CASE STUDY STANDARD CHARTERED BANK (UGANDA) LIMITED MBARARA BRANCH
The introduction of customer friendly service by the bank such as m-banking, internet banking, Automated Teller Machines among others as a way of delivering convenience service to customer has become common in the recent year as a way of gaining competitive advantage and maintaining customer loyalty and increase share in order to improve the financial position of a company. The study main objectives were; to find out m-banking technology used at Standard Chartered Bank and to examine the factors influencing the adoption of mobile banking services at the Standard Chartered Bank using a case study of Mbarara Branch, in and To establish the relationship between m-banking and financial performance of Standard Chartered Bank.
The methods used to collect data basically through self administered questionnaires both structured and semi-structure, interviews and observation. The Data collected was analyzed qualitatively and quantitatively. The study was also backed by literature review on m-banking and banking sector in Uganda. The study findings indicate that one need to register with bank and maintain an account with both the bank and telecom company such as MTN. The services offer by standard chartered bank (Uganda) include; Account Balance Enquiry, Fund Transfer between Accounts, Bills payment (utility bills) among others. The introduction of m-banking in Uganda has contributed to customer loyalty, convenience and also has influenced the financial performance of the banking sector in Uganda positively. Therefore there is a positive relationship between m-banking and financial performance of a bank.
Conclusion and recommendation were made towards strengthening the contribution of m-banking to financial performance of the banking sector in Uganda. the researcher recommends that; The bank should conduct research on other possible m-banking packages, Free training and refreshing training should be provided to staff of the bank and if possible to customers and The bank should provide toll free line to enable customers who want to use the system and also in case of any problem that deserve attention of the bank.
This chapter covers the background of the study, statement of the problem, purpose of the study, objectives of the study, research questions, scope of the study and the significance/ justification of the study.
Recent innovations in telecommunications have enabled the launch of new access methods for banking services; one of these is mobile banking; whereby a customer interacts with a bank via mobile phone (Barnes & Corbitt, 2003). In India 617 million mobile subscribers far exceed fixed line subscribers because of better mobile infrastructure (TRAI, 2010). The banks in India are racing to use this latest technology to reduce their operational costs and increase customer base (Peterson, 2009). Mobile Banking refers to provision and a ailment of banking and financial services with the help of mobile telecommunication devices. The scope of offered services may include facilities to conduct bank transactions, to administer accounts and to access customized information (Tiwari & Buse, 2007).After the launch of mobile banking in India, mobile banking transactions have seen some growth. What attracts customers to mobile banking is the round the clock availability and ease of transactions. But mobile banking still has a long way to go as majority of customers prefer banking in the traditional ways (Ashta, 2010; Wang,Wang, Lin & Tang, 2003). Key question is why customers are not adopting mobile banking. Various factors may influence customers’ adoption. It is argued that adoption will not take place unless customers perceive the service to be useful (Ali & Bharadwaj, 2010). Understanding the symptoms of the problem of why there is a low rate of mobile banking usage along with understanding of preferred mobile banking services, could help banks to come up with a right solution to improve their mobile banking service as well as to increase the rate of Mobile banking usage.
Mobile banking offers a potential solution for the millions of people in emerging markets that have access to a cell phone, yet remain excluded from the financial mainstream. It can make basic financial services more accessible by minimizing time and distance to the nearest retail bank branches (CGAP, 2006) as well as reducing the bank‘s own overheads and transaction related costs. According to the International Telecommunication Union (ITU), over 90% of South Africans use a mobile phone (ITU, 2009), while only 40% have a bank account (African Executive, 2008). Mobile banking presents an opportunity for financial institutions to extend banking services to new customers (Lee, Lee and Kim, 2007).
In recent years, banks, payment system providers, and mobile operators have begun experimenting with branchless banking models which reduce costs by taking small-value
transactions out of banking halls and into local retail shops, where agents such as airtime
vendors, gas stations, and shopkeepers, register new accounts, accept client deposits, process transfers, and issue withdrawals using a client’s mobile phone to communicate transaction information back to the telecommunication provider or bank. This enables clients to send and receive electronic money wherever they have cell coverage. They need to visit a retail agent only for transactions that involve depositing or withdrawing cash (Salzaman, Palen & Harper, 2001).
Stiff competition in Uganda’s financial sector is forcing institutions into adopting new forms of technology to reduce the costs of doing business and widen customer outreach for enhanced profitability. Banking services has become usual in recent years as a way of maintaining customer loyalty and increase market share. (Africa-Uganda- Business-Travel-Guide.com). the new innovative systems (such as mobile banking) are especially targeting the earning but unbanked population in rural and hard to reach areas.
According to Bank of Uganda (BoU)’s 2012 Annual Supervision Report, annual bank deposits have grown over the last three years though at a sluggish rate, an indication that more Ugandans are slowly taking on banking. Last year, bank deposits grew by 17.5% to Ushs 10.5trillion up from Ushs 8.9trillion in 2011. In 2010, bank deposits grew by 42.5% to Ushs 8.02% up from 5.63% in 2009. The same report notes that in 2012, Mobile Money (MM) transfer services continued to register strong growth.
The number of registered customers increased from 2.9 million in 2011 to 8.9 million in 2012, while the amount transferred by customers rose from Ushs3.7 trillion to Ushs.11.7 trillion over the same period,” reads a BoU report. With 8.9 million Ugandans holding a Mobile Money account in just four years, yet about 3.5 million Ugandans hold a bank account, is just enough to tell that MM platform has taken Uganda’s banking sector by storm. Pioneered by MTN Uganda in 2009, the MM transfer product has been embraced by all major telecom companies including Airtel and Warid, Uganda Telecom (UTL) and Orange. Housing Finance Bank also offers this service under their M-cash with Ezee Money being the newest entrant. So, what explains the massive uptake of MM services compared to banking, yet commercial banking operations in Uganda started in 1906?
Nasikye (2009) Mobile banking (m-banking) involves the use of a mobile phone or another mobile device to undertake financial transaction linked to a client account. According to Owen m-banking refers to provision and availing of banking and financial service with the help of mobile telecommunication device. Services include performing balance checks, account transactions, payments, credit applications and other banking transactions through a mobile device such as a mobile phone which is most used in developing countries or Personal Digital Assistant (PDA).
Financial performance refers to the financial soundness where depositors’ funds are safe in a stable banking system. (BOU, 2002)The financial soundness of a financial institution may be strong or unsatisfactory varying from one bank to another. Mugembe (2008) external factors such as deregulation: lack of information among bank customers, homogeneity of the bank business do cause bank failure. The activities undertaken in m-banking contribute to the financial soundness of the commercial banks in Uganda. Some useful measures of financial performance are coined into what is refer to as CAMELS (Capital adequacy, Asset quality, Management, Earning, Liquidity and Sensitivity analysis) which guide the banking sector Madhyam, Stichele (2010).
The technology innovations have influenced the banking sector in one way or another. Kassim 2005 explains that the technological revolution has produced new development in the banking industry. According to Oryiek (2008) the first ATM in Uganda was brought by SCI for Standard Chartered Bank in 1997 and SCI has been an active catalyst in the rapid growth and development of electronic banking in the country hence the introduction of m-banking few years ago and this explains why Standard Chartered Bank is ranked as one of the performing banks in Uganda.
Mobile banking has transformed the way people in the developing world transfer money and now it is poised to offer more sophisticated banking services which could make a real difference to people’s lives. This type of banking can offer a wide variety of services
ranging from account information, which has to do with alerting the customers on the updates and transactions on their account through their mobile phones. People receive short messages on their phones informing them of their immediate transactions in their bank accounts. Also, they help in payments (utility bills), deposits, withdrawals, transfers, purchase airtime, request bank statements and perform 13 other crucial banking tasks, all in real time over their mobile phones.
Banks including Standard Chartered Bank (Uganda) (Buyer and lenders, 2001) have largely implemented service delivery technology as a way of augmenting the services traditionally provided by personnel, Howcraft, Bacett, (1996). According to IDG News Service from Sep, 2008 Equity bank pioneered the first m-banking technology in the world to reach out to the unbanked, and for championed the empowerment of ordinary people through inclusive finance. Nasikye (2009) the m-banking technology is similar to that of MTN (mobile money) Warid (warid-pesa), Airtel money, Safaricom’s MPESA (in Kenya), among others that has made banks uncomfortable given the shift of most transactions from banks to mobile phone kiosks
Standard Chartered Uganda, whose official name is Standard Chartered Bank (Uganda) Limited, but is often referred to as Stanchart Uganda, is a commercial bank in Uganda which is foreign (subsidiary of Standard Bank Group, UK) Madhyam, Myriam (2010). As of December 2011[update], it was the second largest commercial bank in Uganda, by assets, with an estimated asset base of US$792.4 million, behind Stanbic 2011 the bank. Shareholders’ Equity stood at approximately US$92.7 million. At that time, Stanchart owned an estimated 15% of total bank assets in the country and maintained about 2.6% of all bank branches in Uganda. Stanchart Uganda is a 100% subsidiary of the Standard Chartered Bank Group, an International financial services conglomerate, headquartered in London in the United Kingdom, with operations in more than seventy countries and a network of over 1,700 branches, employing in excess of 73,000 people.
In the banking sector in our world today, mobile banking is a fast growing issue. This has come to improve the level of banking system and can be described as the provision of banking or financial services with the aid of mobile telecommunication devices. M-banking has come to stay, providing its customers with an expedient way of banking. This is not however without challenges, but they are minimal and can be handled without much stress.
Mobile banking has been one of the fastest growing markets in Uganda and is still growing at a period at a rapid pace following the addition of few telecommunication players who have attracted dynamic number of subscribers. Mobile banking has transformed the way people in the developing world transfer money and now it is poised to offer more sophisticated banking services which could make a real difference to people lives. Mobile banking has also helped in payments (utility bills), deposits, withdrawals, transfers, purchases airtime, request bank statements (New Vision may 2012). Despite the above, the contribution of mobile banking as far as financial performance of commercial bank is uncertain. Therefore the purpose of this research was to establish the relationship between mobile banking and financial performance of commercial bank
The main purpose of the study was to establish relationship between mobile banking and financial performance of commercial bank.
- To find out m-banking technology used at Standard Chartered Bank (Uganda) using a case study of Mbarara Branch in Mbarara Municipality.
- To examine the factors influencing the adoption of mobile banking services at the Standard Chartered Bank (Uganda) using a case study of Mbarara Branch in Mbarara Municipality
- To establish the relationship between m-banking and financial performance of Standard Chartered Bank (Uganda) using a case study of Mbarara Branch in Mbarara Municipality.
- What is the m-banking technology used at Standard Chartered Bank (Uganda) using a case study of Mbarara Branch in Mbarara Municipality?
- what are the factors influencing the adoption of mobile banking services at the Standard Chartered Bank (Uganda) using a case study of Mbarara Branch in Mbarara Municipality?.
- What is the relationship between m-banking and financial performance of Standard Chartered Bank (Uganda) using a case study of Mbarara Branch in Mbarara Municipality?
The study concentrated on to finding out m-banking technology used at Standard Chartered Bank (Uganda) using a case study of Mbarara Branch in Mbarara Municipality, to examine the factors influencing the adoption of mobile banking services at the Standard Chartered Bank (Uganda) using a case study of Mbarara Branch in Mbarara Municipality and to establish the relationship between m-banking and financial performance of Standard Chartered Bank (Uganda) using a case study of Mbarara Branch in Mbarara Municipality.
The study was conducted around Mbarara Municipality since the place was convenient in terms of; time, cost and information required which was readily available since respondent (staff members) were accessible.
The study covered the financial statement of Standard Chartered Bank for the period 2010 – 2014. This period was chosen because of mobile banking playing a big role to financial institutions, there still exists the problem of inefficiency in the proper use of mobile banking systems which has led to relatively low levels of profit generation to many financial institutions due to this period.
The findings of the research/study assisted the Standard Chartered Bank (Uganda) to know which m-banking service is urgent and need strategic observation.
The study improved not only researcher’s scope of understanding m-banking but also entire public hence gain exposure to the m-banking technology.
The dissertation was used as reference material by future researchers interested in further research on m-banking and its effects on financial performance of commercial bank. It’s also a requirement for award of bachelor’s of Business Administration at Bishop Stuart University.
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