Rift Valley University Bale Robe Campus

College of Business and Economics

Department Of Business Management
THE IMPACT OF INTERNET BANKING ON SERVICE DELIVERY
AND CUSTOMER SATISFACTION ON CBE: (THE CASE OF BALE
ROBE TOWN BRANCHES)
Prepared by

No Name Id

1 Daniel Shebiru…………………..0192/14
2 Tadela Shimelis…………………0093/14
3 Sime Jafer……………………….0081/14
4 Sara Belachew…………………..0195/14
5 Aberash Tegenu…………………0190/14

A RESEARCH PROPOSAL SUBMITTED TO BUSINESS MANAGEMENT

DEPARTMENT IN PARTIAL FULFILLMENT OF THE REQUIREMENT FOR
REGULAR BACHELOR'S OF ARTS (BA) DEGREE IN BUSINESS MANAGEMENT

ADVISOR:- MR. TESHOME DEJENE

December 2024
Robe, Ethiopia
Contents
List of Table........................................................................................................................................................................................ iii
Acronyms............................................................................................................................................................................................ iv
Abstract................................................................................................................................................................................................ v
Chapter One.......................................................................................................................................................................................... 1
Introduction.......................................................................................................................................................................................... 1
1.1.Background of the Study............................................................................................................................................................ 1
1.2 Statement of the Problem........................................................................................................................................................... 2
1.3 Research Question...................................................................................................................................................................... 3
1.4 Objectives of the Study.............................................................................................................................................................. 3
1.5 Research Hypothesis.................................................................................................................................................................. 3
1.6 Significance of the Study........................................................................................................................................................... 3
1.7. Scope of the study..................................................................................................................................................................... 3
1.8 Limitation of the study............................................................................................................................................................... 4
1.9 Organization of the proposal paper............................................................................................................................................ 4
Chapter two.......................................................................................................................................................................................... 5
Literature review.................................................................................................................................................................................. 5
2.1. Overview of the Ethiopian Banking System.............................................................................................................................5
2.2 Information and Communication Technology...........................................................................................................................5
2.4. Service quality.......................................................................................................................................................................... 6
Chapter Three....................................................................................................................................................................................... 8
Research Methodology......................................................................................................................................................................... 8
3.1. Description of the study area..................................................................................................................................................... 8
3.2. Research Design........................................................................................................................................................................ 8
3.3. Research approach.................................................................................................................................................................... 8
3.4. Source of data........................................................................................................................................................................... 8
3.5. Data collection tools.................................................................................................................................................................. 8
3.6. Sampling techniques................................................................................................................................................................. 8
3.7. Sample Size............................................................................................................................................................................... 8
3.8 Methods of Data Analysis.......................................................................................................................................................... 9
Chapter four........................................................................................................................................................................................ 10
Research Schedule and Budget........................................................................................................................................................... 10
4.1 Research Schedule................................................................................................................................................................... 10
4.2 Budget...................................................................................................................................................................................... 11
Reference............................................................................................................................................................................................ 13

ii
 List of Table
Table 1:- Research Schedule ………………………………………………………………11

Table 2:- Expected budget of the research………………………………………………..12

iii
 Acronyms
Commercial Bank of Ethiopia………………………………. CBE

Automatic Teller Machine ……………………………..……ATM

Customer satisfaction ………………………………….…… CS

IB= Internet banking ……………………………………….IB.

Information and Communication Technology ……………..ICT

iv
 Abstract
The main objective of this study to determine how is internet banking influence of customer satisfaction
and focus on how to assess the challenges of Internet i.e. modern banking technology on service
delivery and customer satisfaction of banking service by analyzing the case of Commercial Bank of
Ethiopia under Bale robe town branches. Banks in particular adopt information and communication
technology (ICT) to improve the efficiency and effectiveness of services offered to customers, improve
business processes, as well as to enhance managerial decision making and work group collaborations.
The study will target customers who actively use internet banking services provided by the Commercial
Bank of Ethiopia at the Bale Robe town branches. Additionally, bank staff involved in internet banking
services may also be included to provide insights from the service provider's perspective. The research
will employ quantitative methods (surveys) and qualitative methods (interviews) to gather data,
providing a comprehensive view of customer experiences and perceptions regarding internet banking.

Key words: Internet Banking, Customer satisfaction, Service quality, ICT

v
 Chapter One
Introduction
1.1.Background of the Study
Today’s business environment is very dynamic and undergoes rapid changes as a result of technological
innovation, increased awareness and demands from customers. Business organizations, especially the
banking industry of the 21st century operates in a complex and competitive environment characterized
by these changing conditions and highly unpredictable economic climate. Information and
Communication Technology (ICT) is at the center of this global change curve.

Internet is a man-made resource, embracing principally the electronic technologies of computers and
telecommunications (voice, data, and video) and comprising of both electronic hardware and computer
software. The significance of IT in today’s successful organization cannot be underestimated. It plays a
major role in the success of the organization in today’s highly competitive world by providing easy and
fast means of collecting, storing, retrieving, processing, transmitting and distributing information. There
can be various other factors that determine the success of a firm, and a firm may use various strategies
to pursue the path of success. However, fast and easy access of information through the use of IT is
very important to the firm because it influences all the other success factors, and the competitive
strategies cannot be practically implemented without its support

Commercial banks have a major role in the economic development of a country. They are the major
financial intermediaries between the sources of funds and the users of funds and their business is
heavily dependent on information related to the fund market, which includes fund suppliers, fund users,
brokers; information related to the central bank, and Ministry of Finance directives that they have to
follow; and information related to their competitors. Besides, their business also includes providing
financial information to their customers. Hence, commercial banks are highly information intensive,
and the use of IT by them, for easy and fast means of information collection, storage, retrieval,
processing, transmission, and distribution of information, should have extensive contribution to their
performance.

One of the modern yardsticks used for rating a modern business enterprise is its ICT infrastructural
layout. This is an indication of the importance of ICT for business establishments. Banks in particular
adopt information and communication technology to improve the efficiency and effectiveness of
services offered to customers, improve business processes, as well as to enhance managerial decision
making and work group collaborations. This helps strengthen their competitive positions in rapidly
changing /emerging economies. Environmental, organizational and technological factors are creating a
highly competitive business environment in which customers are the focal point.

Bhaskar R.and Tewdros Sisay (2011) stated that, CBE’s operational improvement plans will modernize
its services to its growing client base in Ethiopia as part of its vision to become a World Class bank in
the region. CBE is a government owned bank which offers arrange of retail banking services, which has
already opened a subsidiary company in Southern Sudan with plans to extend its services to other East
African countries.

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“Temenos’’ software delivers all the functionality and efficiencies we need to match a world class
commercial bank. Its dedicated investment in product development to continually meet the needs of its
clients and their customers was a very compelling proposition for us. The lack of flexibility and
homogeneity in our current systems impacts product innovation, service delivery, risk management and
cost control. Being able to replace all systems with T24 will deliver a single view of the business and
customer and therefore provide a better understanding of our customers to improve services, enable us
to effectively monitor and manage risk and lower our total cost of ownership. We will have an
enormous wealth of functionality and flexibility to develop a wide range of new products enabling us to
strengthen our presence in there tail space, as well as penetrate new markets in the face of increased
competition. By using this software CBE is going to provide to their customers better services like E-
banking, Mobile banking etc. Temenos software was benchmarked against solutions from Oracle FS
and Infosys and proved to be the most functionally rich plat form to deliver end to end operational
support and broaden CBE’s service offering, such as mobile banking, to enter new markets.

the relationship between ICT and the various organizational activities is similar to government & civil
servants while Government outlines policies and civil servants execute those policies. ICT acts as a
tool for the actualization of various organizational activities in order to implement and enforce policies.
However, the purpose of this study will be to show the challenges of internet on service delivery and
customer satisfaction the case of Commercial Bank of Ethiopia Bale Robe branches.

1.2 Statement of the Problem

Today, information and communication technology has become the heart of banking sector, while
banking industry is the heart of every robust economy. Electronic banking system has become the main
technology driven revolution in conducting financial transactions. Technology is no longer being used
simply as a means for automating processes. Instead it is being used as a revolutionary means of
delivering services to customers. The adoption of technology has led to the following benefits; greater
productivity, profitability, and efficiency; faster service and customer satisfaction; convenience and
flexibility; and space and cost savings.

Even if Ethiopia is one of the fastest developing countries in Africa the Ethiopian banking system is
still under developing. Ethiopian banking system is comparatively good, but the Electronic banking
system is relatively not at in use. Currently Commercial Bank of Ethiopia starts some E- banking
services such as Automatic Teller Machine (ATM) service, Internet Banking, Mobile Banking and
other services. But compared to other developing countries in Africa it is still at the beginning stage.
Due to various reasons the use of Information Technology on the banking services is limited. Hence
even if it is limited, Information technology has impact on banking service in Ethiopia.

Here in Ethiopia there is frequent power and telecommunication service interruption. These basic
service interruptions have greater impact on the operations of Commercial Bank of Ethiopia. When
there is interruption in telecommunication, it directly leads to frequent ATM break downs, the inability
to access funds at other branches, referrals to branches due to network break down as it affects the
Automatic Teller Machines, POS machines, and in general the whole activity of the bank if so the bank

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will fail to achieve its strategic goals. This in turn affects the service delivery and customer satisfaction
of Commercial Bank of Ethiopia.

Therefore, this research mainly focus or interest on how to assess the challenges of Internet i.e. modern
banking technology on service delivery and customer satisfaction of banking service by analyzing the
case of Commercial Bank of Ethiopia under Bale robe branches

1.3 Research Question

At the end of the research the following question have to answered

 What is the level of customer understanding on internet banking service?

 What is the effect of internet banking on customer satisfaction on CBE?
 Does internet have an impact on process efficiency of CBE?

1.4 Objectives of the Study

1.4.1 General Objective
The general objective of the study is to assess the impact of internet on service delivery and customer
satisfaction on CBE Bale Robe town branches
1.4.2 Specific Objectives

The specific objectives of this study are;

 To identify the customers understanding of internet banking service delivery of CBE bale robe
town branches,
 To show the impact of internet banking on customer satisfaction,
 To investigate the impact of internet banking on the efficiency of service on CBE.

1.5 Research Hypothesis

H0: internet banking has a positive and significant impact on customer satisfaction.
H1: internet banking has no a positive and significant impact on customer satisfaction.

1.6 Significance of the Study

The study will be expected to have different significances like;-

a. It will provide relevant information to management and planners of Commercial Banks of

Ethiopia regarding the impact of Internet service on banking services,
b. Recommendations forwarded will be useful to address the strategic issues of banks especially
issues regarding related products. Hence, policy makers can use this study to draw some policy
implications,
c. It will serve as a reference material for other researchers who conduct their study in related
topics.

1.7. Scope of the study

The research will be limited to the Bale Robe town branches of the Commercial Bank of Ethiopia. This
localized focus allows for an in-depth analysis of internet banking practices and their effects on service

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delivery and customer satisfaction within a specific context. The study will target customers who
actively use internet banking services provided by the Commercial Bank of Ethiopia at the Bale Robe
town branches. Additionally, bank staff involved in internet banking services may also be included to
provide insights from the service provider's perspective. The research will employ quantitative methods
(surveys) and qualitative methods (interviews) to gather data, providing a comprehensive view of
customer experiences and perceptions regarding internet banking.

1.8 Limitation of the study

The findings may be limited to the specific sample of customers from the Bale Robe branches, which
may not be representative of all customers of the Commercial Bank of Ethiopia or other banks in the
region. This limitation may affect the generalizability of the results to a broader population.

Participants may provide socially desirable responses or may not accurately reflect their true feelings
about internet banking services due to various factors such as fear of repercussions or misunderstanding
of survey questions.

The research focuses exclusively on internet banking and does not consider other banking channels
(e.g., mobile banking, traditional branch services) that may also influence customer satisfaction and
service delivery. The study may be limited by time constraints that affect the depth of data collection
and analysis, potentially leading to a surface-level understanding of customer experiences.

1.9 Organization of the proposal paper

The proposal of the study organized in to five chapters. The first chapter deals with background of the
study, statement of the problem, objective of study, scope of study, significance of study, and
organization of the proposal research. Relevant literature related to the study was be reviewed in
chapter two. Chapter three focuses with the description of the study area, materials and methods of the
study that we will use. In chapter four, it include schedule and budget for research

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 Chapter two
Literature review
2.1. Overview of the Ethiopian Banking System
Traditional institutions organized with a sense of cooperation and risk sharing has enabled Ethiopians to
experience saving and financial management within its cultural context. Equb and Edir are some of the
informal financial institutions that shaped the social bond and interaction (Gebeyaw Aychile2008).
Modern banking in Ethiopia started in 1905 with the establishment of Bank of Abyssinia, which was
based on a fifty year franchise given to the British-owned National Bank of Egypt. It has landmark
significance in introducing financial services, which were hitherto unknown in the country (Alemayehu
G. 2006). A significance feature of commercial banking in Ethiopia then was its innovative nature
rather than its contribution to growth and its competitive nature.

As the society was new for the banking service, banks had faced difficulty in familiarizing the public
and they faced considerable cost of installation. In the pre-1974 era, there hardly was any banking
competitive environment, as the banking industry was dominated largely by a single government owned
bank, State Bank of Ethiopia. Despite the efforts made to disengage banking from foreign control and
to make the institution responsible to Ethiopia’s credit needs, these developments did not bring about
meaningful competitive environment, as banking industry was characterized by specialization and low
level of business. The establishment of privately owned Addis Ababa Bank in 1964 and its growing
branch network created relatively better banking competition among commercial banks, with
concentration of their branch offices in big towns and trade routes in the country.

2.2 Information and Communication Technology

Information Technology (IT) is the automation of processes, controls, and information production using
computers, telecommunications, software and ancillary equipment such as automated teller machine
and debit cards. It is a term that generally covers the harnessing of electronic technology for the
information needs of a business at all levels. Communication is the conveyance or transmission of
information from one point to another through a medium .

Information and Communication Technology (ICT) is the automation of processes, controls, and
information production using computers, telecommunications, software and other gadget that ensure
smooth and efficient running of activities. It is a term that largely covers the coupling of electronic
technology for the information needs of a business at all levels. ICT has surpahumanssed the role of
support services or only electronic data processing; its fields of applications are slightly global and
unlimited. Its devices especially the Internet and modern computer email facilities have further
strengthened early modernizations like the telephone and fax. Other ICT devices include data
recognition equipment, factory automation hardware and services, telecommuting and teleconferences
using real time and online system (Adeoti, 2005).

It is a concept that is having a remarkable effect on almost entire aspects of the endeavors. This implies
that it involves the application of principles to engage physical component in achieving an intended
goal. The merging of computer and telecommunication after about four decades of applying computers

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to routine data processing, mainly in information storage and retrieval, has created a new development
where information has become the engine of growth around the world. This development has created
catch-up opportunities for developing countries such as Nigeria to attain desired levels of development
without necessarily „reinventing the wheels‟ of economic growth. This new technology has brought
far-reaching revolution in societies, which has tremendously transformed most business (banking)
scenes (Ovia, 2005)
2.3. Challenges of Internet in Banking
ICT fosters online exchange of information dialogue. This enables faster resolution of conflict and
quicker determination of a customer need. However, Nigerian banks face a lot of challenges. The most
identified challenge is Nigeria’s poor infrastructure. Electricity supply is sporadic and inefficient.
Nigeria also has very low internet penetration with less than one internet service provider per thousand
people.

Ovia, J. (2001) highlighted the following as the identifiable challenges facing Nigerian banks in the
effective implementation of ICT.
I. Low internet connectivity
Though there is a growing dependence on internet technology, there has been low supply in terms of
connection speed. However, the introduction of wireless system has improved the efficiency rate.
II. Low Tele-density
Nigeria has one of the lowest tele-densities in the world. Tele-density refers to the number of landline
telephones in use per 100 individuals living within an area. A tele density greater than 100 means there
are more telephones than people. It is however practically impossible to grow and expand the Nigerian
financial market without adequate telecommunication infrastructure.

III. Security
Access to bank servers by unauthorized individuals poses a great threat to the utilization of ICT in the
Nigeria’s banking industry. Fraud and counterfeit money are challenge confronting ICT enhanced
banking. It is not enough to acquire sophisticated ICT equipment but exposure to information-
technology related failure should be minimal.

2.4. Service quality

Quality in a service organization is a measure of the extent to which the service delivered meets the
customer's expectations. The nature of most services is such that the customer is present in the delivery
process. This means that the perception of quality is influenced not only by the "service outcome" but
also by the "service process". The "perceived quality" lies along a continuum. "Unacceptable quality"
lies at one end of this continuum, while "ideal quality" lies at the other end. The points, in between
represent different gradations of quality.
2.5. Customer Satisfaction
The customer satisfaction is the customer’s evaluation of the service and product that provide by firms
and banks when this service and product match with the customer’s expectation. However, the
customer perceptions are the point for actual service experience, and customer’s expectation uses to
find the performance of which service are compared, customer gap is the difference between customer

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expectation and perceives, also, this difference led the customer to be dissatisfaction. The firms must
obligate to take a focus on what satisfaction by customers because it creates a strong relationship
between firms and customers.

the service quality is the customer’s expectations for the commodity and service as achieved to the
customer, also delivering quality service it intends that the same with customer expectations, The
satisfaction and loyalty relationship is determined by customers, company or banks, and competitors,
and the relationship includes the customer buying habits, perception, expectations, sources of
information, positive word of mouth, service quality, satisfaction and loyalty. However, the customer
loyalty leads by customer satisfaction and customer’s loyalty produces the profitability for banks and
all things related to each other.
Caruana (2002) describes the service quality is the consequence by customers for the comparison
process about what they consider banks service should be, and the expectation how the bank’s
performance for that service.

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 Chapter Three
Research Methodology
3.1. Description of the study area
The study will be conducted in the Commercial Bank of Ethiopia Bale Robe town selected branches.

3.2. Research Design

The type of research employed in this study will be both descriptive and econometric models, which
will include a linear multiple regression model. The reason behind the use of descriptive design for this
study will be to properly describe the state of affairs, as it will exist at that time in CBE, Bale Robe
town branches

3.3. Research approach

In this study, the researcher will use both qualitative and quantitative approaches. Under this approach,
the combination of both qualitative and quantitative approaches for conducting research will be
employed to gather meaningful data required to meet the objectives of the study

3.4. Source of data

Both primary and secondary sources of data will be used in this research. The primary data will be
collected from the sample customers and staff of the Commercial Bank of Ethiopia. Secondary data
sources such as documents, books, reports, journals, and research works related to the topic in CBE, as
well as reports from CBE Bale Robe town branches, will be used to gather secondary data.

3.5. Data collection tools

The researcher will use questionnaires, interviews, and focus group discussions. Open-ended and close-
ended questionnaires will be presented to sample respondents who are staff of CBE to collect relevant
data from them. On the other hand, interviews will be employed to collect data.

3.6. Sampling techniques

The sampling technique that will be used for the managers, technical experts from Information
Technology departments, and existing customers of CBE will be Purposive Sampling Technique.
Because instead of using random sampling techniques, purposive sampling will be better for collecting
information in such areas of study. The reason behind this is to obtain currently existing detailed
information regarding electronic banking services that will be offered by the Commercial Bank of
Ethiopia. Since the questionnaires will be developed in English and local languages (Amharic) and if
needed will use oromic and the information needed will require knowledge of previous service delivery
by the bank, purposive sampling technique will be used for the selection of existing customers of the
bank.

3.7. Sample Size

The target population of the study will include employees and managers from different branches of the
Commercial Bank of Ethiopia, technical experts from Information Technology departments, and
customers of the Commercial Bank of Ethiopia who will be selected because they have been served by

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CBE before and after the implementation of different banking software and various technological
products.

3.8 Methods of Data Analysis

Based on the objectives of the study, appropriate tools and techniques of analysis such as descriptive
analysis and econometric models will be employed. Demographic and socio-economic conditions of
sample respondents will be analyzed and used for interpretation of data and drawing conclusions. To
analyze the data, descriptive statistics will be employed for data analysis. The analysis and findings of
the study will be presented by using tables, graphs, charts, and the like.

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 Chapter four
Research Schedule and Budget
4.1 Research Schedule
Here's a detailed timeline table for a 4-month research project on "The Impact of Internet Banking on
Service Delivery and Customer Satisfaction on Commercial Bank of Ethiopia: The Case of Bale Robe
Town Branches." This table outlines the key activities from selecting the title and submitting the
proposal to the end of the research defense.

Month Week Activity Description Milestone

Month 1 Week 1 Title Selection Finalize the research title and Title selected.
objectives

Week 2 Proposal Writing Write the research proposal, Complete draft of

including objectives, literature proposal
review, and methodology.

Week 3 Proposal Submit the research proposal to Proposal

Submission the relevant authority for submitted.
approval

Week 4 Proposal Receive feedback on the proposal Revise proposal

submitted. and make necessary revisions. based on
feedback.

Month 2 Week 1 Literature Conduct a comprehensive Complete

Review literature review on internet literature review.
banking and customer |
satisfaction.

Week 2 Research Design Develop research methodology Finalize research

and design data collection tools design.
(surveys/interviews)

Week 3 Data Collection Prepare for data collection by Prepare for data
Preparation identifying target participants and collection
scheduling interviews.

Week 4 Data Collection Distribute surveys to customers Start data

and conduct interviews with bank collection.
staff

Month 3 Week 1 Data Collection Continue data collection; follow Midway through
up with participants as necessary data collection

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 Week 2 Data Collection Complete data collection; ensure End of data
all data is gathered and collection.
organized.

Week 3 Data Cleaning Clean the collected data and Preliminary data
and Analysis begin analyzing it using analysis complete
statistical methods.

Week 4 Writing the Draft Begin writing the first draft of the Complete first
research paper, focusing on draft sections
methodology, findings, and
discussion.

Month 4 Week 1 Review and Share draft with peers/advisors Receive feedback
Revisions for feedback; start revisions on draft
based on feedback received.

Week 2 Finalizing Paper Continue revising the paper; Finalize revisions.

finalize all sections including
introduction, literature review,
and conclusion.

Week 3 Prepare for Prepare presentation materials for Presentation

Defense the research defense; practice materials ready
presentation skills.

Week 4 Research Conduct the research defense Successful

Defense before the committee; respond to completion of
questions and feedback. defense.

Table 1:- Research Schedule

This structured timeline will help us stay organized throughout our research project, ensuring that we
meet all necessary milestones leading up to our final defense. Adjustments can be made as needed
based on progress and specific requirements.

4.2 Budget
Here’s a budget table for your research project titled "The Impact of Internet Banking on Service
Delivery and Customer Satisfaction on Commercial Bank of Ethiopia: The Case of Bale Robe Town
Branches

Budget Item Description Expected cost(ETB)

Internet (Data) Internet access to download Books and 300

Journals Includes online resources.

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 Transportation Travel costs for interviews or site visits 500

Defense Presentation Materials | like 200

Preparation Printing slides, posters, etc.

Writing and |Professional editing of the final paper, 100

Editing Questionary paper printing cost

Total Expected cost at the end of research 1100

Table 2:- Expected budget of the research

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 Reference
1. Adeoti,J.O(2005). “Information Technology Investment in Nigerian Manufacturing Industry:
The Progress So Far”, Selected Papers for the 2004AnnualConference, Ibadan: Nigerian
Economic Society, 213-244
2. Bhaskar Reddy M. and Tewdros Sisay (2011), E-Business: Application of software and
technology in selected Ethiopian Banks: Issues and challenges Berger, A. N. (2003). The
economic effects of technological progress: evidence from the banking industry, Journal of
Money, Credit, Banking, 35 (2), 141-176.
3. Gebeyaw Aychile, (2008). Financial Performance of National Bank of Ethiopia Workers
‟Savings and Credit Association with special emphasis to adjustments (NBE WSACA) ‟
4. Ovia J. (2001). Financing Information and Communication Technology: Opportunities and
Constraints. A paper presented at the African IT exhibitions and Conferences venue held at the
Eko le Meridien Hotel Lagos.
5. http://www.wikipedia.com
6. http://www.google.com
7. http://www.researchgate.com
8. http://www.youtube.com

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