Abstract:
ABSTRACT
The emergence of Information and Communication Technology (ICT) in the banking sector
provides a competitive advantage for banks by lowering operational cost and the best satisfaction
needs for customers. Operations of banks therefore, have evolved from the exchange of cash
cheques and other negotiable instruments to the use of digital applications for transactions.
Through this technology, banks are now able to offer convenience services to their customers.
The study seeks to examine digital banking innovation and explore competition with selected
universal banks namely; GCB Bank, Agricultural Development Bank, ECOBANK, Standard
Chartered Bank and the Guarantee Trust Bank. The study provided analysis on the level of
digital banking technology usage, customer perception of digital banking, and the influence of
digital banking on customer attraction, satisfaction and retention. The results on digital banking
usage show that there are multiplicity of electronic banking services and products that banks
customers use with ATM being the most popular and widely used. On the perception of
respondents regarding digital banking services of their banks, customers perceived digital
banking as a platform that enhance quality banking, eliminate long queue at bank and an easier
and cheaper way of banking. It also satisfies banking needs, serve as convenient means of
performing financial transaction and offer secured services among others. The study also
explored the effect of digital innovation on competitiveness of banks. Customer attraction,
customer satisfaction and customer retention were used as proxy measure of competitiveness.
Results of the correlation analysis indicate that digital innovation is positively and significantly
correlated with customer attraction and customer satisfaction but not significantly correlated with
customer retention. Following the correlation analysis, regression analysis was performed to find
out the digital innovation on customer attraction, customer satisfaction and customer retention.
The results of the regression analysis as presented show that digital innovation has positive and
significant effect on customer attraction and then on customer satisfaction. Digital innovation
therefore has no direct effect on customer retention. Hence, the study recommends the need for
banks to recognized and exploit the innovation potentials of digital banking applications in order
to improve customer value, enhance customer attraction and satisfaction as well as increase
banks’ profitability as a whole.
