Effect of Information Technology free essay sample

EFFECTS OF INFORMATION TECHNOLOGY ON CUSTOMERS’ SATISFACTION IN NIGERIAN FINANCIAL INSTITUTIONS. By ERNEST E. INYANG, A. D. O. OTONKUE AND JUDE U. BASSEY ABSTRACT Information technology may be considered to be the harnessing of electronic technology in its various forms to improve the operations and profitability of the business as a whole. Information Technology provides significant improvements with facilities such as word processing (improving secretarial, typing and some reprographic services) communication facilities in the form of electronic mail, databases in relation to filing and data retrieval. Such advances improves business efficiency eliminating unnecessary delays in communication between different parts of the organization and dealing with routine filing and correspondence. KEY WORD: INFORMATION TECHNOLOGY, CUSTOMER’S SATISFACTION INTRODUCTION This research is the lack of investigation on the effects of information technology in delivering service to customers, especially in the financial services sector. Hence, this research work hinges on the effect of an information technology enabled electronic delivery channel on overall customer satisfaction. This is the assumption that higher customer satisfaction leads to sustainable revenue growth and profitability. This claims is based on the arguments provided in Heskett etal (1997) that profit and growth are estimated primarily by customer loyalty and loyalty is a direct result of customer satisfaction. This research work is undertaken with a view to finding out whether good performance of Nigerian financial institutions is largely due to implementation of information technology and also to improve upon the existing marketing activities of Nigerian financial institutions, so as to ave high customers’ satisfaction. For the purpose of this study the hypothesis tested is: Ho:Information Technology has no positive impact on customers’ satisfaction in Nigerian financial institution. Hi:Information Technology has positive impact on customers’ satisfaction in Nigerian financial institutions. This research work is significant in the sense that it would help to identify ways of improving the services of Nigerian financial institutions. It may also serve as a basis on which future research on information technology and customer satisfaction may be based. REVIEW OF SOME RELATION LITERATURE According to Kinshnan etal (1999), financial service companies have products such as current and servings accounts and in some cases may also offer insurance policies. An interesting aspect of financial service companies is that they do not fully fit into the mould of full service industries that offer tangible products and full service industries. The notion of quality in financial service firms is quite different from that in manufacturing companies. The nature of the financial service industry is such that its products are mostly intangible for instance, in an investment company, the product delivered is not the stock certificate, but the investment it represents, as well as the peripheral services such as online account services and accurate periodic reports. Since customers do not view the actual product as a full product, the service accompanying the product is very important in consequence, in modeling overall customer satisfaction for financial service companies, it is important to include both product and service attributes. Prior research has identified specific attributes to quality that are linked to customer satisfaction in both manufacturing and service industries (Garvin 1988, Zeithamal etal, 1990). Research on service quality has generally investigated the quality attributes of certain service encounters (Zeithamal etal, 1990). There is a paucity of research and guidance in understanding the drivers of overall customer satisfaction at the firm level. This is true especially for multi-channel firms that are increasingly becoming the norm in the financial services sector Frei (etal, 1995). Roth and Jackson (1995), in one of the few rigorous empirical studies on the financial service industry identified the determinants of service quality in the banking industry. The analysis indicated that the quality of customer interface positively influences service quality. However, the study used a composite measure for the quality of customer interface that includes various factors such as responsiveness to customer inquiries, accuracy of account statements, timeliness of mailing account statements, customer complaints and processing errors. According to Kinshnan etal (1999), in the financial services business, the notion of customer interface is multifaceted and may vary, depending upon the channel of service delivery. While all the service encounters mostly involve the customer in one way or the other the nature of personal interactions with customers at branches differs from that of IT enabled automated delivery channels. There is a need for a deeper understanding of this distinction for firms to leverage overall customer satisfaction. Different components of the customer interface may have varying impacts on satisfaction across the customer population. METHODOLOGY The various information generated in the course of this research were obtained through participatory observations of twenty–four selected financial institutions and through questionnaires administered to the management and the customers of the selected financial institutions. The set of questions asked from the respondents were such that will elicit more information concerning the institutions internal operation especially in relation to customers’ satisfaction with the operations of the institutions. In the course of this research work, a good number of respondents randomly selected were interviewed. The information targeted by the research work include the following: a. Sourcing of the institutions information technology equipment such as the computer systems and the peripherals. b. Effectiveness of the institution’s channels of distribution. c. Satisfaction of the customers in the operations of the financial institution. Analysis of variance (ANOVA) and correlation coefficient are used to analyze the data. Analysis of variance technique makes use of the F-formula and drastically reduces computational labour involved in many samples. The ANOVA procedure is based on the mathematical theory that the independent sample data can be made to yield two independent estimates of the population variance, namely, within group variance estimate and between group variance estimate. The ANOVA formula for the computed F–ratio is: F = MSSB/MSSW at a = 0. 05 and n – 1, m-1 degrees of freedom. Where: MSSB is the mean squares of between groups MSSW is the mean squares of within groups Decision rule:- If the calculated F – value is less than the tabulated (critical) value then HO is accepted. And if the calculated value then the difference is significant and H0 is rejected. The surveyed customers were given a list of fire effects on lickert rating as follows:- 1. Very good 4 points 2. Good3 points 3. Average or fair2 points 4. Poor or Bad1 p0int 5. No Answer0 point Six factors were considered in the analysis. These are: a. Quality of computerization. (QCOMPUT) b. Quality of institutions services vis- a – vis the use of computing facilities (QSVC). C. Impact of Information Technology on customers satisfaction (ITIMPACT). d. Level of computerization (IT LEVEL). e. Effects of computerization on customers’ waiting time (WAITIME). f. Overall customers’ satisfaction with financial institutions services (OSATIS). DATA ANALYSIS AND DISCUSSION OF RESULTS DATA ANALYSIS The averaged responses from the selected financial institutions on the factors are as shown in Table 1 DISCUSSION OF RESULTS The ANOVA table analyses the variability of the customers’ satisfaction. The F – column displays the ratio of the mean square for the regression to the mean square error of the residuals. This is called the F – ratio. A large value shows that the regression may be statically significant. The ratio is approximately 14. 52. This shows that the result is statistically significant. The correlation coefficient expresses the strength of the relationship on a search ranging from -1 to +1. a positive value close to +1 indicates a strong positive relationship in which an increase in one variable implies an increase in the value of the second variable. A negative correlation indicates that an increase in the first variable signals a decrease in the second variable. From the correlation Table 1, there is a positive correlation between the level of information technology (column 6) and overall customer satisfaction (column 4). In terms of Hypothesis Testing, the will hypothesis â€Å"there is no positive relationship between level of Information Technology and overall customer satisfaction is rejected. Hence, the level of information technology has a positive impact on customer’s satisfaction in Nigerian financial institutions. The results obtained from the response show that the introductions of computing facilities was greatly improved the services of financial institutions. There was 10% response for effect of IT on reduced waiting time. For quality of service vis–a–vis computerization there were 70. % responses for High Quality, 25% for Good Quality and 4. 2% for No Answer. This shows that the Quality of financial services with respect to computerization is High with respect to Quality of computerization there were 50% responses for High Quality, 45. 8% for Good Quality and 4. 2% for Average. This shows that the Quality of computerization ranges between High Quality and Good Quali ty not all the financial institutions have attained High Quality of computerization. Based on the level of Information Technology implementation, there were 20. 8% responses for High level, 75. % for Average level and 4. 2% for No answer. The figures show that the financial institutions have just attained the average level of Information Technology Implementation on the impact of Information Technology on customers’ satisfaction, there were 100% responses for positive impact. This shows that Information Technology has positive impact on customer’s satisfaction in financial institutions. It is also discovered that all the financial institutions considered responded that their areas of computer applications are word processing, payroll processing and communications. CONCLUSION AND RECOMMENDATIONS The world is dynamic. Also, the nature of needs and wants of the generality of consumers keep on changing. It goes without saying that any organization intending to maintain a good level of profitability and improved performance has to be duly prepared for all these changes and cope favorably with them. This calls for effective implementation of appropriate information technology to accommodate these changes with minimum stress. Though it is recognized that Information Technology would certainly cost a lot of capital, it would be a good and productive investment. Computers and telecommunication systems have become very important as delivery system and productivity tools of electronic data and information. Nigeria financial institutions have now realized that financial services to day require prompt delivery of services, efficiency and the ability of customers to be served in any of their branches in any part of the country, without any encumbrances. As a result of these, financial institutions are embarking on the use of computer applications software, internet facilities that can help them to provide efficient, comprehensive and nationwide services to their customers. And these have resulted in an overwhelming customers satisfaction. To function effectively and competitively, the financial institutions should: a. Lay emphasis and rely heavily on Information Technology b. Introduce a sound quality management programme that would ensure that Information Technology implementation Products meet the requirements of Nigerians. c. Create an awareness of IT opportunities into the business planning process. REFERENCES Berk K. N. Carey P. (2000). â€Å"Data Analysis with Microsoft Excel. † USA: Duxbury Thomas Learning Centre. Bowen, J. W Hedges, R. B. (1993). â€Å"Increasing service quality in Retail Banking. † Retail Banking Journal 15(3). pp. 21, 28. Fornel C. , Ryan, M. J. West Brook R. A. (1999). â€Å"Customer satisfaction: The key to Retention MOBIBUS† 9(3), pp 14-18. Grifell–Tatje, E. Lovell, CAK (1999): â€Å"Profits and Productivity†, Management Science, vol 45, No 9 Sept. 1999, pp. 1177 – 1193. Harker, P. T. Zenious (1999) â€Å"Performance of Financial Institutions†. Management Science vol. 45, No. 9 Sept. 1999. Krishna K. (2009): â€Å"Trade Investment and Growth†. Nexus, analysis and prognosis. Roth and Jackson (1995): Strategic Determinant of Service Quality and performance: Evidence from the Banking Industry; management science 41(11), pp 1720 – 1733 Soteriou, A. (1999): â€Å"Operations Quality and Profitability in the Provision of Banking Services. † Management Science 49(9), pp. 1221 – 1238. TABLE 1 AVERAGE RESPONSES OF RESPONDENTS |FIN INSTI |WAITIME |Gcompt |gsvc |OSATIS |ITIMPACT |TOTAL |ITLEVEL | |1 |5 |4 |4 |3 |3. |19. 6 |39. 2 | |2 |3. 6 |4 |4 |3. 6 |5 |20. 2 |4 | |3 |3 |3 |3. 6 |4 |4 |17. 6 |3 | |4 |5 |3. 6 |3. 6 |4 |5 |21. 2 |3. 6 | |5 |5 |4 |4 |3. 6 |4. 3 |20. |4 | |6 |3. 6 |5 |4. 3 |4. 3 |4 |21. 2 |3. 3 | |7 |4 |3. 6 |5 |5 |4. 3 |21. 9 |5 | |8 |3 |4 |4 |4. 3 |4 |19. 3 |4 | |9 |3. 6 |5 |4 |4 |4. 3 |20. |4 | |10 |5 |5 |5 |5 |4 |24 |5 | |11 |4 |4 |5 |5 |4 |22 |4 | |12 |4 |5 |5 |4 |5 |23 |5 | |13 |3 |4 |3 |4 |4 |18 |5 | |14 |3. |4 |3. 6 |3 |5 |18. 9 |4. 3 | |15 |3. 6 |4 |5 |5 |5 |22. 6 |5 | |16 |4 |3. 6 |4. 3 |4 |4 |19. 9 |3. 6 | |17 |5 |4 |4 |4 |4 |21 |4 | |18 |3. |4. 3 |4 |4. 3 |4 |20. 2 |4. 3 | |19 |4 |3. 6 |3. 6 |4 |4. 6 |19. 8 |4 | |20 |3 |3. 6 |4 |4 |5 |19. 6 |3. 6 | |21 |5 |4 |4 |4. 6 |5 |22. |3. 6 | |22 |5 |4 |4 |3. 6 |4. 3 |20. 9 |4 | |23 |4 |3 |4 |4 |4 |19 |4 | |24 |3. 6 |4 |4 |5 |4 |20. 6 |5 | The tabulated or critical value of F – using the F – table is as shown in the ANOVA table. ANOVA: Single Factor |Source of variation |SS |DF |MS |F |P-Value |F-critical | |Between Groups: |5602. 5023 |6 |933. 75038 |1452. 132 |32. 18E-137 |2. 1553035 | |Within Groups: |103. 52625 |161 |0. 6430202 | | | | |Total |5706. 285 |167 | | | | | Decision: The calculated F – value is 1452. 132. the critical F-value is 2. 15. Since the calculated F – value is greater than the tabulated F-value. Ho is rejected and H1 is accepted which implies that information technology has positive impact on customers satisfaction in Nigerian financial institution. THE CORRELATION COEFFICIENT TABLE IS AS SHOWN BELOW |Column 1 |Column 2 |Column 3 |Column 4 |Column 5 |Column 6 | |Column 1 |1 | | | | | | |Column 2 |0. 116777 |1 | | | | | |Column 3 |0. 197878 |0. 369635 |1 | | | | |Column 4 |-0. 6824 |0. 130663 |0. 580463 |1 | | | |Column 5 |-0. 04909 |0. 006001 |0. 037217 |-0. 08049 |1 | | |Column 6 |-0. 09995 |0. 315265 |0. 373817 |0. 465422 |0. 128972 |1 | KEY: Column 1 – WAITIME; Column 2 – QCOMPT; Column 3 – QSVC; Column 4 – OSATIS; Column 5 – ITIMPACT, Column 6 – ITLEVEL