An Investigation of the Impact of Cashless Banking on Financial Transactions: A Case Study of Union Bank, Oyo State
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Background of the Study
The evolution of cashless banking has radically altered the landscape of retail banking by replacing traditional cash transactions with digital payment systems. Union Bank in Oyo State has been a pioneer in adopting cashless banking technologies such as mobile money, online fund transfers, and digital wallets. These innovations offer customers unparalleled convenience, enhanced transaction speed, and improved security while simultaneously reducing the risks associated with cash handling (Okeke, 2023). The bank’s strategic initiatives include the rollout of secure digital payment gateways, integration with fintech partners, and extensive customer education campaigns that encourage the transition to digital transactions. These efforts have not only streamlined operations but have also helped to foster a more transparent and inclusive financial ecosystem. Digital platforms empower customers by providing real-time updates and facilitating seamless transactions, thereby bolstering overall financial efficiency. However, challenges such as technological glitches, connectivity issues, and cybersecurity risks persist, which may undermine customer confidence in cashless systems. This study investigates the impact of cashless banking on financial transactions at Union Bank, examining both its benefits in terms of speed and efficiency, as well as the challenges that need to be addressed to ensure broad-based adoption and secure operations (Chinwe, 2024; Akinola, 2025).
Statement of the Problem
Despite significant progress towards a cashless economy, Union Bank experiences obstacles that impede the full potential of digital transactions. Some customers face difficulties adapting to digital interfaces due to low digital literacy, and intermittent network disruptions further compromise transaction reliability. In addition, cybersecurity risks—such as phishing and data breaches—pose significant threats to customer funds and the bank’s reputation. These issues contribute to customer apprehension and may result in lower adoption rates of cashless solutions. The technological challenges are compounded by regional infrastructural deficiencies, making consistent service delivery difficult in certain areas of Oyo State. This inconsistency not only affects customer satisfaction but also hinders the bank’s overall efficiency and profitability. As customers become increasingly aware of these risks, their trust in cashless banking may erode, thereby reducing the anticipated benefits of reduced operational costs and faster transaction processing. This study seeks to identify and analyze these challenges, aiming to provide recommendations that will bridge the gap between digital innovation and customer readiness, ensuring a secure and efficient cashless banking environment.
Objectives of the Study
- To assess the contribution of cashless banking to transaction efficiency at Union Bank.
- To identify key technological and infrastructural challenges hindering cashless adoption.
- To recommend strategies for enhancing digital security and customer support.
Research Questions
- How has the adoption of cashless banking improved transaction efficiency at Union Bank?
- What challenges limit customer adoption of cashless payment systems?
- What measures can enhance cybersecurity and infrastructural reliability in cashless banking?
Research Hypotheses
- H₁: Cashless banking significantly reduces transaction times compared to traditional methods.
- H₂: Technological and infrastructural challenges are negatively correlated with customer adoption rates.
- H₃: Enhanced cybersecurity protocols improve customer confidence in digital transactions.
Scope and Limitations of the Study
This study is limited to Union Bank’s cashless banking operations in Oyo State. Limitations include variations in regional digital infrastructure, differences in customer digital proficiency, and the continuously evolving nature of cybersecurity threats.
Definitions of Terms
- Cashless Banking: The provision of banking services through digital channels without the use of physical cash.
- Digital Payment Platforms: Systems that facilitate electronic transactions, such as mobile wallets and online transfers.
- Cybersecurity: Measures taken to protect digital systems from unauthorized access and cyber threats.
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