MEKELLE UNIVERSITY

College of Dry Land Agriculture and Natural Resources

E-Banking Service Delivery and Customers’ Satisfaction in Ethiopia
A Senior Seminar Paper Submitted to
Department of Agricultural and Resource Economics
Agricultural Economics Program
By:

Name of Members ID Number

1. Hadush Gebreslassie………………………….…...115673/09
2. Hadas Haileslassie………….……………………...131360/10
3. Teka Bezaw………………………………………...130973/10
4. Ishetu Buzaya……………..…………………….….130833/10

Advisory Team: Belets Gebremicael (MSc)

Gebremedhin Abraha (MSc)
Meressa Kassa (MSc)

January, 2019
Mekelle University
Contents
Acknowledgement ........................................................................................................................................ ii
EXECUTIVE SUMMARY ......................................................................................................................... iii
1. INTRODUCTION .................................................................................................................................... 1
1.1 Background of the Seminar Paper ...................................................................................................... 1
1.2 OBJECTIVES ..................................................................................................................................... 3
2. E-Banking Services Delivery and Customers’ Satisfaction ...................................................................... 3
2.1 Concept of E-banking ......................................................................................................................... 3
2.2 Types of E- banking ............................................................................................................................ 5
2.2.1 Internet Banking........................................................................................................................... 5
2.2.2 Automated Teller Machines (ATMs) ........................................................................................... 5
2.2.3 Point of Sale ................................................................................................................................. 6
2.2.4 Home banking .............................................................................................................................. 6
2.2.5 Telephone Banking ...................................................................................................................... 6
2.2.6 Branch Networking ...................................................................................................................... 7
2.2.7 Mobile Banking ........................................................................................................................... 7
2.3 Benefits of E- Banking........................................................................................................................ 7
2.3.1 Benefits of E-Banking for Banks ................................................................................................. 8
2.3.2 Benefits of E-Banking for Customers .......................................................................................... 9
2.4 E-banking Opportunities in Ethiopia ................................................................................................ 10
2.4.1 Opportunities for Customers ...................................................................................................... 10
2.4.2 Opportunities for Banking Sector .............................................................................................. 10
2.5 E-banking challenges in Ethiopia ..................................................................................................... 11
2.6 Customer Satisfaction ....................................................................................................................... 13
CONCLUSION ........................................................................................................................................... 15
Reference .................................................................................................................................................... 16

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Acknowledgement

First and above all, we praise to God, the help and kindness of the almighty for providing us with
strength to accomplish this seminar paper. Next we would like to extend our special
acknowledgement to our advisors; Belets Gebremicael (MSc), Gebremedhn Abraha (MSc), and
Meressa Kassa (MSc) for their invaluable contribution to our work, starting from the selection of
title, sharing relevant materials to our title, comments, encouragements and guidance at various
stages of doing this seminar paper.

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EXECUTIVE SUMMARY

In the highly competitive banking industry, the success and failure of any business organization
merely depends on how well it satisfies the needs and wants of customers. If a bank needs to stay
competitive in the industry, it has to continuously meet the needs and wants of its customers. The
aim of this seminar paper is to review the different findings studied by researchers on E-banking
services and their impact on customers’ satisfaction provided by different banks in Ethiopia. This
paper reviews different researchers’ findings related to E-banking services delivered by different
banks in Ethiopia mainly mobile banking and Automated Teller Machines (ATMs). Point of sale,
home banking, telephone banking, and branch networking are other forms of e-banking which are
not common in Ethiopia. This paper also reviews the benefits of e-banking to banks and customers
and challenges and opportunities of e-banking in Ethiopia.

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1. INTRODUCTION

1.1 Background of the Seminar Paper

In sub-Sahara Africa, developments in information and communication technology (ICT) are

radically changing the way business is done. Online commerce is now thought to hold the promise
of a new commercial revolution by offering an inexpensive and direct way to exchange information
and sell or buy products or services Abdu, E., & Li, J. (2017, May).
A reference to the Ethiopian history reveals that the first bank in the country’s Bank of Abyssinia
was founded during the reign of Emperor Menelik II in February 1905. Due to a foreign
domination of its management (mainly the British), the Bank of Abyssinia was forced to dissolve
and in its place was established the Bank of Ethiopia in 1931 whose management was still left to
foreigners due to the lack of skilled manpower in the country. The Bank of Ethiopia was later
replaced by the State Bank of Ethiopia soon after the war with Italy. The latter was the first bank
in the country fully controlled and owned by the Ethiopian government. In the meantime, however,
a number of foreign banks had opened their branches in the country, most of them with an interest
to have control over the nation’s economy. It was the State Bank of Ethiopia that gave rise to the
present Commercial Bank of Ethiopia (CBE) and National Bank of Ethiopia (NBE) TESHOME,
F. (2016).
The emergence of E-banking in Ethiopia goes back to the late 2001, when the largest state owned
commercial bank of Ethiopia (CBE) introduced ATM to deliver service to the local users.
However, due to lack of suitable infrastructure, it failed to collect the fruit of its membership.
Despite being the pioneer in introducing ATM based payment system and acquired visa
membership, CBE was challenged by other competitor banks like Dashen Bank, which worked
aggressively to maintain its lead in e-payment system (SM, U., et al,).
Now a day Commercial Bank of Ethiopia and other private Commercial Banks are implementing
different kinds of e-banking services. A few from among are: Internet banking, mobile banking,
ATM (Automated Teller Machine) and POS (Point of Sale Terminal) channels (SM, U., et al,).

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In order to provide efficient and effective services, Banks currently uses deposit, machine,
technology, manpower/human resources and other materials as basic inputs to achieve its
predetermined goals and objectives. Among those resources, technology is one of a competitive
advantage for the banking industry to ease delivery of the intended service, to make timely
decision, exploit resources user friendly, achieve the objectives of the organization as planned and
contribute for the enhancement of the overall development Worku, G., (1970).
Nowadays modern technology is being introduced in all fields and it is changing the world with
full of innovations. In this regard, information technology is considered as the key driver for the
changes to take place around the world. For this reason, the traditional banking services are getting
modernized by the use of electronic banking (ADBIB, M. (2013).
The concepts of e-banking become popular when the banking activities and information
technology are merged. When the internet facilities enter into the banking sector, the inter-bank
activities are linked through internet, the concept of “Electronic Banking or Net Banking” is also
introduced. Electronic banking enables a customer to do banking transactions through the bank’s
website in the internet. It is more or less like bringing the bank to customer’s computer, at the
place and time of customer’s choice (ADBIB, M. (2013).
Banks play an important and active role in the financial and economic development of a country.
An effective banking system greatly influences the growth of a country in various sectors of the
economy. Practitioners in the banking industry face a large number of complex challenges in the
global marketplace. It is crucial for banks to better understand changing customer needs and
adopt the latest information technology system in order to compete more effectively with global
organizations (Malhotra and Mukherjee, 2004).
The majority of current e-banking users are youth between the age of 18 up to 35, gender wise the
males are the dominant users, occupationally salaried and students are the majority users and
business men/women are not active participant in using the service, educational level diploma and
above diploma holders are the majority users and the banks do not keep full record of their
customer profile in standardized way for easy reference. There is a relationship between
demographic characteristics and customer satisfaction in e-banking than ordinary banking (Worku,
et al, (2016).

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1.2 OBJECTIVES
1.2.1 General objective

The main objective of this seminar is to review the different e-banking services delivered by
banks and their effect on customers’ satisfaction in Ethiopia.
1.2.2. Specific objectives

 To review the different types of E-banking services practiced by different banks in

Ethiopia;
 To review the effect of these banking services on customers’ satisfaction;
 To review the benefits of E-banking for both banks and customers;
 To review the major challenges and opportunities of electronic-banking.

2. E-Banking Services Delivery and Customers’ Satisfaction in Ethiopia

2.1 Concept of E-banking

E-banking has been defined in many ways by different scholars; Daniel (1999) defines electronic
banking as the delivery of banks’ information and services by banks to customers via different
delivery platforms that can be used with different terminal devices such as personal computers and
mobile phone with browser or desktop software, telephone or digital television; Abid and Noreen
(2006) defined it as any use of information and communication technology and electronic means
by a bank to conduct transactions and have interaction with stakeholders; Magembe et al.( 2002)
also defined electronic banking (e-banking) is nothing but e-business in banking industry. E-
banking is a generic term for delivery of banking services and products through electronic
channels, such as the telephone, the internet, the cell phone, etc. E-banking is a form of banking
service where funds are transferred through an exchange of electronic signal between financial
institutions, rather than exchange of cash, checks, or other negotiable instruments (Kamrul, 2009).
Another definition of E-banking is that, it is the use of a computer to retrieve and process banking
data (statements, transaction details, etc.) and to initiate transactions (payments, transfers, requests
for services, etc.) directly with a bank or with other financial service provider remotely via a
telecommunications network (Yang, 1997, p.2). E-banking can be also defined as a variety of
platforms such as internet banking or online banking, TV-based banking, mobile phone banking,

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and PC (personal computer) banking (or offline banking) whereby customers access these services
using an intelligent electronic device, like PC, personal digital assistant (PDA), ATMs, POS, kiosk,
or touch tone telephone (Alagheband, 2006, p.11).
A common definition for electronic banking comes from the Basel Committee on Banking
Supervision: “e-banking includes the provision of retail and small value banking products and
services through electronic channels as well as large vale electronic payments and other wholesale
banking services delivered electronically” (BCBS, 1998).
Remote banking, considered representative for the new economy, consists of electronic
transactions between customers and their bank. Electronic banking, more commonly known as e
banking, is the newest delivery channel for banking services. The term had been defined in many
ways by researchers mainly because electronic banking refers to several types of services through
which customers can request information and execute transactions via telephone, digital television,
computer or mobile phone. According to Allen (2001), e-banking refers to the supply of
information or services by a bank to its customers, via a computer or television. Keivani et al.
(2012) describes electronic banking as “an umbrella term for the process by which a customer may
perform banking transactions electronically without visiting a brick-and-mortar institution”. Most
experts agree that e-banking ensures 24-hour-a-day, 7-day-a-week accessibility through a type of
advanced information system.
Electronic banking refers to the use of the Internet as a remote delivery channel for providing
services, such as opening a deposit account, transferring funds among different accounts and
electronic bill presentment and payment. This can be offered in two main ways. First, an existing
bank with physical offices can establish a Website and offer these services to its customers in
addition to its traditional delivery channels. Second, is to establish a virtual bank, where the
computer server is housed in an office that serves as the legal address of such a bank. Virtual banks
offer their customers the ability to make deposits and withdraw funds via ATMs (Automated Teller
Machines) or other remote delivery channels owned by other institutions, for which a service fee
is incurred (Timothy (2012).

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2.2 Types of E- banking

2.2.1 Internet Banking

According to Shiffu, A. (2014), technology is affecting the life of every individual both
qualitatively and quantitatively in the present age. The quick expansion of information technology
has imbibed into the lives of millions of people and introduced major changes in the worldwide
economic and business atmosphere. Technological developments in the banking sector have
speeded up communication and transactions for clients (Booz et al., 1997). Internet banking is one
of the technologies which is fastest growing banking practice now a days. It is defined as the
provision of information or service by a bank to its customers over the internet. It is viewed as a
supplemental channel used in conjunction with other channels to provide the convenience of
banking anytime from one’s home or work, without having to incur some of the costs associated
with a branch visit like going to the branch or waiting on lines. Online banking eliminates physical
and geographic boundaries and time limitations of banking services (Yang et al., 2007). Also as
compared with traditional banking labor is replaced by machine very significantly (computer
networks) which is low in cost and is available easily 24-hour-a-day, 7-day-a-week (Wu et al.,
2006). E-banking services first emerged in the early 1990’s, when credit card, ATM, and telephone
banking services were three major applications. During the last decade, database, information
system and other technologies were applied into banking services at different levels. After the
availability of internet facility, e-banking services are now conducted through a secure website
operated by local banks and includes online enquiry, e-payments, e-transfer etc. There are two
general business models to provide online banking facilities to its customers- First one is,
incumbent bank also known as „bricks and clicks‟ model, applying online banking as an
enhancement to its traditional banking sector and integrating branches, ATM, call centers and
online service into a whole system and using e-banking as a new channel of delivering services.
Whereas the another one is known as direct bank or virtual bank or internet primary bank with no
branch offices but using internet, telecommunication network and wireless networking to provide
banking services (Xu and Zhao, 2000).

2.2.2 Automated Teller Machines (ATMs)

According to Loverock (2011), Automated Teller Machines (ATM) reduces the workload of
bank`s staff – ATMs reduce the work pressure on bank`s staff and avoid queues in bank premises.

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The customer can obtain exact amount. There is no human error as far as ATMs are concerned
(Pandian et al, 2011). Using ATM, a customer can withdraw cash up to a certain limit during any
time of the day or night (Akrani, 2011). ATM is an electronic service that provides a 24 hours
service to customers. ATM is an electronic machine in a public place, connected to a data system
and related equipment and activated by a bank customer to obtain banking services without going
in to the banking hall. It allows customers to access banking services such as withdrawals,
transfers, inquiries about account balances, requests for cheque books, account statements, direct
deposits, foreign currency exchange etc. (Fenuga, 2010). Using an ATM requires an ATM card
and a pass code, often referred to as a PIN (Personal Identification Number).

2.2.3 Point of Sale

Point of Sale (POS) also sometimes referred to as Point of Purchase (POP) checkout is the location
where a transaction occurs. A "checkout" refers to a POS terminal or more generally to the
hardware and software used for checkouts, the equivalent of an electronic cash register. A POS
terminal manages the selling process by a sales person accessible interface. The same system
allows the creation and printing of the receipt (Shittu, 2010).

2.2.4 Home banking

Generally refers to the practice of conducting banking transactions from home rather than at branch
locations that allows customers to obtain information about personal accounts via a phone call; it
is based on the existence of a telephone line, a customer passwords and personal code that provide
access to data; clients are able to consult account balances, transfer money within their accounts
and conduct routine transactions;

2.2.5 Telephone Banking

Telephone Banking (Telebanking) can be considered as a form of remote or virtual banking, which
is essentially the delivery of branch financial services via telecommunication devices where the
bank customers can perform retail banking transactions by dialing a touch-tone telephone or
mobile communication unit, which is connected to an automated system of the bank by utilizing
Automated Voice Response (AVR) technology (Balachandher et al., 2001).

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2.2.6 Branch Networking

Networking of branches can be depicted as the computerization and between associating of

geographically diverse stand-alone bank branches, into a framework of Wide Area Network
(WAN) for making and sharing of solidified client data (Abor, 2005). It provides quick inter-
branch transactions and hence the effect of time and distance are eliminated. Regardless of where
a customer opened his or her accounts, he or she can access it anywhere.

2.2.7 Mobile Banking

Literally this is banking conducted through the use of a mobile phone. A mobile banking
transaction can be an account inquiry that does not involve a payment such as checking account
balance, checking credit limit, looking up transaction history or that involve payment transaction
such as a mobile payment, a mobile purchase, a mobile money transfer (Karthikeyan et al., 2017).
This system uses short text messaging system to inform customers of their account (Chovanova,
2006). Mobile banking, also referred to as m-banking, is an application of mobile Commerce that
enables customers to bank virtually at any convenient time and Place (Suoranta, 2003). It is also
defined as the provision of banking and related financial services such as savings, funds transfer,
and stock market transactions among others on mobile devices (Tiwari and Buse, 2007). Mobile
banking systems offer a variety of financial functions, including micro payments to merchants,
bill-payments to utilities, person to person transfers, business to business transfers, business to
person transfers and long-distance remittances. Currently, different institutional and business
models deliver these mobile banking systems. As Porteous (2006) notes, some mobile banking
systems are offered entirely by banks, others entirely by telecommunications providers, and still
others involve a partnership between a bank and a telecommunications provider.

2.3 Benefits of E- Banking

According to WONDIMU, M. (2013), Business organizations are trying to uncover the new
technologies coming from the E-commerce applications which has a lower transaction cost
resulted to eliminate association in distributing channels (Salman &Kashif 2010). The cost can be
reduced to zero in some services like information and manufactured goods information.
Transaction of low cost and easiness provides to adopt the new trend of technology to trade
information among different groups and business parties. Information and Communication

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technology transformed business to go from local to global. However it has been said that E-
banking is vital in the banking sector of developing countries (Polatoglu and Ekin 2001). The
online payment system is quite new in banking institutions and dispersion of these innovations can
result in more competent online banking systems which resulted in lots of changes in the
technologies of the banking sector. Generally E-banking has a benefits for banks, customers and
for the economy.

2.3.1 Benefits of E-Banking for Banks

Banks can utilize the time saved by the channel migration of customers to mobile banking for
expansion of business through better marketing and sales activities. Mobile banking enables banks
to reduce cost of courier, communication, paper works, etc. And also it reduces costs in setting up
a branch and the resources to process transactions (Sunil and Durga 2013). Also banks providing
mobile banking services can have competitive advantage over those banks, which are not
providing this service. It has also been found to increase customer loyalty that is using mobile
banking customers need not to go in banks branches for fund transfer or for information, which
creates a good relationship between banks and customers which helps in increasing loyalty towards
the banks.
Banking industry has received numerous benefits due to growth of E-Banking infrastructure. There
are highlighted below WONDIMU, M. (2013):

 The growth of E-banking has greatly helped the banks in controlling their overheads and
operating cost
 Many repetitive and tedious tasks have now been fully automated resulting in greater
efficiency, better time usage and enhanced control.
 The rise of E-banking has made banks more competitive. It has also led to expansion of
the banking industry, opening of new avenues for banking operations.
 Electronic banking has greatly helped the banking industry to reduce paper work, thus
helping them to move the paper less environment.
 Electronic banking has also helped bank in proper documentation of their records and
transactions.
 The reach and delivery capabilities of computer networks, such as the Internet, are far
better than any branch network

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2.3.2 Benefits of E-Banking for Customers

Customers don‘t need to stand at the bank counter for various enquiries about their account.
Customers can save their valuable time and travelling cost in reaching the bank for their financial
transactions (Sunil and Durga 2013). Customers can pay their utility bills on time and save
themselves from paying penalties, since alerts are received from the bank.
The benefit of E-banking is not limited to banks but also to their customers. Thanks to the
emergence of the Internet, banking transactions are no longer limited to time and geography. It is
very easy for consumers throughout the world to access to their bank accounts 24 hours per day
and seven days a week WONDIMU, M. 2013). Customers can enjoy a variety of services,
especially services which are not provided by traditional bank branches (Pham 2010).It is argued
that one of the greatest benefits that E-banking brings about is that it is not expensive or even free
for customers to utilize E-banking products/services. However, some people believe that prices
appear to be one factor that is impedimental to the diffusion of E-banking (Sathye 1999). The price
debates often revolve around geographical differences and disparities between costs of Internet
connections and telephone call pricing.
Turban (2008) E-banking is really beneficial to customers such as:
Convenience – By e-banking, customers can carry out their banking activities whenever you want.
E-banking is a 24 hour service, so customers are no longer tied to the branch’s hours. On top of
that, they don’t have to take the time to travel to the branch and wait in the inevitable lines, thus
giving you more time to do what you want.
Mobility – e-banking can be done from anywhere, as long as customers have an Internet
connection.
No Fees – Because an e-bank doesn’t have to worry about funding an actual bank location with
all of those additional costs, fees can be reduced and are often non-existent. Those checking and
savings accounts that are offered by completely online banks usually have no fees at all.
Online Statements – Most online banks try to be as paper-free as possible. Most statements and
correspondence is done online, reducing the amount of paper used and sent out to you. This again
will help reduce the costs of the online bank. As an added bonus, this makes online banking a great
environmental choice. Be warned, some banks do charge if you do want a paper copy of something.

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Direct Deposit – With any incoming money, such as salary, customers can arrange for it to be
directly deposited into the bank account by the company sending the money. This is actually a
double benefit, as customers don’t have to take the time to deposit the check, plus the money goes
into customers account faster allowing them to earn interest that much quicker.
Automatic Bill Paying – With automatic bill paying, customers can automate paying their
monthly bills.
Real Time Account Information – Because customers can access their accounts anytime, they
can get up to date, real time information on the money in your accounts.
Transfers – Transfers between accounts with the same financial institution online can be done
almost instantaneously. Not only is there no hold on the money being moved around, you can do
it whenever you like and from wherever.

2.4 E-banking Opportunities in Ethiopia

2.4.1 Opportunities for Customers

General banking customers have been significantly affected by the advent of e-banking revolution
(EPHREM, S. (2016) :
A banking customer’s account is extremely accessible with an online account. Through internet
banking customer can operate his account remotely from his office or home. The need for going
to bank in person for every single banking activity is dispensed with.
Electronic banking lends an added advantage towards payment of utility bills. It eliminates the
need to stand in long queues for the purpose of bill payment.
All services that are usually available from the local bank can be found on a single website.
Sharp growth in credit card/debit card usage can be majorly attributed to e-banking customer can
shop globally without any need for carrying paper currency with him/her.
By the medium of e-banking (including internet banking), banks are available 24 hours 7 days a
week and are just a mouse click away.

2.4.2 Opportunities for Banking Sector

In addition to banking customers, growth of e-banking infrastructure in general and online banking
in particular has proved to be extremely beneficial to banks and overall bank organizations on
account of following (EPHREM, S. (2016):

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The concept of online banking has immensely helped the banks in putting a tab over their specific
overheads and operating cost.

The rise of electronic banking has made the banks more competitive. It resulted in opening of
better prospects and avenues for banking operations.

The online banking has ensured transparency of transactions and facilitated towards removing the
documentation requirements to a major extent, since majority of records under an e-banking set
up are maintained electronically.

The reach and delivery capabilities of internet-enabled banks, proves to be significantly better than
the network of physical bank branches.

2.5 E-banking challenges in Ethiopia

Banking in Ethiopia faces numerous challenges to fully adopt and adapt E-Banking applications
and seize the opportunities presented by ICT applications in general. Key Challenges for E-
Banking applications are:
Low level of internet penetration and poorly developed telecommunication infrastructure: Lack of
infrastructure for telecommunications, Internet and online payments impede smooth development
and improvements in e-commerce in Ethiopia. Most rural areas of the country, where the majority
of small and medium businesses are concentrated, have no Internet facilities and thus are unable
to engage in e-commerce activities.
Lack of suitable legal and regulatory framework for e-commerce and e-payment: Ethiopian current
laws do not accommodate electronic contracts and signatures. Ethiopia has not yet enacted
legislation that deals with e-commerce concerns including enforceability of the validity of
electronic contracts, digital signatures and intellectual copyright and restrict the use of encryption
technologies.
High rates of illiteracy: Low literacy rate is a serious impediment for the adoption of E-Banking
in Ethiopia as it hinders the accessibility of banking services. For citizens to fully enjoy the benefits
of E-Banking, they should not only know how to read and write but also possess basic ICT literacy.
High cost of Internet: The cost of Internet access relative to per capita income is a critical factor.
Compared to the developed countries, there are higher costs of entry into the e-commerce market

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in Ethiopia. These include high start-up investment costs, high costs of computers and
telecommunication and licensing requirements
Absence of financial networks that links different banks (Banks are not yet automated): Most of
the banking-transactions currently taking place use credit and debit cards supplied by Visa and
MasterCard. For conducting e-banking, the use of credit or debit cards is mandatory thus requiring
the need for specialized systems which are not currently available.
Frequent power interruption: Lack of reliable power supply is a key challenge for smoothly
running e-banking in Ethiopia.
Resistance to changes in technology among customers and staff due to:
Lack of awareness on the benefits of new technologies,
Fear of risk,
Lack of trained personnel in key organizations,
Tendency to be content with the existing structures,
People may be resistant to new payment mechanisms.
In Ethiopian, among the known common problems which are related to electronic banking few
of them are listed below Abraham H (2012).
 Lack of banking services through the web or other electronic means such as using mobile
phone,
 Data and network security and privacy,
 Lack and limitation of government policies, regulations and e-commerce laws, as well
as legislation to protect workers and to make the Internet secure,
 Weak telecommunications,
 Broken and slow Internet connections,
 Lack of Internet awareness.

EPHREM, S. (2016), also identified some challenges related to e-banking.

 Social and cultural barriers such as High rate of illiteracy, less awareness and customer
acceptance;
 Economic factors such as High cost of internet, low income and heavy investment and
cost of Technology;

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  Legal and security issues such as Cyber security issues and lack of suitable legal,
regulatory frame works of E-payment and restricted business;
 Infrastructural barriers like Low level of internet penetration, weak telecommunication
and frequent power interruption;
 Knowledge barriers such as Lack of trust by customer, lack of technological knowledge
and language barriers.

2.6 Customer Satisfaction

A customer is a person who maintains an account with the bank. One view of this question is that
a person does not become a bank customer unless and until he opens an account with a bank
(Adebayo, 2013). Customer satisfaction is defined as the number of customers, or percentage of
total customers, whose reported experience with a firm, its products or its services (ratings)
exceeds specified satisfaction goals (Farris et al., 2010). Customer satisfaction is a person’s
feelings of pleasure or disappointment resulting from comparing a product’s perceived
performance or outcome in relation to his or her expectations (Musiime and Biyaki, 2010).
Customer satisfaction is a measure of how products and services supplied by a company meet or
surpass customer expectation. Customer satisfaction is also defined as the number of customers
whose reported experience with a firm exceeds specified satisfaction goals (Farris, Paul et al.,
2010). Another definition of customer satisfaction refers to the extent to which customers are
happy with the products and/or services provided by a business. Further definition of customer
satisfaction states that it is a term generally used to measure a customer's perception of a company's
products and/or services (Ahmed, 2005). It's not a straight forward science. Customer satisfaction
will vary from person to person, depending on a whole host of variables which may be both
psychological and physical. According to Saha& Zhao (2005), customer satisfaction is defined as
a collection of outcome of perception, evaluation and psychological reactions to the consumption
experience with a product/service.

Customer satisfaction is a key determining factor why customers leave or stay with a bank. Fornell
(1992) cited in Thakur (2011) noted that although customer satisfaction and quality appear to be
important for all firms, satisfaction is more important for loyalty in service industries like bank.
Because even if the customers appear to be satisfied, they may look for other bankers if they
believe they might receive better service elsewhere (Reichheld, 1996) cited 10 in Thakur (2011).

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Thus the banking organizations need to know how to keep their customers. However, keeping
customers is also dependent on a number of other factors. These include a wider range of service
choices, greater convenience, better prices, and enhanced income (Thakur, 2011).

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CONCLUSION

TESHOME, F., (2016) identified that when customers use e-banking for the purpose of balance
enquiry, cash withdrawal, and other purposes, there are connection related problems and limited
amount of money to withdraw. But there are also other problems that hinder the smooth delivery
of the e-banking services because, there are times when cash availability is not present to withdraw
using ATMs during holidays. According to Mersha, F. (2016), Age and education are demographic
factors that have significant influence on customer satisfaction. Empathy, reliability and assurance
from dimension of service quality have a substantial influence on customers’ satisfaction. But there
may be other variables such as distance from the customers’ home to the bank with significant
influence on customers’ satisfaction. A study carried out by Worku, et al., 2016) concluded that
the majority of current e-banking users are youth between the age of 18 up to 35, gender wise the
males are the dominant users, occupationally salaried and students are the majority users and
business men/women are not active participant in using the service, educational level diploma and
above diploma holders are the majority users and the banks do not keep full record of their
customer profile in standardized way for easy reference. There is a relationship between
demographic characteristics and customer satisfaction in e banking than ordinary banking. But
there are no reasons explained by Worku, et al., 2016) why youth are e-banking users than others,
why females are dominated by male in using e-banking, why salaried and students are major users,
and why business men/women are not active in using e-banking services. According to Shiffu, A.
(2014), technology is affecting the life of every individual both qualitatively and quantitatively in
the present age. But there are societies who are living in rural areas where access of internet and
other Medias are not available are not affected by technological changes. In general even if there
are different e-banking service delivering options, these e-banking services may cause
employment rate to decline. The reason is that if customers access banking services in their home
and without the interference of bank workers, bankers are tending to decrease their working loads
and there is no enough space to hire additional employees. As a result this can affect a nations’
economy negatively.

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