William Yeboah Sampong

EFFECT OF BANK INNOVATIONS ON FINANCIAL PERFORMANCE OF
UNIVERSAL BANKS IN GHANA
By
William Yeboah Sampong (BBA)
A thesis submitted to the department of Accounting and Finance,
Kwame Nkrumah University of Science and Technology,
in partial fulfillment of the requirement for the award of
MASTER OF BUSINESS ADMINISTRATION IN
FINANCE
August, 2015
DECLARATION
I hereby declare that this submission is my own work towards the MBA and that, to the best
of my knowledge, it contains no material previously published by another person nor material
which has been accepted for the award of any other degree of the University, except where
due acknowledgement has been made in the text.
William Yeboah Sampong …………………… ………………..

Signature Date
Certified by:
Dr. Kwame Mireku ……………………. ………………..
Signature Date
Certified By:
Dr. K. O. Appiah …………………… ……………….
Signature Date
ii
ACKNOWLEDGEMENT
My sincere gratitude and appreciation goes to my research assistants, especially Rita Kyiraa
and all the bank officials whose help contributed to the success of this study.
I am also very grateful to all lecturers of KSB especially DR. Kwame Mireku for his
guidance and supervision of this theses.
I very much appreciate the effort of my wife, (Mrs. Evelyn Sampong), my children (Kendra
Sampong and Jeffery Sampong Senibour) and my mother, Mrs. Beatrice Sampong, whose
players and support keeps spurring me on to this height.
Finally, I thank the almighty God for giving me the strength, knowledge, wisdom and
understanding to go through this course successfully.
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DEDICATION
To the Almighty God be the glory for making my dreams come into reality.
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ABSTRACT
The Ghanaian Banking industry is witnessing a revolution as a result of technological
innovations that have become a common feature of banking in the contemporary business
environment. The arrival of the Internet and the proliferation of mobile telecommunication
companies in Ghana present both an opportunity and a challenge to banks in Ghana. The test
for the banking sector has been how to profitably formulate a new service delivery means in
such a way that its clients will enthusiastically learn to use and trust. The purpose of this
work is to identify the effect of bank innovations on the financial performance of universal
banks in terms of their income or revenue generation, liquidity, efficiency, profitability and
the general patronage of banking services in Ghana. This work is a survey of bank executives
from fifteen (15) universal banks in Accra and Kumasi. Questionnaires were administered to
find out the opinions of bank executives on the effect of bank innovations on financial
performance. It was discovered that most of the innovations have positive effect on the
income generating potentials of the banks, they also improves efficiency, liquidity and
profitability of the banks. This study also found out that E-zwich as an innovation in the
financial sector has no direct effect on financial performance of the universal banks in Ghana.
It is recommended that corporate banks must make it a policy to establish an efficient and
effective marketing department to oversee the publicity of all bank innovative products. The
Government through Bank of Ghana must continue to invest in researching into innovations
in the financial sector, and the universal banks whose operations are affected by any national
innovative products or platforms such as E-zwich should be consulted and their concerns
factored in the product before implementation.
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TABLE OF CONTETS
DECLARATION......................................................................................................................ii
ACKNOWLEDGEMENT ......................................................................................................iii
DEDICATION......................................................................................................................... iv
ABSTRACT .............................................................................................................................. v
LIST OF TABLES .................................................................................................................. ix
CHAPTER ONE ...................................................................................................................... 1
INTRODUCTION.................................................................................................................... 1
1.0 Background of the Study ................................................................................................. 1
1.1 Statement of the Problem ................................................................................................. 4
1.2 Objective of the Study ..................................................................................................... 5
1.3 Research Questions .......................................................................................................... 6
1.4 Significance of the Study ................................................................................................. 6
1.5 Scope and Limitations of the Study ................................................................................. 7
1.6 Organization of the Study ................................................................................................ 7
CHAPTER TWO ..................................................................................................................... 8
LITERATURE REVIEW ....................................................................................................... 8
2.0 Introduction ...................................................................................................................... 8
2.1 Definition of Key Terms .................................................................................................. 8
2.1.1 Financial Performance .............................................................................................. 8
2.1.2 Return on Asset ......................................................................................................... 8
2.1.3 Universal Bank.......................................................................................................... 9
2.1.4 Innovation ................................................................................................................. 9
2.1.5 Return on Equity ....................................................................................................... 9
2.2 Bank Innovation ............................................................................................................... 9
2.3 Financial Performance of Universal Banks ................................................................... 12
2.4 Bank Innovations and Customer Deposits ..................................................................... 13
2.5 Types of Bank Innovation Products ............................................................................... 14
2.5.1 Internet Banking...................................................................................................... 14
2.5.2 E-ZWICH ................................................................................................................ 15
2.5.3 Telephone Banking ................................................................................................. 15
2.5.4 Automatic Teller Machine (ATM).......................................................................... 16
2.5.5 Mobile Banking ...................................................................................................... 17
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2.5.6 Branch Networking ................................................................................................. 17
2.5.7 Electronic Fund Transfer At Point Of Sale (EFTPOS) ........................................... 18
2.5.8 Cash Smart Cards .................................................................................................... 18
2.5.9 The Electronic Funds Transfer System (EFTS) ...................................................... 19
2.6 Critique of Existing Literature ....................................................................................... 20
CHAPTER TREE .................................................................................................................. 21
RESEARCH METHODOLOGY ......................................................................................... 21
3.0 Introduction .................................................................................................................... 21
3.1 Research Design............................................................................................................. 21
3.2 Population of the Study.................................................................................................. 22
3.3 Sample Size and Sampling Technique ........................................................................... 22
3.4 Data Collection .............................................................................................................. 24
3.5 Data Analysis ................................................................................................................. 24
3.6 Reliability and Validity of Data ..................................................................................... 24
3.7 Ethical Issues ................................................................................................................. 25
CHAPTER FOUR .................................................................................................................. 26
DATA PRESENTATION AND ANALYSIS ....................................................................... 26
4.0 Introduction .................................................................................................................... 26
4.1 Demographic Characteristics of Participants ................................................................. 26
4.1.1 Sex of Respondent .................................................................................................. 26
4.1.2 Age of Participants .................................................................................................. 27
4.1.3 Departmental Distribution of Respondents ............................................................. 28
4.1.4 Banking Sector Experience of Respondents ........................................................... 28
4.2 Data Analysis of Bank Innovations ............................................................................... 29
4.2.1 Effect of Bank Innovations on Total Revenue ........................................................ 29
4.2.1.1 Automated Teller Machines (ATMs)............................................................... 29
4.2.1.2 E-ZWICH Payment Systems and Bank Revenue ............................................ 30
4.2.1.3 Mobile/Internet Banking and Bank Revenue ................................................... 31
4.2.2 Influence of Bank Innovations on Return on Assets .............................................. 32
4.2.2.2 E-ZWICH Payment Systems ........................................................................... 33
4.2.2.3 Mobile/Internet Banking .................................................................................. 34
4.2.3 Consequence of Bank Innovations on Bank Profitability ....................................... 35
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4.2.4 Impact of Bank Innovations on Patronage of Banking Services ............................ 38
CHAPTER FIVE ................................................................................................................... 42
SUMMARY OF FINDINGS, CONCLUSION AND RECOMMENDATIONS .............. 42
5.0 Introduction .................................................................................................................... 42
5.2 Summary of Findings ..................................................................................................... 42
5.3 Conclusion ..................................................................................................................... 44
5.4 Recommendations .......................................................................................................... 45
5.5 Areas for Further Studies ............................................................................................... 45
REFENCES ............................................................................................................................ 46
APPENDICES ........................................................................................................................ 48
Appendix A Letter of Introduction ...................................................................................... 48
Appendix B Questionnaire ................................................................................................... 49
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LIST OF TABLES
Table 3.1 Distribution of Population and Sample Size ............................................................ 23

Table 4.1.1 Sex of participants ................................................................................................ 26
Table 4.1.2 Ages of Respondents ............................................................................................ 27
Table 4.1.3 Department of Respondents .................................................................................. 28
Table 4.1.4 Experience of Participants .................................................................................... 28
Table 4.2.1 Automated Teller Machines (ATMs) and Bank Revenue .................................... 30
Table 4.2.2.2 E-Zwich Payment Systems ................................................................................ 31
Table 4.2.1.3 Mobile/Internet Banking .................................................................................... 32
Table 4.2.2.1Automated Teller Machines (ATMs) ................................................................. 33
Table 4.2.2.2 E-Zwich Payment systems ................................................................................. 34
Table 4.2.3.1 Automated Teller Machines (ATMs) ................................................................ 36
Table 4.2.4.1 Automated Teller Machines (ATMs) ................................................................ 39
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CHAPTER ONE
INTRODUCTION
1.0 BACKGROUND OF THE STUDY
This study is to show how financial innovative products affect the financial performance of
the Ghanaian Banking Sector. Rose (1999) defines banks as any financial institutions which
offer a broad range of financial services, including the provision of credit, deposits and
payment systems and employ an extensive variety of financial intermediation functions in
any business economy. According to Lerner and Tufano (2011), „financial innovation is
defined as the „act of creating and then popularizing new financial assets or products, as well
as new financial technologies, organizations and markets‟. In recent past, it was possible for
banks to satisfy their customers and to meet their own performance targets without the need
to develop any new products to enhance service delivery due to the fact that account holders
and banks were few, with the low volume of transactions, and luck of competition in the
banking industry. According to the 2014, Ghana Banking survey by PricewaterhouseCoopers
„Ghana has 27 universal banks, 137 rural and community banks, 58 non-bank financial
organizations including, leasing firms, mortgage providers, finance houses, and saving and
loan institutions‟. These do not include the hundreds of „Susu‟ collectors, who serve as
informal, small-scale depository financial organizations for market sellers, artisans and
commercial transport operators. Of the twenty-seven (27) universal banks, 10 are owned by
Ghanaians while the remaining is backed by international owners.
Bank innovations involve the development of new products/services or production process
that lead to efficient and effective operations. Nofie (2011), described innovations in the
banking industry as the entrance of new or improved products or a processes which reduces
the operational cost of rendering existing banking services. According Agboola (2003), the
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adoption of Information and Communication Technology in financial institutions have
improved customer services, facilitated the accuracy of account, provided for home and
office banking services, ensured convenient business hours, timely and fair attention, and
improved service delivery.
The liberalization of banking industry by the bank of Ghana, and the resultant rise in
competition among the banking and non-banking financial institutions in the Ghanaian
financial market has brought to the fore the need for the creation of innovative financial
assets or products that would maintain current customers and attract new ones. The Banking
Act, 2004, has reinforced the threat of new entrants of competitors into the financial market,
and the continuous education has created public awareness of banking services which have
resulted in a rise in customer quest for quality and improvement in products and introduction
of new ones. The banking sector in the country comprises mainly universal banks, savings
and loans organizations and also special rural and community banks.
The traditional commercial banking is declining in terms of competition and this may
threaten the financial stability of the banks. This will result in increasing bank failures
through the exposure to higher risk by the banks, which either makes more risky advances to
clients or by involving in 'nontraditional' banking activities that guarantee better returns but
with additional risk. The conventional manual system of banking, for instance, put a lot of
stress and strain on bank staff that has to attend to many more customers and handle more
paper work. To reduce the Increasing cost of manual processing of customers‟ data, Banks
are thus compelled to introduce measures that will increase their profitability, capitalization,
deposit and fund mobilization as well as reduce their operational costs, to serve the customers
who complained of time wasted in queuing for banking services compelling most of them to
keep their savings at home and thereby adversely affecting deposit mobilization.
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In furtherance of the objective to compete, universal banks in the Country decided to
restructure their system of operations by embarking on Bank Innovation or other Direct
Customer banking Sales services, which offer consumers and businesses the opportunity to
undertake a lot of banking functions at home instead of been physically present in the
banking hall. The customer is able to do home banking through the internet and telephones
that provide him/her with a lot of convenient banking services. The customers are able to
transfer funds from one account to another, make loan applications, request for cheque books,
monitor the loan payments, pay bills, check accounts balances, buy and sell financial assets,
and perform other services. Through innovation home banking has become easier and very
convenient to users. Home banking gives the user the following advantages; privacy, speed,
accuracy and the ability to do business in all the 24 hours in a day. The banks also levy
moderate commission for the use of home banking innovation. One banking function that is
not currently available to home bankers is the ability to receive cash; therefore, the users must
still attend to the bank teller or automatic teller machine (ATM)
The internet bank operates solely through the Internet, which is a global network of computer
networks with no "brick and mortar" building or the branch offices. Internet banking has the
following advantages; firstly, it eliminates many of the expenses of the conventional banks,
secondary, the banks can hypothetically pay depositors a higher rate of interest on deposits as
compared with the conventional commercial bank‟s rate. Thirdly, financial institution that
uses the internet banking for service delivery removes or minimizes the need to build more
branches to serve clients efficiently. Fourthly, Internet banking has the prospect of convenient
banking to the customer who is able to manage personal accounts and to perform other
services such, as paying bills on-line, applying for auto loans and also the ability to offer the
customer a 24-hour telephone response to the customers who can discuss his/her needs with
bank service representatives.
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This help to reduce long queues, long waiting hours and inaccessibility to banking services
outside banking hours and weekends. When there were only three commercial banks, for
example in Ghana, there was limited or no competition at all, but with the emergence of new
banks and government deregulation of Interest rates. Competition has become very keen. The
universal banks, therefore, developed different innovative products in order to stay in
business. The networking system is a typical example of this. In recent times, also banks
have developed new methods of advancing loans to their customers especially salaried
workers. This is done by entering into agreement with established organizations to facilitate
the grant of loans to their staff. This has proved very helpful to workers, and relieved
employers of the burden of having to look for funds to grant loans to their workers.
1.1 STATEMENT OF THE PROBLEM
The traditional commercial banking is declining in terms of competition and this may
threaten the financial stability of the banks. Therefore, banks in Ghana must have business
strategy that include the development, implementation and evaluation of the effect of
innovative products, aimed at maintaining existing customers and attracting new ones, such
innovations must also improve efficiency and profitability of the banks. Banks in Ghana have
been generally slow in adopting new and modern innovative ways of improving service
delivery to their customers, and three reasons may be attributable to their lackadaisical
attitude toward the development of new financial innovations. Firstly, the payback period for
the initial capital outlay may be longer and unacceptable to management and shareholders,
secondly, these innovations may not have a positive correlation with financial performance in
terms of efficiency and profitability and thirdly, the innovations may, nevertheless have their
peculiar problems like computer and internet frauds, frequent breakdowns of the system and
lack of personnel with requisite skill and commitment, which the banks needed in order to
satisfy their customers, stay in business and effectively compete. However, some universal
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banks in Ghana are developing innovative products in place of their old modus operandi of
manual ways of doing business. Modern technologically advanced methods liken E-zwich,
Internet Banking, and Telephone Banking, which are all envisaged to reduce operational
costs, and to attract more retail depositors to the banks. According to Frimpong (2010),
„innovations provide an impetus for banks to improve their market performance by
recovering from palpable inefficiencies prevalent in the banking industry, as is the case in
Ghana and other emerging countries‟. But what still remains uncertain to bank executives is
whether bank innovations assist to attain the expected financial performances of the banks
and the customer welfare‟. Even though bank innovations have attracted considerable
interest to researchers, the effect of these innovations on bank performance in Ghana has not
been extensively researched into, therefore, the need to conduct this study. The results of this
study will determine whether bank innovations have resulted in improving efficiency and
profit levels of universal banking institutions in Ghana.
1.2 OBJECTIVE OF THE STUDY
The general objective of this work is to identify the effect of bank innovations on the
financial performance of the Ghanaian universal banks. The study also pursued other specific
objectives in evaluating the impact of bank innovation on financial market as follows:
1. To examine the effect of innovations on the revenue or income of universal banks in
Ghana.
2. To examine the effect of these innovations on liquidity and efficiency of banks in
Ghana.
3. To examine the effect or the consequences of bank innovations on the levels of profits
of the universal banking institutions in Ghana.
4. To find out the effect of bank innovations on patronage of banking services.
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1.3 RESEARCH QUESTIONS
With regard to the research objectives the following sampled questions adapted from
previous studies by Ngumi (2013) were posed to management, heads of departments and staff
of selected commercial banks in Ghana:
1. Whether Automatic Teller Machines (ATMs) have had an encouraging impact of
improving bank earnings in terms of commissions?
2. Whether ATMs control the reduction of costs, and thereby resulting in improved
return on assets for the bank?
3. Whether Income from E-Zwich has high mark-up which leads to more profits for the
banks?
4. Whether Mobile/Internet Banking achieves less costs of operation resulting in greater
amounts of profits over their useful life to the firm?
5. Whether Mobile/Internet Banking facilitates or enhances the accessibility to funds by
customers for ease of withdrawal?
6. Whether Mobile Banking is attracting more retail depositors for the bank?
1.4 SIGNIFICANCE OF THE STUDY
The study is significant in terms of its contribution towards understanding the important role
of bank innovations in the Ghanaian banking industry and the whole economy of Ghana. This
would enable shareholders or investors and management to be able to deal with and justify
the resources spent on bank innovations. It would also bring to the fore the impact of these
innovative products on the banks, and how it will help improve service delivery to their
customers and to improve profitability and efficiency. „Innovations in electronic banking (e-
banking) in Ghana have helped to improve not only efficiency but also financial
intermediation‟ (Acquah, 2006).
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The benefits of bank innovation would not be left out on policy makers as it would be useful
to Bank of Ghana who has the desire to grow the financial services in Ghana and to reduce
the level of cash transactions in the country. The findings and recommendation of this study
would bring to light the areas of support that government of Ghana should pay attention to
towards bank innovations, and to formulate fiscal and monitory policies that aid the universal
banks.
The research work will become a secondary source of information for any one who wants to
undertake a further research work in this area. The suggested recommendations will also
help the public and banking officials in their work.
1.5 SCOPE AND LIMITATIONS OF THE STUDY
The study was restricted to fifteen (15) universal banks out of the twenty seven (27) banks in
Ghana. The research was also restricted to only banks in Accra and Kumasi. There are many
bank innovations but the study concentrated on E-zwich, Automatic Teller Machines and
Mobile/internet Banking. Banking confidentiality is cardinal principle under banking law and
therefore, strategic level staffs of the banks were reluctant of answering questions.
1.6 ORGANIZATION OF THE STUDY
The organization of the study will be as follows: Chapter one will deal with or talk about the
background of the study, statement of the problem, significance of the study, research
question, scope and limitations of the study and finally the organization of the study. Chapter
two is also another which will take into account the literature review on the topic the
researcher is writing on. Chapter three of the study will cover the research methodology.
Chapter four of the study will deal with analysis and presentation of data collected Chapter
five which will be the last chapter will take into account summary of findings, conclusions
and recommendations based on a researcher‟s topic.
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CHAPTER TWO
LITERATURE REVIEW
2.0 INTRODUCTION
This chapter undertakes an academic appraisal of diverse literatures pertaining to bank
innovation. The study focuses on the following important areas of the phenomenon under
review; bank innovations and their effect on bank performance.
2.1 DEFINITION OF KEY TERMS
2.1.1 FINANCIAL PERFORMANCE
Financial performance can be defined as the measurement of how well an organization has
put to good uses, its resources or assets to conduct business and generate revenue and thereby
making profit which is the ultimate goal of every business organization, for its stakeholders.
Financial performance could also be described as the measurement of an organization‟s total
financial wellbeing over a specific period of time, usually one year. The same bank could
have it performance compared over a number of years; there could also be comparison of
performances between firms across the banking industry.
2.1.2 RETURN ON ASSET
The return on asset is a ratio which measures how efficient and effective a firm is using its
resources. It shows the ability of the management of a bank to generate additional income
from the investment in innovations. This ratio is indicative of the profitability of a bank and
the higher this ratio, the more efficient management is using resources at their disposal. It
also measures the relationship in terms of ratio between profit before interest and taxes and
the total assets of a bank.
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2.1.3 UNIVERSAL BANK
According to Rose (1999), a bank is a financial institution that undertakes a broad variety of
financial services; especially the provision of credit, savings and payment services and
undertakes a broad variety of financial activities in any business economy. This definition, by
far goes beyond the meaning of commercial banking which is restricted to the provision of
services such as accepting of deposits, giving loans, operating checking accounts, electronic
funds transfer, and foreign exchange transactions and are mainly in the area of commerce.
Universal banks are not restricted in their scope of operations. They deal in commerce,
merchandising, agriculture, investment in socio-economic development and the provision of
services to the peripheral markets like unbanked or under-banked in an economy.
2.1.4 INNOVATION
Innovation is the development of new approaches or techniques for delivering existing
product, or on the other hand, the creation of new product or requirement. According to
Lerner & Tufano (2011), two categories of innovation exist, which are product and process
innovations. The former are exemplified by new derivative contracts, new corporate
securities or new forms of pooled investment products, while the latter are typified by new
means of distributing securities, processing transactions or pricing transactions.
2.1.5 RETURN ON EQUITY
Return on equity is a ratio that measures the periodical relationship between the profit
available to shareholders and their total equity of the firm. It shows how profitable the
shareholder‟s investments have been over a period, usually one year.
2.2 BANK INNOVATION
The importance of innovation in the Ghanaian Banking Industry abounds in several banking
literature, few of which are indicated as follows:
9
According to Ghana Banking Survey (2008), carried out by PricewaterhouseCoopers,
„valuable returns, convenience banking, Presence everywhere banking, Satisfying banking
hall experience, Good customer service, and a Convincing image of a strong bank would be
among key factors consumers would consider in deciding where to deposit their funds‟.
PricewaterhouseCoopers (2014) survey confirmed that „bankers (executives) consider that
technological factors will have the greatest influence on the future business of banking, and
that key drivers for informing decisions about the industry‟s uptake and deployment of
technology for the increasing wealth, demand for convenience, cost-efficiency, and increased
banking penetration‟. According to Al-Hawari and Ward (2011), „the banking industry in
mature markets has witnessed a wholesale and ongoing shift in confidence, and never before
has loyalty management and personal customer attention been such an issue for the sector‟.
As rivalry within the banking sector intensified convenience and improved returns on deposit
funds continued to be the trademark of bank‟s marketing strategies for extensive growth over
the recent past years, many more banks commenced identified variations of the same range of
products-spots of virtual banking or innovation (e.g. e-banking and m-banking products).
Zero balance accounts, quick cash, easy cash, school transactions solutions, juvenile saving
accounts, card-based solutions.
Mobile/Internet banking has many advantages to the customer and the bank or financial
institution. It increases ease of banking, grants more access to savings and significantly
reduces time for banking. From the perspective of the bank, Mobile/internet banking reduces
operational costs of the bank considerably as compared with the cost of operating additional
branches to expand operations. Internet banking has all the impact on productivity of ATMs,
except it lacks the function of cash dispensing by the ATMs as an innovation that provides
retail banking services even after banking hours (24 hours a day). It accrues continual
productivity for the bank.
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The selection of particular banking products to be used by a bank is strategic in achieving a
good reputation or image for the bank both in the short and long run. Apart from the high
reputation and prestige, they also help in improving the banks chances of increasing its
deposit mobilization. Even if the bank‟s sole purpose is to maximize share holders‟
investments, the concern for bank reputation may also be important. Investors‟ belief about
the bank‟s ability of offering good and unique services may affect the price at which the bank
can raise capital, employ people and sell its products.
According to Rose (1999), the combination of both the Automated and human tellers imply
more productivity for the bank during banking hours. Also as it saves customer‟s time in
service delivery as an alternative to queuing in banking halls, customer can invest such time
saved into other productive activities. ATMs are a cost efficient way of yielding higher
productivity as they achieve higher productivity per period of time than human tellers (an
average of about 6400 transactions per month for ATM compared to 4300 for human tellers,
(Rose 1999)
The automation of the Ghanaian domestic payments system is will help the banks reduce the
processing cost associated with the use of cheques to make payments whilst keeping control
over payments in the hands of the their managements. This for both banks and customers,
will save time, costs, offer control of cash, improve relations with vendors and simplify
reconciliation. The adverse effect of this product is the cost of set up and maintenance.
The cheque clearing process is very labour intensive and requires that paper cheque be moved
from point to point. Movement of physical cheques is by a bearer to speeding up the
collecting process. Through technology some banks are speeding up these processes by
transmitting the Magnetic Ink Character Recognition (MICR) data electronically to the
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paying bank followed by the physical Cheque. Cheque processing is another area in banking
that technology is influencing significantly.
Technological innovations initiated by financial institutions have resulted in a significant
increase in public savings in terms of time and money. Innovation significantly supplemented
the central banks‟ effort in mopping up excess liquidity and controlling monetary growth,
thereby reducing inflation. It also enables banks to adapt to new situations to increase the
scale and range of their operation and to cater for both domestic and international needs as
well as helping banks in networking their operations.
2.3 FINANCIAL PERFORMANCE OF UNIVERSAL BANKS
Creativity and innovations are crucial for the survival of every business been it private or
public sector. According to Damanpour et al., (2009), „innovation affects a firm‟s
performance positively‟. According to Frimpong (2010), „innovations provide an impetus for
banks to improve their market performance by recovering from palpable inefficiencies
prevalent in the banking industry, as is the case in Ghana and other emerging countries‟.
Profitability and efficiency are the major motives for banks to assume risks for expansion in
its operations. Some of the measures that are used in evaluating a bank‟s profitability and
efficiency are Return on Asset, Return on Equity, Net Profit Margin. Bank innovations have
the potentials to increase the volume of retail transactions through increase usage of
electronic transfers and payment systems which encourage the banking business. According
to Mawutor (2014), „the introduction of E-banking has indeed had a positive effect on the
profitability of Agricultural Development Bank (ADB) since it was introduced‟.
Table 2.2.2.1 shown below is a secondary data from a survey work done by
PricewaterhouseCoopers on the „opportunities and challenges that technology-driven factors
will most likely bring to the future business of banking in Ghana‟. The table shows the
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responses on how bank managers anticipate how technological factors may affect the future
of the Ghanaian banking business. According to the survey bank executives confirmed that,
these technologies or competitive drivers will have a significant increase in balance
sheet/cost/revenue of the banking sector over the next 5 years. From the table, revenue
especially non-interest income streams, to be generated outweighed the cost of implementing
bank innovations.
PricewaterhouseCoopers 2014
2.4 BANK INNOVATIONS AND CUSTOMER DEPOSITS
According to Domeher et al., (2014), „the ease with which customers can use the innovation,
the compatibility of the innovation with customers‟ needs, the perceived usefulness thereof,
the amount of information provided on the innovation and the level of customers‟ education
all have a significant positive impact on the adoption of e-banking innovations in the
Ghanaian banking industry‟. The inauguration of national electronic payment system or
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platform popularly called E-zwich, by the Bank of Ghana, has the objective of extending the
coverage of financial services and transactions to a large segment of the population, who
stand to benefit because the system is safe, secure and very efficient to users. The e-zwich
which is a biometrics smart card works both on-line and off-line and is meant to ensure
cashless transaction and rope in the large untapped informal sector. It would promote access
to deposited funds and ease the transfer of funds from one account to another, and also
eliminate the burdensome and insecure physical cash transactions. Some of the challenges
faced by bank innovation is the difficulty of changing the Ghanaians‟ perceptions about
technology and their wait-to-see attitude. Therefore, all users including the small micro
business enterprises as well as the larger populace must be motivated to take advantage of the
platform and be linked up to the larger financial system.
2.5 TYPES OF BANK INNOVATION PRODUCTS
2.5.1 INTERNET BANKING
Internet banking involves the conduct of conventional banking activities on the Internet, that
is, the global network of computer which does not depend on any "brick and mortar" office
building; it offers financial services that are accessed through the Internet‟s World Wide Web
(W.W.W.). By reducing the overhead expenses of traditional banks, Internet banks in theory
can offer clients better interest rates on deposits than that of traditional banking average rate.
Banks often rely on the Internet to convey information about financial products to the general
public, replace business conducted at the branch offices, which do away with the need to put
up new branches, and to serve clients more efficiently. Internet banking sites present the
prospect of more suitable means to manage customer finances, and such activities as paying
bills on-line, searching for mortgage or auto loans, applying for credit cards, and finding the
nearest ATM or branch office. Several Internet banks also offer 24-hour telephone support,
so clients can discuss their needs with bank service representatives directly. Internet Banking
14
has the disadvantage of exposure to internet fraud, frequent network breakdown and virus
infection.
2.5.2 E-ZWICH
The national switch, otherwise known as E-zwich, which is a banking arrangement that make
available a common electronic platform linking the payment systems of all license banks and
non-bank financial organizations in Ghana, is a project undertaken by the Bank of Ghana, in
association with other banks to bring the payment systems in Ghana to the best global
standards. The Ghana interbank payment and settlement systems (GIPS) Limited, is the
company responsible for managing the national electronic banking switch. customers of e-
zwich can load money onto a „smartcards‟, which function in a like manner of bank debit or
credit cards, except that they require biometric (fingerprint) identification instead of pin
numbers and the cards can work in e-zwich Point of Sale (POS) machines that are „off-line‟,
or do not require an active connection to the bank.
The benefits of the e-zwich card includes: improved revenue from a rising smartcard
customer base; reduced cash holdings, bank charges, communications costs, reconciliation
problems and reduction of risks linked with fraud; Additionally, the ability of the system to
reach the unbanked easily would bring more people outside the banking system into the
financial system and increase deposits mobilized by bank to enable them to create more
credit; The users will also profit from a more comfortable, less risky and easier means of
spending and receiving money through the use of the smart card.
2.5.3 TELEPHONE BANKING
Telephone banking is a bank innovation that enables the clients of a bank to undertake
banking activities through the telephone. It can be considered as a form of remote or virtual
banking, which is basically the performance of bank financial activities through
15
telecommunication devices whereby bank clients can undertake retail banking business by
calling on the telephone or mobile communication unit which is connected to a system of the
bank by Automated Voice Response (ABR) technology, Balachandher et al, (2001).
For the assurance of the system‟s security, the client must be first authenticated via a numeric
or verbal password or by means of security questions being asked by a live representative at a
centre or branch. With a clear exception of cash dispensing in the form of deposits and
withdrawals, it offers almost all the functions of account balance information, standing
orders, ordering of cheque books and change of address. In addition to the self-service
activities listed earlier, telephone banking operatives are usually trained to do what was
conventionally obtainable exclusively at the branches. According to Leow (1999),
„Telephone banking, has numerous benefits for both customer and banks. It increases
convenience expand access and significant time saving. On the other hand, from the banks
perspective, the costs are substantially lower than those of branch based services‟. Telephone
banking has nearly all the effects on performance of ATMs, apart from the ability to produce
or dispense cash to the user. As delivery medium that offer retail banking activities to
customers even after banking hours (24hours a day), it provides persistent efficiency for the
bank. It makes banking at the client‟ convenience possible both in their homes and offices,
the customer can perform banking without visiting the ATMs or the branch office of the
bank. These results in saving time spent on banking, it also provides convenience, efficient
and higher productivity for both the bank and customers.
2.5.4 AUTOMATIC TELLER MACHINE (ATM)
ATMs are the most commonly used bank innovation in recent times. Almost all the universal
banks in Ghana have this facility available for their customers. On most contemporary ATM,
the clients is identified after inserting a plastic ATM card with a magnetic stripe or a plastic
16
smart card with a chip, that contains a unique card number and some security data, such as
cessation date and personal identification number (PIN), join computer terminals accounting
records and the cash vault in one unit, allowing clients to go into the bank‟s record keeping
system with a plastic card containing a personal identification number (PIN) or by punching a
special code number into the computer terminal linked to the bank‟s computerized records 24
hours a day. Once entrance is attained, it grants a lot of retail banking services to clients.
ATMs are generally situated outside of the banks halls, and could also be located at filling
stations, airports mall, supermarkets and places far from the branches of a bank. They were
established initially to work as cash generating or dispensing devices. However, because of
advancement in technology ATMs are capable of offering a variety of banking services, for
example withdrawing cash, cash transfers from one account to another and bill payments,
checking account balances, making deposit and printing account statement. Banks use the
ATM as well as other innovative products to achieve competitive advantage, because it has
the effect of cost reduction and depicts an image of a strong bank.
2.5.5 MOBILE BANKING
This is a wireless internet application of banking generally referred to as m-banking. This
involves the working together of the internet and mobile phone communication for banking
activities. This innovation offers the customer services such as SMS Banking that provides
instant notification about transaction which helps to keep a watch on account with a round the
clock services and to-ups of mobile phone credits. The customer is able to perform other
services such as account enquiries, request for cheque book.
2.5.6 BRANCH NETWORKING
Networking of bank branches is the computerization and inter-connecting of geographically
scattered unconnected bank branches, into one integrated system in the form of a Wide Area
17
Network (WAN) or Enterprise Network (EN) for creating and sharing of consolidated
customer information or records. The advantage is that it present is faster rate of inter–bank
dealings as the problem of remoteness and time constrains are removed. Thus, there is extra
output per time period. There are a number of networked branches serving the customer at
different locations of convenience to the client. There is virtual division of labour between
bank branches by means of its connected positive effect on output among the branches.
Additionally, as it reduces customer journey distance to their home bank branch, it makes
extra time available for the clients‟ productive activities.
2.5.7 ELECTRONIC FUND TRANSFER AT POINT OF SALE (EFTPOS)
An EFTPOS is an on-line arrangement that enables clients to transfer funds directly from
their bank accounts to a merchant‟s accounts after making purchases (at purchase points). An
EFTPOS employ a debit card to start an electronic fund transfer process, (Chorafas, 1988),
improved banking efficiency resulting from the use of EFTPOS to service clients shopping
payment conditions as an alternative to the bookkeeping duties in handling cheques and cash
withdrawals for purchases. Also, the system remained operational even after regular banking
hours; therefore, the bank continues to achieve efficiency even after normal banking hours. It
also saves clients time and energy in travelling to branches or ATMs for cash withdrawals
which can be exploited into other productive services.
2.5.8 CASH SMART CARDS
Smart cards are implanted with micro chip that enables data to be stored on the card. These
cards are referred to as Stored Value Cards. Its application is to store the customer‟s account
information, identification and value of his account and electronically transfer the customers
account. It has the advantage of carrying cash without the risk of having the cash lost or
stolen. The smart card gives the customer the convenience to cash money even after normal
18
banking hours and can be spent and loaded easily. It also gives the bank, the ability to control
the secure communication or transaction information between itself and its customer.
However, if a criminal manages is to find the pass code of a customer, he can access his
account hence putting both the bank and the customer at risk. It is expected that multifunction
smart cards will replace the credit card, debit card and potentially the medical insurance card.
While widely used in the developed countries, smart cards are just starting to appear in some
developing countries.
2.5.9 THE ELECTRONIC FUNDS TRANSFER SYSTEM (EFTS)
EFTS is an application of advanced computer and communication technology in effecting
payment. It is a communication network which allows the faster movement of information
from one location to another without any personal contact. Bank deposit balances can be
transferred to any area by electronic impulses. This system reduces the use of cheque
payments. With this system, the need for currency reduces and minimizes the production and
destruction costs in the use of coin, notes and cheque payments. With this system, the
problem of dud cheque risk on the part of both the bank and the customer is eliminated since
the adequacy of a customer‟s checking account balances are made known to the payee prior
to the transaction. It also benefits both the bank and customer by reducing float, quicker
availability of credits to accounts. Fierce, competition for consumer credits impersonalized
banking service for individuals, greater velocity, and smaller necessary volume of demand
deposits and centralization of account data. The use of EFTS has come about as a result of
different kinds of problem associated with the payment mechanism. The transfer of money in
particular has become increasingly expensive to operate especially as the tendency has been
for transaction service to be pared at minimum. The cheque is very costly to handle because
of its legality and the banks have therefore developed more economic methods of payment in
keeping with modern requirement by using this system.
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2.6 CRITIQUE OF EXISTING LITERATURE
The Ghanaian universal banks stand to benefit from the various positive effects of bank
innovations on their operations in terms of influences on total revenue, return on asset,
profitability and patronage of bank services or customer adoption, as reviewed from the
relevant literature and writers such as: Mawutor, (2014); Domeher et al., (2013); Agboola
(2003); Merton (1992); Zikmund et al, (2010); Chorafas, (1988); Leow (1999); Frimpong
(2010); Balachandher et al, (2001); PricewaterhouseCoopers, (2014). There is concentration
of the effect of bank innovation on profitability studied but these are mostly in developed
economies and other developing countries like Kenya and India, but the same cannot be said
much of Ghana. Ghana recent banking industry reforms have instituted the much needed
payments system facilities for the progress of efficient and effective financial markets. The
central bank is pursuing structural changes that will help to maintain the health and stability
of the financial market and improve the transmission mechanism of monetary policy. The
relevance of this study is derived from the fact that the relationship between investment in
innovations and the performance of universal banks has not been adequately researched into
in Ghana and this survey is an attempt to highlight the impact of innovations on performance
of universal banks in Ghana.
20
CHAPTER TREE
RESEARCH METHODOLOGY
3.0 INTRODUCTION
This chapter deals with the methodology employed in carrying out this study. The chapter
carefully examined the data sources and techniques used for data analysis. It also focuses on
the methodology by which information was collected, analyzed and interpreted. The research
was based on intuitive, authoritative knowledge, reasoning from findings and empirical
evidence from demonstratable facts through observation and or experimentation data
collection and analysis. The methodology covers the research design, population and sample
size, sampling techniques, data collection and analysis, reliability and validity of data and
ethical consideration.
3.1 RESEARCH DESIGN
According to Polit et al (2003), „a research design is the overall plan for obtaining answers to
the questions being studied and for handling some of the difficulties encountered during the
research process‟. In effect, the research design is the plan or process that collects data to
answer the research questions posed.
The research design involves specific data analyzing methods the researcher wishes to rely
on. A lot of strategies can be adopted such as descriptive, survey or case study, and
quantitative or qualitative. According to Creswell, (2003), „the research problem, personal
experience of the researcher‟s and the audience for whom the report will be written are the
criteria for selecting an approach‟. This study used the survey methodology. According to
Nesbary, (2000), a survey research is a „process of collecting representative sample data from
a larger population and using the sample to infer attributes of the population‟. The
21
justification for using this design is that it allows for the generalization of results from sample
perspective for the whole population. The time frame for data collection is short as compared
with other methodologies; it also has a high level of reliability which facilitates the
generalization from a sample population. Leedy, (2001), argued that „a survey has the
advantage of wider application because it allows data to be collected on a large population
within a short space of time‟.
3.2 POPULATION OF THE STUDY
The population for a study can be defined as the total number of the units for which the
researcher requires information. The population can be a finite or infinite collection of
individual elements. According to Kumekpor, (2002), „population is the total number of all
units of the phenomenon to be investigated that exists in the area of investigation‟. The target
population for this study is management, senior staff and heads of sections or departments of
selected universal banks in Ghana. The reason for concentrating on these staff is that they are
responsible for the formulation and implementation of policies that affect the performance of
their respective universal banks. They also have greater understanding of the consequence of
innovations on financial operations after evaluation of these innovations.
3.3 SAMPLE SIZE AND SAMPLING TECHNIQUE
A sample can be described as a subset of a population or a selected representative of a larger
population. Kombo & Tromp (2009), defined population sample as „a set of respondents
selected from a larger population for the purpose of a survey‟. To collect information on the
entire population will amount to waste of resources such as time and money. On the other
hand, if the selected sample does not sufficiently reflect the features of the population, the
findings or outcomes of the study may be misleading. There are various sampling techniques
available for selecting samples for a study, and include simple random sampling, purposive
22
sampling, cluster sampling, stratified sampling and quota sampling. The purposive or
judgmental sampling technique was adopted to select the sample units. The reason for using
this technique is that it will select a logically assumed sample that can be a representative of
the larger population; it is also useful in situations where expert knowledge is required in
selecting a sample from the population or the researcher is bias towards a specific subject that
will produce the most extensive information of a population. Samples of 124 staff of the
fifteen (15) universal banks were purposively selected, and structured questionnaires were
administered to find out their views and knowledge of the consequence of bank innovations
on the performance these universal banks.
Table 3.1 Distribution of Population and Sample Size

Bank Estimated Population Sample Size
Bank A 115 4
Bank B 120 9
Bank C 220 14
Bank D 190 12
Bank E 109 11
Bank F 80 9
Bank G 60 6
Bank H 30 5
Bank I 180 12
Bank J 75 8
Bank K 130 9
Bank L 68 4
Bank M 92 6
Bank N 50 5
Bank O 87 10
Total 1,606 124
Source: Field data, 2015
23
3.4 DATA COLLECTION
The sources of information gathered for this research were primary. Structured questionnaires
were the main tool employed. Close-ended questions were used considering the topic studied
and the characteristics of the sample, close-ended statements were made requiring
„agreement„or „not agreed‟ answers. It should be noted that it is suitable for the type of issues
raised which were clear–cut and the use of this made handling and analysis easily and less
cumbersome.
Questionnaires were administered directly by the researcher and assistances that were trained
by the researcher. Respondents gave information on gender, age, department and period of work.
In the preparation of the questionnaire, a number of vital factors were taken into
consideration. These factors were mainly the nature of the respondents as well as the issue of
time among others. To this end, simple statement with optional responses were designed, this
will ensure the elimination of misunderstanding of questions asked that could impair the
validity of the research. It was also realized that respondents may not have enough time to
respond to too many questions. Hence, statements made, were streamlined to bring out the
most effective answers necessary for the purposes of the research.
3.5 DATA ANALYSIS
The responses were analyzed and presented in the form of tables. Figures calculate in
percentages and inferences subsequently made. Quantitative methods are used for the data
analysis. The quantitative method was appropriate for this study because it is relatively an
unexplored topic of financial research in Ghana.
3.6 RELIABILITY AND VALIDITY OF DATA
Kombo and Tromp, (2009), defined reliability as the „degree of consistency that the
instrument or procedure demonstrate‟. Validity refers to the congruent or “goodness of fit”
24
between an operational definition and the theory it is supposed to measure. Validity is used to
review and test the conformity of the various opinions whether the information received
measured what they are planned to measure.
3.7 ETHICAL ISSUES
The motivation and course of action of the study were made clear to the respondents before
data was collect; nonetheless, there were four ethical or sensitive issues that the study took
into account which may influence the outcome of the study. Firstly, in the banking industry
confidentiality is cardinal principle and this may affect the responses the staff gave. Despite
the fact that respondents‟ privacy and anonymity was guaranteed some respondents found it
difficult to make decisive commentary. Secondary that the distribution of questionnaire may
not be fairly across the banks and also the selection of participants may suffer from equity.
Thirdly, the study was restricted to participants located in Accra and Kumasi and thereby
ignoring the eight other regions in Ghana which could have material impact on the result of
the findings. Fourthly, Perceptions, attitudes and time constraints of the staff would have
influenced their responses. Some respondents were reluctant to give out information or
deliberately gave wrong information which led to the difficulty in obtaining valid data and
therefore, measurement error may have occurred.
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CHAPTER FOUR
DATA PRESENTATION AND ANALYSIS
4.0 INTRODUCTION
The study examined the effect of bank innovations on financial performance of universal
banks in Ghana. Questionnaire was used to assemble the primary data. Out of the one
hundred and twenty-four (124) questionnaires issued out to the respondents, 110 were
returned, representing a favorable response rate of about 89%. This chapter deals with the
data presentation and analysis in relation to the purpose of the study, which was to find out
the impact of various innovations on revenue, profitability, return on assets and the general
public‟s patronage of banking services.
4.1 DEMOGRAPHIC CHARACTERISTICS OF PARTICIPANTS
4.1.1 SEX OF RESPONDENT
The study collected information on demographic characteristics. Gender was considered to be
relevant because it has influences on the development, implementation and patronage of
innovation as confirmed by earlier studies (Rogers, 1995). The comprehensive outcome of
each of the demographic features is presented in the table below:
Table 4.1.1 Sex of participants

Sex Number Per cent (%)
Man 69 63
Woman 47 37
Total 110 100
Source: Field data, 2015
The above computation revealed that the majority of the participants were men. Particularly,
the statistics demonstrated that 63 of the respondents were men constituting 63% and 47 were
26
women representing 47%, as exhibited in the table above. This statistics confirmed some
belief that most or majority of bank executives in Ghana are men.
4.1.2 AGE OF PARTICIPANTS
The next demographic variable of the participants was their age bracket the researcher
wanted to find out the age characteristics of bank executives in Ghana. The following table
shows the age distribution.
Table 4.1.2 Ages of Respondents

Age Bracket Number Percent (%)
10 – 20 0 0
21 - 30 2 2
31 – 40 21 19
41 – 50 44 40
Over 50 43 39
Total 110 100
Source: Field Data, 2015
The age variable of the participants examined showed that, the greater amount of the
participants were in the age bracket of 41 – 50 years representing 40%. This was followed by
participants aged over 50 years who accounted for 39% of the sampled size, the next age
bracket is 31 – 40 with 19 percentage point, interestingly the age bracket of 21 – 30 had 2
percentage point with age bracket of 10 – 20 having 0 percent. This study showed that
majority of universal bank executives in Ghana are aged over forty years. According to
AbuShanab et al. (2007). „Age is a significant factor that positively influences the adoption of
e-banking innovations‟. This generalization leads to the belief that younger people to easily
adopt innovations as compared with the adults.
27
4.1.3 DEPARTMENTAL DISTRIBUTION OF RESPONDENTS
Table 4.1.3 Department of Respondents

Department Number Percent (%)
Executive 4 4
Finance 46 42
ICT 9 8
Audit 3 3
Credit 27 25
Liabilities 7 6
HR 2 2
Others 12 10
Total 110 100
The departmental distributions of the participants examined showed that, the greater amount
of the participants were in Finance department representing 42%. This was followed by
participants in Credit department who accounted for 25% of the sampled size, the next is
those who did not associate with any department with 10 percentage point, ICT department
had 8% of the sample size. Liabilities follows with a 6 percent, Executive 4 percent, Audit 3
percent and HR had 2 percentages. The finance department recorded the highest response
because of the nature of the research, as the topic under study seeks to find out the effect of
bank innovations on bank performance.
4.1.4 BANKING SECTOR EXPERIENCE OF RESPONDENTS
The following were the result obtained from the study with regard to experiences of
respondents in the banking industry.
Table 4.1.4 Experience of Participants

Period Number Percent (%)
Less than 1 year 2 2
Between 1 – 5 years 20 18
Between 5 – 10 years 32 29
Over 10 years 56 51
Total 110 100
28
The experiences of the participants examined showed that, the greater amount of the
participants were in the year‟s bracket of over 50 years representing 51%. This was followed
by participants between 5 - 10 years who accounted for 29% of the sampled size; the next
bracket is 1 – 5 with 18 percentage point, with the least percentage point participants with
less than 1 year. Most of the bank executives have being working for more than five years
which shows that staff retention in the banking sector is significant as it is generally assumed
that, the more the worker stays on a job for a long time, the more efficient and effective
he/she becomes in terms of performance of output and the ultimate ripple effect on the
banking sector in general.
4.2 DATA ANALYSIS OF BANK INNOVATIONS
4.2.1 EFFECT OF BANK INNOVATIONS ON TOTAL REVENUE
The aim of this section is to find out the effect or influence of bank innovations on revenue of
universal banks in Ghana. The questionnaire was flamed in the form of a statement been
made for the respondents to confirm the degree of their agreement or otherwise. The likert
scale was used to assign values to the responses.
4.2.1.1 AUTOMATED TELLER MACHINES (ATMS)
Analysis of data collected on the effect of ATMs on increasing commission, interest income
and the potential for generating income for the banks are presented in table 4.2.1.1. Which
shows that 83% representing about 91 of the respondents agreed in total that ATMs have
positively affected fee based income, 15% were neutral and 2% are in disagreement. In the
same vein, when asked about ATMs influence on interest based income 23% of respondents
totally agreed, 4% were indifferent and 73% totally disagreed that ATMs affect interest
income. 72% of the respondents totally agreed that ATMs have the potential to expand
29
income generating capabilities of the banks, 5% were undecided and while 23% disagreed
with the statement.
These results confirmed a similar study done by Ngumi (2013) which concluded that
commercial banks in Kenya had the believe that investment in ATMs will continue to yield
more incomes in the forms of commission, interest and has the potential for expanding the
operation of the banking industry. Banks should continue to invest more in ATMs for
improved returns or earnings.
Table 4.2.1 Automated Teller Machines (ATMs) and Bank Revenue

Strongly Strongly
Statement Agree Agree Neutral Disagree Disagree
% % % % %
ATMs have had constructive impact of 25 58 15 2
rising commission fee based revenue
ATMs have had constructive impact of 5 18 4 38 35
raising interest based revenue
ATMs have raise the revenue creation 27 45 5 18 5
prospect of the bank
4.2.1.2 E-ZWICH PAYMENT SYSTEMS AND BANK REVENUE
Data on Table 4.6 show the respondents have rejected the assertion that E-Zwich influences
the revenue of universal banks in Ghana. The findings of this research shows that 94% of the
respondents were in disagreed in total with the accession that E-Zwich had a constructive
impact on commission based revenue, 6% were neutral and none of the respondents agreeing
to the statement. With regard to the influence of E-Zwich on increment in interest based
income all the respondents (100%) totally disagreed with the statement. Again all the
respondents disagreed that E-Zwich has expanded the revenue generating prospects of the
banks. These results proved that the banks executives survey believe that the introduction of
30
E-Zwich do not any direct consequence on income in the form commission, interest or the
potential for future expansion.
The effect is that managers would be reluctant in giving their maximum support for such a
national platforms that has little benefit as exhibited in the table below. Therefore, the bank
of Ghana in coming out these products must have broad consultation especially with the
universal banks for a successful implementation.
Table 4.2.2.2 E-Zwich Payment Systems

Strongly Strongly
% % % % %
E-Zwich have had a constructive 6 43 51
impact of raising commission fee
related revenue
E-Zwich have had constructive 58 42
impact of raising interest related
revenue
E-Zwich have raised the revenue 28 72
creation prospect of the bank
4.2.1.3 MOBILE/INTERNET BANKING AND BANK REVENUE
Data collected on table 4.2.1.3 revealed that 79% in total of the sampled population believes
that mobile banking and internet banking have positive effect of increasing commission based
income of the banks. 15% was indifferent and a total of 6% disagreed with the statement. On
the influence of internet banking on interest based income, a total of 39% agreed with the
assertion, and as much as 55% of the respondents were indifferent, and 6% disagreed. The
study further shows a positive relationship between internet banking innovation and the
potential for the banks to expand their income generating potential, with 94% of the
respondents agreeing, and only 6% of the respondents remained neutral.
31
The result for mobile/internet banking received an overwhelming agreement that it have
influence on income, bank executives will be confident investing more of the resources in
these products which believe will in more revenue.
Table 4.2.1.3 Mobile/Internet Banking

Strongly Strongly
% % % % %
Mobile/internet banking have had 12 67 15 5 1
constructive impact of raising
commission fee related revenue
Mobile banking have had 5 34 55 6
interest related revenue
Mobile banking have raised the 40 54 6
revenue creation prospect of the
bank
4.2.2 INFLUENCE OF BANK INNOVATIONS ON RETURN ON ASSETS
The researcher in this part was to find out the impact of bank innovations on returns on assets
of the banks.
Table 4.8 reveal the answers on the effect of ATMs on return on assets, 71% of the
respondents agreed that ATMs have high rate of return on assets, 19% of the respondents
were neutral and 9% disagreed. 25% of the respondents confirm that investment in ATMs
have payback period of less 4 years, 14% were indifferent, and the majority of the
respondents representing 61% disagreed that ATMs have period of payback is less than 4
years. On revenue generation ability, 59% were in agreement ATMs have effect on income
mark-ups, 9% disagreed, whilst 32% were in disagreement.
32
The imply that ATMs are a good source of operational cost reduction, a period for payback
that is less than 4 years and greater mark-ups on income. Banks should therefore, invest in
these products to improve upon shareholders returns on equity.
Table 4.2.2.1Automated Teller Machines (ATMs)

Strongly Strongly
% % % % %
ATMs leads to a decrease in cost of 23 48 19 5 4
banking, and therefore, have higher
rate of returns on assets of the bank
Cost of ATMs have payback years 1 24 14 41 20
that is less than four (4) years and
therefore, better return on assets
Revenue generated through ATMs 10 49 9 4 28
have had greater effect on income
mark-ups
4.2.2.2 E-ZWICH PAYMENT SYSTEMS
Data in table 4.9 shows how the respondents perceived the effect of E-Zwich on the rate of
return on assets of the universal banks. Only 6% of the sampled units agreed that E-Zwich
has enhanced return on assets, 4% were indifferent and 90% disagreed. None of the
respondents agreed that E-Zwich has payback of less than 4 years, 2% were neutral while
98% disagreed. On revenue generation from ATMs and its mark-ups all respondents
disagreed.
In effect, the bank executives have rejected E-zwich as having contributed to the banks‟ rate
of return on assets. This means that the universal banks do not benefit directly from the
national payment platform introduced by the Ghana Integrated Payments and Sustems
(GhIPSS).
33
Table 4.2.2.2 E-Zwich Payment systems
Strongly Strongly
% % % % %
E-Zwich has lead to a decrease in 6 4 75 15
cost of banking, and therefore, have
higher rate of returns on assets of
the bank
Cost of E-zwich has payback years 2 89 9
Revenue generated through E-Zwich 96 4
has had greater effect on income
mark-ups
4.2.2.3 MOBILE/INTERNET BANKING
As shown in table 4.10, 93% of the respondents were in agreement that mobile and internet
banking influences cost reduction and hence increase return on asset, 4% cannot decide and
3% Disagreed. On statement on payback, 68% agreed that mobile banking has a payback less
than 4 years, 11% of those sampled were indifferent while 21% disagreed. 81% of
participants believed that revenue generation of internet/mobile banking have greater impact
on bank income mark-ups and therefore increases return on asset, 10% remained neutral and
9% disagreed with the statement.
The imply that Mobile/Internet are a good source of operational cost reduction, a period for
payback that is less than 4 years and greater mark-ups on income. Banks should therefore,
embark on investment in these products to improve upon shareholders returns on equity.
34
Strongly Strongly
% % % % %
Mobile/Internet banking have lead to 28 65 4 3
a decrease in cost of banking, and
therefore, have higher rate of
returns on assets of the bank
Cost of Mobile/Internet banking 4 64 11 14 7
have payback years that is less than
four (4) years and therefore, better
return on assets
Revenue generated through 8 73 10 5 4
Mobile/Internet banking have had
greater effect on income mark-ups
4.2.3 CONSEQUENCE OF BANK INNOVATIONS ON BANK PROFITABILITY
The forth aim of this work was to find out the impact of bank innovations on universal banks‟
annual profits, and following results were obtained and analyzed in tables below.
As shown in Table 4.11 the analysis of the result in respect of the consequences of ATMs on
the profitability of the universal banks. 93% of the respondents agreed as having contributing
to annual profits of the banks, whilst 4% were indifferent and 3% disagreed. On whether
ATMs have low maintenance costs, 33% of the respondents strongly agreed, 52% agreed, 7%
were indifferent, 3% disagreed and 5% strongly disagreed. On whether investments in ATMs
are mostly motivated by profit 70% of the respondents confirmed that, 18% were undecided
while 12% were in disagreement.
The effect of the above analysis is that the bank officials accepted the fact that ATMs
contributes immensely to towards the profitability of the banks.
35
Table 4.2.3.1 Automated Teller Machines (ATMs)
Strongly Strongly
% % % % %
Revenue from ATMs have high 41 52 4 3
mark-ups and therefore, leading to
more profits for the bank annually.
Operating costs of ATMs are low 33 52 7 3 5
leading to increase profitability
levels of the bank
The motive for investing in ATMs 13 57 18 8 4
is basically making profits to the
bank
Table 4.12 shows the outcome attributable to the respondents relating to the consequence of
E-Zwich on the profitability of universal banks in Ghana. Only 6% agreed that E-Zwich have
revenue that have high mark-ups and therefore, contributing to profit of the financial
institutions, 2% were neutral, and 70% disagreed while 12% strongly disagreed. As to
whether E-Zwich has low maintenance cost, 6% agreed, 3% neutral, 70% disagreed and 12%
strongly disagreed. 1% was neutral that investment in E-Zwich is motivated by profits, 82%
disagreed 12% strongly disagreed.
Again the above is an indication that the executives of the universal banks rejected the
profitability of the E-zwich to the banks.
36
Strongly Strongly
% % % % %
Revenue from E-zwich have high 6 2 70 12
Operating costs of E-zwich are low 6 5 84 5
leading to increase profitability
levels of the bank
The motive for investing in E-zwich 2 81 17
bank
The impact that mobile and internet banking currently have on the profit levels of the
universal banks in Ghana, are presented in table 4.13. Sixty four percent strongly agreed that
revenue from internet banking has a high mark-up and therefore, contributes to the annual
profits of universal banks, 27% agreed, 2% were indifferent, 4% disagreed while 3% strongly
disagreed. Regarding whether mobile banking have low operating costs and leading to
increase profit levels, 19% strongly agreed, 49% agreed, 28% were neutral and four percent
were in disagreement. Twenty nine percent strongly agreed that investment in mobile
banking is profit motivated, 61% agreed 1% was indifferent, 7% disagreed and 2% strongly
disagreed.
The result for mobile/internet banking received an overwhelming agreement that it have
influence on profitability, bank executives will be confident investing more of the resources
at their disposal in these products which they believe will improve profitability.
37
Strongly Strongly
% % % % %
Revenue from Internet Banking have 64 27 2 4 3
high mark-ups and therefore, leading
to more profits for the bank
annually.
Operating costs of Mobile banking 19 49 28 4
are low leading to increase
profitability levels of the bank
The motive for investing in ATMs 29 61 1 7 2
bank
4.2.4 IMPACT OF BANK INNOVATIONS ON PATRONAGE OF BANKING
SERVICES
The above objective was aimed at finding out the impact of bank innovations on patronage of
banking services.
The following table 4.14 displays the outcomes from respondents in respect of the impact of
ATMs on the level of deposit on the universal banks in Ghana. Asked whether ATMs have
brought more retail savers to the bank, 82 agreed, 9% were neutral, and 9% disagreed. With
regard to whether ATMs have enabled customer access to their deposits, 96% agreed, 4%
were neutral. On whether corporate savers could be attracted through ATMs, 2% was neutral
and 98% disagreed.
It was generally, accepted that ATMs attracts retail savers to the universal banks, and grants
the customer a greater access to saved funds. The bank executives were of the opinion that
ATMs is not good source for attracting corporate savers.
38
Table 4.2.4.1 Automated Teller Machines (ATMs)
Strongly Strongly
% % % % %
ATM services have brought more 23 59 9 6 3
retail savers to the bank
With ATMs bank customers are able 55 41 4
to access their deposits all the 24
hours in a day for withdrawal
Corporate savers could be attracted 2 63 35
through ATMs
Table 4.15 below exhibits the outcome of the study on the impact of E-Zwich on customer
deposits in commercial banks in Ghana. On whether E-Zwich payment systems have
attracted more retail depositors, 21% of the respondents were indifferent, 59% disagreed and
20% strongly disagreed. On whether with E-Zwich customers are able to access their deposits
all the 24 hours in a day for withdrawal, 36% strongly agreed, 61% agreed, 2% neutral and
1% disagreed. On whether E-Zwich has attracted more corporate depositors and deposits,
67% of the respondents disagreed and 33% strongly disagreed.
The impact of E-Zwich on savings has not been favorable as the bank executives totally
reject it as a tool for deposit mobilization in Ghana. However, on accessibility to deposits, the
product has been very effective in this regard.
39
Strongly Strongly
% % % % %
E-Zwich have brought more retail 21 59 20
savers to the bank
With E-Zwich bank customers are 36 61 2 1
able to access their deposits all the
24 hours in a day for withdrawal
Corporate savers could be attracted 67 33
through E-Zwich
Table 4.16 below exhibits the outcome of the study on the impact of internet/mobile banking
on customers‟ deposit habit in the Ghanaian universal banks. On whether mobile/internet
banking has attracted more retail depositors for the bank, 78% agreed in total, 6% were
neutral, 16% disagreed in total. As to whether mobile banking has enabled customer to access
their deposits, 72% agreed in total, 8% were indifferent, and 18% also disagreed in total. On
the attracting corporate savers, 4% agreed, 1% was neutral and a total of 95% disagreed with
the statement.
The result showed that, though mobile/internet banking is very effective in promoting the
patronage of banking services in Ghana, it is only exclusive to retail customers but not
applicable to corporate or institutional customers.
40
Strongly Strongly
% % % % %
Mobile/Internet banking have 31 47 6 10 6
brought more retail savers to the
bank
With Mobile/Internet banking 22 50 8 12 8
customers are able to access their
deposits all the 24 hours in a day for
withdrawal
Corporate savers could be attracted 4 1 71 24
through Mobile/Internet banking
41
CHAPTER FIVE
SUMMARY OF FINDINGS, CONCLUSION AND RECOMMENDATIONS
5.0 INTRODUCTION
This study sought to find out the effect of bank innovations on the financial performance of
universal banks in Ghana. There are so many innovations in the financial sector, but this
investigation was limited to Automated Teller Machines (ATMs), E-Zwich Payment systems
and Mobile/Internet Banking. The study throw light on the consequences of these innovations
that the banks are coming up with on total income, return on assets, patronage of bank
services in Ghana and profitability of the banks. This chapter is a composition of the
summary, conclusion drawn on all that have been discovered out of the study, the finding
thereof and the relevant recommendation made that would lead to clear understanding of the
impact of bank innovations on performance of universal banks in Ghana.
5.2 SUMMARY OF FINDINGS
The arrival of the Internet and the proliferation of mobile telecommunication companies in
the Ghanaian economy have offered both an opportunity and a test for the Ghanaian banking
sector. For years, banks in Ghana have used strong computer networks to mechanize million
of daily transactions, but in recent times, frequently the only paper record is the customer‟s
receipt at the ATMs or point of sale. Now that bank customers can be linked to the internet
through personal computers and mobile phones, banks foresee related economic benefits by
adapting new and innovative electronic processes for their operations. Various findings were
made with respect to the four stated objective as follows:
The first objective was to ascertain the impact of bank innovations on revenue of universal
banks in Ghana. It was discovered that most of the innovations have positive effect on
42
income. For example, 83% of the bank executives interviewed agreed that ATMs have great
influence on income, again 79% of interviewers agreed that mobile banking will increase
incomes of the banks, this is indicative for the fact that management will easily be convinced
investing in these products. Conversely, as much as 94% of the respondents were in
disagreement with the accession that E-Zwich had a direct constructive effect on revenue
generation of the banks.
The second objective was to find out the impact of bank innovations on return on assets of
the universal banks. It was discovered that most of the bank executives agreed that the
introduction of ATMs and Internet/mobile banking have a favorable consequences on return
on assets, on the other hand, majority of the sampled bank executives rejected the statement
that e-zwich has direct impact on return on assets, in effect these bank executives were of the
opinion e-zwich does not have direct effect on returns on assets.
The third objective was to establish the effect that innovations on profits of the universal
banks in Ghana. The findings discovered that some of the bank innovations have a
constructive influence on profitability of the universal banks in Ghana. According to the
respondents innovations such as ATMs and Mobile banking have influence on profitability.
The respondents rejected E-zwich innovation as having direct influence on the profit levels of
the universal banks in Ghana.
The fourth objective sought to find out the effect of innovative products on patronage of
banking services in Ghana. It was revealed that innovation have been helpful in attracting
customers to the banks. The respondents agreed that online banking is a influential "value
added" instrument to attract and maintain new customers while helping to remove costly
paper handling and teller interactions in an ever more competitive banking environment.
Over 82% of the respondents agreed to the assertion that ATMs have brought more
43
depositors to the banks. The bank executives also confirmed that the innovation products
have made it easier for bank customers to have access their deposits and can withdraw with
ease. The E-zwich machine in particular, despite its many benefits like convenience,
transaction speed, effectiveness in terms of security and easy access to cash did not receive a
favorable response from the bank executives.
5.3 CONCLUSION
The purpose of this work was to identify the effect of bank innovations on the financial
performance of universal banks in terms of income generation, liquidity, efficiency,
profitability and the general patronage of banking services by Ghanaians. This work is a
survey of bank executives from fifteen (15) universal banks in Ghana by the use of
questionnaires that were administered to find out opinions of bank executives on the effect of
bank innovations on financial performance. From this study it was found that the
performance of banks in Ghana in the near future would greatly be based on factors such as
the introduction of efficient and effective innovative products such as ATMs and
Mobile/Internet banking to attract customers, who are seeking for ease of banking, “presence
everywhere banking”, better customer service, and a convincing image of a strong bank.
These innovative products have the potential to improve upon the revenue generation and
profitability of the universal banks. The arrival of the Internet and the proliferation of mobile
telecommunication companies in Ghana present both an opportunity and a challenge to banks
in Ghana. The test for the banking sector has been how to formulate a new service delivery
means in such a way that its clients will enthusiastically learn to use and rely on. After all,
banks have spent many years to achieve customer‟s trust, and they are not prepared to risk
that on an internet site that is wearisome, confusing and less secure. Most of the universal
banks now present completely secure and functional online banking for free or for a small fee
to the customers. The opportunities presented could be seen in the area of operational cost
44
reduction that could be achieved through these innovative products, increase in customer base
or patronage of banking services.
5.4 RECOMMENDATIONS
From this study it has become clear that by embarking on bank innovation universal Banks in
Ghana will consolidate their gains and assets base by becoming more efficient in service
delivery and profitable to their shareholders. The following suggestions are made to the
universal banks and the entire financial market to enhance their customer base and improve
upon their profitability.
It is recommended that corporate banks must make it a policy to establish an efficient and
effective marketing department to oversee the publicity of all bank innovative products.
The Government through Bank of Ghana must continue to invest in researching into
innovations in the financial sector. The universal banks whose operations are affected by any
national innovative products or platforms such as E-zwich should be consulted and their
concerns factored in the product before implementation.
The pricing of innovative products should be reasonable in order not to further drive or scare
the prospective customers or users.
The problem of psychological dissatisfaction as a result of luck of trust in an innovative
products‟ security, that most customers are likely to complain of, should be addressed.
5.5 AREAS FOR FURTHER STUDIES
This research did not cover the satisfaction level of customers on bank innovations which
could be found as crucial for the success of these innovative products in Ghana. Research
should be conducted into the problems faced by users as they make attempt to adopt the
financial innovative products.
45
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(2001) “Electronic Banking in Malaysia: A Note on Evolution of Services and
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PriceWaterhouseCoopers, Accra.
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Ngumi, P. M. (2013). „Effect of Bank innovations on Financial Performance of Commercial

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Polit, D., & Beck, C., (2003). Nursing Research: Principles & Methods, & 7th Edition,
Lippincott, Williams & Wilkins, United States of America.
Rogers, E. M. (1995). Diffusion of innovations, 4th edition, Free Press, New York, NY.
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MA.
47
APPENDICES
Appendix A Letter of Introduction
Date…………………….
To
…..….………..…………..
….………………………..
… ………………………..
Kumasi
Dear Sir,
THESIS DATA ON ‘EFFECT OF BANK INNOVATIONS ON FINANCIAL

PERFORMANCE OF UNIVERSAL BANKS IN GHANA
I am a student of Kwame Nkrumah University of Science and Technology, Kumasi, and

pursuing my Masters of Business Administration Degree, Banking & Finance option, I am
conducting a research on the topic, „Effect of Bank Innovation on Financial Performance of
Universal Banks in Ghana‟. I am in the process of assembly important data for this work.
You have been recognized as one of the respondents in this study. I wish to guarantee that
your answers will be handled with utmost good faith and in the greatest confidentiality; the
responses will be used exclusively for the reason of this study.
You are kindly requested for your help which will go a long way in making the study
successful.
I thank you for your immeasurable contribution in terms of time and responses. It will be
appreciated if you can complete the form within the next 7 days to facilitate early completion
of the study.
Yours Sincerely
William Yeboah Sampong
Student No. 20288141
48
Appendix B Questionnaire
SECTION 1: GENERAL INFORMATION

This questionnaire is intended to gather data concerning the impact of bank innovations on
financial performance of universal banks in Ghana.
1. Bank Information
Bank Name (Voluntary) ………………………………………
2. Participant Information
Sex: Man Woman
Age range (tick as suitable)
No. Age range Mark as suitable
a 20 – 29
b 30 – 39
c 40 – 49
d 50 – 59
e 60 & Over
Section (tick as suitable)

No. Section Mark as suitable
a Chief Executive
b Accounting
c ICT
d Audit & Assurance
e Credit Management
f Liabilities
g Human Resource
i Others
Period of you have been working this Bank (Mark as suitable)

No. Period (Mark as suitable)
a Less than 1 year
b Between 1 – 10 years
c Between 11 – 20 years
d More than 21 years
49
SECTION 2: EFFECT OF BANK INNOVATIONS ON TOTAL REVENUE
Under this part a statement concerning the effect of bank innovations on revenue generation
of the bank is made. Please answer with a response that fit your judgment. Kindly mark as
suitable in the boxes a mark (√)
Neither
Strongly Strongly
Disagree agree not Agree
No Statement disagree agree
disagree
1 2 3 4 5
Automated Teller Machines (ATMs)

1 ATMs have had constructive impact
of rising commission fee based
revenue
2 ATMs have had constructive impact
of raising interest based revenue
3 ATMs have raise the revenue
E-Zwich Payment systems

4 E-Zwich have had a constructive
impact of raising commission fee
related revenue
5 E-Zwich have had constructive
impact of raising interest related
revenue
6 E-Zwich have raised the revenue
Mobile/Internet Banking
7 Mobile/internet banking have had
commission fee related revenue
8 Mobile banking have had
interest related revenue
9 Mobile banking have raised the
revenue creation prospect of the
bank
50
SECTION 3: EFFECT OF BANK INNOVATIONS ON RETURN ON ASSETS
Under this part a statement concerning the effect of bank innovations on returns on assets of
the bank is made. Please answer with a response that fit your judgment. Kindly mark as
Strongl Neither Strongly
y agree agree
Disagree Agree
No Statement disagre not
e disagree
1 2 3 4 5
Automated Teller Machines (ATM)

10 ATMs leads to a decrease in cost
of banking, and therefore, have
the bank
11 Cost of ATMs have payback years
12 Revenue generated through ATMs
have had greater effect on income
mark-ups

13 E-Zwich has lead to a decrease in
cost of banking, and therefore, have
the bank
14 Cost of E-zwich has payback years
15 Revenue generated through E-
Zwich has had greater effect on
income mark-ups
16 Mobile/Internet banking have lead
to a decrease in cost of banking,
and therefore, have higher rate of
returns on assets of the bank
17 Cost of Mobile/Internet banking
have payback years that is less
than four (4) years and therefore,
better return on assets
18 Revenue generated through
Mobile/Internet banking have had
greater effect on income mark-ups
51
SECTION 4: EFFECT OF BANK INNOVATIONS ON BANK PROFITABILITY
Under this part a statement relating to the effect of bank innovations on profitability of the
bank is made. Please answer with a response that fit your judgment. Kindly mark as suitable
in the boxes a mark (√)
Strongl Neither Strongly
Disagre
y agree not Agree agree
No Statement e
disagree disagree
1 2 3 4 5

19 Revenue from ATMs have high mark-
ups and therefore, leading to more
profits for the bank annually.
20 Operating costs of ATMs are low
leading to increase profitability levels
of the bank
21 The motive for investing in ATMs is
basically making profits to the bank

22 Revenue from E-zwich have high
23 Operating costs of E-zwich are low
leading to increase profitability levels
of the bank
24 The motive for investing in E-zwich is
25 Revenue from Internet Banking have
high mark-ups and therefore, leading to
26 Operating costs of Mobile banking are
low leading to increase profitability
levels of the bank
27 The motive for investing in ATMs is
52
SECTION 5: EFFECT OF BANK INNOVATIONS ON PATRONAGE OF BANKING
SERVICES
Under this part a statement concerning the effect of bank innovations on patronage of
banking services. Please answer with a response that fit your judgment. Kindly mark as
Neither Strongly
Strongly agree agree
Disagree Agree
No Statement disagree not
disagree
1 2 3 4 5

28 ATM services have brought more retail
savers to the bank
29 With ATMs bank customers are able to
access their deposits all the 24 hours in
a day for withdrawal
30 Corporate savers could be attracted
through ATMs

31 E-Zwich have brought more retail savers
to the bank
32 With E-Zwich bank customers are able

to access their deposits all the 24 hours
in a day for withdrawal

through E-Zwich
34 Mobile/Internet banking have brought
more retail savers to the bank
35 With Mobile/Internet banking
customers are able to access their
deposits all the 24 hours in a day for
withdrawal
through Mobile/Internet banking
53

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EFFECT OF BANK INNOVATIONS ON FINANCIAL PERFORMANCE OF

UNIVERSAL BANKS IN GHANA

William Yeboah Sampong (BBA)

A thesis submitted to the department of Accounting and Finance,

Kwame Nkrumah University of Science and Technology,

in partial fulfillment of the requirement for the award of

MASTER OF BUSINESS ADMINISTRATION IN

of my knowledge, it contains no material previously published by another person nor material

due acknowledgement has been made in the text.

William Yeboah Sampong …………………… ………………..

guidance and supervision of this theses.

players and support keeps spurring me on to this height.

understanding to go through this course successfully.

The Ghanaian Banking industry is witnessing a revolution as a result of technological

factored in the product before implementation.

Table 3.1 Distribution of Population and Sample Size ............................................................ 23

1.0 BACKGROUND OF THE STUDY

payment systems and employ an extensive variety of financial intermediation functions in

banking industry. According to the 2014, Ghana Banking survey by PricewaterhouseCoopers

Ghanaians while the remaining is backed by international owners.

Bank innovations involve the development of new products/services or production process

improved service delivery.

restructure their system of operations by embarking on Bank Innovation or other Direct

still attend to the bank teller or automatic teller machine (ATM)

bank service representatives.

universal banks, therefore, developed different innovative products in order to stay in

1.1 STATEMENT OF THE PROBLEM

„innovations provide an impetus for banks to improve their market performance by

profit levels of universal banking institutions in Ghana.

1.2 OBJECTIVE OF THE STUDY

objectives in evaluating the impact of bank innovation on financial market as follows:

1. To examine the effect of innovations on the revenue or income of universal banks in

2. To examine the effect of these innovations on liquidity and efficiency of banks in

of the universal banking institutions in Ghana.

4. To find out the effect of bank innovations on patronage of banking services.

of selected commercial banks in Ghana:

1. Whether Automatic Teller Machines (ATMs) have had an encouraging impact of

improving bank earnings in terms of commissions?

return on assets for the bank?

4. Whether Mobile/Internet Banking achieves less costs of operation resulting in greater

amounts of profits over their useful life to the firm?

5. Whether Mobile/Internet Banking facilitates or enhances the accessibility to funds by

customers for ease of withdrawal?

1.4 SIGNIFICANCE OF THE STUDY

intermediation‟ (Acquah, 2006).

help the public and banking officials in their work.

1.5 SCOPE AND LIMITATIONS OF THE STUDY

1.6 ORGANIZATION OF THE STUDY

and recommendations based on a researcher‟s topic.

This chapter undertakes an academic appraisal of diverse literatures pertaining to bank

review; bank innovations and their effect on bank performance.

2.1 DEFINITION OF KEY TERMS

2.1.1 FINANCIAL PERFORMANCE

Financial performance could also be described as the measurement of an organization‟s total

performances between firms across the banking industry.

2.1.2 RETURN ON ASSET

the total assets of a bank.

merchandising, agriculture, investment in socio-economic development and the provision of

services to the peripheral markets like unbanked or under-banked in an economy.