1.1              Background to the Study

The revolution of information technology has affected practically every sphere of life; noteworthy is the banking industry. The introduction of electronic banking has changed and redefined the means banks were operating. Likewise, the emergence of global economy, e-business has significantly become an essential element of business strategy and a solid catalyst for economic development, as technology is now considered the major factor for organizations' success and as their core competencies. As a result, electronic banking system has become an essential practice amongst commercial financial institutions and some virtual banks particularly Kuda Microfinance Bank in Nigeria, owing to that the introduction of this banking system has enhanced banking efficiency in making services to customers. Therefore, the banks (domestic or foreign) are investing more on providing the customers with the new technologies with e banking. As a result, e-banking has come to be preferred due to its ease and flexibility, and transaction related benefits like speed, efficiency, accessibility and more (Elisha, 2010).

Technology is necessary in improving more effective and much faster services to customers. Emergence of e-banking was resulted also from globalization (Kabir & Poddar, 2015). In many developed nations, financial sector has developed the area of e-services and have proactively associated with developing it in order to meet the ever-changing demands and to satisfy the modern customers, (Hammoud, Bizri and Baba, 2018). The Electronic Payment Methods (EPM) are simplified and personalized methods of conducting financial transactions (using mobile or internet) without including physical cash or paper cheque thus reducing the instance where people need to carry large sums of money and join the prolonged queues on bank premises in order to perform financial transaction (Jenevive & Anyanwaokoro, 2017). E-banking offers speed, effectiveness, convenience and security compared to physical banking procedures. Automated Teller Machine (ATM) and Point of Sale (POS) have gotten rid of the need to use cheques and paper documentation (Jenevive & Anyanwaokoro, 2017).

As a result of the competitive nature of modern-day banking, customer satisfaction has become critical than ever through which different financial institutions push the frontiers of banking service delivery to remain ahead of the competition (Rahimi & Kozak, 2017). In the context of Nigeria for example, customer satisfaction delivery has attracted attention recently because of the intense competition which has been observed over the past years in the financial industry. As a result, different financial institutions in Nigeria have involved themselves in introducing various internet-based technology resources from where Kuda Micro finance was borne out in anticipation of improving the delivery of banking services which would certainly, in turn, enhance the customer experience of their clients. Besides, many financial institutions in Nigeria have prioritised customer satisfaction to the degree that it has become a significant business goal which they aim to accomplish with their customer service departments (Farayibi, 2016).

Satisfaction was measured based on the suitability of a banking service or product and its ability to meet the needs of the customer (Zameer et al., 2018). Olorunniwo et al. (2006) likewise suggest that customer satisfaction might be determined using customers' perception of service efficiency, value, and benefit. Generally, bank customers can be satisfied by the quality and reliability of a product or service which is delivered with the existing delivery channels in the bank (Oliver, 2014). Implicitly, customer service departments have become the channels whereby these services and products are provided and monitored. This allows retail banks to determine the satisfaction levels of their clients with the different feedbacks received (Oliver, 2014).

The competitive nature of retail banking in Nigeria as shown above has required the need for financial institutions to constantly check their product and service delivery channels to guarantee customer satisfaction. In a recent customer service study, Helmrich (2017) suggests that customers have a significant role to play in building business reputation and it is for that reason very important for financial institutions to show awareness and deal with customer concerns properly with using virtual banking. In doing so, there is also a tendency to build potential customers with reviews from current customers (Nunan et al., 2018). A number of other authors in the area of virtual banking likewise suggest that virtual banking can focus employees' customer-focused engagement behavior efforts and abilities on delivering the quality of service that improves customer satisfaction in the bank (Setia et al., 2013; Trainor et al., 2014). Therefore, virtual banking which includes the use of social networks, mobile applications, and company review websites can affect the relationship between employees' customer-focused engagement behavior and customer satisfaction in the bank (Trainor et al., 2014). Therefore, this study sought to examine virtual banking in Nigeria and customer satisfaction by using Kuda microfinance bank as a case study.

1.2       Statement of the Problem

Virtual banking has been embraced by financial institutions in an attempt to enhance their service delivery, decongest queues in the banking hall, allow clients have access to their money by withdrawing 24/7, help global payment and remittance, track personal banking transaction, request for online statement, and even transfer deposit to a third-party account. Despite the effort of banks to ensure that customers reap the benefits of virtual banking, most of these virtual banks particularly Kuda Micro finance bank has been met with complaints from customers as regards, malfunctioning of the app, network downtime, acquisition of ATM cards, non-acceptability of Nigerian cards for international transaction, online theft and fraud, non-availability of financial service, most especially during this time of shortage of cash inflow in Nigeria due to the policy developed by the apex bank (Central Bank of Nigeria). Hence, this study is aimed at examining the reason why these problems occur and, in most cases, continue, and then to make recommendations based on the findings of the study.

1.3       Objectives of the Study

The main purpose of this study is to examine the relationship between virtual banking in Nigeria and Customer Satisfaction by using Kuda Micro Finance Bank as a case study; the specific objectives of this study are as follows:

i)                   To examine the relationship between technology based self-service banking service on customer satisfaction among Kuda bank customers in Nigeria.

ii)                 To ascertain the relationship between electronic payment system and the bank’s service delivery.

iii)               To investigate the reasons for persistent complaints from customers as regards e-banking in Nigeria.

iv)               To determine the challenges facing effective implementation of virtual banking system in Nigeria.

1.4       Research Questions

            This study aimed to answer the following research questions:

i)                   What is the relationship between technology based self-service banking service on customer satisfaction among Kuda bank customers in Nigeria?

ii)                 What is the relationship between electronic payment system and the bank’s service delivery.

iii)               What are the reasons for persistent complaints from customers as regards e-banking in Nigeria?

iv)               What are the challenges facing effective implementation of virtual banking system in Nigeria?

1.5       Research Hypotheses

            The following hypotheses were formulated from the objectives of this study:

i)                   There is a significant relationship between technology based self-service banking service and customer satisfaction among Kuda bank customers in Nigeria.

ii)                 There is no significant correlation between electronic payment system and the bank’s service delivery.

1.6       Significance of the Study

            The outcome of this study will be of immense benefit to the management of Kuda Micro Finance Bank, since it will help identify most of the challenges faced by the banks as well as the complains table by the customers. Solutions will then be proffered on these identified challenges. This will go a long way to help the bank achieve its stated objectives, and in the long run increase shareholder’s wealth. Furthermore, the study would enable banks executives and indeed the policy makers of the banks and financial institutions to be aware of virtual banking system as a product of electronic commerce with a view to making strategic decisions.

Also, the study will be of immense benefits because it would provide answers to factors militating against the implementation of electronic banking in the financial industry as a whole and also valuable tool for students, academician, institutions and individuals that wants to know more about electronic banking system.

1.7       Scope of the Study

            This study will examine the relationship between virtual banking in Nigeria and Customer Satisfaction in Kuda Micro Finance Bank. This means that issues relating to virtual banking will be explained. In view of the technicalities involved, it would be unrealistic to assume that all necessary facts have been gathered in the course of carrying out this study. Information is limited to those accesses and made available by the respondents and also have gathered from end users.  More so, since financial industries have many forms, the study will only be limited to Kuda Micro Finance Bank.

1.8       Limitations of the Study

            The following were some of the constraints that wanted to serve as barriers to the success of this study, but the research still found a way around them to achieve success in the end:

Time constraints

            The researcher finds it difficult to go round all the bank branches due to limited time availability, as a result of this, the data were only collected from few banks randomly.

Inadequate data

            Virtual banking is a recent developed system in which not all banks have embraced, those that have embraced it were able to give their information to the researcher and those that have not fully embraced it were unable to give accurate data to researcher.

Lack of funds

            Due to the nature of this work, researcher find it difficult to raise the funds needed to carry out the research appropriately, as a result of this, few bank branches were selected based on the available finance to enable researcher get the needed information.