CHAPTER ONE INTRODUCTION
1.1 Background of the Study
Prior to the introduction of legal tender, such as coins, notes and other forms of modern instruments used in economic transactions, commercial activities were carried out through the exchange of goods and services known as the barter system. Barter system was a form of traditional means of economic transaction whereby goods are exchange with goods. Barter system was followed by primitive forms of money, such as wampum, manillas, whales’ teeth, disc-shaped stones, cowries and shells, which were used across different parts of the world as means of payments for goods and services (Davies, 2002). These traditional forms of economic transaction were later converted to paper notes and coins. However, with the growth and development of information technologies (ITs) and its subsequent application in the banking sector, bank notes and coins were converted to data and, in turn, transmitted through internet services and telephone lines (Johnson, 2005).
The growth of ITs in the world is becoming a dominant factor and has created positive impacts on the banking industry. The growth of ITs in the banking sector comes with the advancement in electronic system which is characterized by new and more sophisticated ways of transaction (Ozuru, Chikwe, & Uduma, 2010). Moreover, it also led to the development of the automated teller machines (ATMs), internet, telephone and mobile banking. These forms of electronic systems help in differentiating between conventional and modern banking; and facilitate the process of transferring cash in the form of data rather than in its raw cash form. Hence, banks across the world adopted different forms of electronic banking and Nigerian banks were not left behind.
Nigerian banks now have adopted different forms of electronic banking but are still battling with rising problems associated with the system such as: indiscriminate issuance of ATM cards without any regard to the customer’s literacy level; unfriendliness of the system; and lack of assurances on the use of the system. In fact, the above constraint on indiscriminate issuance of ATM cards is serious considering the average literacy level in Nigeria, which is about 56.9 per cent of 167 million in 2011 (Adeola, 2011). This average literacy level in Nigeria, has a significant effect on customers’ ability to effectively use electronic system in banking activity and tend to affect their perception towards the effectiveness and simplicity of the system (Ogbuji, Onuoha, & Izogo, 2012).
Moreover, it has been observed that lack of orientation on how to use ATM cards and pin numbers by banks as well as deployment of unsolicited emails and short text messages (SMS) by scammers requesting customers to provide details of their cards is affecting bank customers’ use of electronic banking. This present activities of fraudsters, according to Johnson (2011), is causing chaos and threatening the usage of ATM cards. Similarly, inefficient and inconvenient banking services offered through ATMs militates against customers’ use of the system in Nigeria. Therefore, this study examined how customers’ trust affects the use of ATM services among bank customers in Sokoto State, Nigeria.
1.2 Problem Statement
The Nigerian banking sector is becoming more competitive because customers want improvement in the products and services provided by the banks apart from ensuring the safety of their cash deposits (Kasum, Abdulraheem, & Olaniyi, 2004). This is why customers change their patronage from banks that operate conventionally (using paper entry) to banks that operate using electronic system (such as ATM, internet, mobile and telephone banking) (Dogarawa, 2005; Ezeoha, 2005). However, Kumbhar (2011) indicated that efficiency, security, responsiveness, cost effectiveness, problem handling, compensation and contact services are factors that affect customers’ perception on the use of ATM. Additionally, Manjunatha and Shivalingaiah (2004) explained that customers’ perception is one of the major determinants of organizational products and services.
The quality of banking products and services are determined by customers’ assessment resulting from the trust and satisfaction they derive in patronizing and utilizing accessible and affordable facilities (Olaleke, 2010). In addition, customers’ level of trust and satisfaction with service delivery is derived largely from the quality of services provided by the banks that use electronic system (Adeoye & Lawanson, 2012). This therefore, shows that trust has always been a key factor in all business organizations, especially in the banking sector, its products and services (Toth,
2009).
The above discussion probably explains why Giddens (1990) argue that, trust in an organization, its products and services is associated with an abstract system (expert system). Therefore, even though people trust an abstract system to perform their duty, the major contradiction of the modern society is the tension between trust and mistrust, or trust and uncertainty (Jalava, 2006). It thus becomes imperative to also consider the suggestion by Davis, Bagozzi, and Warshaw (1989) that perceived ease of use, usefulness, attitude toward behavior, intention behavior and actual usage, affect the use of electronic system. Other scholars Chiemeke, Evwiekpaefe, and Chete (2006) argue on the existence of other variables (perceived security and privacy level) that could also influence customers’ trust in the use of ATM services. This study therefore argues that, by implication, electronic banking is not only constrained by the factors enumerated above, but also limited by the banks’ inability to extend the installations of the ATMs beyond their premises in Nigeria, which seems to be reducing the rate at which customers access electronic banking at their finger-tips and thereby affect their level of trust on banks.
It is in view of the preceding argument that this study considers the sociological proposition that without some element of trust, human social and business life will not be possible (Good, 1988; Simmel, 1990). Equally, if trust is one of the most valuable aspects in the study of customers and organizations (Giddens, 1990; Simmel, 1990), can lack of trust hinder the growth and development of electronic banking in Sokoto State, Nigeria? Since Aladwani (2001) assert that weak customers’ trust on banking products and services could possibly affect the credibility and image of the banks, including customers’ usage of electronic banking services such as the ATM. Thus, the study investigated if privacy, security, attitude towards behavior, intention behavior, actual usage, perceived usefulness and ease of use affect customers’ trust in the use of ATM services in Sokoto State, Nigeria.
1.3 Research Questions
1. What is the level of customers’ trust in banks towards the use of ATM services in Sokoto State?
2. What is the relationship between security, privacy, intention behavior, actual usage, attitude towards behavior, perceived usefulness and ease of use on customers’ trust in the use of ATM services in Sokoto State?
3. What is the most predicting factor of security, privacy, intention behavior, actual usage, attitude towards behavior, perceived usefulness and ease of use on customers’ trust in the use of ATM services in Sokoto State?