers’ bank visits is shown in tab
le
4.4
.
Out of the total of 12
0
respondents,
51 representing 42.5
% mentioned that, they visit their banks three or more time
every month. The results indicate that customers of
Bank Of Africa

in
Uganda

still find it useful
to visit their bank branches regu
larly every month to transact some banking business such as
detailed bank statement requests, loan application,
foreign funds transfer

etc. for which the
ATMs can not be used.



Table 4.5: Gender and IT Innovations




IT Innovations

Total




Yes

No

Gend
er

Male

Count

51

0

51

% within Gender

100.0%

.0%

100.0%

% of Total

42.5%

.0%

42.5%

Female

Count

49

20

69

% within Gender

71.0%

29.0%

100.0%

% of Total

40.8%

16.7%

57.5%

Total

Count

100

20

120

% within Gender

83.3%

16.7%

100.0%

% of Total

83.3%

16.7%

100.0%

Source: Primary data

There were significant differences on IT innovations as indicated by 83% of the respondents
42% males and 41% females ( Chi
-
Square=17.739, df=1, sig=0.000). There is great IT
innovativeness in terms of ATM, telepho
ne banking, internet banking and electronic funds
transfer at Bank of Africa as indicated by 83% of the respondents.


12


Table 4.6:

Gender and ATM Usage




ATM Usage

Total




Once

Twice

Thrice

Four and more

Gender

Male

Count

11

21

11

8

51

% within Gend
er

21.6%

41.2%

21.6%

15.7%

100.0%

% of Total

10.9%

20.8%

10.9%

7.9%

50.5%

Female

Count

1

0

11

38

50

% within Gender

2.0%

.0%

22.0%

76.0%

100.0%

% of Total

1.0%

.0%

10.9%

37.6%

49.5%

Total

Count

12

21

22

46

101

% within Gender

11.9%

20.8%

21.8
%

45.5%

100.0%

% of Total

11.9%

20.8%

21.8%

45.5%

100.0%

Source: Primary data



There was a significant usage of ATM by 67% of the respondents indicated using ATM
more than twice in a month. (Chi
-
square=48.893, df=3, sig=0.000).



Results are in line w
ith

Irechukwu (2000) in Nigeria, he lists some banking services that
have been revolutionized through the use of ICT as including account opening, customer account
mandate, and transaction processing and recording. Information and Communication Technology
has provided self
-
service facilities (automated customer service machines) from where
prospective customers can complete their account opening documents direct online. It assists
customers to validate their account numbers and receive instruction on when a
nd how to receive
their chequebooks, credit and debit cards (Agboola, 2004). The ICT products in use in the
banking industry in many developing and developed include Automated Teller Machine, Smart
Cards, Telephone Banking, MICR, Electronic Funds Transfer
, Electronic Data Interchange,
Electronic Home and Office Banking (Agboola, 2002).

Level of service delivery

Table 4.7:
Descriptive statistics for service delivery


N

Mean

Std. Deviation

Human Teller importance

120

3.78

1.306

Time

120

4.01

1.267

Efficie
nt

120

3.78

1.210

Increased charges

120

3.52

1.263

Faster services

120

3.45

1.407

Interrelationships

120

2.77

1.358

Communication

120

3.52

1.443

Convenient

120

3.47

1.372

Speed

120

3.66

1.300

Average


3.55



13

Source: Primary data



The service delivery at Bank of Africa was above average 3.55 (approximately 4, scale of
Agree) in terms of human teller importance, time of delivery, efficiency, speed, faster services
and communication. However there were increased charges and low inte
rrelationships.


Table 4.8
:

Factor Analysis of service delivery items


Service delivery

Convenient

.986

Faster services

.984

Communication

.983

Increased charges

.977

Speed

.972

Human Teller importance

.972

Time

.941

Efficient

.933

Interrelations
hip

.921

Eigen value

8.354

% of variance

92.83

Source: Primary data



Results above indicate 93% service delivery at Bank of Africa in terms of priority as
Convenient, Faster services, Communication, Increased charges, Speed, Human , Teller
importance,

Time, Efficient, Interrelationship.


Effect of IT innovations on service delivery

Table 4.
9
:
Correlation matrix for IT innovations and service delivery




IT Innovations

Service delivery

Spearman's rho

IT Innovations

Correlation
Coefficient

1.000


Sig
. (2
-
tailed)

.


N

120


Service delivery

Correlation
Coefficient

.526
**

1.000

Sig. (2
-
tailed)

.000

.

N

120

120

**. Correlation is significant at the 0.01 level (2
-
tailed).

Source: Primary data



There was a significant positive effect of IT Inn
ovations on service delivery (r=0.526, p
-
value<0.01). This implied that IT Innovations enhanced the service delivery at Bank of Africa.


14


Table 4.
1
0
:
Regression Model of IT Innovations and service delivery

Model

Unstandardized
Coefficients

Standardized
Coef
ficients

t

Sig.

B

Std. Error

Beta

1

(Constant)

1.700

.370


4.589

.000

IT Innovations

1.550

.302

.427

5.124

.000

R
-
Square= 0.182 , Adj R
-
Square= 0.175 , F= 26.257, Sig=0.000

Source: Primary data



IT innovations
linearly and positively affected service delivery (F=26.257, Sig=0.000).
IT Innovations predicted 17.5% of service delivery at Bank of Africa.

Innovations significantly
enhanced the services of Bank of Africa in terms of ATM, telephone banking, internet ba
nking
and electronic funds transfer.

The results are inline with literature that

has continued to change the way banks and their
corporate relationships are organized worldwide and the variety of innovative devices available
to enhance the speed and qualit
y of service delivery (Agboola, 2004, 2001).

However, most research about innovation focused on manufacturing industries though increasing
attention has been paid to innovation in service industries recently (Gallouj, 2002; Howells and
Tether, 2004; Miles,

2004). The survival of an enterprise in the age of knowledge
-
based
economy depends on how to improve their organizational innovation capability. Technological
innovation is the key variable and means of differentiation between logistics service providers.

Commercial banks can increase their performance by employing new technologies. They should
employ new information technologies to raise their service capability in the e
-
commerce age
(Agboola, 2001).



CONCLUSIONS AND RECOMMENDATI
ONS

Conclusions


This st
udy offered insights into
the perceptions of banking customers regarding the effect
of technological innovations on banking services in
Bank of Africa.
The s
tudy focused on
customers with B
ank

of Africa. It has been revealed by that the Bank has two electr
onic banking
technologies that customers have used ATMs and internet banking.

The data for the study was
mainly obtained from the field survey through questionnaire administration and interviews. Out
of an initial sample of

130, 12
0 questionnaires were rec
eived repr
esenting a response rate of
92.3%. Bank IT

employees

were also interviewed to ascertain the type of electronic delivery
channels
utilized by the Bank of Africa and its impact on service delivery
. The new delivery
channels include
d ATMs
and Intern
et banking. It was found that ATMs
is

the most popular
electronic delivery channel for
Bank of Africa. This

is
followed by Internet banking
particularly
BOA On Line and B
-
Web.


With respect to the type of IT innovations used by customers, ATMs
is

the most

highly
used electron
ic delivery tool indicating 83.3
% of the total respondents. This is followed by
internet banking representing 16.7%.
Electronic Funds Transfer Point of Sales

and phone
banking are not used in bank of Africa at least among the customers

interviewed.

It was
also
found that most
Bank of Africa

customers still visit their bank branches regularly and find
interaction with human tellers very important. The results of the study generally indicate that,

15

these new delivery channels have contrib
uted positively to the provis
ion of banking services and
on service delivery in general.

Recommendations


Given the increasing competition in the retail banking industry and rapid technological

evolution, the question of whether banks should innovate is no

longer necessary given the
ben
e
fits
innovations. This study has demonstrated that there is positive impact of IT innovation
service delivery. Therefore, for banks to remain competitive there is considerable need to be
innovative by adopting and diffusing
various IT innovations. For example, elsewhere, banks
through the collaboration of hardware, software, telecommunications and other companies, have
introduced new ways for consumers to access their account balances, transfer funds, pay bills,
and buy goods

and services without using cash, mailing a check, or leaving home. These include
the Proprietary

Bank Dial
-
up Services
-

A home banking service, in combination with a PC and
modem, lets the bank become an electronic gateway to customer’s accounts enabling

them to
transfer funds or pay bills directly to creditors’ accounts;
Off
-
the
-
Shelf Home Finance Software
-


This category is an essential player in cementing relationships between current customers
and h
elping banks gain new customers;
Online Services
-
bas
ed
-

This category allows banks to
setup up retail branches on subscriber
-
based online services (e.g., Prodigy,
CompuServe, and
America Online) and
World Wide Web
-
based
-

This category allows banks to bypass subscriber
-
based online services and reach the c
ustomer’s browser directly through the World Wide Web.

The fact that this PC banking technologies are not Bank of Africa and other commercial banks in
Uganda, this study recommends increased investment in IT innovations.


16

References

Abor, J.A. (2005).
Tec
hnological Innovations and Banking in Ghana: An

Evaluation

of

Customers’ Perceptions
. University of Ghana, Legon.

Agboola, A.A. (2004).
Information and Communication Technology (ICT) in

Banking

Operations in Nigeria


An Evaluation of Recent

Experienc
es
. Obafemi Awolowo

University Ile
-
Ife, Nigeria.

Agboola, A. A. (2001).
Impact of Electronic Banking on Customer Services

in Lagos,

Nigeria
. Ife Journal of Economics and Finance.

Department of

Economics,

O.A.U, Ile
-
Ife, Nigeria, vol. 5, Nos. 1&2.

A
lu, A. O. (2000).
Effects of Information Technology on Customer Services

in the

Banking Industry in Nigeria.

Amin M, (2005).

Social Science Research, Conception, Methodology &

Analysis.

Makerere

University.

Balachandher , Santha, Norhazlin & Rajendra,
(2001).
Electronic Banking in

Malaysia: A

Note on Evolution of Services and Consumer Reactions.


Bank of Africa, Annual Reports, (2007).

Chorofas, D. N. (1988).
Electronic Funds Transfer
. Butterworths,

London, UK.

Coombs, Saviotti & Walsh, (1987).
Ec
onomics and Technological Change
.

Macmillan:

London.

Damanpour, F., & Evan, W. M. (1984).
Organizational innovation and

performance: the

problem of organizational lag
.
Administrative

Science Quarterly,
29(3), 392
-
409.

Essinger, J. (1999).
The Virtual
Banking Revolution: The Customer, the Bank

and

the

Future
. 1
st

ed., International Thomson Business

Press,

London, UK.

Gallouj, F. (2002).
Innovation in the service economy: The new wealth of

nations.
Cheltenham,

UK: Edward Elgar.

Howells, J., & Teth
er, B. S. (2004).
Innovation in services: Issues at stake and

trends
. A

Report for DG Enterprise of the European Commission,

under

contract INNO
-

Studies 2001: Lot 3 (ENTR
-
C/2001).

Ige, O. (1995).
Information Technology in a De
-
regulated

Telecommunica
tions Environment.

Keynote address, INFOTECH 95,

First

International Conference on Information

Technology

Management,

Lagos, November 16
-
17.

Irechukwu, G. (2000).
Enhancing the Performance of Banking Operations

Through

Appropriate Information Techn
ology
, In: Information

Technology

in Nigerian

Banking Industry, Spectrum Books, Ibadan,

pp63
-
78.

“Internet Banking Handbook. (2001) Federal Reserve Board of Chicago’s

Office

of the

Comptroller of the Currency (OCC).

Key, J.P. (1997).
Research Design

in Occupational Education
. Oklahomi

State

University.

IRB, Thesis Handbook.

Kimberly, J. R., & Evanisko, M. J. (1981).
Organizational innovation: the

influence of

individual, organizational, and contextual factors on

hospital adoption of

technologi
cal and administrative innovations
.

Academy of Management Journal,

24(4), 689
-
713.

Leow, H.B. (1999).
New Distribution Channels in banking Services
.

Banker’s

Journal

Malaysia, No.110, June 1999, p.48
-
56.


17

Roscoe, J. T. (1975).
Fundamental research stat
istics for the behavioral

sciences,
New York:

Holt.

Miles, I. (2004).
Innovation in services
.In J. Fagerberg, D. Mowery, and R.

Nelson (Eds.)

Understanding Innovation
, Oxford: Oxford University

Press.

Okunoye, Bada & Frolick, (2007).
IT innovations an
d e
-
service

delivery: an

exploratory

study
. Proceedings of the 9th International

Conference

on Social Implications of

Computers in Developing Countries,

São Paulo, Brazil, May 2007.

Rose, P.S.(1999).
Commercial Bank Management
. 4
th
edition,

Irwin/
McGraw
-
Hill,

Boston, USA.


Yasuharu, U. (2003).
The Effects of
Information

System Investment in

Banking


Industry.