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1.1    Background to the Study

Globally, electronic transaction channels and financial performance have in recent years become popular topical issue in both developed and developing countries. They have succeeded in attracting a good deal of public interest because of its apparent importance for the economic health of financial institutions and society in general (Jara, Parra and Skarmeta, 2014). Increasing number of research on financial performance signifies the importance of this construct for the success of organizations. Thus, it is widely believed in finance literature that, financial performance (FP) is not only to maximize the returns of shareholders but is also a medium through which the economic development of a nation could be enhanced (Bicen, 2015). The advancement in electronic transaction has played an important role in improving effective service delivery in the money deposit banks in Nigeria. In its simplest form, this modern way of exhibiting transactions and deposit machines now allow customers to carry out banking transactions beyond banking hours. Specifically, with the recent development in technological advancement, individuals can check their account balances, transfer of money from one person to the other and make payments without having to go to the bank hall. This is gradually creating a cashless society where consumers no longer have to pay for all their purchases with hard cash hence improving customer relationship management system (Davinson and Sillence, 2014). The firms’ performance is critical to the growth and development of any economy, and Nigeria inclusive. Hence, good firm’s performance results into achieving strong competitiveness, high return on investment for shareholders, increase in the standard of living, improvement in the financial health of an organization, generating employment and increase in Goss Domestic Products (GDP) of an economy. Conversely, poor firm performance in the Nigeria banking industry is capable of causing financial ill-health that can adversely affect the industry’s competitiveness, poor standard of living, economic instability, as well as the relevant stakeholder returns on investment (Adeyemi, Ola, & Oyewole, 2014; Suffian, 2009). Therefore, in order to maximize the interest of all the stake holders and agencies, managers have to balance every group interest, for that will minimize the potential negative effects and consequences of divergent reactions on financial results of the organization (Ajagbe, Ismail, Isiavwe, & Ogbari, 2015; Amu Christian Ugwueze, Nathaniel & Nwezeaku, 2016). More importantly, FP in the money deposit banks in Nigeria remains a major contentious issue for researchers, practitioners as well as policy makers.            

However, the banking industry plays a major role in every economy. The provisions of financial services to consumers, businesses or government enterprises are carried out through electronic transaction channels. Banking consists of safeguarding and transfer of funds, lending or facilitating of loans, guaranteeing, creditworthiness and exchanging of money. In sum, performing all these important function effectively can influence firms’ performance. These services are provided by institutions such as money deposit banks, saving banks, trust companies, finance companies and merchant banks or other institutions engaged in investment banking. Thus, money deposit banks in Nigeria accept deposits and advice customers on technical matters related on how to invest wisely. This includes depository institutions such as commercial banks, savings and loans associations, building societies and mutual saving banks (Ajagbe, Ismail, Isiavwe and Ogbari, 2015). The modern use of technological advancement brought huge impact on banking sector and creates new interactive ways through which customers can interact with banks and with less human resources interference. For example, bank customers can pay for airline tickets and subscribe to initial public offerings by transferring the money directly from their accounts. More importantly, they can pay for various goods and services by electronic transfers of credit to the sellers account. As most people now own mobile phones, banks have also introduced mobile banking to cater for customers who are always on the move and hence improving firms’ performance. Electronic transactions allow individuals to check their account balances at ease and make fund transfers using their mobile phones. Specifically, electronic transaction has made banking operation system easier around the world and it is fast gaining acceptance in Nigeria. From these scenarios it is clear that financial performance (FP) could contribute to organizational survival in many ways. Davinson and Sillence (2014) argue that FP has potential to enhance and sustain the existing of the organizational through technological advancement, putting customers first, reducing friction, and increasing efficiency. FP may also contribute to organizational success by enhancing co-worker and managerial productivity, promoting better use of scarce resources, improving coordination, strengthening the organization’s ability to attract and retain better employees, reducing variability of performance, and enabling better adaptation to environmental changes (Laforet & Li, 2015; Kamau & Oluoch, 2016). Research demonstrates that FP can be an indicator to improve organization in complex work environments through measures or ratios which includes; gross profit margin (GPM), profit margin (PM), return on capital employed (ROCE), earning per share, (EPS), and return on investment (Bicen, 2015).     

More specifically, the development of electronic transaction channels changed the natures of financial services delivered to customer by the widely use of electronic banking technologies. More importantly, the electronic transaction channels can be achieved through the dimensions which include; automated teller machine (ATM), Mobile banking, internet banking, electronic fund transfer and direct deposit (Chad, 2011). These electronic transactions services give the customer the opportunity to conduct banking transactions with great peace of mind and at his/her convenience. It also saves time so that other interests can be taken into consideration. For example, these electronic transactions activities range from balance inquiry, cash withdrawals, bill payments, fund transfer, electronic payment, and loan applications among others (Babin and Griffin, 2010). In other words, financial performance is scientific evaluation of profitability and financial strength of any business concern (Jeffery, 2015). One of the most fundamental facts about businesses is that the FP of the firm shapes its financial structure and has the necessary liquidity to run its financial obligations and among other things.

In a survey of ten money deposit banks in Nigeria, Ehikhamenor (2013) identified some striking economic benefits that banks can derive from investing more in technology as time reduction, improved operations, increased profitability, better management-customer relationship, financial performance, streaming of operations, expansion of activities, improved service, minimization of risk exposure in turbulent markets, among others. Increasing number of research on financial performance work signifies the importance of this construct for the success of organizations. Multiple conceptualizations of financial and non-financial performance exist in the literature (e.g., pro-social organizational performance, contextual performance linking to customers’ satisfaction and internet banking (Onay and Ozsoz, 2013). Conceptualization of electronic transaction channels has not really received major research attention compared to other conceptualizations of automated teller machine, internet banking and mobile banking (Pikkarainen, Pikkarainen, Karijaluoto and Pahnila, 2014). According to the literature, that of point of sale too has not really gained much research attention (Pikkarainen, 2014).

The ultimate objective of any firm is to maximize returns while also preserving its risk occurrence (Akhlaq, 2011). Importantly, firm performance is essential to all investors and the investment firm. For instance, investors pay attention to current returns and the potential for future profits because of their interest in the market price of their investments (Abaddi, 2012). Financial Performance according to, Yazid, Razali, & Hussin (2012) is driven by past activities of the company which impact on the current and the future. Major concern had always been the measurement of firm performance. Acharyya & Ball (2011) stress that the primary goal of measuring financial performance is to assess the progress of achieving corporate objectives which can either be financial or non-financial.  

Given the foregoing analysis, some authors (Acharyya & Ball, 2011; Laforet & Li, 2015; Kamau & Oluoch, 2016; Kombo, Paulík and Kwarteng, 2016) have identified the firm performance as one of the key issue that enable investment firm to have continuity. The bulk of the financial performance problems and deficiencies of the financial investment firms in Nigeria could more appropriately be attributed to managerial inefficiencies and inappropriate management decision making. Specifically and summarily, there is a general consensus that the managements of financial investment firms can achieve both investors and firm performance through automated teller machine, human resources, mobile banking, internet banking, point of sale, good investment climate and deploying the resources where appropriate (Kylaheiko, Puumalainen, Patari & Jantunen, 2017).     

In any part of this globe, FP and better return on investment are the ultimate goals of not only individual investors but also to the nation at large (Davinson & Sillence, 2014), and therefore, governments are charged with the responsibility of creating enabling environment through which the investment firm can operate effectively. Thus, financial performance can guarantee the proper functioning of the economy and enhancing the standard of living of the individuals (Kyuska, 2015). FP involves a broad range of activities including good policy, governance, infrastructure, human resources, access to finance and better atmosphere. Therefore, Mundu, (2010) resolved that, financial performance can be defined in terms of profitability, liquidity, capital structure and market ratio, quality of services in terms of reliability, responsiveness, appearance, cleanliness/tidiness, comfort, friendliness, communication, courtesy, access and availability of security, flexibility in terms of delivery speed and specification, resource innovation, utilization in terms of productivity and efficiency,.

The present study is about exploring the mediating effect technological advancement on the relationship between electronic transaction channels and FP through the mechanism of automated teller machine, internet banking, mobile banking and point of sale. Performance of firm in relation to investors return by employees can be an important solution for improving performance and effectiveness in the Nigeria money deposit banks (NMDB). Literature has offered support to the role of technological advancement in improving effective functioning of organizations (Narteh, 2015). Research has also indicated that electronic transaction channels (ETC) in a firm is significantly correlated (Kyuska, 2015), which means that a firm that practices ETC will not likely exhibit signs of positive effect on their financial performance except management organize the right variables. Money deposit banks in Nigeria is expected to improve its’ FP when the organization practice the concept of management skill and motivate development of good relationship among their teeming customers of the firm and the bank staffs.

1.2 Statement of the Problem

Financial performance (FP) as one of the determining factor of success in investment organization has been receiving a great deal of research (Lwiki, Ojera, Mugenda, & Wachira, 2013; Tomno, 2014; Mwangi, 2014; Piotrowicz, & Cuthbertson, 2014), and successful organizations encourage employees to do more than their usual job duties to achieve both customers satisfaction, investors and financial performance (Kithinji, 2015).

Empirically, electronic means of transaction is one of the significant factors found to influence FP. The main electronic means of transaction that have received empirical attention in relation to FP over the years include automated teller machine (Siyanbola, 2013; Wong, 2014; Bichanga & Wario, 2014; Kaynak & Harcar, 2015; Laforet; 2015; Bicen, 2015 & Njenga, Kiragu; 2015; Mwatsika, 2016), internet banking (Mansumitrchai, Somkiat, Chiu and Candy, 2012; Muzividzi, Mbizi & Mukwazhe, 2013; Neghab, Heravi & Kahani, 2013; Camilleri, Cortis, Diandra & Fenech, 2014; Ray and Ghosh, 2014; Martins, Oliveira & Popovič, 2014; Kombe, 2015; Singh & Malhotra, 2015; Al-Smadi, & Al-Wabel, 2015; Stephen & Sandeep, 2015) and mobile banking (Laukkanen & Laukkanen, 2017; Lin & Kumssa, 2011; Saleem & Rashid, 2011; Mallikarjuna & Murali, 2014; Thakur, 2014; Ethang’atha, Thiaine, & Lyria, 2015; Mullan, Bradley & Loane,  2016; Dennehy, & Sammon, 2015; Mohammadi, 2015; Forrer & Donald, 2015; Nguyen, Cao, Dang, & Nguyen, 2016; Miao, & Jayakar, 2016; Morosan & DeFranco, 2016; Jafari, Jandaghi & Taghavi, 2016; Dupas, Karlan, Robinson & Ubfal, 2016; Kylaheiko, Puumalainen, Patari, & Jantunen, 2017; Mokhtar,  HIdayat-ur- & Katan, 2017). Only a few studies considered the effect of point of sale on FP despite the importance of electronic transaction channels in contemporary business organizations (Omwansa, 2013; Piotrowicz & Cuthbertson, 2014; Sharma & Chandak, 2015). Research establishes that the driving force is to identify the long queues that customers face in Nigeria money deposit banks when withdrawing money. This has propelled management to introduce the automated teller machine (ATM) system not only to reduce customers’ long queues but also to enhance or facilitate financial performance of the organization through appropriate patronage of customers (Saif-Alyousf, Saha, & Md-Rus, 2017). In other words, since the introduction of the ATM, the problem of long queues at the banking hall has not been solved (Ngugi, Pelowski, Koul & Ogembo, 2010). Thus, another bottleneck regarding the use of ATMs is the complexity in nature, technicality of its usage in the mind of some customers, reliability as compared to the financial performance and whether there is lack of education into the operation of ATM to some customers (Sharma & Chandak, 2015). In sum, other reasons for adopting ATMs include; reduction of customer service delivery time, improvement of quality of service, bringing services closer to customers and cutting on cost of operations (Ngugi, Pelowski, Koul and Ogembo, 2010). In support of this ground, Saif-Alyousf et al., 2017) argued that there is a high degree of customer complaints with ATMs downtime, cash out, inability to dispense cash, high charges and sometimes, poor service recovery efforts when customers have problems. Frequent system failure especially on ATM machines has also been of concern and affects quality customer service delivery especially during end of the month and during festive seasons when the service is most needed by customers (Ngugi et al., 2010).  

One of the prominent early studies that attempted to investigate the effect of mobile banking on FP is Clark (2011). They found that mobile phone transaction indirectly influenced FP. More specifically, mobile phones were developed to improve communication such as landline, telegrams and faxes. Financial institutions introduced mobile phone as an improvement to the banking channels. In this regard mobile phone service providers have taken mobile money services deeper into the financial sector by offering a range of financial services through their networks (Clark, 2011). The current mobile banking using mobile money services like has been established to cater for money transfer needs and demand by urban dwellers to their families in living in remote rural areas where there are no banks (Mahmood, Bagadu & Ford, 2014). Research establishes that M-banking is a profitable retail-banking product and has been the cornerstone of financial institution operation over the years (Solomon, Shamsudeen, Wahab, Ajagbe & Wallace, 2014). The adoption M-banking has been facing growing difficulties because of certain perceptions that bank customers have. In addition, it has been indicated that M banking growth and its usage in Nigeria has been growing at a slow rate (Solomon et al., 2014).  It is evident that M banking adoption is growing at a slower pace in comparison to the population that is eligible to have them (Clark, 2011). For example, in Nigeria setting mobile baking has been seen to be greatly used by many people in the urban settlers. Perhaps, adoption of this mobile platform has not been clearly seen to be translating into the performance of the banks as a result of rural areas that do not actively participate in the usage.

In a different perspective, literature reveals that the link between internet banking and FP was not only direct, but also indirect (Sundas, & Rashid, 2014). The impact of internet in this modern day is enormous to organizations and individuals in areas of business and research. More importantly, one of such scientific and technological innovation is the use of the internet in our daily affairs. Banks have been key users of the internet especially in Nigeria for more than a decade now (Adeyemi & Oyewole, 2014). Thus, Nigerian banks have branches scattered all around Africa and some in Europe and America, establishing a presence in developed countries. The maintenance of the link among all these branches can only be aided with the use of internet which comes with its cost and also the risk posed by internet hackers, virus programmers and hackers who steal users‟ passwords and convert the banks‟ customers‟ funds to theirs or purchase goods online from the banks‟ customers‟ accounts (Udo, 2015).

It is important to note that before the emergence of computerized banking system, banking operation was manually done, and that solely accounts for the inefficiency in handling transaction. This manual system involves posting of transactions from one ledger to another without the aid of computer systems. Computations which should have been done through computer or electronic machine were done manually, which sometimes lead to miscalculations due to human errors, thereby leading to extension of closing hours when account is not balanced on time (Siyanbola, 2013). Still, there is delay in payment of checks between banks; time wasted in banks as people line in queue waiting for service, errors as a result of manual work and fraud related cases was common (Wong, 2014).

Recent studies demonstrate that traditional banking is not positively related to organizational performance (Kaynak & Harcar, 2015; Bichanga & Wario, 2014; Kombo, Paulík & Kwarteng, 2016). Traditional banking system was often characterized by delay and inefficiency in the delivery of financial services until the introduction of electronic banking in recent years. Thus, the introduction of electronic banking system has brought efficiency and effectiveness in service delivery, reduces queues and cash handling. Another study conducted by Laforet (2015) revealed that implementation of information technology and communication networking has brought about a revolution in the functioning of the banks and the financial institutions. The electronic transaction through technologic

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