WOLLO UNIVERSITY

COLLEGE OF BUSINESS AND ECONOMICS

DEPARTMENT OF ACCOUNTING AND FINANCE

ASSESSMENT OF CHALLENGES AND

PROSPECTS OF
ELECTRONIC BANKING SYSTEM :
( THE CASE OF COMMERCIAL
BANKOF ETHIOPIA DESSIE TOSSA
BRANCH)

ASENIOR ESSAY SUBMITTED TO THE DEPARTMENT OF

ACCOUNTING AND FINANCE IN PARTIAL FULFILLMENT OF
THE REQUIREMENTS FOR BACHELOR OF ART (B.A) DEGREE
IN ACCOUNTING AND FINANCE

PREPARED BY: DARIWOS MULATU

ID NO: - WOUR/1904/07
ADVISOR TO:-MOHAMMED ADEM (MSc)

JUNE, 2017
DESSIE, ETHIOPI

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 ACKNOWLEDGMENT

First and for most l would like to thank the almighty God his holy mother our lady virgin
Saint Mary for their unspeakable gifts throughout my life.
Next to this I would to expressly deep gratitude and indebtedness to my advisor
Mohammed Adem for her careful criticism, suggestion, encouragement and help whose
valuable comments decisive impact up on the outcome of the study.

I would like to thank my family who have never forgotten me in their prayers and who
have done a lot my personality today, morally and financially. Last but most I would like
to thank to the commercial bank manager, employees and customer who have provided
me information and valuable material for the study and more over I am indebted to all my
family who have never forgotten me in their prayers and support .

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 Abstract
This study was assign to assess the challenges and opportunities of electronic banking
system in commercial bank Dessie Tossa branch. In preparing these research both
primary and secondary data were used. The primary data were collected through
questionnaires both open ended and close ended techniques and interviews to the bank
managers, whereas, Secondary data has been obtained from website and literature on e-
banking. The researcher used purposively sampling for the selection of the sample. And
the data collection through the questionnaires and interview would be organized and
analyze, then tabulation in the form of tables and interpretation were made. The result of
the study indicated that the major challenges that the bank faces in the adoption and
doing of e-banking technology are, high cost of implementation of e-banking lack of
customer awareness, limitation in network infrastructure and internet related supporting
services, lack of legal and regulatory framework. The study also identified operational
and services benefit, increase productivity, reduce paper work and reduced transaction
cost. On the bases of finding of the study were make the conclusion and Recommendation
for challenge and prospects of electronic banking system.

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Acronyms
ATM- Automatic Teller Machine

E-Banking- Electronic Banking

E-Commerce- Electronic Commerce

E-Payment- Electronic Payment

EFT- Electronic Fund Transfer

ICT- Information and Communication Technology

IT- Information Technology

MB- Mobile Banking

NBE- National Bank of Ethiopia

PC- Personal Computer

POS- Point of Sale

PIN- Personal Identification Number

SME- Small and Medium Scale Enterprises.

VISA - Visa International Service Association

Table of content
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Contents Page
ACKNOWLEDGMENT.................................................................................................................I
ABSTRACT.....................................................................................................................................II
ACRONYMS................................................................................................................................III
TABLE OF CONTENT.......................................................................................................................IV
LIST OF TABLES........................................................................................................................VI
CHAPTER ONE.............................................................................................................................1
INTRODUCTION..........................................................................................................................1
1.1Background of the Study.......................................................................................................1
1.2Background of the Organization............................................................................................2
1.3 Statement of the problem......................................................................................................3
1.4 Research questions................................................................................................................3
1.5 Objectives of the study.........................................................................................................4
1.5.1 General objective...........................................................................................................4
1.5.2 Specific objectives.........................................................................................................4
1.6 Research Methodology......................................................................................................4
1.6.1 Research design.............................................................................................................4
1.6.2 Data sources and collection methods.............................................................................4
1.6.3 Sampling design and techniques....................................................................................5
1.6.4 Method of Data analysis and presentation......................................................................5
1.7 Significance of the study.......................................................................................................5
1.8 Scope of the study.................................................................................................................6
1.9 Limitation of the Study.........................................................................................................6
1.10 Organization of the study....................................................................................................7
CHAPTER TWO............................................................................................................................8
REVIEW OF RELATED LITERATURE......................................................................................8
2.1 Empirical Studies..................................................................................................................8
2.2 Terms and Concepts.............................................................................................................9
2.3 importance of E-banking.....................................................................................................10
2.4Types of electronic banking.................................................................................................11
2.4.1 Mobile banking............................................................................................................11
2.4.2 Internet banking...........................................................................................................11
2.4.3Telephone banking........................................................................................................12
2.4.4Electronic card..............................................................................................................12
2.5Delivery channels of E-banking...........................................................................................12

IV
 2.5.1 Automated Teller Machines (ATMs)...........................................................................12
2.5.2 Personal Computer Banking Services..........................................................................13
2.5.3 Electronic Funds Transfer at Point of Sale (EFTPoS)..................................................14
2.5.4 Credit Cards.................................................................................................................14
2.5.5 Debit Cards..................................................................................................................15
2.6 Characteristics of E-banking...............................................................................................15
2.7 Technologies Used in the Banking Sector..........................................................................15
2.8Challenges of E-banking......................................................................................................16
2.9 E-Banking Fraud.................................................................................................................18
2.10 Security Measures to Avoid E-banking Fraud..................................................................18
2.11 Opportunity of electronic banking....................................................................................19
CHAPTER THREE......................................................................................................................21
3. Data presentation and discussion..............................................................................................21
CHAPTER FOUR........................................................................................................................34
4.1Conclusion and recommendation.........................................................................................34
4.1.1 Conclusion...................................................................................................................34
4.1.2 Recommendations........................................................................................................35
Refernce.......................................................................................................................................36
Appendix......................................................................................................................................37

List of Tables

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List Page
3.1 Background of the respondents …………………………………………………..21
3.2Expectations of E-banking…………………………………………………………23
3.3 Negative factors of doing e-banking ……………………………………………..26
3.4 Prospects of electronic banking system ………………………………………….30
3.5 The effort that under way to promote E-business ………………………………..31

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 CHAPTER ONE

INTRODUCTION

1.1 Background of the Study

The increasingly competitive environment in the financial service market has resulted in
pressure to develop and utilize alternative delivery channels. The most recently delivery.
Channel introduced is online or electronic banking also known as e-banking (Daniel
&Storey, 2001). Online or electronic banking systems give everybody the opportunity for
easy access to their banking activities. These banking activities may Include but not
limited to: retrieving an account balance, money transfers between a users accounts, from
a users account to someone else account, retrieving an account history (Liaoa and
Cheung, 2002)
The definition of Electronic banking (E-banking) varies amongst researchers partially
because Electronic banking refers to several types of services through which bank
customers can request information and carry out most retail banking services via
computer, television or mobile phone (Daniel,2001).
Different authors have defined it in different ways based on their understanding of the
application of electronic banking. According to (Daniel, 2001).Electronic banking is
electronic connection between the bank and customer in order to prepare, manage and
control financial transactions on a secure website operated by their retail or virtual bank,
credit union or building society. This implies that E-banking is a service that allows an
account holder to obtain account information and manage certain banking transactions
through a personal computer via the financial institution web site on the internet.
For many consumers, electronic banking means 24-hour access to cash through an
Automated Teller Machine (ATM) or Direct Deposit of pay checks into checking or
savings accounts (Ekin, 2001).
Electronic banking system provides opportunities like reduce the transaction costs
between customers, improve business efficiency. Service and attract new customers.
Electronic banking also increases the power of the customer to make price comparison
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across suppliers quickly and easily and as a consequence of this pushes price and margin
down ward (Kerem, 2003).the commercial benefit of electronic banking lie in firstly,
firms are able to expand their geographical reach. Secondly, important cost benefit lie in
improved efficiency in production and logistics processes, thirdly, there is enormous
scope for gaining through improved customer communication and management
(Harrison, 2008).

According to (Harrison ,2008) many of the factor affecting successful adoption of e-

banking are include lack of infrastructure development , poor internet connection , lack of
public acceptance ,the absence of a proper legal and regulatory frame work are more
challenge the function of e-banking .
So the paper is concerned the challenge and prospects of electronic banking system .

1.2 Background of the Organization

The commercial bank of Ethiopia (s.c) was incorporated as Share Company on
proclamation no, 207 /95 October 2003 to take over the commercial banking activities of
the former state bank of Ethiopia under this name; it began operation on January 1, 2003
with a capital of Eth, 20,000,000 and served for about 6 years.
According to this proclamation, the main objectives of the commercial bank of Ethiopia
are as follow:-
1. To extend commercial bank services throughout the country
2. To encourage the mobilization of saving by making the people aware of the use of
banking
3. To extend loans, credit and all other banking facilities to any person for specific
purpose and periods.
4. To spread widely banking habits among the people.

VISION .The bank inspires to becomes a world-class commercial bank by the year 2025

Mission

The bank is committed to maximizing shareholders value through enhanced financial

intermediation and customers’ satisfaction

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1.3 Statement of the problem
E-banking has been widely used in developed countries and rapidly expanding in
developing countries. Most transaction in today are not made manually, banking
transaction are processed in computerized way. Since e-banking transactions are made
electronically it increases efficiency, reduce transaction cost and increase convenience of
making banking transaction. However; there is challenge faced while using electronic
banking system in commercial bank of Ethiopia Dessie Tossa branch. Like lack of
customer trust, very poor internet connection and in security in the bank in order to utilize
and adopt e-banking facilities are the indicators for the existence of the problem in
commercial bank Dessie Tossa branch.

Lots of researches on E-banking system have been done in different countries in the
world. Different factors in the adoption of E-banking have been taken as the main factors
of the adoption of new technology by different researchers such as environmental factors
(like lack of suitable legal and regulatory framework for e-commerce, poor ICT
infrastructure, lack of competitive pressure in the industry), organizational factors (Lack
of skilled man power, resistance to changes in technology among staff) and technological
factors (security risk and functionality). However, despite the importance of these
adoptions and development of E-banking, very limited number of research has been done
on the challenges and opportunities of E-banking in developing countries like Ethiopia.
Therefore, more studies are still required to assess challenges and prospects of E-banking
in the country (Zhao, 2008)
Therefore, the purpose of this study was to identify the challenges and opportunities of E-
banking technology in commercial bank of Ethiopia Dessie Tossa branch.

1.4 Research questions

Based on the above problem the researcher would be rise the following questions that
would be answered after the accomplishment of the research work.
1. What are the major challenges of electronic banking?
2. What are the prospects of electronic banking?
3. What are the efforts that under way to promote E-banking in commercial bank Dessie
Tossa branch?

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1.5 Objectives of the study
1.5.1 General objective
The General objective of this study were examined the challenges and prospects of

electronic banking system in commercial bank of Ethiopia in Dessie Tossa branch.

1.5.2 Specific objectives

The specific objectives of the study were
 To identify the major challenge of electronic banking system
 To identify the prospects of electronic banking system.
 To examine the efforts that under way to promote E-banking in commercial bank
Dessie branch.

1.6 Research Methodology

This section describes the methodology under taken in relation to justification of the
research design, data sources and collection methods, sampling techniques and method of
data analysis and presentation.

1.6.1 Research design

In an attempt to assess challenges and prospects of electronic banking system, the
researcher would be used descriptive type of research design. As the name implies
descriptive method would be used when the researcher wanted to describe specific
behavior occurs in the involvement. It gives the researcher the ability to use look at
whatever they are studying in so many various aspects and can provide a bigger over

view as opposed to other forms of research.

1.6.2 Data sources and collection methods

The researcher were used both primary and secondary sources, the primary data were
collected through interview from bank managers and distributed questionnaires both
customers and employees .Secondary data were collected from website and literature on
e-banking.

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1.6.3 Sampling design and techniques
The targeted population of the study includes managers, employees and customers of
commercial bank of Ethiopia Dessie Tossa branch. The total numbers of employees are
40, among the total numbers of employees the researcher would be selected 20 who have
direct related to the electronic banking system and also among the total 150 number of
customers the researcher would be selected 25 customers who are related to the use of
electronic banking and ATM.
To select the sample the researchers were used judgmental sampling techniques to select
employees and judgmental convenience sampling techniques to select customers which
are based on the researcher judgment to select the sample techniques. The reason is that
randomly selecting the respondent from the population may lead unreliable information
.so the researcher would be use judgmental sampling techniques in order to obtain
appropriate information related to the topic.

1.6.4 Method of Data analysis and presentation

The data collection through the questionnaires and interview would be organized and
analyze, then tabulation in the form of tables and interpretation were made. The data that
would be gained from questionnaires were analyzed quantitatively, whereas the data that
would be gained from the interview also analyze qualitatively and conclusion and
recommendation were given.

1.7 Significance of the study

The purpose of the study is to assess the challenges and prospects of E-banking in
commercial bank Tossa Dessie branch. In general the study will have the following
significance.

 the commercial bank

Since E-banking technology is in an infant stage in Ethiopia, identification of
opportunities and challenges for the adoption of E-banking can impact positively on the
performance of banks that wish to adopt and/or have adopted E-banking applications
Provide an opportunity for decision-makers and managers of the Bank’s to consider and

5
evaluate the opportunities and problems observed in the existing practices, in order to
take appropriate corrective measures in the area or to accelerate the positive factors (if
any) for the promotion of E-banking practices. The finding will provide a framework for
the Banks for the design of their future directions and to adjust their goals and objectives
as per real opportunities and challenges.

 Researcher
This is important to the researcher as it equips him with the knowledge of e-banking. it
will also enable the researcher to obtain Bachelor of art degree in accounting and finance

 Wollo university college of business and economics

The research report will be available in the library and will be used by other future
researchers who will be interested in this area of the research

1.8 Scope of the study

The study were conducted in commercial bank of Ethiopia Dessie Tossa branch .This
branch were selected because of the extensive use of e-banking facilities , and better
application of online or e-banking than other bank .In addition to this ,the study focuses
on 2006-2009E.C due to the nature of the branch.

1.9 Limitation of the Study

The research study was not free from limitation. There were some issues which has
hindered the attainment of the study objectives. Some limitation that the researchers were
faced.
 Difficult to inspect all aspects of the company
 Lack of transparency in the employees by misunderstanding of the objective
 The major problem of the study is some head of the department were not willing
to give full in formation
 Time and financial constraint to go every day and collected the data in detail.

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1.10 Organization of the study
The paper is organized into four chapters, chapter one deals about introduction
Moreover, it includes background of the study, background of the organization, statement
of the problem, objectives of the study, research methodology ,significance of the study
,limitation of the study, scope of the study and organization of the paper. Chapter two
literature review; this include prior research done and theoretical review of challenge and
prospects of electronic banking. Chapter three; this include data presentation and
discussion of findings. And finally Chapter four include finding conclusion and
recommendation; this chapter discusses the conclusion that are drawn from the finding of
the study and based on this the researcher gives recommendation

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 CHAPTER TWO

REVIEW OF RELATED LITERATURE

2.1 Empirical Studies
A lot of related studies were conducted by different researchers in different countries.
Nevertheless, there are limited numbers of studies were conducted in Ethiopia on the
adoption and development of the technological innovation particularly on E-banking
services. Specifically, Gardachew (2006), conducted research on the opportunities and
challenges of E-banking in Ethiopia. The aim of his study was focused on analyzing the
status of E-banking in Ethiopia and investigates the main challenges and opportunities of
implementing E-banking system. The author conducted a survey on the existing operating
style of banks and identifies some challenges of using E-banking system, such as, lack of
suitable legal and regulatory frame works for E-commerce and E- payments, political
instability in neighboring countries, high rates of illiteracy and absence of financial
networks that links different banks. According to Gardachew (2008), Opportunities
offered by ICT through e-learning programs and Commitment of the governments on
development of ICT Infrastructures are considered as drivers of using E-commerce and
E-payment systems.

Ayana (2008), also conducted research on factors affecting adoption of E-banking

System in Ethiopian Banking industry. The study was conducted based on the data
gathered from four banks in Ethiopia. The result of the study indicated that, the major
barriers Ethiopian banking industry faces in the adoption of Electronic banking are:
security risk, lack of trust, lack of legal and regulatory framework, Lack of ICT
infrastructure and absence of competition between local and foreign banks. The study
also identified perceived ease of use and perceived usefulness as a driver of adopting E-
banking system.

Study conducted by Khalfan et al., (2006) on ‘Factors influencing the adoption of internet
banking in Oman. Data, used in their study were collected using semi structured

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interviews and survey questionnaire as well as reviewing some bank documents. The
results of their study provide a Pragmatic picture about the adoption of E-Commerce
applications in the core financial sector domain of Oman. One of the main findings is that
security and data confidentiality issues have been a major challenge. The banking sector
was reluctant to use E-commerce applications as they felt that transactions conducted
electronically were open to hackers and viruses, which are beyond their control. Lack of
top management support is the other inhibiting factor in the adoption of electronic
commerce applications as per their finding.

2.2 Terms and Concepts

The definition of Electronic banking (E-banking) varies amongst researchers partially
because Electronic banking refers to several types of services through which bank
customers can request information and carry out most retail banking services via
computer, television or mobile phone (Daniel,2001) Different authors have defined it in
different ways based on their understanding of the application of electronic banking.
According to Daniel (2001), electronic banking is electronic connection between the bank
and customer in order to prepare, manage and control financial transactions on a secure
website operated by their retail or virtual bank, credit union or building society. This
implies that E-banking is a service that allows an account holder to obtain account
information and manage certain banking transactions through a personal computer via the
financial institution web site on the internet.

For many consumers, electronic banking means 24-hour access to cash through an
Automated Teller Machine (ATM) or Direct Deposit of pay checks into checking or
savings accounts (FTC, 2006).
Electronic banking, also known as Electronic Funds Transfer (EFT), is simply the use of
electronic means to transfer funds directly from one account to another without the
physical involvement of the bank personnel, rather than by cheque or cash.
By using Electronic fund transfer an account holder can use:-

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 Salary deposited directly into bank or credit union account
 Withdraw money from account through an ATM machine with a personal
identification number (PIN), at any convenience,
 Settle utility bills and other regular payments
 Transfer money between accounts
 Order payment to government offices like tax and pension
 Conduct transactions at the point-of-sale, using acredit/debit card rather than cash,
credit or a personal check

2.3 importance of E-banking

Electronic banking systems provided easy access to banking services. The interaction
between user and bank has been substantially improved by deploying ATMs, Internet
banking, and more recently, mobile banking. Electronic banking (E-banking) reduces the
transaction costs of banking for both Small and Medium Enterprises (SMEs) and banks.
SMEs need not visit banks for banking transactions, providing round the clock services
(Cheng, 2006). Customers prefers E- banking for conveniences, speed, round the clock
services and access to the account from any parts of the world. E-banking offers benefits
to banks as well. Banks can benefit from lower transaction costs as E-banking requires
less paper work, less staffs and physical branches (Cheng, 2006).
E-banking reduces loan processing time as borrow application can be viewed by loan
processing and loan approval authority simultaneously (Smith, 2003).
The benefits of E-banking identified from the current literature are classified in two main
categories - tangible and intangible.
Tangible benefit
- Increase automation process
- Transformation of traditional market chain
- Retained and expand customer base
- Reduced operational costs
- Acquisition of each market
- Increase business efficiency

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Intangibles benefit
-Enhance wellbeing and education of customers
- Competitive advantage

2.4 Types of electronic banking

Electronic banking consists of the following, mobile banking, internet banking, telephone
banking electronic card etc.

2.4.1 Mobile banking

Mobile banking involves the use of mobile phone for settlement of financial transactions.
It supports person to person transfers with immediate availability of funds for the
beneficiary. Mobile payments use the card infrastructure for movement of payment
instructions as well as secure Short Message Service (SMS) messaging for confirmation
of receipt to the beneficiary. Mobile banking is meant for low value transactions where
speed of completing the transaction is a key. The services covered under this product
include account enquiry, funds transfer, recharge phones, changing of passwords and bill
payment which are offered by few institution (Sathye, 2004).

2.4.2 Internet banking

Internet banking involves conducting banking transactions such as account enquiry
printing of statement of account; funds transfer payments for goods and services, etc on
the internet (World Wide Web) using electronic tools such as the computer without
visiting the banking hall. E- Commerce is greatly facilitated by internet banking and is
mostly used to effect payment. Internet banking also uses the electronic card
infrastructure for executing payment instructions and for final settlement of goods and
service over the internet between the merchant and the customer, currently the most
common internet payments are for consumer bills and purchase of air ticket through the
websites of the merchants (Littler, 2006).

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2.4.3Telephone banking
These are banking services which a customer of a financial institution can asses using a
telephone line as a link to the financial institution’s computer centre. Services rendered
through telephone banking include account balance funds transfer, change of pin, and
recharge phones and bills payment (James, 2008).

2.4.4 Electronic card

An electronic card is a physical plastic card that uniquely identifies the holder and can be
used for financial transactions on the internet. For instance, Automated Teller Machine
(ATM) and Point-of Sales (PoS) terminal are used to authorize payment to the merchant
or seller (James, 2008).
The various types of electronic cards include debt, credit cards; releasable cards require
visiting banks for replenishment. Debit cards are linked to local bank accounts and offer
immediate confirmation of payment. Credit cards can be used to link a customer to a
credit line and can also be used for accessing local and international networks and are
widely accepted in most countries. The underlying infrastructure and operational rules are
often provided by global trusted schemes (such as visa and master card) in addition to
local lines (James, 2008).

2.5Delivery channels of E-banking

E- Banking services are delivered through various electronic means collectively called
electronic delivery channels. Electronic Banking is really not one technology, but an
attempt to merge several different technologies. Each of these evolved in different ways,
but in recent years different groups and industries have recognized the importance of
working together (Abor, 2004). The various delivering channels for E- banking are
discussed as follows.

2.5.1 Automated Teller Machines (ATMs)

ATM is also called 24-hour tellers are electronic terminals which give consumers the
opportunity to bank at almost any time (FTC, 2006). ATM banking is one of the earliest
and widely adopted retail E-banking services in Kenya (Nyangosi et al. 2009).

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It is described as a combination of a computer terminal, record-keeping system and Cash
vault in one unit, permitting customers to enter the bank’s book keeping system with a
plastic card containing a Personal Identification Number (PIN) or by punching a special
code number into the computer terminal linked to the bank’s computerized records 24
hours a day (Rose, 2001).
To withdraw cash, make deposits or transfer funds between accounts, a consumer needs
an ATM card and a personal identification number. Once the customer login, access to
transactions are displayed on the screen. It offers several retail banking services to
customers. They are mostly located outside of banks, and are also found at airports,
malls, and places far away from the home bank of customers. Some ATMs charge a
usage fee for this service, with a higher fee for consumers who do not have an account at
their institution. If a fee is charged, it must be revealed on the terminal screen or on a sign
next to the screen (Rose, 2001).
ATM services have a lot of advantages. They include increase in productivity during
banking hours if the service is available in addition to the human tellers. They are cost-
effective way of achieving higher productivity per period of time. According to (Rose,
2001).

2.5.2 Personal Computer Banking Services

PC-Banking is a service which allows the bank’s customers to access information about
their accounts via a proprietary network, usually with the help of proprietary software
installed on their personal computer. Once access is gained, the customer can perform a
lot of retail banking functions. The increasing awareness of the importance of
Computer literacy has resulted in increasing the use of personal computers. This certainly
supports the growth of PC banking which virtually establishes a branch in the customers’
home or office, and offers 24-hour service, seven days a week. It also has the benefits of
Telephone Banking and ATMs (Abor, 2004).
It offers consumers the convenience of conducting many banking transactions
electronically using a personal computer. Consumers can view their account balances,
request transfers between accounts and pay bills electronically from home.

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2.5.3 Electronic Funds Transfer at Point of Sale (EFTPoS)
An Electronic Funds Transfer at the Point of Sale is an on-line system that allows
customers to transfer funds instantaneously from their bank accounts to merchant
accounts when making purchases (at purchase points). A POS uses a debit card to
activate an Electronic Fund Transfer Process (Chorafas, 1999). Point-of-Sale Transfer
Terminals allow consumers to pay for retail purchase with a check card, a new name for
debit card. This card looks like a credit card but with a significant difference, the money
for the purchase is transferred immediately from your account to the store's account.
Increased banking productivity results from the use of EFTPoS to service customers
shopping payment requirements instead of clerical duties in handling cheques and
cash withdrawals for shopping. Furthermore, the system continues after banking hours,
hence continual productivity for the bank even after banking hours. It also saves
customers time and energy in getting to bank branches or ATMs for cash withdrawals
which can be harnessed into other productive activities (Abor, 2004). Some banks issued
international cards (such as Visa, MasterCard etc.) to their customers.

2.5.4 Credit Cards

A credit card is a small plastic card issued to users as a system of payment. It allows its
holder to buy goods and services based on the holder's promise to pay for these goods
and services. The issuer of the card creates a revolving account and grants a line of credit
to the consumer (or the user) from which the user can borrow money for payment to a
merchant or as a cash advance to the user (Ioannou, 2006). A credit card is different from
a debit card in that it does not withdraw money from the users account after every
transaction. The issuer lends money to the consumer to be paid to the merchant. Holders
of a valid credit card have the authorization to purchase goods and services up to a
predetermined amount, called a credit limit. The vendor receives essential credit card
information from the cardholder, the bank issuing the card actually reimburses the
vendor, and eventually the cardholder repays the bank through regular monthly
payments. If the entire balance is not paid in full, the credit card issuer can legally charge
interest fees on the unpaid portion.

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2.5.5 Debit Cards
A debit card (also known as a bank card or cheque card) is a plastic card that provides an
alternative payment method to cash when making purchases. Functionally, it can be
called an electronic cheque, as the funds are withdrawn directly from either the bank
account or from the remaining balance on the card. In some cases, the cards are designed
exclusively for use on the internet, and so there is no physical card (Ioannou, 2006).
In many countries the use of debit cards has become so widespread that their volume of
use has overtaken or entirely replaced the cheque and, in some instances, cash
transactions. Like credit cards, debit cards are used widely for telephone and Internet
purchases and, unlike credit cards, the funds are transferred immediately from the bearer's
bank account instead of having the bearer pay back the money at a later date. Debit cards
may also allow for instant withdrawal of cash, acting as the ATM card for withdrawing
cash and as a check guarantee card.

2.6 Characteristics of E-banking

E-banking includes the systems that enable bank customers to access accounts, transact
business, or obtain information on financial products and services through a public or
private network, including the Internet. Customers’ access E-banking services using an
intelligent electronic device, such as a Personal Computer (PC), Personal Digital
Assistant (PDA), Automated Teller Machine (ATM), telephone (Ibrahim et al 2006).

2.7 Technologies Used in the Banking Sector

Nowadays, banks can use advanced technologies and internet, networks, payment cards,
Automated Teller Machine (ATMs) and soon. This is one is of the prospects that enables
banks to increase the efficiency and productivity.
The banking business has continued realizing the advantages of the cutting-edge
information and communication technology. It has become essential to effectively
implement the appropriate technology to have faster decision support and effective data
integration in the financial intermediary process and also to look for other avenues to
augment income.

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Concerning the sect oral outlook, there are emerging initiatives to invest in electronic
multi-service channels and also a tendency to optimally utilize the available resources in
a consortium, which partly supports the effective implementation of the envisaged
national payment system. Additionally, the ongoing efforts of emplacing the electronic
laws focusing on the retail banking business are expected to have a positive effect on the
growth of the payment card business. These are other opportunities for banks to expand
their activities and ultimately realize a second-generation reform in the Ethiopian
financial sector.
In this regard, commercial Banks are still at the early stage to implementing modern
banking technology and value-added service provision. Withstanding the prevailing long
attachment of branch-based service channel, which is perceived to lead the society to
Ethiopian banking system is one of the most underdeveloped compared to the rest of the
world. In Ethiopia cash is still the most dominant medium of exchange and electronic-
banking is not well known, let alone used for transacting banking business. All banks in
Ethiopia are too late to move with technological advancement and they should clearly
chart out the time schedule for their integration and technological advancement. But
unlike other E banking delivery channels all most all banks has installed ATMs at
convenient locations for their cardholders. Currently, debit service only gives for Visa
and master cards and clients of respective banks can withdraw cash and can buy goods
and services by using the debit card. (Worku, 2010).

2.8 Challenges of E-banking

Banking organizations have been delivering electronic services to consumers and

businesses remotely for years. Electronic funds transfer, including small payments and
corporate cash management systems, as well as publicly accessible automated machines
for currency withdrawal and retail account management, are global fixtures. However,
the increased world-wide acceptance of the Internet as a delivery channel for banking
products and services provides new business opportunities for banks as well as service
benefits for their customers (BCBS, 2001)
The development of an efficient monetary transfer system is associated with so many
factors. These problems are infrastructural deficiency such as erratic power supply and

16
communication link especially in developing countries. In this case it requires
government or organizations to provide stable and efficient power supply and
telecommunication system (Oleka, 2009).
Inadequate skilled managers and requisite tools on end users and client systems, here
efforts should be done in provision of infrastructure and skilled man power,) so the
banking legislation should set out standard charges for e-payment services (Littler, 2006).

 Power Failure and Communication Link

Constant electric failure leads to deficiencies in infrastructures such as ATMs, computers
which slow down the rate of electronic transactions and also failure links from which are
often as a result of spikes and surges caused consistent electronic power supply
(Aladwani, 2001).

 Lack of computer bank up

As a result of lack of computer backup when the bank system is corrupt there will be a
loss of information about a customer, and this may lead to misappropriation of customers
account, therefore the bank should have a manual backup (ledger) containing all data
about the customers (Akinuli, 2001).

 Lack of adequate investment capital

Funds that can be used to buy new information technologies and for modernizing existing
systems is generally in short supply. While there are a numberof modern banking
applications in use, there is also integrated banking system, which continued to
experience innovations in terms of product development specifically, and there has been
tremendous improvement in the speed in which funds are transferred within and outside
the domestic economy (international money transfer) (James, 2008).
 Reduces employment in the country
Electronic banking in the country today has reduced the rate of employments in the
country whereby most works that should be done by human are done by machines
thereby lead to minimum rate of employment and high rate of unemployment in the
country (Oleka, 2008)

17
 Low public acceptance
Customers and public do not have trust in the machine in the sense that fraudulent
personals uses the system in carryout fraudulent activities, even today banks uses the
machine in looting customers money from their accounts. Some customer complains that
sometimes when they go for withdraw with their ATM the machine will seize the card
while their account will still be debited with un withdraw sum in course of ratification of
this problem, the customer might be discouraged because it will take a longer time or end
up unsolved (James, 2008).

 Insecurities in banks
Most electronic machines today are not secure thereby making it easier for fraudulent
personnel to carry out their fraudulent activities without been caught. Due to insecurity,
banks cannot prevent stop or dictate any fraudulent activity. Computer hackers also use
the system in stealing data or information by breaking of codes (Hodagho, 2001).

2.9 E-Banking Fraud

Convenience is the key reason of why millions of people are opting out of traditional
banking for online banking. Banks also enjoy providing the option of online banking
because they can save on operating costs. Most internet banking fraud occurs in a two-
step process. Firstly, the offender must get their hands on the customer's account
information, like their username and password. Secondly, the offender will use that
information to move his victim's money to another account or withdraw it to make
fraudulent purchases. For the first step, offenders often employ one of the many popular
fraud schemes to obtain personal information.

2.10 Security Measures to Avoid E-banking Fraud

Kaleem and Ahmad (2008) argued that in undertaken E-banking transactions, customers
are always concerned about hackers and anti-social elements. Hacking enables the
unethical hackers to penetrate the accounts of online bankers, and spend their money.
Availability of confidential information which is just secured by a user name and
password makes it vulnerable to such threats. Most of the banks try to make their sites
secured by implementing latest network security software. Learn to keep your cards,

18
documents and passwords safe, and monitor your accounts to safeguard yourself from
bank fraud committed through identity theft. Most importantly, find out how to protect
your personal information to avoid identity theft from happening to you (BSP, 2006).
E-bankers should install virus scanners and keep them and their systems up-to- date
especially PC banking. They should avoid practices that easily lead to security hazards in
particular they should not start up arbitrary executable attachments received via
electronic e-mail. Users should check fingerprints of certificates against the fingerprints
that are (should be) given by the bank on official paper documents (Claessensl., 2002;
BSP, 2006).

2.11 Opportunity of electronic banking

Electronic banking offers substantial advantages to net dwellers in the form of enhance
convenience time saving ability to buy and sell many bank places , and in the emergent
market space electronic transaction between citizens and government render the
opportunities for letter to collect "customer "information that can be used as an important
input to operation and policy decision-making . Online identification technologies have,
thus been sophisticated allowing access to individual personal details (Havalreta, 2007)

 Worldwide presence
This is the biggest advantage of conducting banking online. A firm engaged electronic
banking can have a national wide or a worldwide presence. IBM was one of the first
companies to use the term e-banking to refer to servicing customers and collaborating
with business partners from all over the world.
 Cost effective marketing and promotions
Using the web market products guarantee worldwide reach at a normal price. Advertising
techniques, payclik advertising ensures that advertiser only pay the advertisement that is
actually viewed. Affiliated marketing where customers are direct to a business portal
because of the effort of the affiliated who in turn receive a compensation for their efforts
meeting with success. Have emerged account of electronic banking .Affiliated marketing
has helped both the business and the affiliates. Firms have managed to use cost effective
online advertising strategy to their advantage.

19
 Developing a competitive strategy
Firms need to help a competitive strategy in order to ensure a competitive strategy
advantage. Without an effective strategy they will find it impossible to maintain the
advantage and earn profit.

 Overhead costs are reduced

An e-banking essentially is independent of costs that are incurred for hiring personal and
retaining them with competitive incentive topped with abundant facilities.

 Better customer services

Electronic banking has resulted in improved customers services many times on visiting
the web site the customer has readily available customer services may help in
encouraging the customers to know more about the product or services, moreover
payments can be made online. Products and services can be shipped to the customer
without the customer having to leave the house.

20
 CHAPTER THREE

3. DATA PRESENTATION AND DISCUSSION

This chapter deals with data analyses, presentation and discussion which were conducted
from sample respondent. Questionnaire were distributed to 20 commercial bank
employees and 25 commercial bank customers who were selected using convenience
judgmental sampling method out of these 45 questionnaires 40 were completed and
collected as a result of this the response rate is 88.89% Generally the collected data is
analyzed as follows.

Table 3.1 background of the respondent

Item Respondents
No Percentage
1. Sex

Male 25 62.5%
Female 15 37.5%

Total 40 100
2. Age

Below 25 years 12 30%

25-35 Years 22 55%
35-45 Years 4 10%
Above 45 Years 2 5%
Total 40 100
3. Educational level

College diploma 10 25%

BA/BSC degree 23 57.5%
Master degree 7 17.5%
Other 0 0%

Total 40 100
4. work experience

1-5Years 20 50%
5-8Years 10 25%
8-11 Years 7 17.5%
Above 11years 3 7.5%

21
 Total 40 100
5. Your position in the
bank?

Teller 5 25%
Cashier 4 20%
Auditor 2 10%
Accountant 4 20%
Account Clark 3 15%
loan officer 1 5%
Branch Manager 1 5%
Total 20 100
Sources; questionnaire, (2017)

Table 3.1 shows background of the respondent which includes Five (5) classes that are
sex, age, educational level, years of services in the organization and position in the bank.
As it can be seen the above table the sex range, 25(62.6%) of the respondent are Male
and 15(37.5%) of the respondent are Female. This shows Majority of the respondent are
Male. 12(30%) of the respondent were below 25 years of age, 22(55%) are 25-35 years
old,4(10%) are 35-45 years old and 2(5%) of the respondent were above 45 years old.
This Shows majority of the respondents are 25-35 years old. 10(25%) Of the respondent
are had qualification of colleague diploma, 23(57.5%) had qualification B.A Degree,
7(17.5%) of the respondent had qualification Master degree and 0(0%) of the respondent
are other. This shows that majority of the respondent had B.A Degree.

From the total number of the respondent 20(50%) had below 1-5 years of experience,
10(25%) had 5-8 years of experience, 7(17.5%) had 8-11 years of experience and also
3(7.5%) of the respondent had above 11 years of experience in the bank sector. This
show that Majority of the respondent had below 5 years of experience. This implies that
since average of the respondents are experienced so; they are efficient in using resources
and understanding electronic banking system well. Thus lead the bank effective..
Finally this table shows position in the organization 5(25%) of the respondent are Tellers,
4(20%) are Cashiers, 2(10%) are Auditors, 4(20%) Are Accountants, 3(15%) are Account
Clarks, 1(5%) are Loan officer and also 1(5%) of the respondent is branch Manager. This

22
shows Majority of the respondent are Teller position in the bank. This implies that there
is segregation of duties in the bank this lead the bank to perform the task properly.
3.2 expectations of electronic banking
Table 3.2.1Doyou have ATM card?
Response Frequency Percentage

Do you have ATM card?

A. Yes 35 87.5%
B. No 5 12.5 %

Total 40 100
Source; questionnaire, (2017)

According to the above table the researcher get a numerical output in terms of output ,
thus the respondent were provided for the usage status towards ATM card and from the
total sample taken surprisingly 35(87.5%) of the respondents are actual holder and they
currently use ATM card. Unfortunately 5(12.5%) respondent are non-user of the
automatic teller machine card. This implies there is user of ATM in the bank, this lead to
the bank increase productivity during banking hours if the service is available in addition
to the human tellers and also cost-effective way of achieving higher productivity.
Table 3.2.2 Machine Easiness
Response Frequency Percentage

Do you think ATM is to

use?

A. Yes it is 36 90%
B. No it's not 4 10%

Total 40 100
Sources; questionnaire, (2017)

In the above table 36(90%) the respondent were respond ATM Machine is easily to use
but 4(10%) of the respond ATM Machine is difficult to use, from the above numerical
Figure the researcher obtained the simplicity of ATM machine (Functional simplicity for
actual customers). ATM Machine easiness to customers increase user of ATM Card. This
lead to the bank delivers their eservices easily and effectively.

23
Table 3.2.3 Services of banking
No respondent and percentage
No Item Yes No Total
1 Does your bank have 40(100%) 0(0%) 40(100%)
mobile
Banking?

2 Does your bank have its 40(100%) 0(0%) 40(100%)

own
Website?

Sources; Questionnaire, (2017)

From the above table item number one (1) indicate that the majority 40(100%) of the
respondents are responded that the bank have its own mobile banking. Whereas the
remaining 0(0%) of respondents are responded that the bank have not its own mobile
banking from these the researcher understand that commercial bank of Ethiopia Dessie
Tossa branch has mobile banking service. Mobile banking involves the use of mobile
phone for settlement of financial transactions. It supports person to person transfers with
immediate availability of funds for the beneficiary.

In the above table shows that 40(100%) of the respondents are responded that the bank
have its own website. While the remaining 0(0%) of respondents are responded that the
bank have not its own website. From these the researcher understands that the majority of
the respondents responded the bank have its own website .so, website is an important part
of e-banking which is used for business organization to increase banking efficiency and
effectiveness.
Table 3.2.4 advanced technologies
Does your bank use advanced technologies and internet network payment card ?
Response Frequency Percentage

Yes 35 87.5

No 5 12.5
Total 40 100
Sources; Questionnaire, (2017)

As shown in the above table 35(87.5%) of the respondents are responded that they use
advanced technology and internet network payment card. While the remaining
24
respondents 5(12.5%) are responded that they didn't use advanced technology and
internet network payment card. Use of advanced technology is indication for the
improvement of e-business so using advanced technology is the best way to increase e-
banking system.
Table 3.2.5 Customer Satisfaction
Does using online banking increase customer satisfaction?
Response Frequency Percent

Agree 8 20%

Strongly agree 30 75%

Disagree 2 5%

Strongly disagree 0 0%
Neutral
0 0%
Total 40 100
Sources; Questionnaire, (2017)
In the above table shows that 30(75%) and 8(20%) of the respondents are argue that
using online banking increase customer satisfaction. Whereas the remaining respondents
argue that online banking do not increase customer satisfaction. From this researcher can
understand that using online banking increase customer satisfaction. Customers
satisfaction is the primary consideration for both product and services giving
organizations this implies that the bank can satisfied customers need by using electronic
banking systems this lead the bank attract more customers and this result increase the
image of the bank .
3.3 Negative factors of doing electronic banking in commercial bank Tossa branch.
Table 3.3.1 what are the major challenge of using electronic banking?
Response
Item Quantity Percentage
What are the major challenges
of using electronic banking?

A. there is a network connection 5 12.5%

problem.
B. The limitation on the 8 20%
withdrawing amount per day.
C. frequent problems on the 3 7.5%
ATM machine.
25
 D. all are challenges. 24 60%

Total 40 100
Sources; Questionnaire, (2017)
As stated above, the new electronic banking system comes with a new idea and
technology to facilitate the banking system .Even though it makes easy and convenient
for performing large and complex business transaction, the system may have same short
come including poor internet access, insecurities in the bank, low public awareness and
high cost of ICT infrastructure. Because of these reason the researcher try to search the
users’ attitude towards the limitation of the system.
Based on the researcher analyses 5(12.5%) of respondents face a problem with regard to
the network connection. And 8(20%) are often worried on the restriction amount to
withdraw per day. These make them to incapable to withdraw the desired amount with 24
hours. The other respondents those who concerning about the frequent and repetitive
problem on the machine covers a total of 3(7.5%) from the total respondents these may
be arise from the lack of expert and sophisticated of the machine. The last result from the
above analysis indicates the large amount of respondents which totaled 24(60%) are face
the above all problem's regarding with ATM machine. Since the above stated problems
are exist in the bank thus lead to the bank difficult to deliver their banking services
effectively and efficiently.

Table 3.3.2 The level of customer awareness towards electronic banking system.
Respondents
Item Quantity Percentage (%)
How much the level of
customer awareness towards
electronic banking system?
A. Very good. 14 35%
B. good. 10 25%
C. satisfactory. 12 30%
D. poor 4 10%

Total 40 100
Sources; Questionnaire, (2017)
In the contemporary world there is a continues growth in the bank industry and it also
pushes the customers towards to engage in the advanced and active financial institution.

26
The above table indicates the customers ‘awareness status as such electronic banking
systems are more developed. The result from such analysis indicate that 14(35%) are
above they well aware (very good) about electronic banking systems, 10(25%) of the
respondents shows (good) awareness about electronic banking systems, the satisfactory
levels holds 12(30%) of the respondents awareness towards electronic banking systems
and the small part of this analysis covered by 4(10%) respondents that they have poor
awareness about the electronic banking systems. This implies that customers awareness
towards e-banking is important to the customers in order to access e-banking services
easily that provided by the bank, this lead to the bank increase productivity.
Table 3.3.3 Lack of adequate ICT infrastructure that affects e-banking.
Item No of respondent and percentage
Yes No Total
1. Lack of adequate ICT 26(65%) 14(35%) 40(100%)
infrastructure exists in the bank.

2. Using internet banking is 30(75%) 10(25%) 40(100%)

difficult due to low internet
access.

3. Mobile banking service may 23(57.5%) 17(42.5%) 40(100%)

not perform well because of
network problem.

Sources; Questionnaire, (2017)

According to the above table the majority 26(65%) of the respondents express their
agreement using internet banking is difficult due to low internet access while the
remaining 24(35%)of the respondents are agreed that using internet banking is not
difficult due to low internet access . As the table indicate above the researcher can
conclude that low internet access is the problem of commercial bank of Ethiopia Dessie
Tossa branch. Item number two(2) shows that the majority 30(75%) of the respondents
are argued that lack of available ICT infrastructure affect e-business where as the
remaining respondents are argued that lack of available ICT infrastructure is not affect e-
business . From this the researchers understand that it is known without ICT
infrastructure there is no e-business. This implies that ICT infrastructure is basic
requirement in order to implement electronic banking systems, by implementing it the
banking become beneficial from e-banking services.

27
As indicated in item number three (3) 23(57.5%) of the respondents are responded that
mobile banking service may not perform well because of network problem. While the
remaining 17(42.5%) of the respondents are responded that mobile banking perform well.
From this the researcher understands that network connection problem comes from lack
of ICT infrastructure and low internet access that cause customers not to use e-banking
system. This result the bank faced difficulty in order to deliver e-banking service
effectively and efficiently
Table 3.3.4 the relationship between the cost versus benefit

Item Quantity Percentage

What is the relationship between
the costs versus benefit of
electronic banking?
A. favorable 29 72.5%
B. Unfavorable 0 0%
C. normal 11 27.5%

Total 40 100
Sources; Questionnaire, (2017)
Even if the bank installs such electronic banking system for the purpose of extending
their banking service for the actual customers in order to complete the bank industry and
to follow up the technology as of the customers demand, there must be economic benefit
from the system cost. Based on the analysis output 29(72.5%) of the respondents answers
show that there is a favorable difference between the benefit and the related cost. And the
remaining 11(27.5%) recognize the cost benefit relationship as a normal (benefit =cost)
return performance. Unfortunately no respondents agree with unfavorable return from
such relationship. This implies that the benefit obtained from implementation of
electronic banking systems more than the cost incurred for implementing it. This lead the
bank takes advantage from e-banking.

28
Table 3.3.5 organizational factors that challenges electronic banking.
Item No of respondent and percentage
Strongly Strongly
Agree Agree Neutral Disagree Disagree Total
There is lack of E-
banking 14(35%) 26(65%) 0(%) 0(%) 0(%) 40(100%)
technology and
managerial skill to
use electronic
banking ?

Lacks of 16(40%) 20(50%) 0(%) 0(%) 4(10%) 40(100%)

confidence within
the security affect
the adoption of
electronic
banking?

Sources; Questionnaire, (2017)

From the above table item 1, 14(35%) and 26(65%) of the respondents are argue that lack
of technological and managerial skills affect on the use of e-banking. while the remaining
respondents respond lack of technological and managerial skills does not impact on the
use of e-banking . From this the researcher concludes that lack of technological and
managerial skills. This implies that lack of technical and managerial skills in
implementation and development of e-banking technology is considered as factors that
has negative influence on the adoption and development of e-banking. Thus lead the bank
ineffective for the adoption and development of e-banking.

As shown in the above table item 2, the majority of 20(50%) and 16(40%) of the
respondents are responded that are lack of confidence within the security affects the
adoption of e-banking while the remaining 4(10%)of the respondents are responded that
lack of confidence within the security does not affect the adoption of e-business. From
this the researcher can understand that lack of confidence within the security is one of the
major challenges of e-banking which discourage customers not to adopt e-banking. This
leads the bank ineffective to deliver e-banking services.

29
Table 3.4 Prospects of electronic banking system.
Respondent
Item Quantity Percentage
1. What are the possible
significant of electronic banking
system?
A. there is a substantial advantage 31 77.5%
B. the bank only satisfy a little of 6 15%
advantage compare with the cost
C. There is extremely no 3 7.5%
advantage for the bank.

Total 40 100%
2. What is the benefit of ATM
payment?
A. it is available at any time so 12 30%
you can withdraw as needed.
B. it is faster than withdrawing 3 7.5%
when it is compare with that of
using bank book.
C. it decrease theft of cash on 4 10%
hand
D. All are answer. 21 52.5%
Total 40 100%
Sources; Questionnaire, (2017)
it is true that a new system development face a merit and demerit for the individual
customer, for the firm, industry .the above item number one (1) is an indicator of the
researcher need to determine substantial advantage of the system for the bank . It
accounts 31(77.5%) respondents those who assume a significant advantage of the system
for the bank. The second ranked figure of 6(15%) indicate a little benefit relatively
compare with the cost incurred by the bank. There is also insignificant as a whole for the
bank according to 3(7.5%) coverage respondents. this implies the bank take advantage
from e-banking.

Item number two (2) concerning with the issue of positive outcome or the necessity of the
card the above table contains the significant alternative that yield from using ATM card
the target respondents also account those alternative as per the required need from using
the card less of the half sample size i.e. 30% uses ATM card for its accessible as of
demand .primarily those individual customers wants to withdrawal they required amount

30
without the limitation time, workday. Whereas the remaining 53.5% are commonly used
for its accessibility, much faster than withdrawing by using bank book account, absence
of exposed to theft in fact all are important items listed by the researcher when using
ATM card. This leads the bank to become effective in implementing of e-banking
systems.
3.5 The efforts that under way to promote e-business
Table 3.5 Promotion of e-business.

No Item No of respondents and percentage

Agree Strongly Neutral Disagree Strongly Total
agree disagree
1 Using high 17(42.5 21(52.5% 0 2(5%) 0 40(100%)
level of ICT %
infrastructure is
the way to
promote e-
business

2 To building 11(27.5 28(70%) 0 0 1(2.5%) 40(100%)

legal and %
regulatory
frame work is
the way to
promote e-
business

3 To decrease 10(25%) 29(72.5% 0 0 1(2.5%) 40(100%)

frequent power
interruption and
security issue is
developed e-
business
Sources; questionnaire, (2017)
As shown in the above table 3.5 item number one (1) indicate that the majority
17(42.5%) and (21(52.5%) of the respondents are answered that using high level of ICT
infrastructure is the way to promote e-business while the remaining respondents are
responded that using high level of ICT infrastructure is not the to promote e-business
from the above table the researcher conclude that high level of available ICT
infrastructure is the way to promote e-business which ICT the brain of doing of e-
business . since the e-banking technology requires a general good infrastructure in terms

31
of communication and information technology, so implementation of good ICT
infrastructure Thus lead the bank effective in providing e- banking services.

Item number two (2) shows that the majority 28(70%) and 11(27.5%) of the respondents
are answered that building of legal and regulatory frame works is the way to promote e-
business. While remaining respondents are responded that building legal and regulatory
frame works is not the way to promote e-business. From this the researcher concludes as
building of legal and regulatory frame work is the way to promote e-business.
Item number (3) indicates that the majority 29(72.5%) and 10(25%) of the respondents
are answered that decreasing frequent power interruption and security issue is develop e-
business where as the remaining respondents are respond that power interruption and
security issue is not impact on e-business , so the researcher conclude that increasing
supply of sufficient power and securely implementing of e-business increase the working
capacity of the bank and increase the confidence of the customer's in order to use e-
business .
3.6 Analysis of Interview designed for the bank managers
Questions 1.what are the Driving forces that initiate the bank to adopt e-banking service?

The driving forces that initiate the bank to adopt e-banking services includes :- Existence
of high competition in the banking industry , desire to improve organizational
performance, improve the relationship with customers, reduce transaction cost, cover
wide geographical area, build organizational reputation, satisfy customers, to keep the
international banking standard and rapidly changing customers’ needs and preferences .
Question 2. What are the basic challenges of adopting and developing new technological
innovations like ATM and mobile banking in your institution?

 Organization Factors Affecting Adoption of E-Banking Technology.

High cost of implementation of E-banking, Lack of customer awareness with E-banking
products, Lack of technical and managerial skills in implementation and development of
E-banking technology ,Resistance to changes in technology among by Board, top
Management and staff ;

32
 Environmental Factors Affecting Adoption of E-Banking Technology.
Limitation in network infrastructure and internet related support services, Customer low
levels of computer literacy Limitation in ICT infrastructure; Lack of sufficient
government support affect customers’ willingness, Lack of legal framework for Banking;
Lack of law mandating the bank to adopt E- banking technology. Lack of adequate
coordination, interaction and cooperation between banks.

 Technology Factors Affecting Adoption of E-Banking Technology.

Users do not trust the E-banking technology provided by banks, Customer fear of risk to
use E-banking technology; Lack of confidence with the security aspects, and financial
crimes are easily facilitated through e– banking.
Question 3.What are the benefits your bank gained from the adoption and development
of E- banking system (ATM and mobile banking system) in the delivery of service to
customers?

In addition to operational benefits, there are also services benefits that the banking
industry can attain from adoption and development of E-banking technology. Enhance
accessibility of the bank's services(in terms of place), Facilitates development of new
products and new business in the banking industry, improve customer services,
improving transaction speeds, E-banking is convenient, accessibility; i.e. No time limit
to access bank account and information(in terms of time) Facilitates marketing & market
access, Create better relationship among banks and clients, overcome geographical
limitations.

33
 CHAPTER FOUR
4.1 CONCLUSION AND RECOMMENDATION
This chapter discusses the conclusion that are drawn from the finding of the study and
based on this the researcher gives recommendation

4.1.1 CONCLUSION
The findings of the study revealed that adoption and development of E-banking
technology in commercial bank Accordingly, a number of conclusions can be drawn from
these results.
 Potential operational efficiency benefits of E-banking adoption and development
as perceived by the increase productivity, reduces paper work, reduce transaction
cost, generate foreign currency, and increase reliability and reducing errors.
 Moreover, the banks realized service benefits like, facilitate development of new
products, facilitate marketing and market access, improve customer service,
increase accessibility of the bank services, create good relation among banks and
clients and encourages price transparency. Perceiving both operational and
services benefits have positive tendency to adopt and develop E-banking
technology among the banks.
 Despite the above benefits of adopting and developing E-banking technology in
commercial bank of Ethiopia Dessie Tossa branch is associated with some
challenges. The study shows that high cost of ICT equipment’s and network,
software and re-organization, lack of customer trust and resistance to changes in
technology are the major challenges of commercial bank facing for adoption and
development E-banking technology.
 The prevailing technical and managerial skills available in the commercial bank
of Ethiopia Dessie Tossa branch towards adopting and extending of E- banking
technology are found to be limited to influence the technological development
rate.
 Limitation in network infrastructure and internet related support services, low
levels of computer literacy, low level of ICT infrastructure and lack of sufficient
government support are considered the basic external challenges facing the bank
to adopt and develop E-banking technology.
 Besides, Security risks and lack of trust on the technological innovations are
another Challenges faced by the bank in adoption and development of E-banking.
Therefore, from the above discussion it is possible to conclude that E-banking
technology is not well adopted and developed in commercial bank of Ethiopia Dessie
Tossa branch.

34
4.1.2 RECOMMENDATIONS
Based on the findings the researcher came up with the following possible
recommendations to policy makers, the banks, and the government in order to overcome
the challenges, exploit the opportunities in adoption of E-banking technology and to
ensure a successful practice of E-banking technology in commercial bank Dessie Tossa
branch.
 The Bank should create deep awareness to community concerning the E-banking
products they offer and the benefits associated with using E-banking services through
advertising their products and services on the internet, mass media as well as through
organizing public exhibition and talk shows. Besides, the bank should attract the
community to use the technology by diverse incentive campaigns. This way,
customers’ interest would be aroused;
 Bank should work to improve customers’ confidence by providing adequate security
of transaction back up of critical data files.
 In collaboration with banks, Government should educate and inform the community
on the workability and effectiveness of E-banking technology. This will increase the
customer confidence levels;
 The bank should facilitated proper and continuous training courses for their
employees to have adequate understanding of the E-banking technology so as to
achieve the desired objectives;
 High cost of ICT equipment and network, software and re-organization has been a
challenge the banks facing adoption and development of E-banking. The researcher
therefore, recommend that either bank should raise fund by issuing share to public in
order to acquire these facilities needed in the industry or Government should support
banking sector by facilitating development of sufficient ICT infrastructure for the
successful implementation and development of E-banking services; and
 The central bank should issue suitable legal frameworks for adoption of the E-
banking technology.

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 REFERNCE
1. Abor, J. 2004, Technological innovation and banking in Ghana: an evaluation of
customer perception, Accra University of Ghana,legon.
2. Ahmed, s, 2008, Bankers"perceptione-banking "in Pakistan journal of internet banking
and commerce vol.13, No 1
3. Aladwani, A, 2001, online banking, international journal of information management.
4. BSP, 2006, electronic banking consumer awareness program for internet product and
services, circular no, 542 Appendix c
5. Cheng, T, 2006, Adoption of internet banking: An empirical study in Hong Kong
decision support system, vol, 42, pp 1158-1572
6. Chorafos, D, N, 1999, electronic fund transfer, Butter worth’s,London, UK.
7. Daneil, E, and storey, C, 2001, online banking: strategic and management challenges
program.
8. Ekin, J, 2001, Electronic banking in Nigeria, vol. P. 12-30
9. Federal trade commission, FTC, 2006, factors for consumer.
10. Harrison, U, 2008, analyses of the legal challenges posed by electronic banking.
11. Hodagno, T, 2001, marketing challenge in e-banking journal of marketing
management 19:1067-1085.
12. Ibrahim , 2006, customers perceptions of electronic services delivery in UK retail
banking sector international journal of marketing vol,24,no 7,pppp475- 493.
13. James, 2008, accounting information system 7 editions.
14. Liaoa, z, and Cheung, M, 2002, internet based e-banking and consumer attitudes an
empirical study information and management 39:283-295.
15. Littler, S, 2006, consumer perception risk and uncertainty and implications: Journal
of Retailing and consumer services vol.13, 431-443.
16. Rose, P, 2001, commercial bank management, 4’Thedition.
17. Sathye, T, 2004, Adoption of internet banking by Australia consumer: an empirical
investigation.
18. Smith, A, 2003, e-banking: foundation of financial.
19. Zhoa,S 2008, introduction of E-commerce, part 5.
http //:www.combanketh.com.

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 Appendix
Wollo University
College of Business and Economics
Department of Accounting and Finance

Research Questions

Dear sir/ madam

The aim of this questionnaire is to collect information for research to be conducted on the
challenge and prospects of electronic banking system in the case of commercial bank of
Ethiopia Dessie Tossa branch by Dariows mulatu, who is undergraduate student of
Accounting and finance at Wollo University. Your cooperation in providing genuine
response to the following questions is highly important for the success of this study. it is
only for academic purposes and your response will be kept confidentially.

Thank you in advance for your cooperation

Instruction
l. Do not write your name
ll. Circle your best response to the questions and write your answer on the space provided
lll. Attempt all questions

Part 1.Personalprofile: - General information about the respondents

Please indicate you’re:-
1. Sex
Male female
2. Age
A. below 25 years C. 35-45 Years
B.25-35 years D. Above 45 years

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3. Educational level
A. College diploma C. Master Degree
B. BA/BSC degree D. Other
4. Over all experience in the bank
A. Below 2years C.4-6 years
B. 2-4 years D. Above 6 years
5. Position in the bank…………………………………………………………….

Part 2. Question related to expectations of doing e-business in the commercial bank.

1. Do you have ATM card?
A. Yes B. No
2. Do you think ATM easy to use?
A. Yes it is B. No it is not
3. Does your bank have its own web site?
A. Yes B. No
4. Does your bank use advanced technology and internet network payment card?
A. Yes B. No
5. using of online banking increase customer satisfaction?
A. Strongly agree C. Neutral E. strongly disagree
B. Agree D. disagree

6. Does your bank use mobile banking?

A. Yes B. No
If your answer is no what is the reason?
1.......................................................................................................
2.......................................................................................................
3.......................................................................................................

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Part3. Question related to negative factors doing e-banking in commercial bank?
1. What are the major challenges of using e-banking?
A. There is a network connection problem
B. The limitation on the withdrawal amount per day
C. Frequent problem on ATM machine
D. All are challenge
If there is additional challenge that you observed please mention it……………………..

2. How much is the level of customer awareness towards electronic banking system?
A. Very good C.satisfactory
B.goodD. Poor
3. Lack of available ICT infrastructure affect to use e-banking?
A .yes B.No
4. Customers do not accept e-banking services?
A. Yes C.No
5. What is the relationship between the costs versus benefit of electronic banking?
A. favorable
B. Unfavorable
C.normal
6. There is legal frameworks that enforce banking industry to adopt technological
innovation?
A. Strongly agree C. Neutral E. strongly disagree
B. Agree D. disagree
7. There is lack of technological and managerial skill to use e-banking?
A. Strongly agree C. Neutral E. strongly disagree
B. Agree D. disagree
8. Lack of confidence within the security affects the adoption of e-banking?
A. Strongly agree C. Neutral E. strongly disagree
B. Agree D. disagree

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9. What are the possible significance of electronic banking system for the bank?
A. There is a substantial advantage
B. The bank only satisfy a little of advantage compare with cost
C. There is extremely no important for the bank
If you have any reason please mention it..................................................................
10. What are the benefits of ATM payment?
A. it is available at any timeso you can withdrawals needed
B. it is faster than withdrawing when compare with that of using bank book
C. it decrease theft of cash on hand
D. All are answer
Ifyouhaveanyreasonpleasemention it...............................................................
Part,4. Questions related to efforts that under way to promote e-banking
1. Using high level of infrastructure is the way to promote e-banking?
A. Strongly agree C.neutral E. Strongly disagree
B. Agree D. disagree
2. Building legal and regulatory framework is the way to promote e-banking in
commercial bank?
A. Strongly agree C. Neutral E. strongly disagree
B. agree D. disagree
3. Decreasing frequency power interruption and security issue increase e-banking
application software?
A. Strongly agree C. Neutral E. strongly disagree
B. Agree D. disagree

Interview designed for the bank managers

1. What are the Driving forces that initiate the bank to adopt e-banking service?
2. What are the basic challenges of adopting and developing new technological
innovations like ATM and mobile banking in your institution?
3. What are the benefits your bank gained from the adoption and development of E-
banking system (ATM and mobile banking system) in the delivery of service to
customers?

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