Adoption of Electronic Banking in Ghana Banking System

A Case Study of Guaranty Trust Bank (Ghana) Limited

Research Paper (postgraduate), 2014

47 Pages, Grade: A



Electronic banking (e-banking) has brought about a revolution in the functioning of banks as it offers major opportunities to banks and their customers. This has made the transition to electronic banking a necessity for banks in order to be viable. Despite its benefits, developing countries still lag behind in the adoption of electronic banking. This study therefore seeks to examine the adoption of e-banking in the Ghanaian banking industry with Guaranty Trust Bank Ghana Limited (GTBank) as the case study to identify the benefits, challenges and critical success factors for the adoption of e-banking in the Ghanaian banking industry. The research made use of questionnaires and interviews to collect data from staff and customers of GTBank. The results of the study indicated that e-banking adoption was a business strategy taken by the bank in response to customer needs and the changing marketing trends in the banking industry. The benefits, challenges and critical success factors of e-banking are also identified and discussed. From the study it is obvious that tremendous benefitssuch as revenue generation, improvement in productivity and efficiency in service delivery and cost savings were derived from e-banking. The lack of a solid technology infrastructure was identified as a major challenge of e-banking adoption in the country. The study however revealed that there is a promising future for e-banking in Ghana.Some recommendations to enhance the adoption of e banking in country are made based on this study.

Key Word: Adoption of Electronic Banking In Ghana Banking Sector



The Banking Industry is one of the areas of business that has been influenced the most by technology. Banking operations have evolved from the mere exchange of cash, cheques and other negotiable instruments to the application of Information and Communications Technology (ICT) to banking transactions. Through technology, banks are now able to offer convenience services to their customers. According to Molla (2005), Information and Communications Technologies (ICTs) have changed the way of conducting business transactions and meeting the growing demands of customers for most organizations. The promise of ICTs in the banking sector has been seen in terms of its potential to increase customer base, reduce transaction costs, improve the quality and timeliness of response, enhance opportunities for advertising and branding, facilitate self-service and service customization, and improve customer communication and relationship.

Business via the internet or electronic commerce is providing a competitive advantage for banks by lowering operational cost and providing best satisfaction of customer needs. A strong banking industry is important in every country and can have a significant effect in supporting economic development through efficient financial services. In Ghana the role of the banking industry needs to change to keep up with the globalization movement. This change will include moving from traditional distribution channel banking to electronic distribution channel banking. Given the almost complete adoption of e-banking in developed countries, the reason for the lack of such adoption in developing countries like Ghana is an important research that needs to be addressed.

In the world of electronic commerce, it is very important that banks should provide electronic banking services in order to have the long-term survival (Burnham, 1996). Consequently, most banks in developed and some in developing parts of the world are now offering electronic banking services with various levels of sophistication. It is expected that banks that do not offer electronic banking services may lose their customers to their competitors (Orr, 1999).

Electronic banking is the automated delivery of new and traditional banking products and services directly to customers through electronic medium. This system allows customers to access their accounts, transact business, make enquiries and have prompt responses from banks (Parisa, 2006). Automated Teller Machines (ATMs), telephone banking, internet banking, mobile banking, debit cards, credit cards, online bill payment and many others are examples of how technology is changing traditional banking.

In a further development, Simpson (2002) contends that electronic banking has survived in a number of countries given its ability to increase banks market share and facilitation of business transaction. More linkage is therefore drawn on the importance of electronic banking to improve the business environment of any economy. Awareness, information, customer protection, response time, reliability, security, technology readiness all are considered to be important elements for electronic banking.

With the help of the internet, banks are providing benefits to their customers. From the customer’s point of view, electronic banking is providing convenient and valuable source to deal with funding because it provides convenience to access account 24/7 (Applegate etal., 1996). Customers can use these services anywhere that is homes, offices and so on and anytime without visiting the banks. The banks can use the electronic commerce technology for meeting the competitive advantage and gaining the best level of profitability while providing best services to its customers.

The banking system in developing countries is significantly different from that in developed countries such as the United State of America, Britain and South Africa. As with most developing countries, Ghana has been undergoing a process of financial sector restructuring and transformation as an integral part of a comprehensive strategy for sometime (Acquah 2006). According to Bawumia (2007) banks in Ghana will need to reinvest themselves in this new conducive but challenging environment. This is important because electronic transactions will continue to grow and only countries that make a move towards embracing electronic business will participate in this revenue generation (Akoh, 2001).

Harold and Jeff (1995) contend that financial service providers should modify their traditional operating practices to remain viable in the 1990s and the decades that follow. Woherem (2000) also claimed that only banks that overhaul the whole of their payment and delivery systems and apply ICT to their operations are likely to survive and prosper in the new millennium. He advises banks to re-examine their service and delivery systems in order to properly position them within the framework of the dictates of the dynamism of Information and Communication Technology.

Under these conditions, the transition to E-banking has become a necessity for banks as it offers major opportunities in terms of competitive advantage and allows banks on one hand to improve efficiency and operational effectiveness and on the other hand to develop a stronger and more durable business relationship with its customers. However, the adoption of innovation within an organization in general and the adoption of E-banking specifically is not always an easy thing to bring about as it can be complex and expensive to implement.


The Banking industry in Ghana plays a significant role in the country’s economy. Through borrowing, lending and related activities, banks facilitate the process of production, distribution, exchange and consumption of wealth. Banks also administer payment systems which are core to an economy. Competition and limitation of resources has placed banks under pressure to lower their transactional cost and improve their services and maintain quality of service.

According to Yasuharu (2003), implementation of information technology and communication networking has brought about a revolution in the functioning of the banks and the financial institutions. The transition to electronic banking has therefore become a necessity for banks as it offers major opportunities in terms of competitive advantage and it also allows banks to develop a stronger and more durable business relationship with its customers.

In developed countries, banks engage in vigorous e-banking and this had helped these banks to stay competitive through productivity gains, transaction cost reduction and customer service improvement. Despite its benefits, however, developing countries still lag behind developed countries in the adoption of e-banking.

Guaranty Trust Bank Ghana Limited (GTBank) is a universal bank which began operations in Ghana on 13th of March 2006.GTBank has earned a name as being one of the top technology driven banks in Ghana. The Bank uses its expertise and knowledge in the financial services industry to provide its customers with world class value-adding financial services. In recognition of this, GTBank Ghana was awarded the Best Bank of the Year and Best Bank in Electronic banking in 2009 and 2010. What did the Bank do for it to have successfully adopted e-banking and be awarded Best Bank in Electronic Banking for two consecutive years?

It is against this background that the researcher seeks to describe the status of adoption of e-banking in GT Bank as a means of identifying the benefits, challenges and critical success factors for the adoption of e-banking in the Ghanaian banking industry.


The general objective of this study is to describe the status of e-banking adoption in GT Bank.

The specific objectives to be achieved are:

1. To identify the services that are being provided through e-banking by GTBank.
2. To identify the benefits GTBank and its customers derive from e-banking.
3. To identify the critical success factors for the introduction of e-banking by GTBank.
4. To identify the challenges encountered in the adoption of e-banking by GTBank.


The following are the research questions to be addressed by this study.

1. What are the services that are being provided through e-banking by GTBank?

2. What are the benefits that may be derived by GTBank and its customers in adopting e- banking?
3. What are the critical success factors for the adoption of e-banking by GTBank?
4. What are the challenges GTBank face in introducing e-banking in Ghana?


The internet and internet based technologies have revolutionized the way banks operate and interact with their environment. The findings of this study would be useful to policy makers in the banking sector in the development ofa national policy framework for electronic banking adoption in Ghana to facilitate economic and social growth. This study would also assist all stakeholders in the banking industry identify and formulate strategies that will promote e-banking. This study also seeks to address the lack of studies on e-banking adoption in developing countries such as Ghana and also help researchers in studies related to e-banking.


As stated above, this research will focus on describing the status of electronic banking adoption in Ghana as a means of identifying the benefits, challenges and critical success factors for the introduction of e-banking in Ghana by GT bank. The study is also centered on the various types of e-banking products that have been released onto the Ghanaian market.

Due mainly to time constraint and the attention needed from the officials and respondents of the bank this study is limited to only one bank which is Guaranty Trust Bank Ghana Limited. Questionnaires were administered to officials and customers of the bank.


The research will be conducted among GTBank staff at the Electronic Channels, Cards Services and IT departments as well customers of the bank who use one or more of the e- banking services. The methodology used for the study will primarily be the use of questionnaires for respondents to answer and structured interviews. All questions will be close ended and arranged in proper order, in accordance with the relevance. This is to make interpretation a lot easier. The questionnaire will be designed in a straightforward manner for easy understanding to elicit the exact and appropriate responses required for the study.

The questionnaires will be self-administered to staff and customers of GT Bank and this will help to explain to respondents the essence of the research. The study will make use of Microsoft Excel 2010 and Statistical Package for Social Science version 19 for the data analysis.

The information gathered will be tabulated and then presented in both bar and pie charts for interpretation and analysis.


The entire research was organized into five parts and the outline of each chapter is given as follows:

Chapter One: This chapter discussed the Introduction, Background of the Study, Objectives of the Study, Statement of the problem, Objective of the Study, Significance of the Study and Research Problem.

Chapter Two: This was on Literature reviewed from relevant textbooks, journals, websites and other referenced sources. It also included the theoretical framework used for the study.

Chapter Three: This chapter covered the company profile and research methodologies used for the study.

Chapter Four: This chapter covered the presentation and analysis of data by way of figures, graphical presentation and statistics.

Chapter Five: This chapter comprised a summary of the research, conclusion and recommendation on how e-banking may be integrated into Ghanaian banking activities with GTBank as the case study.



This chapter appraises previous research by accredited scholars and researchers. A literature review is a body of text that aims to review the critical points of current knowledge on a particular topic. Its ultimate goal is to bring the reader up to date with current literature on the topic and forms the basis for another goal, such as the justification for future research in the area. The chapter starts with introduction of electronic banking, its adoption, the different E-banking service delivery channels, E-banking benefits, its challenges and Critical Success Factors. A brief history of how electronic banking was introduced in Ghana has also been discussed.


Vilattes (1997) defines E-banking as a distance banking that not only handles the flow of information between customers’ “living spaces” (e.g. homes, offices, etc) and the physical facilities of the bank, but also deals with solicitation, sales, distribution and access to services, all without requiring the customer and the financial institution representative to be in the same physical place at the same time.

According to Mols (1998), electronic banking is the automated delivery of new and traditional banking products and services directly to customers through electronic medium. This system allows customers to access their accounts, transact business, make enquiries and have prompt responses from banks.

Daniel (1999) described electronic banking as the provision of banking services to customers through Internet technology. Other authors (Mols, 1998; Karjaluoto et al., 2002) indicated that banks have the choice to offer their banking services through various electronic distribution channels technologies such as Internet technology, video banking technology, telephone banking technology, and Wireless Application Protocol technology (WAP). Karjaluoto et al. (2002) also indicated that Internet technology is the main electronic distribution channel in the banking industry. In more detail the author described E-banking as an online banking that involves the provision of banking services such as accessing accounts, transferring funds between accounts, and offering an online financial service.

Most electronic business specialists agree that E-banking ensures 24-hours-a-day, seven-days-a-week accessibility, through any type of advanced information system (Automated Teller Machines, Personal Computers, Internet, mobile phones etc.) and for all types of financial transactions (Daniel, 1999; Mols, 1998; Sathye, 1997).


Wang et al. (2003) claim that in the 1990s, E-banking was under-utilised as business organisations used it only to market their products and services. Thornton and White (2001), who examined customer orientations and usage of financial distribution channels in the Australian financial industry, found that more recently most financial institutions, faced with competitive pressure after the introduction of deregulation in 1983, had rethought their strategies to take full advantage of Internet technology. Tan and Teo (2000) note that the challenge to expand and maintain banking market share has influenced many banks to invest more in making better use of the Internet. The emergence of E-banking had made many banks rethink their Information Technology (IT) strategies in competitive markets. They suggest that the banks that fail to respond to the emergence of E-banking in the market are likely to lose customers and that the cost of offering E-banking services is less than the cost of keeping branch banking. This notion was also confirmed in a study conducted by Jasimuddin (2004) who examined the role of E-banking in Saudi Arabia.Jasimuddin indicated that the majority of Saudi banks had taken advantage of Internet technology to establish web sites but few offered E-banking services. He suggested that if the Saudi Arabian banking industry wished to be successful in the global economy it would need to integrate Internet technology into its banking strategy. Despite the fact that Internet technology acceptance is growing worldwide, the Ghanaian banking industry is yet to adopt fully Internet technology.

Information Technology (IT) is defined as the modern handling of information by electronic means, which involves its access, storage, processing, transportation or transfer and delivery (Ige, 1995). According to Alu (2002), IT affects financial institutions by easing enquiry, saving time, and improving service delivery. In recent decades, investments in IT by commercial banks have served to streamline operations, improve competitiveness, and increase the variety and quality of services provided.

Over time, technology has increased in importance in Ghanaian banks. Traditionally, banks have always sought media through which they would serve their clients more cost-effectively as well as increase the utility to their clientele. Their main concern has been to serve clients more conveniently, and in the process increase profits and competitiveness. Internet, electronic and communications technologies have been used extensively in banking for many years to advance the agenda of banks.

In recent years, the adoption of E-banking began to occur quite extensively as a channel of distribution for financial services due to rapid advances in IT and intensive competitive banking markets.

Automated Teller Machines (ATMs) were the first well-known machines to provide electronic access to customers. With the advent of the ATM, banks are able to serve customers outside the banking hall. The ATM is designed to perform the most important function of the bank. It is operated by a plastic card with its special features. The plastic card is replacing the cheque, personal attendance of the customer, banking hour’s restrictions and paper based verification. ATMs have made hard cash just seconds away all throughout the day at every corner of the globe. ATMs allow the Bank’s customers to do a number of banking functions – such as withdrawing cash from one’s account, making balance inquiries and transferring money from one account to another, purchase prepaid mobile phone a credits using a plastic, chip or magnetic-stripe card and a Personal Identification Number (PIN) issued by the financial institution.

The adoption of electronic banking is often credited with helping fuel strong growth in the many economies (Coombs et al, 1987). It seems apparent then that, electronic banking affects not just banking and financial services, but also the direction of an economy and its capacity for continued growth.

The idea of Internet banking according to Essinger (1999) is: “to give customers access to their bank accounts via a web site and to enable them to enact certain transactions on their account, given compliance with stringent security checks”. To the Federal Reserve Board of Chicago’s Office of the Comptroller of the Currency (OCC) Internet Banking Handbook (2001), Internet Banking is described as “the provision of traditional (banking) services over the internet”.

Internet banking by its nature offers more convenience and flexibility to customers coupled with a virtually absolute control over their banking. Service delivery is informational (informing customers on bank’s products, etc) and transactional (conducting retail banking services).

As an alternative delivery conduit for retail banking, it has all the impact on productivity imputed to Tele-banking and PC-Banking. Aside that it is the most cost-efficient technological means of yielding higher productivity. Furthermore, it eliminates the barriers of distance / time and provides continual productivity for the bank to unimaginable distant customers.


Banking in Ghana has undergone many changes in service delivery with the aim of improving the quality of service being provided to the customers. Banks were serving their customers through the manual system, which resulted in long queues to transact the business. The other problem faced by many companies in Ghana is that, many people including companies do not accept cheques as a payment method. This is because of the time and the inconveniences involved in accepting and depositing cheques company accounts. For decades, the banking sector was dominated by Barclays and Standard Chartered banks. Barclays Bank (formerly known as the Colonial Bank) in February of 2006 celebrated ninety years of its operations in Ghana and Standard Chartered bank (formerly known as the Bank of British West Africa) has been operating in Ghana since 1896.

Commercial banks began to operate in Ghana in 1874. The first commercial bank to operate in Ghana was the Bank of British West Africa (BBWA) now the Standard Chartered Bank (Ghana) Limited. It was established in 1874 with only one branch in Accra. In 1917, Barclays Bank, D.C.O (now Barclays Bank of Ghana Limited) started operations mainly to finance the booming foreign trade, mainly between Ghana and Britain. These two banks were overseas branches of large international banks incorporated in Britain. They handled all the commercial banking business in the country until 1953 when the state-owned Bank of the Gold Coast (the parent bank of both the Bank of Ghana and the Ghana Commercial Bank was inaugurated.

After Ghana attained its independence in 1957, the enactment of a legislative instrument of Parliament separated the Bank of the Gold Coast into the Bank of Ghana (the Central Bank) and the Ghana Commercial Bank (GCB). The two expatriate banks mentioned above and the GCB therefore, constituted the primary commercial banks in the country and have since dominated the commercial banking system, handling over 70% of all banking business in Ghana (Andoh, 1988). These three banks also constituted the commercial banking system before the 1970s; their main business being to finance foreign trade, while domestic lending in other sectors was minimal. Today, however, the credit distribution system has changed dramatically. The proportion of bank credit directed to the import trade sector, which averaged about 80% until 1960 have now declined to less than 30%. As of the end of December 1984, the number of branches of these three banks was two hundred and ten (210). GCB had the greatest number, one hundred and forty-nine (149), followed by Barclays bank with thirty-three (33) and Standard Chartered Bank with twenty-eight (28) branches scattered over the country.

As of December 1984, there were twelve (12) banks in Ghana: Ghana Commercial Bank, Barclays Bank of Ghana Limited, Standard Chartered Bank Ghana Limited, Agricultural Development Bank, Social Security Bank , Merchant Bank of Ghana Limited, National Investment Bank, Cal Merchant Bank, Ecobank Ghana Limited, Bank for Housing and Construction, Bank of Credit and Commerce and Ghana Cooperative Bank.

From that period to May 2012, several other banks been incorporated into the Ghanaian banking sector. These are: Guaranty Trust Bank Ghana Limited, Stanbic Bank, Zenith Bank, United Bank for Africa, Bank of Africa, Bank of Baroda, Energy Bank, Fidelity Bank Ghana Limited, International Commercial Bank, Access Bank Ghana, UniBank and Unique Trust Bank.

There have been some other changes in the sector mainly in terms of ownership. A large number of these new banks are now owned and managed by Africans, and the sector boasts a number of highly skilled and experienced bankers. Bank branches in Ghana increased by 11.3% from 309 to 344 between 2002 and 2004 with 81 new branches springing, from 2004 and 2006 indicating an increase of 23.5%. The total banking system assets at the end of October 2006 were ¢48,353.0 billion, representing an annual growth of 35.5%, as against 16.6% as of the end of October 2005 (Daily Graphic, December 19, 2006).


In Ghana, the earliest forms of internet, electronic and communications technologies used were mainly office automation devices. Telephones, telex and facsimile were employed to speed up and make more efficient, the process of servicing clients. For decades, they remained the main information and communication technologies used for transacting bank business.

Later in the 1980s, as competition intensified and the PC got proletarian, Ghanaian banks begun to use them in back-office operations and later tellers used them to service clients. Advancements in computer technology saw the banks networking their branches and operations thereby making the one-branch philosophy a reality. Barclays Bank Ghana Limited and Standard Chartered Bank Ghana Limited pioneered this very important electronic novelty, which changed the banking landscape in the country.

Probably, the most revolutionary electronic adoption in Ghana and the world over has been the ATM. In Ghana, banks with ATM offerings have them networked and this has increased their utility to customers. The Trust Bank, Ghana (now a member of the ECOBANK), in 1995 installed the first ATM. Not long after, most of the major banks began their ATM networks at competitive positions. Ghana Commercial Bank started its ATM offering in 2001 in collaboration with Agricultural Development Bank. Currently, almost all banks in the country operate ATMs. The ATM has been the most successful delivery medium for consumer banking in this county. Customers consider it as important in their choice of banks, and banks that delayed the implementation of their ATM systems, have suffered irreparably. ATMs have been able to entrench the one-branch philosophy in this county, by being networked, so people do not necessarily have to go to their branch to do some banking.

Though ATMs have enjoyed great success because of their great utility, it has been recognized that it is possible for banks to improve their competitive stance and profitability by providing their clients with even more convenience. Once again Information Communication Technology (ICT) was what saved the day, making it possible for home and office banking services to become a reality. In Ghana, some banks started to offer Personal Computer PC banking services, mainly to corporate clients. The banks provide the customers with the proprietary software, which they use to access their bank accounts, sometimes the internet via the World Wide Web (www). This is however on a more limited scale though, as it has been targeted largely at corporate clients. Banks have recognised the internet as representing an opportunity to increase profits and their competitiveness. Currently, many banks are offering internet banking (i-banking) in Ghana.

Historically, businesses interested in obtaining high levels of customer satisfaction have focused on using knowledgeable, pleasant servers to deliver high quality products and services to their target markets. Today’s consumer not only demands quality, but also demands that products and services be delivered quickly. Hence, firms must respond to these changes if they wish to remain competitive. As customers experience a greater squeeze on their time, short waits seem longer than ever before. If firms can improve customers’ perceptions of time they spend waiting to be served, then customers will experience less frustration and may feel more satisfied with the service encountered. Furthermore, as the service sector of the national economy expands, the structure of the traditional forty hours work week is eroding. Today, weekends are workdays and 24 hour service operations are commonplace with the supplement of internet banking on customers.

Over the last decade, the Ghanaian Government has made a serious effort to pursue a ‘knowledge-based economy’ agenda to make Ghana a preferred ICT destination. The use of the Internet in Ghana has also seen significant increases since the liberalization of the telecommunication industry in 1990s. The country had 18.1 Internet users per 1,000 people in 2005 as compared to 1 Internet user in 1999 (ITU, 2007). The number of PC ownership doubled to 52 owners per 1,000 people between 1999 and 2005. A National ICT for Accelerated Development policy was introduced in 2003 with the objective of engineering an ICT-led socioeconomic development process. The impact of these initiatives is evident in the November 2005 edition of African Business. The article on the Ghana profile page, entitled “Cake is bigger but the slices are smaller”, claimed interestingly “Ghana has the most developed IT sector in West Africa”. For a country which hitherto could clearly be described as sitting at the disadvantaged end of the global digital divide, it becomes important to ascertain how ICT is affecting the Ghanaian banking business, which also tends to contribute substantially to Ghana’s service sector revenues (ISSER, 2005).


In the Ghanaian banking industry, IT investments and adoption have become a very important component in achieving organizational goals due to competition. In recent past therefore, electronic and communications technologies have been used extensively in banking for many years to advance the agenda of banks. The earliest forms of electronic and communications technologies used by the banks were mainly office automation devices. Telephones, telex and facsimile were employed to speed up and make more efficient, the process of servicing clients.

However, with coming of new partners in banking industry, as competition intensified and the PC got proletarian, Ghanaian banks began to use them in back-office operations and later tellers used them to service clients. The advancements in computer technology have led to application and adoption of new IT investments that have changed the banking landscape in the country.

Arguably, the most revolutionary electronic innovation in this country has been the ATM. In Ghana, banks with ATM offerings have them networked and this has increased their utility to customers. Other technological innovations in banking sector include internet banking, telephone banking, Electronic funds transfer, among others.


Excerpt out of 47 pages


Adoption of Electronic Banking in Ghana Banking System
A Case Study of Guaranty Trust Bank (Ghana) Limited
( Atlantic International University )  (School of Business and Economics)
Ph.D. Economics
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ISBN (Book)
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adoption, electronic, banking, ghana, system, case, study, guaranty, trust, bank, limited
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Dr. David Ackah (Author)Makafui R. Agboyi (Author), 2014, Adoption of Electronic Banking in Ghana Banking System, Munich, GRIN Verlag,


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