Effective implementation of e-banking and its impact on bank perfrmance : bank of Botswana the case of First National Bank or Botswana

Abstract

E-banking, which entails carrying out banking transactions without visiting a bank (brick and mortal), is now globally the norm of banking practice and enables banks to improve service delivery; attract customers; provide services at low cost; and stay competitive. The study assessed the effectiveness of implementation of electronic banking (e-banking) at First National Bank Botswana (FNBB). The objectives of the study were: to evaluate the effectiveness of e-banking implementation against management work process at FNBB; to examine factors influencing its implementation with consequences for bank performance; to assess the impact of e-banking on bank performance; as well as to recommend measures for overcoming constraints to effective e-banking implementation and increase its adoption by FNBB customers. A quantitative research design with a survey questionnaire as the main research instrument of data collection was used to collect data from FNBB managers and individual customers. The data was analysed through a exploratory data analysis technique which helped to summarize and present the data. The data was presented through tables, charts and descriptions. The major statistical tool of analysis was SPSS. The findings indicated five dynamics or forces of change prompting implementation of e-banking at FNBB. These are external political and economic factors facilitating ease entry into the profitable market and inducing competitive rivalry; the need to reposition the bank and gain competitive advantage; the foreseeable inability of the ' conventional branch banking model' to help FNBB use it as a suitable means of extending banking to the estimated 57% of 'potential unbanked customers'; the small size of the market which was currently over-banked and not being able to accommodate many full-service commercial banks; and globalization compelling banks to adopt e-banking services to enhance high service delivery that transcended customer satisfaction. The findings of the study show that implementation of e-banking was ineffective and has resulted in FNBB not realising the benefits and outcomes. This in turn has resulted in low adoption of e-banking products by customers. The failure to effectively use the models and critical success factors of best practice in change management, has contributed to ineffective implementation. The seven most important factors that have contributed to ineffective implementation of e-banking were determined. These are: the lack of an effective change management programme for e-banking; security issues; the lack of a comprehensive customer education campaign; the use of the traditional way of marketing e-banking; bank staff that is not conversant with e-banking product features to market it effectively; the lack of structures in retail banking halls for staff to meet and help customers; the lack of knowledge on e-banking products and services offered; trusting manual banking more than e-banking; and feeling more secure to use manual banking. In order to overcome constraints to effective e-banking implementation and increase its adoption by FNBB customers currently and in future, so as to realise optimum benefits and goals and objectives at FNBB, the following measures are recommended to FNBB management: make use of external experts such as project management and change management consultants to support implementation efforts; undertake a market survey with a view to segment for the e-banking products, infuse their views on implementation, assess the level of awareness and readiness to use these products; develop a customer education campaign prior to implementation; strengthen operations management capacity in terms of technological capability and infrastructure; and form a task-force for addressing all issues related to e-banking. Particular attention should be paid to challenges and lessons learnt and to prepare a report to management. Further investigation should also help to clarify why only three e-banking products - ATM's, point of sale and mobile phone banking are often used while the other four - Internet, card-less (e-wallet), on-line payments and on-line banking are least used.