Project – ASSESSING THE IMPACT OF ARTIFICIAL INTELLIGENCE ON CUSTOMER BRAND TRUST AMONG SELECTED BANKS IN LAGOS.

CHAPTER ONE

INTRODUCTION

• Background to the Study

Artificial Intelligence (AI) has been increasingly integrated into various sectors, including the banking industry. In Lagos, several banks have adopted AI to improve their services, which has significantly impacted customer brand trust. According to a study by Akinola, O. O., Adebanjo, D., & Elbaz, J. (2020), AI applications in banking, such as chatbots and automated customer service, have enhanced customer experience, leading to increased trust in the brand. The study further revealed that customers appreciate the efficiency and accuracy of AI, which reduces errors and wait times.

However, the impact of AI on customer brand trust is not entirely positive. A study by Oyedele, A. (2019) found that while AI improves efficiency, it also raises concerns about data privacy and security. Customers are wary of the potential misuse of their personal and financial information, which can negatively impact their trust in the brand. The study suggests that banks need to ensure robust security measures to maintain customer trust.

Moreover, the effectiveness of AI in building customer brand trust also depends on the quality of the AI technology used. According to a study by Adeniji, A. A., & Ahiauzu, A. (2018), poorly designed AI can lead to customer dissatisfaction, which can harm the brand’s reputation and trust. The study recommends that banks invest in high-quality AI technology and regularly update it to meet customer expectations.

The role of AI in enhancing customer brand trust is also influenced by the level of customer awareness and understanding of AI. A study by Oke, A., & Idowu, A. (2020) found that customers who are unaware or have a limited understanding of AI tend to be more skeptical and less trusting of brands that use AI. The study suggests that banks need to educate their customers about AI to build trust.

Furthermore, the impact of AI on customer brand trust varies among different customer segments. According to a study by Eze, S. C., & Chinedu-Eze, V. C. (2019), younger customers are more accepting of AI and tend to trust brands that use AI more than older customers. The study suggests that banks need to consider the preferences of different customer segments when implementing AI.

Furthermore, while AI has the potential to enhance customer brand trust among banks in Lagos, its impact is influenced by various factors, including data privacy and security, the quality of the AI technology, customer awareness and understanding of AI, and customer demographics. Therefore, banks need to carefully consider these factors when implementing AI.

• Statement of the Problem

The problem of assessing the impact of artificial intelligence on customer brand trust among selected banks in Lagos is multifaceted and complex. The rapid integration of AI into banking operations has raised questions about its influence on customer trust in banking brands. According to a study by Lee and Lee (2019), the use of AI in banking can either enhance or diminish customer trust, depending on the perceived benefits and risks.

One aspect of the problem is the lack of understanding about how AI technologies are used in banking operations. A study by Bughin and Hazan (2017) found that many customers are unaware of the extent to which AI is used in their banking transactions. This lack of transparency can lead to mistrust and skepticism towards banking brands. Therefore, it is crucial to investigate how the use of AI in banking affects customer trust.

Another aspect of the problem is the potential for AI to erode the personal touch in banking relationships. According to a study by Parasuraman and Colby (2015), customers value human interaction in their banking experiences. The increasing use of AI may lead to impersonal banking experiences, which could negatively impact customer trust in banking brands.

The problem is further complicated by the potential for AI to make errors or to be used unethically. A study by Davenport and Ronanki (2018) found that AI systems can make mistakes, and these mistakes can damage customer trust in banking brands. Furthermore, there are concerns about the ethical use of AI in banking, as highlighted by a report by the World Economic Forum (2018).

The problem is also influenced by cultural factors. According to a study by Hofstede (2011), Nigerian customers may have different attitudes towards AI in banking compared to customers in other countries. Therefore, it is important to consider cultural factors when assessing the impact of AI on customer trust in banking brands in Lagos.

The problem of assessing the impact of AI on customer brand trust among selected banks in Lagos is complex and multifaceted. It involves understanding how AI is used in banking, the potential for AI to erode the personal touch in banking relationships, the potential for AI to make errors or to be used unethically, and the influence of cultural factors. Further research is needed to fully understand this problem.

Aim and Objectives of the Study

The aim of the study is to assess the impact of artificial intelligence on customer brand trust among selected banks in Lagos.

1. To examine the extent of artificial intelligence integration in selected banks in Lagos.
2. To evaluate the impact of artificial intelligence on customer brand trust in the banking sector.
3. To identify the factors influencing customer brand trust in relation to artificial intelligence in banking.
4. To assess the perception of customers towards the use of artificial intelligence in banking services.

• Research Questions

The research questions are buttressed below:

1. To what extent is artificial intelligence integrated in selected banks in Lagos?
2. What is the impact of artificial intelligence on customer brand trust in the banking sector?
3. What are the factors influencing customer brand trust in relation to artificial intelligence in banking?
4. How do customers perceive the use of artificial intelligence in banking services?

• Research Hypothesis

The hypothetical statement of the study is buttressed below:

Ho: Artificial intelligence has no significant impact on customer brand trust in the banking sector.

H1: Artificial intelligence has significant impact on customer brand trust in the banking sector.

• Significance of the Study

The significance of this study lies in its potential to shed light on the impact of artificial intelligence (AI) on customer brand trust in the banking sector, particularly in selected banks in Lagos. As AI continues to permeate various industries, understanding its implications becomes increasingly important. This study aims to contribute to the existing body of knowledge by providing empirical evidence on the relationship between AI and customer brand trust in the banking sector.

Secondly, the findings of this study could be beneficial to banking institutions in Lagos and beyond. By understanding the extent to which AI impacts customer brand trust, banks can make informed decisions about the integration and implementation of AI in their operations. This could potentially lead to improved customer trust and loyalty, which are key factors in the competitive banking industry.

Thirdly, this study could also be of significance to policy makers and regulators in the banking industry. The insights gained from this study could inform policies and regulations related to the use of AI in banking, ensuring that its implementation benefits both the banks and their customers.

Fourthly, the study could be significant for customers as well. By understanding how AI impacts their trust in a bank, customers can make more informed decisions about their banking choices. This could potentially lead to improved customer satisfaction and trust in the banking sector.

Fifthly, this study could also be significant for researchers and academics in the field of AI and banking. The findings of this study could provide a basis for further research, contributing to the ongoing discourse on the role and impact of AI in various sectors.

Lastly, the study could have broader societal implications. As AI continues to become more prevalent, understanding its impact on various aspects of society, such as trust in banking, becomes increasingly important. This study could contribute to a broader understanding of the role and impact of AI in society.

• Scope of the Study

The study assesses the impact of artificial intelligence on customer brand trust among selected banks in Lagos. The study is limited to two selected banks in Lagos, namely Access bank Plc and First Bank.

• Operational Definition of Terms

Impact: In the context of this study, impact refers to the effect or influence that one factor, such as artificial intelligence, has on another, such as customer brand trust.

Artificial Intelligence: Artificial Intelligence, often abbreviated as AI, refers to the simulation of human intelligence processes by machines, especially computer systems. These processes include learning, reasoning, problem-solving, perception, and language understanding.

Customer: A customer is an individual or business that purchases the goods or services produced by a business. In the context of this study, a customer refers to an individual who uses the services of a bank.

Brand Trust: Brand trust is the confidence customers have in a specific brand’s reliability and integrity. It is an essential component of a strong relationship between consumers and brands. In the banking sector, brand trust can influence a customer’s decision to stay with a bank or switch to a competitor.

Bank: A bank is a financial institution licensed to receive deposits and make loans. Banks may also provide financial services, such as wealth management, currency exchange, and safe deposit boxes. In the context of this study, the term ‘bank’ refers to selected banks in Lagos.

Project – ASSESSING THE IMPACT OF ARTIFICIAL INTELLIGENCE ON CUSTOMER BRAND TRUST AMONG SELECTED BANKS IN LAGOS.