A CRITICAL ASSESSMENT ON THE ROLE OF ELECTRONIC BANKING ON THE GROWTH OF FINANCIAL INSTITUTIONS: CASE STUDY:CAMEROON INVESTMENT PROMOTION AGENCY (CIPA)

CHAPTER ONE

INTRODUCTION

1.1 Background of the Study

Recent years have seen tremendous changes to the financial institution, with technology having a major influence on how banking and financial services are provided. But in order to be competitive and satisfy the changing needs of its clientele, financial institutions must embrace technology innovations as the world economy grows more digitally interconnected. Today, customers have become more discerning, seeking quality, speed, and a diverse range of services and products from financial institutions. However, in order to cater to varied customer preferences and gain a competitive edge, banks and some financial institutions  have continually devised and introduced technology-driven services, commonly known as electronic banking products and services. These includes; Telephone banking, Online Fund Transfers, Automated Teller Machines (ATMs), Internet banking, Electronic Bank Statements, Bill payment, and Mobile banking. Additionally, e-banking includes services such as loans, brokering, share trading, service promotions, and various financial offerings (Djoumessi, 2009; Dewan et al., 2015).

Furthermore, numerous assessments have been undertaken to evaluate the impact of these products and services on banking services (Matthew & Jonathan, 2015). The development of electronic service technology has created numerous opportunities while also posing threats to various businesses and service sectors. Organizations are increasingly adopting the internet as a distribution channel, either willingly or reluctantly, to maintain competitiveness and secure market share. However, the lack of precise information on electronic or e-services, particularly regarding crucial factors influencing user behavior, poses a significant challenge for financial institutions. Without adequate information, these institutions might implement services or solutions that are not beneficial to their users in their efforts to align with global trends in electronic banking (Cynthia, 2020). Additionally, a global study by Ikpefan et al. (2018) focused on e-banking adoption, e-service adoption, and factors influencing bank customers' adoption of such services. The findings revealed that some individuals consciously or unconsciously resist the use of e-banking despite its associated benefits. In Cameroon, key concerns among bank and financial institution customers regarding electronic banking include network security and system privacy. There is substantial evidence supporting the idea that the presence of new technologies, electronic services, e-businesses, and electronic banks has had a significantly positive impact on both banks and customers (Zorayda, 2003)

 Therefore, a survey will be conducted on a critical assessment on the role of electronic banking on the growth of financial institutions: Case study:Cameroon Investment Promotion Agency (CIPA)

1.2 Statement of the Problem

With the ongoing trends in development, the internet has gained widespread popularity and is utilized by nearly everyone for various purposes. In addition,  companies target their clients, promote to them, advertise to them, and deliver them the services they require online. For their banking benefit, banks now use the internet to offer services to their clients. However, many claim that since the internet's launch, the number of frauds has skyrocketed. According to Dewan et al. (2015), e-banking services encompass money transfers, bill payments, account balance checks, and bank statements. Despite being introduced over two decades ago, internet banking remains relatively unfamiliar in Cameroon. Limited understanding of this service explains the low acceptance of electronic banking. Insufficient research in Cameroon has been conducted to explore the factors influencing electronic banking acceptance (Dobdinga, 2012; Talla, 2013). Therefore, further research is necessary to identify factors that could encourage Cameroonians to adopt internet banking. Investigating demographic and social characteristics, along with customer perceptions, will enable banks to develop strategies to attract more users to their internet banking services. Hence, it is in the light of these that the study seeks a critical assessment on the role of electronic banking on the growth of financial institution.

1.3  Objectives of the Study

The main purpose of this study is to critically assess on the role of electronic banking on the growth of financial institution. Specifically, the study will;

1.Determine the extent to which financial institutions have adopted electronic banking services.

2.Examine how electronic banking has influenced the operational efficiency of financial institutions.

3.Investigate the role of electronic banking in enhancing customer relationship management in Cameroon Investment Promotion Agency (CIPA).

1.4 Research Questions

The following questions have been prepared for the study:

1.        To what extent have financial institutions embraced electronic banking services?

2.        How has electronic banking impacted the operational efficiency of financial institutions?

3.        What role does electronic banking play in enhancing customer relationship management at the Cameroon Investment Promotion Agency (CIPA)?

1.5  Significant of the Study

This study will reveal to government and policymakers on the need to formulate regulations and policies that foster innovation while ensuring the security and integrity of the financial sector. Further more, subsequent researchers will use it as a literature review. This means that other students who may decide to conduct studies in this area will have the opportunity to use this study as available literature that can be subjected to critical review. Invariably, the result of the study contributes immensely to the body of academic knowledge with regard to a critical assessment on the role of electronic banking on the growth of financial institution

1.6 Scope of the study

The scope of this study is boarded on a critical assessment on the role of electronic banking on the growth of financial institutions: Case study:Cameroon Investment Promotion Agency (CIPA).  Empirically, this study will determine the extent to which financial institutions have adopted electronic banking services, examine how electronic banking has influenced the operational efficiency of financial institutions, investigate the role of electronic banking in enhancing customer relationship management in Cameroon Investment Promotion Agency (CIPA).

Geographically, the study will be delimited to staff of Cameroon Investment Promotion Agency (CIPA).

1.7 Limitation of the study

In the course of carrying out this study, the researcher experienced some constraints, which included time constraints, financial constraints, language barriers, and the attitude of the respondents. In addition, there was the element of researcher bias. Here, the researcher possessed some biases that may have been reflected in the way the data was collected, the type of people interviewed or sampled, and how the data gathered was interpreted thereafter. The potential for all this to influence the findings and conclusions could not be downplayed.

More so, the findings of this study are limited to the sample population in the study area, hence they may not be suitable for use in comparison to other schools, local governments, states, and other countries in the world.

 1.8 Definition of Terms

E-banking: short form for electronic banking, refers to the use of electronic and digital means to conduct various banking activities and transactions.

Financial Institution: refers to the portion of the economy that deals with the management, control, and investment of money. It includes a wide range of institutions, such as banks, investment firms, insurance companies, stock markets, and other entities that facilitate the flow of funds within an economy.

Technology: refers to the application of scientific knowledge, tools, and methods for practical purposes, often in the creation and use of machinery, systems, and devices to solve problems or accomplish tasks.

REFERENCES

Dobdinga C. F, (2013), Customers Perception of E-banking Adoption in Cameroon: An Empirical Assessment of the Extended TAM. International Journal of Finance and Economics.Vol.5, No.1.pp.166-176.

Gayathri G and Suvitha K, (2018), “Impact of Information technology on Profitability of Banks in India, (2018), “International Journal of Pure and Applied Mathematics.Vol.118,No.20, PP.225-232.

Hussien Mohamed and Elyjoy Muthoni, (2018), “Effect of Internet Banking on Operational Performance of Commercial Banks in Nakuru country,Kenya. International Journal of Economics, Finance and Management Sciences. Vol 6, No.2, PP 60-65.

Ibrahim Hussien and Muneer Abbad, (2018), Antecedents and Adoption of E-banking in Bank Performance. The Perspective of Private Bank Employees. Interdisciplinary of Information, Knowledge and Management.Vol.13, No.1,pp 362-381.

Jean Bosco,(2017), “Impact of Mobile Banking on Financial Performance of Unguka Microfinance Bank Ltd,Rwanda. Global Journal of Management and Buisness.Research.Vol 17, No 4.

Joseph Vekya,(2017), “Impact of Electronic Banking on the Profitability of Commercial Banks in Kenya”. Journal of Technology and Systems.Vol.1, No.1, pp.18-39.

Loide Davis and Teresia Kaulihowa, (2018), “The Impact of E-banking on commercial Banks’ Performance in Namibia”. International Journal of economics and Financial Research.

Shaohua Yang,Zeyun Li, Yaxin Ma, Xingxing Chen, (2018), “Does Electronic Banking Really Improve Bank Performance? Evidence in China”. International Journal of Economics and Finance, Vol.10,No.2, pp.82-94.