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E-BANKING PRACTICES AND CUSTOMER SATISFACTION- A CASE STUDY IN BOTSWANA
Dr. Asma Mobarek Senior Lecturer Dept. of Accounting & Finance University of Botswana P O Box 70478 Gaborone, Botswana. Tel: +267 355 2223 E-mail: mobareka@mopipi.ub.bw Abstract: Banks’ external environment, including globalization and deregulations; have made the Banks highly competitive. Banks find it difficult to compete on price, and need to look at other ways to retain customers. As customers become more sophisticated, it becomes banks essential to consider the use of technology to respond to their continuously changing requirements. After conducting this research, it is clearly seen that delivery channels are lacking in meeting the demands of the customer by not making them aware of e-banking and using obsolete or not too up-to-date technology. The problem statement is solved. The hypotheses are tested and show that there is a relationship between age group, occupation type and some aspects of E-banking. The responses obtained for the acceptance of the electronic age were unanimous as the banking industry strongly feels that it must adapt to the electronics age if they are to move with time and customer demands and not be left behind. I would thus conclude that banks should drown themselves in all the intricacies regarding E-banking to determine ways that will affect the customers in Botswana and use it to their maximum benefit.

Key Words: Electronic banking; Automated Teller Machine (ATM); Tele-banking; Internet banking and customers
satisfaction.

JEL CLASSIFICATION: E42, E50; E58

1.1 INTRODUCTION Electronic banking is defined as the automated delivery of new and traditional banking products and services directly to customers through electronic, interactive communication channels. E-banking includes the systems that enable financial institution customers, individuals or businesses, to access accounts, transact business, or obtain information on financial products and services through a public or private network, including the Internet. E-Banking is also called Internet banking, on-line banking or PC banking. E-Banking may include ATMs, wire transfers, telephone banking, electronic funds transfers and debit cards. Nowadays, internet banking sites process customer service inquiries, allow transactions from one account to another, take loan applications, open new accounts etc. Some provide commercial services and others are full service banks rushing to get there. In addition to the rapid deployment of electronic bank ‘branches’ an entire financial community has suddenly appeared, offering most and financial service a customer could want. New forms of money are being coined to pay for transactions, and untraceable payment protocols are being tested and marketed. As fewer and fewer bank customers visit banks, more and more are using ATMs, home banking terminals and the internet to do their financial business. This ‘charge’ to the internet is an offensive, aggressive strategy to capture a large share of the financial services market. It is supported by speed of light, telecommunications, powerful, inexpensive computers and secure encryption. This charge to the internet is increasing the number of competitors in the market. Technology has introduced new ways of delivering banking to the customer, such as ATMs and internet banking. Hence, banks have found themselves at the forefront of technology adoption for the past three decades. Banks began at to look at e-banking as a means to replace some of their traditional bank functions, e-banking products/services like ATM and electronic funds transfer were a source of differentiation of banks that utilized them. The evolution of the e-banking industry can be traced to the early 1970s. Banks began to look at e-banking as a means to replace some of their traditional bank functions, for 2 reasons. Firstly, branches were very expensive to set up and maintain due to the large overheads associated with them. Secondly e-banking product/services like ATM and electronic fund transfer were a source of differentiation for banks that utilized them. Being in a fiercely competitive industry, the ability of banks to differentiate themselves on the basis of price is limited. Technology has introduced new ways of delivering banking to the customer, such as ATMs and Internet banking. Hence, it is imperative for banks to align their strategies in response to changing customers’ needs and developments in technology. This study is designed to evaluate electronic banking, more commonly known as e-banking as a strategy and related methods adopted by selected commercial banks in Botswana to improve the customer satisfaction, which plays a major part in the service industry. This research involves the study of four commercial banks in Botswana, these being – Standard Chartered Bank, First National Bank, Barclays Bank and Bank of Baroda. All these banks are providing e-banking services to their customers. The usual E-banking services provided by banks are account management; bill payment and presentment; new account opening; consumer wire transfers; investment/brokerage services; loan application and approval; account aggregation; cash management ; small business loan applications, approvals, or advances; commercial wire transfers; business-to-business payments; employee benefits/pension administration etc. The paper includes an analysis of customers’ perception towards e-banking services, the quality of e-banking services provided by the banks and the constraints in achieving customer satisfaction. The focus of the paper particularly on four delivery channels namely: Automated Teller Machine (ATM), internet banking, tele-banking and manual banking. The main focus is done on internet banking as it is the delivery channel that seems to be slowly growing in Botswana after the ATM delivery channel. The study also recommends the possible and practical additional measures the banks should take in order to achieve maximum customer satisfaction. Customers are not entirely satisfied with the quality of service provided by commercial banks in Botswana. Queuing time is considered reasonable at ATMs but too long in banking halls (The survey on the quality of banking services – 2000 by Bank of Botswana as reported in the Botswana Gazetted). Part of the dissatisfaction of customers’ stems from the fact that customers are not aware and knowledgeable about the full range of e-banking services provided by banks. The decline in the quality of banking services maybe attributed to the fact that there has been an increase in the volume of banking transactions. It is often reported that the grievance redressed machinery in the banks are not adequate enough to address the issues to the

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Electronic copy available at: http://ssrn.com/abstract=1011112

full satisfaction of the customers. Therefore, this is a clear-cut indication that commercial banks have to put in more effort into e-banking services to improve the satisfaction of their customers. The problem presented is to identify where the delivery channels are lacking in providing satisfaction to customers and what can be done to resolve this problem A research based on electronic banking was chosen because by general observation it was noted that many people are not very much aware of electronic banking and its services which should not be the case considering the usefulness and importance of e-banking in this date and time. Thus, in order to promote e-banking services by making customers more aware of them and determining and highlighting to banks their shortcomings or problem areas, this research was conducted. This research is a combination of exploratory and descriptive research as an effort was made to first gain some basic knowledge on e-banking through study of previous research on e-banking (literature review) and general observation. Also, efforts were made to describe customers’ perceptions on internet banking, manual banking, ATM banking and tele-banking by gauging their perceived importance on these services and their ratings on e-banking services. Also, the research was made descriptive through the interviews conducted, especially, of the bank staff as information on their attitudes about e-banking and virtual banking was obtained. This research study considers two main factors: electronic banking and customer satisfaction. Here we can assume independent variable as electronic banking and the dependent variable as customer satisfaction. Hypothetical tests conducted to determine how electronic banking (independent variable) affects customer satisfaction (dependent variable). It is presumed that e-banking preference is affected by factors such as occupation type and age group thus these factors are paid importance to and are linked to e-banking to determine whether they really do have an impact on e-banking. Thus, the objectives established revolved around, age group, occupation type, bank accounts maintained by customers; internet banking, ATM banking, tele-banking, manual banking. It should be noted that some of the objectives are created to facilitate testing of the following quarries such as the advantages and disadvantages that banks face as a result of virtual banking competition; the percentage of respondents preferring electronic or manual banking; derive statistics to show preference of type of banking according to age group and occupation type; determine the average frequency of ATM, tele-banking and internet banking services; usage monthly by bank customer; determine the average time taken by a bank customer in an ATM; investigate the percentage of respondents willing and not willing to pay higher for e-banking services; to rank the four ebanking delivery channels according to customer preference; to determine the average ratings of e-banking services according to different bank and to determine the average ratings of each e-banking service offered. So far there is no available study on this area in Botswana, as pioneer; this study nodoubtly enhance the existing research. Hence, Singh et al., (2000) suggested future research avenues include validating their studies on a set bank in different geographical regions as a case study, in order to confirm its level of representativeness. 1.2.LITERATURE REVIEW The new information technology is becoming an important factor in the future development of financial services industry and especially banking industry. Banks are faced with a number of important questions, for example how to take full advantage of new technology opportunities, how e-developments change, the ways customers interact with the financial services provider etc. E-banking is the newest delivery channel for banking services. Electronic banking can also be defined as a variety of following platforms: (a) Internet banking (or online banking), (b) telephone banking, (c) TV-based banking, (d) mobile phone banking and (e) PC banking (or offline banking). Internet banking is a form of self-service technology, costing millions of dollars, which leading retail banks have made available in the recent past. An understanding of why users are more accepting of Internet banking services should help bank managers implement this self-service technology. This study identifies eight characteristics, which influenced the rate of adoption. Two of these characteristics, namely accessibility and confidentiality, are new to the literature. The results show that adopters of Internet banking perceive the service to be more convenient, less complex, more compatible to them and more suited to those who are PC proficient. Adopters were also found to be more financially innovative. The perceptions that adopters had about social desirability, confidentiality, accessibility and economic benefits were viewed no differently when adopters were compared with non-adopters. (Joseph; Stone, 2003) have said that the internet deals with a large number of varied financial transactions like customer payments, securities transactions applications for loans or insurance acquisitions. The consequence of the structure and intention of the internet to be an open network means high security risks are involved with financial transactions. Today, various techniques and standards are offered in order to control or even avoid these risks. Basic requirements are as follows: customer and financial institution have to authenticate each other; private data have to be encoded. Cryptographic algorithms used need to have certain characteristics; no third party should be able to quickly get access to messages or even to diver financial transactions; a digital signature is necessary to get binding legal contracts. These digital signatures have to secure the integrity of signed documents. It needs to be guaranteed that sender and receiver have the same intentions. In recent years, internet banking usage has become one of the most important e-commerce environment (Wang, Y. et al., 2003). Sohail and Shanmugham(2003), pointed out that a bank’s promotional efforts indeed facilitate awareness of internet banking adoption and its benefits. Technology has introduced new ways of delivering banking to the customer, such as ATMs and Internet Banking. Hence, Banks have found themselves at the forefront of technology adoption for the past three decades. Increasing labour costs in the 1960s placed pressure on labour intensive industries like banking to look forward automating some of their functions. Barclays Bank was the first to envisage the potential of ATMs, and introduced the first ever ATM in 1967. Initially, ATMs were not sophisticated, and served only as cash dispensers. Originally, banks offering an ATM service achieved an advantage over their competitors (O’Hanlon et al.,1993). There was scant understanding of the customers’ needs or expectations and the role of ATMs large in bank’s retail delivery system was vague (Violano et al.,1992). In the early market stage, ATM was a product based on a radical technological innovation, and did not represent a solution to a customer need at that point in time. In the mid-1970s, features like cash balance inquiry, deposits and funds transfer that permitted these customers to conduct the majority of their routine transactions without visiting a bank branch (O’Hanlon et al.,1993). By the late 1980s, ATMs were viewed as a generic service, a commodity with no competitive advantage. Since then IB has been able to successfully cross the chasm as a complete service within the financial service industry. According to the Gartners Group’s 1999 report, there has been a rapid growth in online PC banking in the USA; from just over 10 million in 1999 to the projected 35 million by the year 2003 with a rapid shift in internet access (Barto, 1999). Consumer growth in some European countries such as Germany, Norway and Sweden has been similar (Bons, 1999; Slywotzky,2001). In an attempt to solidify and expand customer relationships and stay ahead of the competition, banks are turning to the next generation of personalized online services-internet banking portals and mobile banking (Fonseca et al., 2001; Saatcioglu,2001). Electronic Customer Relationship management (eCRM) will thus be next paradigm shift. It will be a matter of fundamental change , involving the re-engineering of processes throughout the financial institution. It must not be a web solution or an advisor solution or a call center solution or a wireless solution. Enterprize-wide eCRM must be all of the above. Beyond the ability to deploy across multiple channels, the solution must have consistency and collaboration across all channels (Singh.,et al., 2000). As SCN Education B.V. (2001) pointed out several advantages of E-Banking firstly; some banks who offer services on the net currently are very few, thus those who offer such services would be perceived as leaders in technology implementation thus

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Electronic copy available at: http://ssrn.com/abstract=1011112

they would enjoy a better brand image. Secondly; the costs incurred in delivering various banking products and services would be reduced. Thirdly, banks which enter early will be able to get a better handle on the services and products which the consumers need. Also, these banks will require less time to develop and deliver products to their customers. Finally, the banks can use their web sites to sell their own as well as other third party products to their customers. The diverse range of products and services which can be sold through web sites will lead to increase revenues for the banks. Rotchanakitumnuai, S., & Speece, M., (2003) reported that many Thai banks are currently implementing Internet banking. Banks that offer service via this channel claim that it reduces costs and makes them more competitive. However, many corporate customers are not highly enthusiastic about Internet banking. An understanding of why corporate customers do not accept Internet banking can assist banks to implement this self-service technology more efficiently. In-depth qualitative interviews with Thai firms the researchers suggest that security of the Internet is a major factor inhibiting wider adoption. Those already using Internet banking seem to have more confidence that the system is reliable, whereas non-users are much more service conscious, and do not trust financial transactions made via Internet channels. Non-Internet banking users tend to have more negative management attitudes toward adoption and are more likely to claim lack of resources. Legal support is also a major barrier to Internet banking adoption for corporate customers. (Rotchanakitumnuai; Speece, 2003) state that though banks are very interested in internet banking they are concerned with the risks connected with procedures for transactions over the Internet. Today, banks are already loosing enormous amounts through cheques and credit card fraud. The security solutions of the future are therefore major concern for banks. If customers distrust the security it may create multiple problems. Banks will find it hard to launch Internet banking services if demand is low because of security doubts. Though the banks themselves believe that the security levels for bank transactions over the internet are sufficient, they also believe that their customers distrust existing security solutions, primarily because they are software based. There are 3 security aspects in a transaction: content confidentiality, integrity and authentication and non-repudiation. These aspects are treated independently with various and often disparate standards. It is recommended that security be provided at all levels: client interface, transport and internal systems. Solomon (1997) claims that for client interface and transport, security is currently mainly ensured by the use of cryptographic instruments and by the set up of private financial network. Also, private networks are another solution to secure transactions. These networks can be used for corporate banking and retail banking. 1.3 Sample and Methodology: This research study is intended to be a local research study based on the population of the country of Botswana and more so on the city of Gaborone where there is a higher probability of people being aware and knowledgeable of e-banking and its services. As explained in the sampling plan the scope of the study is restricted to the 4 major commercial banks in Botswana: Barclays Bank, First National Bank, Bank of Baroda and Standard Chartered Bank. However, the limit of the sample size is 100 respondents. The study considers some hypotheses in order to assess the problems that banks are currently facing regarding e-banking in Botswana and can thus form appropriate strategies that can be implemented and these helped to form the ground from which research is done in order to arrive at the most accurate solutions to the problem understudy. The accepted hypothesis is helpful in establishing a common solution. The following hypotheses were determined by background study of e-banking before the research was commenced. This means that general information on e-banking was known beforehand so that the hypotheses could be established. Such general knowledge studied includes – the younger generation seem to be more ‘intune’ with e-banking than the older generation, usually the business occupation type are more concerned and related to ebanking than the other occupation types since it is a vital ingredient to the success of their business, e-banking is growing at a fast rate and the beginning of the end of manual banking is seen. Thus, such basic knowledge obtained through background research was used to formulate the hypotheses. Attention has been paid to the fact that all these hypotheses focus on the selected banks in Botswana. Hypothesis 1:E-banking services as a strategy for improving customer satisfaction as adopted by selected banks are perceived as important by customers. Hypothesis 2:Customers prefer electronic banking to manual banking. Hypothesis 3: Customers are generally happy and satisfied regarding e-banking services as a whole provided by selected banks. Hypothesis 4: There is a positive relationship between the younger age group and preference of electronic banking. Hypothesis 5: The preference for e-banking is greatest for the business occupation type. Hypothesis 6: There is a positive relationship between business occupation type and willingness to pay. This study includes the selection of 4 private commercial banks, these being: Barclays Bank, Standard Chartered Bank, First National Bank and Bank of Baroda. Judgmental sampling method used for selecting the sample to be used for interviewing and gaining responses to the questionnaires. This method involves choosing people who might provide most lustful and useful information for the study as well as answers to the research questions. The sample size in total considering all data collection methods is 100. This consists of 50 questionnaires distributed to bank customers, 8 senior bank staff interviewed (2 people from each bank), 12 junior staff interviewed (3 from each bank) and 30 bank customers observed at ATMs. This sample distribution is considered to be varied enough to greatly mitigate any unfairness or bias which may arise due to sole focus on any one data collection method. Also, the sample size is thought to be considerable enough to represent the whole population and thus account for all types of possible aspects. The following methods used for collecting the appropriate data for analysis and study: The customers selected based on making perceptions about whether they possess some knowledge on e-banking and taking their enthusiasm into account. This is achieved by asking the potential customers whether they do know about e-banking and if they are interested in the subject. The questions asked to the senior staff vary from the questions asked to the junior staff based on the different degrees of their work and contribution towards e-banking involved. The questionnaires distributed to a judgmental sample of persons and their responses analyzed using a software known as SPSS. The basic procedure for this is that initially a framework prepared in order to analyse the raw data that is fed into the framework from the questionnaires. The framework is created in a variable view whereas the data is analysed using SPSS software. The responses of the senior bank’s staff of the bank used to analyse the advantages, disadvantages and competition that banks face as a result of e-banking and to determine strategies that banks can use to achieve a particular level of customer satisfaction. The questions included in the questionnaire are designed to stimulate responses in order to aid in achieving the objectives and testing of the hypotheses. These questions are aimed at gaining information on the general preference of delivery channel for customers, their perception on e-banking and their rating of the quality of e-banking services provided.

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While interviewing the questions asked of the junior and senior bank staff was in random fashion depending on how they answered a question and what that question led to. However, there were some questions that were included in every interview to derive information regarding what is the bank doing to improve the customers’ satisfaction, how does the bank perceive the satisfaction of customers to be regarding e-banking, where does the bank feel it is lacking in e-banking, advantages and disadvantages of e-banking etc. The questions asked of the customers were structured to determine their understanding of e-banking, their enthusiasm regarding e-banking services, acceptance of e-banking, comparison of ebanking and manual banking etc. The interview method adopted enabled the respondents to be more free and elaborate in their responses and enabled to judge their actual and unconscious reactions based on their tone, body language and their facial expressions. It was noted that once the respondents were assured that the information they provide will be confidential and questions were asked in an informal and friendly way most of the respondents answered all questions asked willingly providing useful input to this research. The observations made were based on visual factors such as time taken by bank customers to access the ATMs, how long each customer took, how they feel about ATMs (based on their posture, body language, patience displayed, expressions etc). These observations were carried out at peak hours (7-8am, 4:30-5:30pm), at relaxed hours (10-11am, 8-9pm), on weekdays and on weekends in order to be able to observe the differences in factors according to the different conditions. A conclusion and recommendation has been drawn after a critical and careful analysis of the data. Thus, processing is a crucial process and has been done with utmost care and skill. Data collected using oral interviews was studied in order to find some common ground on which to base an analysis. 1.4. FINDINGS To get an idea if the sample used is fairly represented by males and females. Among 100 respondents 58% represent female and 42% male deemed to be positive as there is more or less an acceptable mix of males and females and no extremities in this study. To determine the percentage of employed and not employed respondents involved in the study. To ensure that the percentage of not employed respondents involved are not significant enough to affect the overall research results as it is assumed that they may not be as concerned and aware of e-banking knowledge as the employed respondents. Since the percentage of not employed respondents is below 35%-40%, it is assumed that the overall research results will not be affected due to this insignificant percentage. The survey includes the occupation types especially the business type. It is found that the respondents represent 42% from the employees, 26% from the business, 12% from the household and the 12% from the student type is deemed to be positive as there is more or less an acceptable mix of different occupation types in this study. It is a general thinking that the younger generation prefer e-banking compare to the older age group. This survey also represent the same belief whether there is a fair representation of both young and old age groups as the results are thought to be affected by the age groups involved since young people are generally assumed to prefer e-banking in comparison to the older age groups. Table 1 shows that the maximum preference for the e-banking represent younger (18-25 years) groups.
Age Group 18 to 25 years 26 to 35 years 36 to 45 years 46 to 55 years 56 to 60 years above 60 years Total Frequency 13 11 9 9 5 3 50 Percent 26 22 18 18 10 6 100

Table 1: Frequency and percentage of the different age groups involved in the study.

This study also considers the percentage of different bank accounts of customers involved in Botswana. This will give a slight indication as to the most popular bank for customers which is one of the objective of this study. It can be seen that the most popular bank is First National Bank.
Bank Account First National Bank (FNB) Barclays Bank Standard Chartered Bank (SCB) Bank of Baroda Total Frequency 20 12 8 10 50 Percent 40 24 16 20 100

Table 2: Frequency and percentage of different bank accounts involved in this study

To derive statistics to show preference of type of banking according to age group. (testing of hypothesis 4)
Preferred type of banking Age group 18 to 25 years 26 to 35 years 36 to 45 years 46 to 55 years 56 to 60 years above 60 years Electronic Banking 12 8 7 6 2 Manual Banking 1 3 2 3 3

Ratio of electronic to manual banking (%) 92.31 72.73 77.78 66.67 40

33.33 1 2 Table 3: Preferred type of banking according to different age groups

To test hypothesis 4, which suggests that there might be a positive relationship between the younger age group and preference of electronic banking. However, it can be seen that the older half of the sample (i.e. from 46 to 55 years to above 60 years) 9 (6+2+1) prefer electronic banking to 8 (3+3+2) people that prefer manual banking. This 1 person difference is

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allowed for and can thus be said that age does contribute to preference of type of banking for the older generation. For the younger generation, (i.e. from18 to 25 years to 36 to 45 years) it can be seen that electronic banking is preferred by (12+8+7) 27 people in comparison to (1+3+2) a mere 6 people that prefer manual banking. Thus it can be safely stated that the younger generation prefer electronic banking to manual banking. This means the hypothesis is proved to be true. To derive statistics to show preference of type of banking according to occupation type. To test hypothesis 5 which suggests preference for e-banking is greatest for the business occupation type in the sense that business people are more likely to prefer e-banking in comparison to the non-business customers who are assumed to prefer manual banking over electronic banking. It can be seen that the preference for electronic banking over manual banking is greater for business customers (84.62%) than for any other type of customers. This confirms the hypothesis.
Preferred type of banking Occupation Electronic Manual Ratio of e-banking to manual type Banking Banking banking (%) 66.67 Employee 14 7 84.62 Business 11 2 50.00 Household 3 3 80.00 Student 8 2 TOTAL 36 14 Table 4: Relationship between the preferred type of banking and the different occupation types

To determine whether customers still feel the need arises to go to the bank despite the presence of e-banking. Also, to judge the bank with the most effective e-banking services as the one with the least number of visits to the main bank branch. The results show that despite the presence of e-banking services such as ATM services all customers feel the need to frequent the bank at least twice a month on average. This shows that they still do not trust and rely on e-banking services and still feel somewhat comfortable with the assurance the physical presence of the bank offers. Also, the results show that the Standard Chartered Bank offers the most preferred e-banking services among customers in comparison to other banks since it has the lowest average.

Bank account FNB Frequency of visits to bank Once Twice Thrice More than thrice 9 7 3 Barclays Bank 3 7 SCB 1 4 1 Bank of Baroda 2 7 1

1 2 2 AVERAGE 5 3 2 2.5 Table 9: Frequency of visits to different bank accounts monthly and average number of visits – for different banks

To determine the average frequency of ATM usage monthly by bank customer.
Frequency of ATM usage m onthly Number of respondents 14 12 10 8 6 4 2 0 Once Tw ice Thrice More than thrice

First NAtional Bank (FNB) Barclays Bank Standard Chartered Bank (SCB) Bank of Baroda

Frequency of visits

Figure 10: Frequency of ATM usage by respondents of different banks. Frequency of ATM usage monthly More than thrice 12 5

AVERAGE

Bank Account Once Twice Thrice 5 First National Bank (FNB) 1 3 4 3 Barclays Bank 1 4 2 Standard Chartered Bank 2 (SCB) 1 2 5 2.5 Bank of Baroda 2 3 2 3 AVERAGE 1 2.75 2.5 6.25 Table 10: Frequency of ATM services by different banks and average according to frequency and different banks.

To determine the respondents reliance on ATM services in general and to judge the bank providing the most effective ATM services by viewing the highest average. The results show that most of the respondents use ATM services more than thrice as indicated by the average of 6.25 persons in comparison to the other averages outlined in the graph. Also, it is observed that probably the highest quality of ATM services is provided by FNB relative to the other banks. On the other hand, one can also assume that the quality of banking provided is not good enough hence most respondents resort to using ATM services more frequently rather than going to the bank personally.

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To merely determine whether ATMs are generally efficient in responding to customers on a timely basis. It is observed that yes, overall ATMs do respond to customers efficiently as most only take 5 to10 minutes to serve a customer while only 16% take more than 15 minutes to serve customers which may partly be attributed to the peak hour period during which delay is experienced. To determine the percentage of respondents willing and not willing to pay higher for e-banking services. The purpose of this objective is to be able to decipher whether respondents perceive e-banking in general as useful, reliable and thus important enough to be willing to pay higher charges for e-banking services or not. The results show that majority of the respondents are not willing to pay higher for e-banking services despite its benefits. This maybe attributed to the fact that they are not well aware of the benefits of e-banking, find it expensive enough already, or are more comfortable with manual banking. To derive statistics to show relationship between willingness to pay higher for e-banking services and occupation type. (testing of hypothesis 6)
Relationship betw een occupation type and w illingness to pay higher for e-banking services Number willing to pay or not 35 pay higher charges 30 25 20 15 10 5 0 Employee Business Household Occupation type Student TOTAL Yes No

Figure 13: relationship between different occupation types and willingness to pay higher for e-banking services.

To test hypothesis 6 which says that there is a positive relationship between the business occupation type and willingness to pay higher for e-banking services. The hypothesis is confirmed to be true as 54% of the business respondents are willing to pay higher charges for the e-banking services in comparison to the other occupation types. This shows that indeed there is a positive relationship between the willingness to pay higher for e-banking services and the business occupation type. To derive results on percentage of respondents preferring electronic or manual banking according to the bank. To determine whether the bank is a contributing factor to respondents’ preference of e-banking to manual banking. Though 80% of the respondents belonging to FNB prefer e-banking to manual banking, the similar ratios for other banks show similar results in the sense that the respondents of those banks too prefer e-banking unto a significant extent. This gives reason to believe that respondents prefer e-banking to manual banking generally regardless of the different banks they maintain their accounts in.

Bank account Barclays Bank of Preferred type of banking FNB Bank SCB Baroda Total 36 Electronic Banking 16 9 5 6 14 Manual Banking 4 3 3 4 Ratio of e-banking to manual 80 75 62.5 60 72 banking (%) Table 12: Preferred type of banking according to different banks including percentage of e-banking preference for each bank.

To determine respondents’ perception on ATM importance. To merely determine whether respondents generally perceive ATM usage as important or not important. The results clearly show that respondents do indeed (90%) perceive ATM usage as important. To determine whether importance of ATM usage is affected by different occupation types. It is seen that majority of the respondents regardless of the fact of which occupation type they belong to perceive ATM usage to be important and the one irregular value of ‘not important’ belonging to the household sector can be perceived to be an extreme value. Thus, we can assume that ATM importance is not affected by the occupation type.
Importance of ATM usage Not Ratio of important to not Occupation Type Important important important 100.00 Employee 21 100 Business 13 83.33 Household 5 1 100 Student 10 TOTAL 49 1 98.00 Table 13: Different occupation types perceptions about importance of ATM usage percentage of importance of ATM according to different occupation types.

To determine whether ATM importance is indeed influenced by different age groups. The results indicate that ATM importance is not influenced by age group as nearly all the respondents regardless of the age group have perceived ATM usage to be important (100%) apart from the age group of 26 to 35 years which can be assumed to be an extreme case thus it is not considered. Hence, ATM importance is not influenced by age group.
Importance of ATM usage Important 13 10 9 9

Age Group 18 to 25 years 26 to 35 years 36 to 45 years 46 to 55 years

Not important 1 100.00 90.91 100.00 100.00

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100.00 56 to 60 years 5 100.00 above 60 years 3 TOTAL 49 1 98.00 Table 14: Perception of respondent’s importance of ATM usage according to age group and percentage that perceive ATM usage as important according to age group.

To derive statistics to show the frequency of tele-banking usage. To figure out whether tele-banking usage is popular in Botswana as can be indicated by the frequency of its usage.

Figure 18: Respondents frequency of tele-banking usage monthly

As is seen, most of the respondents do not use tele-banking at all (88%). This leads to the assumption that the bank customers of Botswana are not well aware of tele-banking as it may not be well marketed or/and tele-banking services are not easily available in Botswana. This shows that tele-banking in Botswana requires serious attention and development. To find out whether the respondents perceive tele-banking as important or not important. As the results illustrate, majority of the respondents perceive tele-banking to be not important. However, this result cannot be relied on as it may not be very accurate since the respondents choice maybe influenced by the fact that they are not aware of tele-banking and thus do not perceive it to be of significance

Figure 19: Perception of importance of tele-banking by respondent.

To determine the relationship between tele-banking importance and occupation type. To determine whether occupation type of respondents has an impact on their perception of tele-banking importance, especially for the business occupation type. The results illustrate that yes; there is a slight indication that occupation type influences perception of tele-banking importance. The business sector respondents who are more inclined and required to use e-banking perceive tele-banking as important unto an extent of 53.85% which is greater than the other occupation type groups. The employee and student occupation types perceive tele-banking importance to be very low as they may not be required to use tele-banking services thus it is assumed that tele-banking importance can vary according to occupation type.
Occupation Type Employee 7 14

Importance of tele-banking Business Household Student TOTAL Important 7 3 2 19 Not important 6 3 8 31 Ratio of important to not important 33.33 53.85 50.00 20.00 38.00 Table 15: respondents’ perception of tele-banking importance according to different occupation types and percentage of respondents of each occupation type perceiving tele-banking as important.

To establish whether perception of respondents view on importance of tele-banking is influenced by their age groups. The results obtained are quite distinguished from each other thus a pattern cannot be established. It can be assumed that the 54.55% importance to tele-banking given by the 26 to 35 years age group is because tele-banking more or less came about in their generation. Similarly, their was no knowledge of tele-banking about 60 years ago which can attribute to the fact that 0% of the respondents belonging to the above 60 years age group see tele-banking as important. The rest of the results cannot be assumed to be very reliable since the perception of most respondents importance of tele-banking may be influenced by their meager knowledge of tele-banking, i.e. if they know more about tele-banking there is a possibility that they will reverse their decisions on its importance. Thus, no analysis can be made on whether tele-banking is indeed influenced by age group due to the lack of knowledge factor about tele-banking.
Age Group 18 to 25 years 5 8

Importance of tele26 to 35 36 to 45 46 to 55 56 to 60 above banking years years years years 60 years TOTAL Important 6 4 2 2 19 Not important 5 5 7 3 3 31 Ratio of important to 38.46 54.55 44.44 22.22 40.00 0.00 38.00 not important Table 16: perception of respondents’ importance of tele-banking usage according to different age groups and percentage of importance of tele-banking according to each age group.

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To merely establish the viewpoints of respondents regarding importance of internet banking. The results clearly show that internet banking is perceived to be important by majority of the respondents (78%). This leads to the analysis that internet banking is seen as important by the Botswana bank customers and there is potential for internet banking in Botswana.

Figure 22: Perception of respondents on importance of internet banking

To be able to figure out whether the importance of internet banking is indeed influenced by the occupation type. As the results depict, though the business occupation type perceive importance of internet banking to be the greatest (84.62%) the other occupation types, nonetheless, also visualize internet banking to be important. Thus, we can say that occupation type does not have a significant influence on importance of internet banking though an allowance can be made for the business occupation type that pay greater importance to internet banking than the rest.
Occupation Type Employee 16 5

Importance of internet banking Business Household Student TOTAL 39 Important 11 5 7 11 Not Important 2 1 3 Ratio of important to not 76.19 84.62 83.33 70.00 78.00 important Table 17: Perception of importance of internet banking according to different occupation types and percentage of respondents perceiving internet banking as important for each occupation type.

To establish whether respondents’ age group has an impact on importance of internet banking. The results show that the percentage of internet banking importance for the age groups ranging from 18 to 25 years to 56 to 60 years is very great and there are very little variances between the percentages. However, the above 60 years age group give only 33.33% importance to internet banking. This may be because of the lack of internet banking in their times and also due to the fact that they are more used to manual systems and thus do not perceive internet banking as important. However, the other age groups convincingly show that internet banking is important regardless of the age group the respondents belong to. Thus, this leads to the analysis that internet banking is not influenced by age group unto a certain point but after that point (above 60 years) the internet banking importance is influenced by the age group.

Importance of internet 26 to 35 36 to 45 banking years years Important 9 7 Not Important 2 2 Ratio of important to not important 84.62 81.82 77.78 Table 18: Importance of internet banking according to important according to each age group

Age Group 18 to 25 years 11 2

46 to 55 years 7 2

56 to 60 years 4 1

above 60 years 1 2

TOTAL 39 11

77.78 80.00 33.33 78.00 different age groups and percentage of respondents feeling internet banking is

To determine the percentage ratings, according to preference of respondents for internet banking service. To have an idea regarding respondents’ feelings towards internet banking – assuming they have taken into consideration factors such as usefulness and necessity of internet banking. The results show that most respondents view internet banking as second preference (50%). To have an idea regarding respondents’ feelings towards ATM services – assuming they have taken into consideration factors such as usefulness and necessity of ATM banking. The results show that ATM banking does have significant place in the eyes of the respondents since 72% of the respondents rate it as their first preference, and in addition it is interesting to note that 0% of the respondents rate it as their fourth preference. The bulk of the choices lie in the first and second preference. This means that ATM banking services definitely have managed to make a majority place for themselves with regards to the other e-banking services – internet banking, telebanking, and manual banking. To determine the percentage ratings according to preference of respondents for tele-banking service. To have an idea about respondents’ feelings towards tele-banking services – assuming the respondents have taken into consideration factors such as usefulness and necessity of tele-banking. The results show that tele-banking is not very popular with the respondents as majority have rated it as their third preference (70%). Also, it is vital to note that not a single respondent has rated tele-banking as their first choice. This maybe largely attributed to the fact that most of the respondents do not use tele-banking thus do not rate it as their preferred choice. To have an idea about respondents’ feelings towards manual banking services – assuming the respondents have taken into account factors such as necessity and usefulness of manual banking services. The results show that majority of the respondents (68%) do not highly rate manual banking, while a total of only 28% view manual banking as their first and second choice. This analysis is encouraging in the sense that it shows that respondents though slowly, are surely moving away from manual banking towards the age of electronic banking.

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Rank the four e-banking delivery channels according to customer preference.
First Second Third Fourth preference preference preference preference Delivery Channel 50 Internet Banking 18 22 10 72 ATM 24 4 0 70 Tele-banking 0 8 22 68 Manual Banking 10 18 4 72 50 70 68 Majority preference % 1 2 3 4 Ranking Table 19: Ranking of delivery channels by determining majority preference percentage in each preference group.

To determine the most favored delivery channel by customers. This is achieved as the first preference is ATM, the second preference is internet banking, the third preference ins tele-banking and the final preference is manual banking. To determine the average ratings of e-banking services according to different banks. To determine whether banks may perhaps be the factor that influences the respondents’ perceptions of e-banking services provided. According to the results depicted above it can be seen that Standard Chartered Bank provides the highest quality of e-banking services in general since the higher the average the higher the better the ratings are. However, it is important to note that the results do not show a significant difference in the average ratings of e-banking services for all the banks as the variances are very small. This leads to the analysis that banks are not a significant influencing factor for the respondents perceptions of the various ebanking services provided.
BANK AVERAGE 4.42 Baroda 4.34 FNB 4.58 SCB 4.15 Barclays Table 20: Average ratings of e-banking services provided by each bank

To determine the average ratings of each e-banking service offered. To be able to decipher the strong and weak service areas of banks that will be indicated by the average ratings. The higher the average rating the better the service, and the lower the average rating the lower the service. As the results clearly indicate, efficiency and correctness of financial status report (5.74) and quality of ATM (5.66) are assumed to be the banks strongest areas, whereas quality of tele-banking (1.74) and up-to-date of the technology used (3.4) are assumed to be the banks weakest areas that require attention to improve them. Most of the other services have neutral ratings in the sense that they are not too strong, nor too weak just simply plain average.
Average rating of Service provided service quality of EFTservices 5.3 ability to pay bills 4.78 efficiency and correctness of financial status report 5.74 efficiency and quality of multi-reporting 3.6 quality of cross-currency services 3.94 user-friendliness of system 5.46 range of products 4.32 reasonableness of costs 4.46 quality of funds management 4.5 security of transactions 4.56 quality of tele-banking 1.74 quality of ATM 5.66 ease of using e-banking 5.08 confidence instilled by bank 4.24 adequacy of knowledge provided by bank 3.58 promptness in attending to grievances 3.72 bank's concern for customer welfare 4.22 up-to-date of technology used 3.4 Table 21: Average ratings according to each service provided

It must be noted that these qualitative questions were only included in the questionnaire to support the choice given by the respondent regarding the respective close-ended question asked of them. Thus, the aim of the qualitative questions was to be sure of the respondents choices, by enabling them to elaborate on their choices. Hence, the responses given by the respondents in this section will be very brief. In respond to the question for willingness to pay higher charges for e-banking services choice those who responded positively explain that e-banking is quick, more convenient, and easily accessible said hardly any queuing problems, efficient, economy of time, convenient, immediate information on account status. In regard to the ATM services this group said that they have access to their money 24X7, time-saving, less taxing than going to the bank, do not have to face sometimes impolite bank employees. it is safer, they feel more comfortable Moreover, reason for importance of tele-banking usage choice who responded favorable said that it is very convenient, can be conducted easily from anywhere. In addition, reason for importance of internet banking choice those who responded this as important explain that it informs on account status every time a transaction is processed, enables buying, selling and viewing of many products and services over the internet, enables buying and selling of stocks, is convenient. On the contrary, those who explained negatively said that e-banking charges are too expensive as it is, they prefer manual banking. However, hardly anyone responded to this negative choice of ATM. Regarding tele-Banking the respondent who considered less important said that they have not used it so do not consider it important, prefer manual banking. Similarly, regarding tele-banking they said that they prefer manual banking, are not familiar with internet banking, risk of fraud as transactions are conducted over the internet, lack of relationship with the bank employees, sense of insecurity, greater chances of fraud, and chances of power failure, addictive. The survey from a group of bankers regarding the advantages and disadvantages of E-banking provided mixed reaction. Those who are optimistic narrate this very important, reliable, necessity in today’s world, fast, convenient and timesaving, a luxury. In addition, they noted that they are able to cut costs by reducing their junior staff that is required to perform the most basic transactions which now e banking has taken over. Furthermore, the senior bank staff claim that they are freed to concentrate on their strategic issues as a result of e-banking since they do not have to deal with nitty-gritty’s caused by some

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of their employees in some instances since e-banking is very reliable and efficient. especially internet banking has enabled them to provide a wide range of products and services to their customers. Moreover, banks noted that initially they incurred huge costs in establishing the e-banking systems they are sure it will pay off in the long-run as they will save costs on employees, uniforms, stationery, electricity etc. Majority of the bankers said that where the ‘brick and mortar’ facilities of traditional banks are lacking in virtual environments this is a downfall as profitable lending relationships could not be established with retail customers and small businesses. However, this is an advantage for traditional banks as they can establish profitable lending relationships since customers are likely to feel safer and then trust the bank since it “actually exists” (tangible). Thus, since the virtual banks cannot establish these relationships they are forced to invest their assets in lower-yielding capital market instruments. Traditional banks on the other hand can invest their assets in higher-yielding capital market instruments. Traditional banks have the advantage of the brand recognition, customer relationships and marketing benefits that the branch’s physical presence provides which is not the case for virtual banks. They have an advantage in that they are more familiar to customers today. The large traditional banks have something that the virtual banks are spending huge amounts to get: brand recognition. A virtual bank must become a known quantity before it can expect to lure a significant number of customers away from traditional banks. Virtual banks will have to continue aggressively advertising to boost recognition and loyalty among customers. Thus, traditional players with existing physical infrastructures have an opportunity to excel. In addition, traditional banks face relatively lower marketing costs in comparison to their online counterparts. The branches (traditional) actually strengthen brand recognition, and offer opportunities for banks to differentiate themselves based on service and convenience. Virtual banks do not have these advantages and attempt to make up for this lost value by spending more on advertising. A comparative analysis shows that traditional banks are making a return on assets much higher than virtual banks. Virtual banks’ strategy of offering high rates while maintaining no branches actually leads to lower profits compared to traditional players, in both the short and long run. Traditional banks usually have a wider interest margin than virtual banks. In addition, traditional banks earn more in non-interest revenue in comparison to virtual banks. Though virtual banks have lower personnel and office and equipment costs they exceed their traditional counterparts in other non-interest expenses such as traveling and data processing costs. A summary of the responses from a group of bankers who does not support e-banking explain that the system is very confusing, risky, very technical, addictive and lack of rapport with customers. They meant that the introduction of e-banking has reduced interaction with their customers and this can prove to be dangerous to them since they will lose their personal touch and customers no longer rely on them and have become independent. Further, the customers can move on to other banks if they are dissatisfied with their current bank, thus they can lose their customers. They also pointed out that the initial costs of development, implementation and installation of e-banking systems is very high and has a major impact on their cash flow. Moreover, banks claim that if a power failure occurs they can lose a huge amount of invaluable information which is difficult to retrieve unless they have suitable back-up systems involved which is an additional expense. Increased competition all banks said that the introduction and rapid growth of e-banking had made it doubly hard for them to survive and fight off competition as all banks are now providing at least the most e-banking facilities so they are finding it difficult to differentiate themselves. The debate between virtual banking versus traditional banking can also be noticed here. Since virtual banks are aiming to operate with no branches at all, this operation with branches lowers costs, which frees the bank to offer better rates and lower fees. Thus, the higher rates and lower fees offer a sustainable competitive advantage that will ultimately lead to profitability. Unfortunately traditional banks do not have such a competitive advantage since branch costs are higher due to their existence and thus cannot offer as competitive rates as virtual banks. Traditional banks are not able to reduce credit risk through geographic diversification like virtual banks. Traditional banks face the disadvantage of higher personnel costs and costs on office and equipment expense equipment in comparison to virtual banks. In addition, some bankers stated that while a traditional branch of brick and mortar would do nothing for the customers, the convenience of all the customers would be greatly enhanced by an electronic, 24 hour branch. The cost of staffing, training and operating an electronic branch is much less too. Many bankers stressed the point that virtual players have the advantage in infrastructure costs and agility compared to traditional banks. They do not have the existing customer base that the traditional banks have thus they do not have to protect the integrity of a brand that has taken a long time to build. Thus, bankers believe these advantages leave virtual banks more free to innovate. Virtual banks have an added advantage of being able to build kiosks, or micro-branches unlike traditional banks. In shortl, banks feel that the most enticing part of e-banking customers comes in its internet package in the form of the profile of internet customers: educated, professional and affluent. On the other hand, the banks feel that they can relate better to manual banking customers since they have greater interaction with them and have hence developed a rapport with them, which cannot be achieved in the case of e-banking customers. Most bankers said that it is convenience (i.e.: location) that has allowed them to survive so long. However, they feel that this main advantage is disappearing as the use of the internet for financial product continues to grow rapidly. Many banks responded that internet banking enables them to maintain the customer relationship or to make it evolving. This is partially because customers can actually be joined wherever an internet access is possible, and most of these banks have targeted customers are the wealthy, young, educated and profitable customers. It increases revenues. It also represents a competitive advantage through differentiation of banking services and image improvement. Internet banking allows a modular approach for cost effective development and has a lower entry cost gate than branch. 100% of the banks perceive security as a major concern because of transactions interception, falsification and also because of the potential bank’s private systems exposure. Also, most banks are concerned about the rapid evolution of Internet and the fast obsolescence of its tools and systems. Some banks highlighted the fact that the performance level of the web and the difficulties to predict its evolution. Customer loyalty decrease this is one of the most serious downfall as ebanking shifts the power to the customer. Nowadays, it is easier for customers to compare services from different banks and to change for the better one. Development of innovative systems in the Internet banking area in order to attract customers has hence become a priority, even if those services are not the most interesting for banks. Payment services constitute the most important link between banks and their customers. The banks need this in order to attract customers with higher margin. Another concern for banks is the confidence in an electronic currency that means that stable exchange rates between electronic and ‘real’ currencies are necessary. If the exchange rates are unstable, there is a chance of arbitrage profits. This, in turn, would reduce confidence of customers and make them skeptical since losses due to value fluctuations are possible. The responses obtained for the acceptance of the electronic age were unanimous as the banking industry strongly feels that it must adapt to the electronics age if they are to move with time and customer demands and not be left behind. Many of the responses obtained from the senior staff was that they do not have much knowledge on this aspect as this is the technical side of things but the little information that was gathered was that the basic steps include the initial setting up of a web site for marketing purposes, banks then start to replicate their existing electronic banking services using browser technology, with either HTML or Java. Unfortunately, due to lack of time the technical staff was not interviewed or briefly questioned regarding the technicalities of e-banking, but then again this research does not focus on the technicalities of ebanking so this aspect was ignored apart from the brief information some of the senior bank staff managed to provide. Many of the senior bank staff commented that corporates do not exist to be banking customers. Their main focus is buying and selling with banks increasingly becoming just another service provider. Some of the staff claimed that many of them do not

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know what they want yet so thinking should be done laterally and that one major push will certainly be for more of everything more information, faster communications, instant query resolution, 24x7 for all relevant services. Basically, corporates want straight-through processing for ordering, receiving product statements and other information, invoicing, and payment. The banks say that they have 2 options: either to seek to provide this sort of infrastructure, clearly working with components that are increasingly being offered more or less off-the-shelf or they can sit back and watch while the corporates put in place these sorts of infrastructures themselves or use non-banking third parties leaving banks to handle whatever netted payments are require at the end of the process which they most definitely do not prefer. Also, one senior staff interviewed made a very valid point saying that the area of payment preparation for corporate clients is more intricate. This is because, while the business users have the same basic needs to transfer money from one account to another, there can be currency implications. Banks must be able to offer cross currency payment facilities in conjunction with an up-to-date treasury rate service. Also, international payments and formats must be supported. Banks say they are responding to this situation by introducing payment import and payroll facilities to reduce errors and time for both bank and client users. Some bankers said that they have identified that the ability to transfer files is an essential service for corporate users as it enables them to quickly and securely transfer files to the bank rather than relying on outdated methods such as files, tapes and disks. The main response obtained to this question was that people are not aware of e-banking at all or unto a minimal extent thus efforts must be made to make customers aware of what e-banking really is, what it does, how it will benefit customers. This should be done through vigorous marketing and advertising of the e-banking services the bank provides. Basically, electronic banking for retail customers means providing up to date account information as well as a funds transfer facility offered to clients. This should be expanded to give clients the ability to pay all household bills e.g.: electricity, telephone, gas. Banks say that this level of functionality should though not be a long-term strategy. This is because business users have more sophisticated needs so the bank must ensure that they provide not only the functionality, but also the choice of technology to meet these needs. Though, balance and transaction reporting is the basic requirement of all business users they must be able to receive a complete financial status report. Since clients often have relationships with other financial institutions banks are offering a multi-bank reporting service. This enables corporate clients to assess their overall financial position by grouping accounts in different scenarios, comparing their values with respect to different currencies. A summary of some responses obtained were that banks, when selecting a vendor system must take care to ensure that the system is as user friendly as possible for both bank and client staff. Banks proclaim that a system that is difficult to use and navigate will not be used to its full capabilities. The screens must be uncluttered and also make the best use of icons, buttons and drop down menus. Users must also be capable of exporting information as well as viewing it on the screen. In the area of payments, banks must be able to define the information and format required for each payment type. Mandatory fields are essential to ensure that only complete payment instructions are sent by clients. Care is also taken to ensure that any hardware or software security, especially in the area of payments is effective but not intrusive. Many and varied responses were obtained. A summary of these benefits are such as reduction of costs - this is in terms of the cost of availing and using the various banking products and services. The customers perceive these costs to be low. Convenience – this is a major plus point for customers since they say that all the banking transactions can be performed from the comfort of the home or office from any other place making it very accessible. speed - the response of the medium is very fast, therefore customers say that they can wait till the very end before effecting a fund transfer if they still need more time to spend thinking about the transfer decision. - funds management - customers can download their history of different accounts and do a ‘what-if’ analysis on their own PC before affecting any transactions on the web.Customers claim that this leads to better funds management as they are able to view their funds status and thus determine their position and how they are to proceed. Respondents came up with various responses to this question which were similar. Words like fast, easy to use, user-friendly, convenient, easily accessible were used. Thus the general advantages of e-banking to customers can be summarized as: - fast - to use especially when compared to actually going to the bank to get the work done- efficient as the machines continue to operate smoothly and tirelessly unlike the bank employees. Also, a significant proportion of the customers said that they do not have to face the employees who are at times unhelpful and impolite to them. With e-banking this problem is solved.- user-friendly - some of the customers, probably those who are more computer familiar and literate appreciated the fact that e-banking is very user-friendly enabling them to conduct transactions through e-banking without encountering any major difficulties.- convenient - a maximum proportion of the respondents stressed and emphasized on the convenience ebanking has generated for them. Most of them, apart from finding it convenient enough to not go to the bank and face long queues have an added convenience of time. E-banking can be done at almost any time.- easily accessible - due to the more or less even distribution of e-banking delivery channels especially ATMs most customers claimed this was a great advantage to them since they do not have to travel far and waste time and can get what they want close by.- time saving - another major advantage of e-banking to the customers is that due to its other benefits such as quick speed, efficiency, convenience and easy access it makes e-banking very time saving in comparison to manual/ traditional banking which customers really appreciate. While the respondents had many positive things to say about e-banking there were nevertheless some negative aspects as well. A summary of the responses given include:- lack of confidence in e-banking - some customers said that since they cannot see their money when it comes to electronically banking they seem to mistrust the e-banking system and thus lack full confidence in it.- lack of security - most of the customers using internet banking said that they run a high risk when conducting transactions over the internet due to the huge mass of people who can access their information and create problems. They claim that conducting transactions through the internet makes it vulnerable. - higher risk of fraud - customers said that when storing money electronically or conducting transactions through e-banking there is a high possibility of fraud and some of them have actually unfortunately been victims to this type of fraud.- lack of understanding - some customers especially the sample that seemed to be not very literate, and the older aged claimed that they had difficulties in understanding how to use the system, how the transactions are conducted, how they will know whether the transaction has been conducted and find the technicalities associated with e-banking somewhat tiresome.- inability to develop closer relationships with banks - some customers found that it is necessary for them to have some sort of relationship with the bank and feel they should identify with the bank but due to e-banking this interaction with the bank is severely limited. - inevitable visit to the bank - most customers said that despite the convenience and easy accessibility of e-banking, they feel that they must pay the bank a visit once a month as not all their requests can be met through e-banking and to assure themselves that everything is well they go to their bank once in a while. Observation Findings Observations were made at: peak times during week days; peak times during weekends- relaxed times during week days;relaxed times during weekends; Observations were made by keeping some factors in mind. These factors are outlined below. - Peak times during week days – during these periods the approximate time taken by customers to be able to use the ATM was considerably longer in comparison to other times. This being just greater than 10 minutes. Sometimes some customers

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were even observed to wait for 20 -25 minutes due to very long queues. Peak times during weekends – the rush here was observed to be a bit similar to the peak hours during weekdays, perhaps just a mite less time consuming with customers taking 10 – 15 minutes to be attended to by the ATM. Relaxed times during week days – the rush during this period was very minimal with just one or two customers in queue and each customer taking less than 5 minutes to access the ATM. Relaxed times during weekends – there was no rush at all during this period with sometimes no customer seen at an ATM for 10 – 15 minutes thus there was hardly any queuing time also. Peak times during week days – the facial expressions and body language revealed by some customers during these peak times was worth watching. A significant proportion of the customers showed impatience as they were probably in a hurry to get to work or had to attend to more pressing jobs. - Peak times during weekends – in contrast, during these times though long queues were evident sometimes most of the customers were prepared to wait patiently enough to get to the ATM probably because they were not very pressed for time and being a weekend were more relaxed.- Relaxed times during week days – during the relaxed times the customers still seemed to be in a bit of a hurry and their body language and exasperated facial expressions conveyed that they did not want to wait for another minute.- Relaxed times during weekends – since they were hardly any queues, most customers were relaxed and spent their time leisurely and slowly at the ATM conducting their transactions as revealed by their relaxed facial expressions and easy going body language. Peak times during week days – most customers simply seemed to be relieved when finally served and hurriedly took off to probably attend to their other issues or get back to work.- Peak times during weekends – customers did also express relief at this stage but did not seem to mind too much since they could afford to spend more time, being a weekend. - Relaxed times during week days – being a week day most customers were busy thus they expressed relief when they finally finished their ATM task.- Relaxed times during weekends – weekend customers during the relaxed times were not bothered at all and went to be served by the ATM feeling casual and emerged feeling just as casual indicating no drop in their mood. TESTING OF THE HYPOTHESES Hypothesis 1: E-banking services as a strategy for improving customer satisfaction as adopted by selected banks are perceived as important by customers. Testing of this hypothesis requires focus on all the 3 e-banking delivery channels discussed in this research as customers have different knowledge on the 3 delivery channels which are namely: ATM, internet and tele-banking. The hypothesis is observed to be false with regards to tele-banking, true with regards to ATM banking and partially true; partially false with regards to internet banking. illustrated in Figure15 – ATM banking is perceived to be very important by majority of the respondents (98%). Also, it is seen that importance of ATM banking is not significantly influenced by occupation type (Figure 16; Table 13) or age group (Figure17; Table 14). Thus, from the view point of ATM as an e-banking strategy to improve customer satisfaction in selected banks, the hypothesis is accepted.Figure 19 clearly indicates that majority of the respondents (62%) do not perceive tele-banking to be of importance. This maybe because majority of the respondents (88%) do not even use tele-banking as depicted in Figure 18. Furthermore, tele-banking is considered to be mainly important by the business occupation type (Figure20 and Table 15) indicating that is not widely accepted by the other occupation types rendering it not so important. As no definite trend can be established between age group and importance of tele-banking as explained in Figure 21 and Table16 these analyses will not be used to test the hypothesis. However based on the importance, frequency and relationship between occupation type and tele-banking importance statistics obtained it can safely be said that the hypothesis should be rejected with regards to telebanking, perhaps because it is still somewhat a mystery to most of the bank customers in Botswana. Finally, coming to internet banking, 78% of the respondents define internet banking as important as Figure 22 illustrates. In addition, internet banking is not significantly affected by both occupation type (Figure 23; Table17) and age group (Figure 24; Table 18). This means that regardless of differences in age group and occupation type majority of the respondents maintain uniformity and perceive internet banking to be of importance. On the basis of this, the hypothesis with regards to internet banking can be accepted. Hypothesis 2: Customers prefer electronic banking to manual banking. This is a simple hypothesis to be tested which can be analysed through the results obtained by the achievement of objective 9 as illustrated by Figure 6 and Table 6. The results give a clear-cut indication that e-banking is preferred to manual banking (as 72% prefer e-banking). This may be attributed to the fact that e-banking overall has better benefits, and benefits that are more significant to most customers than manual banking.Also, the qualitative side of the findings shows that customers prefer e-banking to manual banking due to its very valuable benefits such as time-saving, efficiency and convenience.Thus, the result of the testing of this hypothesis shows that indeed customers do prefer e-banking to manual banking and thus the hypothesis is held true and accepted. Hypothesis 3: Customers are generally happy and satisfied regarding e-banking services as a whole provided by selected banks. The testing of this hypothesis is supported by objective 34. The highest rating for any service that a respondent could provide was 7, therefore, anything 3.5 or above is considered as satisfactory from the customers’ perspectives. As Figure 30 and Table indicate 21 indicate all the services provided by banks are considered to be viewed as satisfactory by banks apart from the quality of tele-banking (1.74) and the extent to which the technology used is up-to-date (3.4). Coming back to testing the hypothesis under question, it can be accepted that customers are generally satisfied with e-banking services as a whole provided by selected banks, although, of course, an exception has to be made regarding the extent to which the technology is up-to-date and the quality of tele-banking. These are 2 areas where all the selected banks have to work on to improve the overall rating of their services. Hypothesis 4: There is a positive relationship between the younger age group and preference of electronic banking. Before attempting to test this hypothesis attention should be paid to Table 7 which shows the preference of banking according to age group as well as the percentage of respondents that prefer e-banking in each age group. The results show a gradual but steady decline in the percentage preference of e-banking as the age group increases. This means that the percentage preference for e-banking for the 18 to 25 years age group is greater than the percentage preference for e-banking for the above 60 years age group. This makes it quite clear that yes there is indeed a definite relationship between age group and preference of type of banking. Also, this relationship is positive as it is observed that the younger the age group the greater their preference for electronic banking. Thus, the hypothesis is accepted. Hypothesis 5: The preference for e-banking is greatest for the business occupation type.

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The basis for testing this hypothesis is depicted in Figure 8 and Table 8. The percentage of business respondents preferring e-banking is 84.62% and as the statistics obtained illustrate this is greater than any other occupation type. Thus, the hypothesis can be concurred with and accepted. Hypothesis 6: There is a positive relationship between business occupation type and willingness to pay higher. This hypothesis will be tested based on the statistics contained in Figure 13 and Table 11. It is seen that the percentage of business occupation type that are willing to pay higher for e-banking services (54%) is higher than the other occupation types. Thus, once again this hypothesis can be accepted as it has proven to be true.

1.5. LIMIITATIONS OF THE STUDY In every research undertaken there are inherent limitations that cannot be avoided. This research too faced some such limitations. These include improper time management, high cost of research, the difficulty in obtaining information as required and the unpredictable nature of data collection, i.e. data collected in any form. Information is not easy to obtain. It is expensive to obtain as most sources are usually reluctant to disclose it. Other limitations may or may not occur depending on uncertain circumstances of sampling and non-sampling-errors. These include the extent to which respondents cooperate, support the researcher and express honesty and truthfulness in the data they provide. In some instances it was noted that the interviewees and respondents to the questionnaires did not accurately respond due to lack of enthusiasm or also due to skepticism. This limitation was reduced by discarding the responses which were considered inaccurate based on instinct and fresh respondents were chosen to fill the emptied spaces in the sample. Problems were incurred when designing the questionnaire in order to determine what design would be clear and understandable by the customer as well as highly accurate and precise. Though open-ended question allow respondents to accurately state their feelings they are difficult to analyse. On the other hand close-ended questions are easy to analyse but they may not cover the full range of the respondents’ choice and the respondent may hence pick a choice he/she does not really accept. This limitation was overcome by designing a questionnaire with a combination of both open-ended and closeended questions to obtain accurate responses from customers. The open-ended questions were used to boost the closeended questions by supporting and substantiating them. As electronic banking is so broad and the electronic banking services covered in this research are so broad and not specific it is possible that a customer’s dissatisfaction maybe due to a certain part of e-banking and not the whole of it. For instance a customer may be satisfied with ATM services provided by a bank but not the tele-banking services. This limitation is overcome by looking at each particular case. Another major limitation of this research was the inadequacy of knowledge that most bank customers had about e-banking especially regarding the internet banking and tele-banking delivery channels. It was observed that the people who are not aware of tele-banking or internet banking intricately or even remotely intricately perceived the delivery channel to be not important. This is misleading since the respondent does not have enough knowledge on the subject matter at hand to be able to judge accurately. All research make some assumptions at some stages in order to proceed further. However, not all assumptions made may be right and hence this is another limitation as the incorrect assumptions may lead to testing of hypotheses on the wrong footing and hence incorrect recommendations and conclusions. Also, competition and changes in lifestyle and technologies have changed the face of banking. With the traditional branch based business on the decline, banks are now seeking alternative ways to provide and differentiate their services. Customers, both corporate and retail, are no longer willing to queue in banks, or wait on phones, for the most basic of services. They demand and expect to be able to transact their financial dealings where and when they wish.With the number of businesses and home computers increasing every year, the electronic delivery of banking services is becoming the ideal way for banks to meet their clients’ expectations. Initially provided by only the larger banks to their corporate clients, every bank realizes that the ability to provide electronic banking services is essential to its survival. Banks, as well as deciding the functionality they wish to provide the bank must then choose the type of customer they wish to target and select the technology best suited to them. The general acceptance of the internet makes it the ideal way for banks to reach a wider retail market without the expense of opening and resourcing additional branches. I would say that the key to providing a successful electronic banking system is in listening to the target market, identifying what they want from a system and then selecting the system which provides this functionality through the technology they require. Since software is by its nature a dynamic medium so banks must ensure that the system they purchase or develop is able to adapt, to incorporate new technologies and also new services. Without the flexibility to add new functionality when it is required banks will find the life span of their investment severely curtailed. Some bankers said that if they opt for package solutions they have to sacrifice flexibility and functionality to save both time and money though this is not true.The threat from competitors makes it all the more important for banks to use IT. The entry of new competitors and niche banks does without doubt pressure the banking sector to change. If banking customers are willing to change their behaviour, traditional banks must continue their development of IT, competing or collaborating with non-banks new entrants. Most of the advantages and disadvantages banks face today especially with regards to electronic banking are linked to virtual banks. Basically, the advantages of virtual banking would prove to be the disadvantages faced by traditional banks doing e-banking and vice versa.Also, banks till have a lot of work left to be done in the tele-banking sector as the results indicate. Banks customers in Botswana are not aware of tele-banking, thus efforts should be made to change this situation. RECOMMENDATIONS Differentiation through service and convenience, not just price, is the surest road to profitability. Such differentiation requires both, offline and an online presence. Thus, banks should offer the best mix of online and offline conveniences, plus competitive rates and deliver it all at a price the bank can afford. This will help banks go a step forward to improve their service and thus gain competitive advantage by retaining and attracting their customers.It must be noted that for virtual banks, higher rates are not just an added benefit for customers; they are the fundamental differentiating factor used to attract deposits. Without the high rates, there would be no compelling reason for a customer to choose a virtual bank over a physical bank with online banking services. Analysis shows that by focusing on rates as their key advantage over the competition, virtual banks trap themselves into paying more for deposits. They have to continue paying high rates or they risk losing their clientele – the clientele who tend to be more price-sensitive, as they were attracted by the higher rates in the first place. Traditional banks should take advantage of this weakness apparent in virtual banks by offering clients higher rates if it is conducive to do so bringing virtual banks to the edge. This again will improve the bank’s position. Since growth alone will not solve the problems of virtual banks. Virtual banks cannot eliminate the vulnerabilities of their business model simply by achieving economies of scale, or creating online loan origination systems. Thus it is recommended that virtual banks must create new ways of differentiating their products through service and convenience. Creating compelling services and conveniences will require some offline presence like kiosk-like “micro-branches’, or the right number of strategically located

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brick and mortar branches serving a larger number of customers per branch than traditional competitors.Virtual banks’ high non-interest expenses can be attributed to their scale-tipping marketing costs. Virtual banks have comparatively higher advertising costs not only because they are new, but because they lack branches. Physical presence has marketing value, in that it helps establish a recognizable brand, and can promote an image of convenience and trust. Virtual banks have to spend more on advertising because they lack the marketing value that physical presence brings. Thus, eliminating a physical infrastructure may have the effect of shifting some costs rather than cutting them.I feel that virtual banks’ business model will only take hold after virtual banks gather enough customers to gain economies of scale, and have established their brand enough to cut their marketing budgets. Though, I feel that even a significant drop in non-interest expenses including marketing, would not be enough to pull virtual banks ahead of their offline competitors. My suggestions to improve e-banking include offering a wider range of financial services and products, building physical branches or kiosks are ways to differentiate and improve the value proposition for customers who might otherwise demand better rates. Brick and mortar facilities also provide shelter against loan rate competition, by creating an opportunity for loan officers to build relationships built on service, not just rates. Also, a physical presence boosts marketing efforts. As (Suh; Han, 2000) have correctly said that banks need to protect their investments and cannot afford to purchase products from companies that may not be around to support or enhance their products.Banks must take into account the factors affecting consumer demand for Internet banking, computer ownership, and Internet usage and consumer acceptance of electronic banking. I recommend that banks must pay attention to these questions that customers must be concerned about regarding internet banking:- can the bank offer a wide range of products and services over the web?- can the customer effect funds transfer between accounts?- is it secure to transact over the Web?- can the customer get access to other websites such as shopping malls through the bank?Also, in total I would recommend the selected banks in Botswana to pay more attention to developing internet and tele-banking services as they are not yet thoroughly developed and thus, they can be exploited to the benefit of the bank. Banks should try and publicise the e-banking services it provides through advertisements, publications, though its website, by means of pamphlets/brochures and encouraging bank employees to talk about it with the customers. Also, attention should be paid to different types of customers such as young and old customers, risk-takers and skeptical customers, regular and irregular customers. Banks should conduct researches to obtain information on how best to deal with the different types of customers it serves. 1.6 CONCLUSION Consumer behaviour is changing partly because of less spare time. The way of use of financial services is characterized by individuality, mobility, independence of place and time and flexibility. Financial transactions caused by purchases will more and more be carried out by non- and near- banks. These facts represent big challenges for banks.Banks are using the Internet as a new distribution channel. Singh et al., (2000) state that while the initial impetus for Internet banking has been the low transaction cost, compared to other channels cost advantages are not sufficient anymore to explain the current development of Internet banking. In the medium-term, internet banking offers considerable scope for new services. Also, Singh et al., (2000) feel that the challenge for financial institutions is to find satisfactory answers to business issues of culture and processes and to create a win-win game which both satisfies banks and customers. The problem presented originally is to identify where the delivery channels are lacking in providing satisfaction to customers and what can be done to resolve this problem. After conducting this research it is clearly seen that delivery channels are lacking in meeting the demands of the customer by not making them aware of e-banking and using obsolete or not too up-to-date technology. The problem statement is solved. The hypotheses are tested and show that there is a relationship between age group, occupation type and some aspects of e-banking. All the objectives are achieved. I would thus conclude that banks should drown themselves in all the intricacies regarding e-banking to determine ways that will affect the customers in Botswana and use it to their maximum benefit. At last but not the least is that Banks must adapt to the electronics age. Consumers demand it. Economics drives it. Banks must exploit it.

5.0 BIBLIOGRAPHY
Barto, G.L., (1999), “e-Banking 1999: New Model of Banking Emerges”, Gartner Group. Bons, A., (1999); “Internet Banking: Early Stage Experiences”, University of Rhodel island, Kington, RI. Fonseca, I.,Hickman , M, and Marenzi, o.,( 2001), “The Future of Wholesale Banking: The Portal”, Commercial Lending Review, Boston, summer. Gerrard, P., & Cunningham, J., B., (2003). The diffusion of Internet banking among Singapore consumers. International Journal of Bank Marketing, 21, 16 – 28. Ibbotson, P., & Moran, L., (2003). E-banking and the SME/ bank relationship in Northern Ireland. International Journal of Bank Marketing, 21, 94 – 103. Joseph, M., & Stone, G., (2003). An empirical evaluation of US bank customer perceptions of the impact of technology on service delivery in the banking sector. Journal of Retail and Distribution Management, 31, 190 – 202. Kapulos, A., Ellis, N., & Murphy, W., (2004). The Voice of the Customer in E-banking Relationships. Journal of Customer Behaviour, 3, 27 – 51. Lymperopoulos, C., & Chaniotakis, I.E., (2004). Branch employees’ perceptions towards implications of e-banking in Greece. Journal of Retail and Distribution Management, 32, 302 – 311. Mattila, M., Karjaluoto, H., & Pento, T., (2003). Internet Banking adoption among mature customers: early majority or laggards?. Journal of Services Marketing, 17, 514 – 528. O’Hanlon J and Rocha, M., (1993), “ Electronic Banking for Retail Customers”, Banking Technology Ltd. Rotchanakitumnuai, S., & Speece, M., (2003). Barriers to Internet banking adoption: a qualitative study among corporate customers in Thailand. International Journal of Bank Marketing, 21, 312 – 323. Saatcioglu,K., Stallaert, J.,and Whinston, A.B., (2001), “Design of a Financial Portal”, Communications of the ACM, Volume 44, no.6, June. SCN Education B.V. (2001). Electronic Banking: The Ultimate Guide to Business and Technology of Online Banking, (1st ed.). Germany: Vieweg. Sohail, M.,and Shanmugham, B., (2003), “E-Banking and Customer Preferences in Malaysia: An Empirical Investigation,” Information Sciences, 150(4), pp. 207-217. Solomon, E.H., (1997). Virtual Money, United States of America: Oxford University Press. Singh, S., Chhatwal, S., S., Yahyabhoy, T., M., & Heng, Y., C., (2000). Dynamics of Innovation in E-banking. Retrieved February 15, 2007, from School of Computing, National University of Singapore in the website http://csrc.lse.ac.uk/asp/aspecis/20020136.pdf Suh, B., & Han, I., (2000). Effect of trust on customer acceptance of Internet banking. Retrieved February 15, 2007, from Graduate School of Management, Korea Advanced Institute of Science and Technology in the website htt p://afis.kaist.ac.kr/download/inter_jnl031.pdf Slywotzky,A.J., (2001), “Revving the Engines of Online Finance”, MIT Sloan Management Review, Cambridge, Summer.

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Violano, M. and Van Collie, S., (1992), “Retail Banking Technology: Strategies and Resources that Seize the Competitive Advantage”, John Wiley and Sons, Inc.

Wang, Y.; Wang, Y; Lin, H. and Tang, T. (2003), “Determinants of users acceptance of Internet Banking an Empirical study,” International Journal of Service Industry Management, 14(5),pp-501-519.
Zikmund, W.G., (2000). Business Research Methods, (6th ed.). United States of America: Harcourt College Publishers.

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