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CHAPTER ONE: INTRODUCTION 1.1 Background to the Study Information Communication Technologies have been a current issue for the past few years and hardly a day goes without a newspaper covering news referring to the ‘new economy’ or ‘information society’. ICT is also widely talked about in academia and governmental bodies. This is as a consequence of their influence in many aspects of our society from on-line shopping to virtual chatting. This research concentrates on the effects of ICT in the performance of commercial banks. The aim is to identify and understand the changes that ICT is causing on the banking sector, in order to examine in detail how the recent (and foreseeable) advances in ICT are affecting the sector and its future evolution. As ICT is having a strong influence on the evolution of the financial sector as a whole, financial markets and banks, some characteristics of evolution of markets will fall within the scope of this research. There exists various approaches to studying the impact of ICT on the banking sector. In this research we combine the technology assessment (TA) and economic approach. The aim of TA is to state objectively as much as possible the positive and negative impacts, the costs and benefits, the risks and advantages associated with (present or foreseeable) technical challenges. TA is an appropriate conceptual framework for analyzing the multiple aspects of the relationship between technology and banking and payment systems. Information and Communication Technology (ICT) is a term that describes the combination of computer technology which is hardware and software with telecommunications technology such as data, image and voice networks. According to Lucas (2010) information technology refers to all forms of technology applied to processing, storing and transmitting information in electronic form. The physical equipment used for this purpose includes computers, communications equipment and networks. Effective service delivery is important and has a great influence on customer satisfaction, improving sales and market share (Joseph &stone, 2003). 1
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Commercial banking is at a stage where customer perceptions and preferences have a very important impact on a bank’s success. Customer satisfaction is a measure of how products and services supplied by a company meet or surpass customer expectation. The integration of world economies has opened an array of business opportunities as well as challenges for firms. Increased standardization activity reflects, among other factors, demand by consumers for safer and higher quality products, technological innovations, the expansion of global commerce and the increased concern by many governments to societal and welfare issues. Firms in service sectors such as banking are under constant pressure to perform better, cheaper and faster. The developments in information and communication technology (ICT) are radically changing the way business is done. Electronic commerce is now thought to hold the promise of a new
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