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The banking sector across the globe is embracing information and communications technology (ICT) and using it as part of business strategy for expansion, revenue increase, an extension of customer network and creating competitive advantage among banking institutions. This cross-sectional study was therefore conducted to assess the impact and challenges of ICT in First Merchant Bank (FMB) Capital city branch, Lilongwe. Purposive sampling was used and a total of 200 customers operating accounts at FMB Capital city branch were selected. Data was collected using a standard structured questionnaire administered through face-to-face interviews. The results revealed that customers are aware of ICT in banking. However, the awareness level differs with different ICT products. 94% of the customers are aware of ATM, 70% are aware of phone banking service, while 40% are aware of internet banking. Customers are into ICT banking for various services like checking account status (93%), bill payment (83%), and fund transfer (63%), but they still think twice to do it because of safety (70%). The study further revealed that demographic characteristics like age, education level and type of account operating significantly (P<0.05) influenced the usage of ICT in banking. Network communication error, shortage of money at ATM during peak hours and weekends, slowing down of ICT systems, and difficulties to access ICT gadgets and internet by customers were identified as the main challenges of ICT in banking. The study revealed that the identified challenges can be overcome by intensification of awareness campaigns (54%), government reduction of taxes in ICT gadgets and internet (23%), automation and monitoring of ICT (13%), and that banks employ and train IT experts (10%).The study recommends that further studies should be conducted incorporating other financial institutions to confirm the present findings. However, the identified strategies should be put into practice for effective utilisation of ICT in banking.
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