1.0 Background of the study
In today‘s globally competitive and highly regulated business environment, the use of technological innovation, effectively to satisfy an array of divergent stakeholders is a key goal of most financial institutions. Technological innovation basically involves the use of electronic gadgets especially computers for storing, analyzing and distribution data. The increasing use of technology has allowed for integration of different economic units in spectacular ways. The business environment in Ghana is a revolving one and the banking industry is not an exception. In Ghana, technological usage within the banking industry has considerably improved, even though it may not been as high as those observed for advanced countries (Adeoti, 2005; Adeyemi, 2006). It is against this background that even as the needs of organizations grew, especially those in the financial industry, the concept of technological innovations also evolved to meet the requirement of a changing business environment.
In the early nineteenth century, the Industrial Revolution ushered in the multistage process and it became necessary to determine the performance of workers and managers and the level of services they provide. Thecenturyalso came with the development of large merchandize firms, having multi products and service lines. Firms needed a way to measure their internal efficiency, that is to say, be able to asses by themselves, if they were operating at optimum level. They also needed to as well ensure that, goods and services were of superior quality and that they also meet
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customer needs. Technological innovation was the answer to these emerging challenges that organizations encountered. (Abor and Joshua, 2004) In order to survive in this fast changing environment and today‘s harsh economic conditions, businesses must be innovative. That is the only way it will be able to change fast enough to meet the demands of its sophisticated customers, stay technologically competent, effectively deal with competition and respond to the pressures of change, both from internal and external. The need for innovativeness to satisfy the growing demand for banking product and services has become a necessity. In this wise, banks are left with no choice than to be innovative technologically. The banking industry has therefore set out on the path of technological innovations prompted by the need to develop products for higher profit with the customer needs in mind Technological innovation has also been supported by the rapid growth in computer and telecommunication. The growth and improvement in technology has made it more profitable to supply new products and services at a relatively low cost. For example, the time spent in queues at banking halls has been reduced by the introduction of electronic banking through the Automated Teller Machine (ATM), telephone banking, internet banking, mobile banking etc and as a result, those in need of bank products and services are relatively ready to put their monies in the banks. Internet Banking for example, has made it possible for bank customers to sit in the comfort of their homes to transact business on their accounts via the internet. Also the cost of processing financial transaction as well as acquisition of information in the financial market has been considerably reduced by the use of computers and the internet.
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Financial institutions and Banks for that matter are among the most regulated institution in the Ghana. Ghana Government does this, through the Banking Supervision Department (BSD) of the Bank of Ghana. Ironically, the often-burdensome regulation of the central bank, which reduces profit and limits activities, has contributed to the growth and the development of new products and services. Banks are working hard to comply with the existing Bank of Ghana regulations whilst ensuring that they do not have any adverse effects on banking activities. Technological innovation has become the ‗command‘ of the Ghanaian banking system. This is evidenced by the fact that, some of the banking products and services enjoyed today did not exist some few years ago. The importance of technological innovation can be appreciated even better as a result of relatively more literate society and the movement of Ghana towards the middle-income economy country. The question often asked is, to what extent has banking services considerably improved? Has technological innovation in the Ghanaian banking system served its desired purposes? Previous studies in this area have concluded that technological innovation has made positive impact on the banking activities. Other studies also concluded that, new electronic delivery channels have contributed positively to the provision of banking services and the growth of the Ghanaian banking industry.(Eric Yeboah-Asiamah 2008).
Technological innovations in the banking industry come with it added advantages in the areas of processes, cost of operations and Services.Processes that the banks go through have gone through a transformation as a result of technological innovation. Retrieval of information for
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example has been made easy. Processes are now fast and easy, whilst accuracy and speed may now be said to be the order of the day. Another great advantage has to do with the fact that processes have been standardized. This means that even though bank branches are scattered through the length and breadth of the country and can be said to serve a large market, the effect of speed and accuracy, ease and convenience, and all the already mentioned attributes, makes customers to feel the positive effects of technological innovations even better. Cost of operations and per transaction costs have gone down considerably due to technological innovation. Standardization again has played a very important role in this regard, in that in has helped to reduce time spent on processes because of the wide area network advantage. Cost involved in for example salary processing, running loan repayment, end of month general ledger balances etc, and has reduced because they can be done with a click of a button. Banking services have seen new products coming on the market due to technological innovation. Brick and mortar are no longer barriers to customers from receiving service. Products like the ATM, Debit cards, Credit cards, Internet banking, Telephone banking etc have come to make service to bank customers easier, faster, convenient and flexible. These new product comes with a double edged advantage for both customers and the banking industry. For the banks, more commissions are earned as the products are patronized whilst the customer gets their needed ease fast and convenient service.The present study evaluates the impact of technological innovation on customer satisfaction, bank efficiency and bank profitability.
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1.2 Statement of the Problem
As the business of banking begun to grow, process especially at the back offices started getting cumbersome. Inefficiencies and ineffectiveness increased as the problem of