THE EFFECT OF E-BANKING SERVICE FAILURE AND RECOVERY ON CUSTOMERS’ LOYALTY IN NIGERIA ABSTRACT The financial industry In Nigeria has witnessed tremendous revolution through the development and introduction of the electronic banking technology. Being a newly introduced product in the country's financial system and with associated benefits, all hands are on deck to make it achieve its purpose. Meanwhile, in an attempt of achieving in its implementation, failures have being witnessed and the impact of such failures on customer service satisfaction and loyalty has not being a thing of concerns to the service providers, rather, the successful implementation of the new technology. Questionnaires were used to solicit responses from the sample of our target population through simple random sampling in a bid to meet our research objectives. The data collected were presented using tables and percentage analysis and therefore analysed. The Z-test statistic was used for testing our hypothesis. The findings of this study shows that acceptance of electronic banking services has effect on customers. Electronic banking service failure and recovery has influence on customer's loyalty and that electronic banking has improved the bank's productivity To this end, it is recommended that the bank information technology training programme should be encouraged among staff; necessary legal codes should be established in order to enhance growth of e-banking in Nigeria. TABLE OF CONTENT CHAPTER ONE: INTRODUCTION 1.1 Background of Study - - - 1.2 Statement of Research Problems - - 1.3 Objectives - - - - - 1.4 Research Hypothesis - - - - 1.5 Scope of Study - - - - 1.6 Significance of the Study - 1.7 Limitations of the Study - - - Reference - - - - - CHAPTER TWO: LITERATURE REVIEW 2.1 Literature Review - - - - 2.2 Banking in Nigeria - 2.3 Electronic Banking - - 2.3.1 Consumer’s Attitude towards the Adoption of Electronic Banking - - - - 2.3.2 Natural culture/Societal Beliefs of Nigerians on Electronic Banking Service - - 2.3.3 Difference between Traditional Banking and Electronic Banking Service - 2.4 Service Failure and Recovery - - 2.5 Emotional Response to Service Failure - 2.6 Customer Satisfaction - - - 2.7 Customer Loyalty - - - - 2.7.1 Effect of Service Failure and Recovery on Customer’s Loyalty in Traditional Service and Electronic Service 2.8 Summary of Literature Reviewed - Reference - - - - CHAPTER THREE: RESEARCH METHODOLOGY 3.1 Methodology - 3.2 Research Design - - - 3.2.1 Population of study - - - - 3.2.2 Sampling Technique - - - 3.2.3 Sample Size - - - 3.3 Source of Data - - 3.4 Data Collection Instrument - - - - 3.5 Administration and Collection of Questionnaire 3.6 Method of Data Presentation and Analysis References - - - - - CHAPTER FOUR: DATA PRESENTATION AND ANALYSIS 4.1 Introduction - - 4.2 Respondents' Bio-Data and Classification 4.3 Analysis of Responses to Administered Questionnaires - 4.4 Hypothesis Testing - - - 4.5 Discussion of Findings - References - - - - - CHAPTER FIVE: SUMMARY, FINDINGS, CONCLUSION AND RECOMMENDATIONS 5.1 Introduction - - - - 5.2 Summary - - - 5.3 Findings - - - - - 5.4 Conclusion - - - - - 5.5 Recommendations - Bibliography - - - - - - Appendix - - - - - - CHAPTER ONE INTRODUCTION 1.1 BACKGROUND TO THE STUDY Today's business environment is extremely dynamic and has experienced rapid changes as a result of technological improvement. Increased awareness now demands banks to serve their customers electronically. There have also been success stories from developed nations on using new technology, particularly the convenience it brings to both users and the banks, such as increased organization's operational efficiency and increased returns on shareholder's investment thereby contributing to national economy and social growth. These successes are encouraging governments and companies in the developing countries including Nigeria, to key into the new technology in such a way that will enhance the deployment and use of electronic business in their respective countries. With the help of telecommunication systems and technologies, banks have the chance of performing interactive retail banking, reach out to customers and provide them with not only general information about its services but also transactions which is of concern to customers themselves. Electronic banking technology has been seen to be a major breakthrough for financial institutions around the world for its many advantages among which are; providing convenience to customers through online banking; that is; banking anywhere at any time without being physically present at the bank (elimination of face to face banking), increased return on investment for shareholders; through service efficiency, charges or commissions on electronic banking services and reduction of overheads from wages and salaries, stationeries and waste, which will be taken care of by the electronic banking technology. With the advantages of convenience, speed, efficiency and economical, derivable from electronic banking technology, Nigeria banks are anxious to invest in the new banking technology, take advantage to penetrate the market and gain competitive edge. However, Nigerian bank are confident that the benefit to be derived from electronic banking will exceed that of old banking system in the near future (Laforet & Li, 2005). Therefore, in the attempt of banks to satisfy and retain customers, there are bound to be challenges in delivering electronic banking services in Nigeria, considering the peculiarities or factors associated with developing nations of which Nigeria is one. These include epileptic power supply, slow technological advancement, poor infrastructure and many others. The challenges could also arise as a result of human mistakes or technological errors which may include but not limited to: unavailability of network system leading to network failures, problems associated with servers or gateway, unqualified personnel and natural occurrences like storms and cyclone, producing resultant effect of service failure. The effort by banks to satisfy and gain customer's loyalty may be dashed with the service failure occurrence, which could be very detrimental to bank's image, and it is seen to be a critical moment of truth for banks. Furthermore, service failure experience may also be critical moments for customers, many of whom will be unsatisfied and may exhibit negative emotional response to the failures by taking an instant decision on whether to continue their relationship or switch to another service provider, (Smith & Bolton, 2002). While successful speedy recovery from the failure can mean the difference between customer retention and defection. Swift response to service failure is likely to Increase customer's confidence about an organisation, as well as influence their overall satisfaction. As a result, customer's loyalty IS very essential to organisation performance In terms of income and overall profitability. Therefore, having a good understanding of the impact of service failure on customers' loyalty is important and necessary for the design of effective service delivery and recovery systems. This may include cost of investment in delivering stable and reliable service and at the same time providing superior recovery when problems occur (Sousa & Voss, 2009). 1.2 STATEMENT OF RESEARCH PROBLEMS Safety and security of money are no longer the major concern of bank customers only, but also efficient fast easy and flexible access to money as well as convenient services that meet particular needs and support their business goals. Globalized competition has stressed the strategic importance of quality and satisfaction. Customer's loyalty results from the battle for winning customer's preferences while maintains sustainable competitive edge. Improvement In electronic banking service is thus vital to banks in terms of achieving customer's loyalty and retention while maintaining high competitive advantage in e-businesses. The foregoing prompts research investigation into the e-banking services, resultant effects of its failure and recovery on customer's loyalty. Hence, the following questions have been logically structured to guide the study: What has been the customer’s view in acceptance of electronic banking. Do emotional responses demonstrated by customers at the time of electronic banking service failure influence their overall satisfaction judgment? Do customer's satisfaction with quick recovery process of electronic banking failure has a subsequent effect on their loyalty? Has the introduction of electronic banking services enhanced the overall productivity of the bank? 1.3 OBJECTIVES OF STUDY This research sought to evaluate the roles and contributions of electronic banking services to customers in Nigeria. In essence, this study would: Investigate customer's view in the acceptance of electronic banking services. Determine whether the responses demonstrated by customers at the time of electronic banking service failure has influence on customer's loyalty. Ascertain whether electronic banking services recovery has influence on customer's loyalty during service failure. Determine whether electronic banking services has enhance the bank's productivity. 1.4 RESEARCH HYPOTHESIS The following were the tentative statement tested in the course of this study. Hypothesis A H0: Acceptance of electronic banking services has no effect on customers. H1: Acceptance of electronic banking services has effect on customers. Hypothesis B H0: Electronic banking service failure has no impact on customer’s loyalty. H1: Electronic banking service failure has impact on customer’s loyalty. Hypothesis C Ho: Electronic banking service failure recovery does not inf1uence customer's loyalty. H1: Electronic banking service failure recovery influences customer's loyalty. Hypothesis D H0: Electronic banking service has not improved the banks productivity. H1: Electronic banking service has improved the banks productivity. 1.5 SCOPE OF STUDY The scope of this research project will be limited to electronic banking among other electronic commerce activities available to internet users: such as shopping, banking, investing and online electronic payment of internet services. This will contribute better understanding of customer's expectations and what they considered as service failure; hence provide a clear insight to customers' expectation. 1.6 SIGNIFICANCE OF THE STUDY This study is intended to provide enhanced understanding of the adoption and impact of electronic banking services in Nigeria, subsequently aid the banks into more efficient management and decision-making m the delivery of their e-services. The research will also update the literature with the perforn1ance of electronic banking system thus serving as an invaluable tool for students, academician, institution, corporate managers and individuals who want to know more about electronic banking trends especially in Nigeria. 1.7 LIMITATIONS OF THE STUDY It is very difficult to ascertain appropriate sample size for carrying out a research work of this nature. The empirical investigations are mostly based on result from few service providers in the industry. However critical subsequent effort can be made to expand the sample range so that the relevant research might be more representative. REFERENCES Agbonifoh, B. A., & Yomere, G. O. (1999). Research Methodology in the social science and education. Benin City: Uniben Press. Fellenstein, C., & Wood, R. (2000). Exploring e-commerce, global e-business and e-societies. New Jersey: Prentice Hall Books. Laforet, S., & Li, X. (2005). Consumer's attitude towards online and mobile banking in China. Journal of International Marketing, 23(5).
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