DEBRE TABOR UNIVERSITY

COLLEGE OF BUSINESS& ECONOMICS

DEPARTMENT OF MANAGEMENT

ASSESMENT OF ELECTRONIC BANKING PRACTICE (IN CASE OF COMMERICIAL

BANK OF ETHIOPIA IN DEBRE TABOR BRANCH)

A RESEARCH PROPOSAL SUBMITTED TO MANAGEMENT DEPARTMENT IN

PARTIAL FULFILLMENT OF THE REQUIREMENT FOR BA DEGREE IN
MANAGEMENT

BYID NO_
1. REEM MSTOFA……………………………...2031/12
2. SIMRET MISGANAW……………………….1914/12
3. SIMEMNESH ABDELA………………………2406/12
4. ASMIRA MOLLA………………………….…2061/12
5. KIDST MESFIN………………………………3227/12

ADVISOR:- TEMESGEN. A(MBA)

June 2023
DEBRE TABOR, ETHIOPIA

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ACRONYMS

ATM -- Automated Teller Machine

POS -- Post of Sales

E-banking -- Electronic Banking

EFT --Electronic Fund Transfer

ICT -- Information Communication Technology

E-payment -- Electronic Payment

CBE -- Commercial Bank of Ethiopia

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ABSTRACT
Despite the growth of e-banking adoption worldwide, Ethiopian banks continue to conduct most
of their banking transactions using traditional methods. The general objective of the study was
assessment of the current extent and practices, benefits realized by banks, driving forces,
opportunities and challenges for the adoption of e-banking service in Commercial Bank of
Ethiopia in Debre Tabor Branch. From this general objective, five specific issues were explored.
A descriptive research design was employed to conduct this study. Both primary and secondary
qualitative data were collected for the purpose of this study from the employees and managers of
the bank and its web site respectively. The collected data was analyzed by using descriptive
analysis such as tables and percentages. From an analysis of the collected data, the findings
revealed that: balance inquiry, cash withdrawal, funds transfers, statement printings are among
the major practice of e-banking among those service provided by the bank to the customer.
Finally, as per the finding the recommendations are given.

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ACKNOWLEDGMENT

First of all, We would like to express our sincere thanks to the Almighty God, the merciful who
helped us throughout our life.

Next our deepest gratitude goes to our advisor Temesgen. A for his helpful and critical advice
and appreciation in the preparation of this paper.

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Table of content
ACRONYMS..............................................................................................................................................ii
ABSTRACT................................................................................................................................................iii
1.1 Background of the study.................................................................................................................1
1.2 Statement of the Problem................................................................................................................2
1.3 Research questions..........................................................................................................................4
1.4 Objective of the study......................................................................................................................4
1.4.1 General objective......................................................................................................................4
1.5 Scope of the Study............................................................................................................................4
1.6 Significance of the Study.................................................................................................................5
1.7 Definition of Operational terms......................................................................................................5
1.8 Limitation of the Study...................................................................................................................6
1.9 Organization of the paper...............................................................................................................6
CHAPTER TWO - REVIEW OF LITRATURE....................................................................................7
2.1 TheoreticalLiterature Review.........................................................................................................7
2.1.1 Automated Teller Machine (ATM)..........................................................................................7
2.1.2 Point- of- Sale Transfer Terminals (POS)...............................................................................8
2.1.3 Internet / extranet banking......................................................................................................8
2.1.4 Mobile banking.........................................................................................................................8
2.2 The Evolution of E -Banking System.............................................................................................8
2.3E- Banking Systems in Ethiopian Banking Industry.....................................................................9
2.4 Factors influencing Banks to adopt E-banking system.................................................................9
2.4.1 Technological Factors.............................................................................................................10
2.4.2 Organizational Factors...........................................................................................................11
2.4.3 Environmental factors............................................................................................................11
2.5 Challenges of adopting E- banking in Ethiopia...........................................................................12
2.5.1 Low level of internet penetration and poorly developed telecommunication infrastructure
...........................................................................................................................................................12
2.5.2 High rates of illiteracy............................................................................................................12
2.5.3 High cost of Internet...............................................................................................................12
2.5.4 Absence of financial institutions networks that links different banks (Banks are not yet
automated).......................................................................................................................................12
2.5.5 Frequent power interruption.................................................................................................13

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 2.6.Benefitof adopting E- banking system..........................................................................................13
2.6.1. Benefit of E-banking for Banks............................................................................................13
2.7 EMPERICAL REVIEW LITERATURE....................................................................................14
CHAPTER THREE - RESEARCH METHODOLOGY......................................................................17
3.1 Introduction...................................................................................................................................17
3.2 Research design.............................................................................................................................17
3.4 Sample Method and SamplingSize...............................................................................................17
3.5 Source of data and method of data collection..............................................................................17
3.6 Methods of data analysis and presentation..................................................................................17
3.7 Ethical Consideration....................................................................................................................18
CHAPTER FOUR- Results and discussion...........................................................................................19
4.1. Introduction..................................................................................................................................19
4.2. Demographic information of the respondents............................................................................19
4.3 Efficiency and cost advantage of e-banking.................................................................................20
4.4 Customer trends in using e-banking services..............................................................................21
4.5 Barriers to adopt e-banking system..............................................................................................22
4.6 Benefits of E-banking to general economy...................................................................................24
4.7 Comparative advantage of E- banking........................................................................................26
CHAPTER FIVE-MAJOR FINDINGS, CONCLUSION AND RECOMENDATION......................29
5.1 Introduction...................................................................................................................................29
5.2 Major Findings..............................................................................................................................29
5.3 Conclusions....................................................................................................................................29
5.4 Recommendation...........................................................................................................................31
Reference..................................................................................................................................................33
Appendix..................................................................................................................................................34
Interviews’................................................................................................................................................36
List of Figures

Figure 2.1 Factor affecting E-banking adoption………………………………….…………………….9

List of tables
Table 1 sex, work experiences and educational status of employees in commercial bank...................................19
Table 2 cost and efficiency advantage of E-banking system...................................................................................21
Table 3 cost advantage of e-banking services in commercial bank of Ethiopia....................................................21
Table 4 Role of technological infrastructure in adopting e-banking system........................................................22

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Table 5 E-banking customers’ trends in commercial bank of Ethiopia................................................................22
Table 6 Number of e-banking customers in commercial bank of Ethiopia Debre Tabor branchfrom 2004-2006
E.C................................................................................................................................................................................22
Table 7 Barriers of adopting system in commercial bank of Ethiopia Debre Tabor branch.............................23
Table 8 e-banking benefits to general economy of the country..............................................................................25
Table 9 comparative advantage of the bank which offer e-banking services over banks give services
traditionally.................................................................................................................................................................26
Table 10 E-banking driving forces in commercial bank of Ethiopia.....................................................................28

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CHAPTER ONE - INTRODUCTION

As an introduction of the study, this chapter presents: background of the organization,

background of the study, statement of the problem, research questions, research objective, scope
of the study, significance of the study and organization of the whole paper respectively.
1.1 Background of the study
In this era of globalization, with increased competition around the globe in all sectors, a strong
banking industry is important in every country and can have a significant effect in supporting
economic development through efficient financial services; as a result, many banks in the world
are modifying their strategies to reach customers worldwide more easily and cheaply. Therefore,
banks are developing the technologies that will help them deliver banking products and services
by the most cost-effective channels and one of such channels is adoption of e-banking or internet
banking. The transaction costs of providing these services are lower than the traditional approach
(Booz & Hamilton, 1997:4).

Financial services industry has recently been open to historic transformation, it can call e
developments are emerging and advancing rapidly in all areas of financial intermediation and
financial markets: e-finance, e-money, electronic banking (e-banking), e-brokering, e insurance,
e-exchanges, and even e-supervision. The new information technology (IT) is turning into the
most important factor in the future development of banking, influencing banks’ marketing and
business strategies. In recent years, the adoption of e-banking began to occur quite extensively as
a channel of distribution for financial services due to rapid advancement in IT and intensive
competitive banking markets.
The driving forces behind the rapid transformation of banks are influential changes in the
economic environment: innovations in information technology, innovations in financial products,
the dynamic nature of customers demand, liberalization and consolidation of financial markets,
deregulation of financial inter-mediation etc. These and other factors make it complicated to
design a bank’s strategy, which process is threatened by unforeseen developments and changes
in the economic environment and therefore, strategies must be flexible to adjust to these changes.
The financial services market is continuing to change rapidly, which brings into question
whether traditional banks, as they are now structured, will actually continue to exist by the end of
the decade or even survive through the next years (Olga lustsik, 2003).

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E-banking services are at an infant stage in Ethiopia; even though expansion of e- banking
throughout the developed and the developing world is rapid, Ethiopia’s financial sector remain
behind in expanding the use of the service. Certainly, the banking industry is not well developed
with a growing number of international trades; increase the demand of the customer and
international relations. The today’s banking system has problems of offering efficient and
dependable services (Garedachew, 2010:9).
By considering that the Ethiopian banking system is underdeveloped compared to the rest of the
world, there is an immediate need to embark on capacity building arrangements and modernize
the banking system by employing the state of art of technology being used in anywhere in the
world. With the growing number of import-export business, and increasing international trades
and international relations, the current banking system is short of providing efficient and
dependable services.

Cash is still the medium of exchange. The use of checks is mostly limited to governmental
institutions, non-governmental organizations and some private businesses. As a result, the
country has not yet realized the full benefit of technological advances in electronic banking
system (Garedachew, 2010:5)

The electronic banking service in Ethiopia is having been in operation for small period of time as
a result, the Ethiopian financial sector has not been studied to any great extent, from the
perspective of provision of electronic banking service. Therefore, more studies are still required
to analyze the challenges and opportunities of E-banking in the country. Thus, to fill this gap and
contributes to the literature on the electronic banking service in Ethiopia the study focused on
analyzing opportunity and challenges of E-banking technology in Banking industry specifically
in commercial bank of Ethiopia (Wondwossen and Tsegai 2005:40)
1.2 Statement of the Problem
E-banking has a lot of benefit in delivering service to customers, in Ethiopia customers were
missed to enjoy with the technological advancement in banking sector which has been
entertained elsewhere in Africa and the rest of the world. This is due to lack of awareness or
competition among banking industries. The modern E-banking methods like ATMs, Debit cards,
Credit cards, Internet banking, Mobile banking and others are new to the Ethiopian banking
sectors. E-banking which refers to the use of modern technology that allows customers to access

2
banking services electronically whether it is to withdraw cash, transfer funds, and to pay bills, or
to obtain commercial information andadvice'sare not well known in Ethiopia (Ayana, 2012).
According to Gardachew (2010:8) conducted a research on the opportunities and challenges of
E-banking in Ethiopia and found that lack of suitable legal and regulatory frame works for E-
commerce and E payments, political instability in neighboring countries, frequent power
interruption, lack of trained personnel’s in key organizations, high rates of illiteracy and absence
of financial networks that links different banks are the major challenges.
Wondwossen and Tsegai (2005:44) found that the main obstacles to the development of E
payments are lack of customers trust in the initiatives, unavailability of payment laws and
controlling system especially for E-payment, lack of skilled manpower and frequent power
disruption.
The issues raised with adoption of new technology are Perceived risk or uncertainty about the
outcome of the use of the innovation (Gerrard& Cunningham, 2003). Uncertainty arises from a
predictive validity of the attributes (for example functionality and security) that is, how well
users of new technology will predict future performance (Cox, 1967). Risk is a subjective
determined expectation of loss; the greater the expected probability of loss, the higher the risk
perceived (Mitchell, 1999), and thus the lower the motivation to adopt an innovation.
The main obstacles and barriers that oppose E-banking adoption are the concerns of security,
privacy of information and technology investment cost. Also, the literature indicates that
according to the customers there are different factors that influencing the adoption of E-banking
such as, perceived advantages and other factors related to the services itself & how to be
accepted and used by the customers, which differ from country to country, reflecting the
economical and technological development in each country (Yabibalbutaw, 2020). All those
mentioned researchers above used simple random sampling to collect data, but in our research
we will use census survey to collect data. There is also a time gap, technological gap,
geographical gap, and human attitude about e-banking.

In this study we will try to identify the main factors influencing adoption of E-banking in
Ethiopian banking industries by using questionnaires conducted with employees of the
Commercial bank of Ethiopia Debre Tabor branch.

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1.3 Research questions
Based on the statement the problem researchers would attempt to answer the following
questions.

The basic research questions of the research: -

1. How looks like the current practices of e-banking service in commercial bank of Ethiopia in
Debre Tabor branch?

2. What are the driving forces towards the adoption of e-banking service in commercial bank of
Ethiopia in Debre Tabor branch?

3. What are the benefits of adopting e-banking service from the viewpoint of the bank?

4. What are the major challenges for the adoption of e-banking service in the bank?
1.4 Objective of the study
1.4.1 General objective
The general objective of this study is to assess electronic banking practice in case of commercial
bank of Ethiopia in Debre tabor branch.

1.4.2 Specific objective

• To identify the current practices of e-banking service in commercial bank of Ethiopia in

Debre Tabor branch.

• To identify the driving forces towards the adoption of e-banking service in commercial
bank of Ethiopia in Debre Tabor branch.

• To identify the benefits of adopting e-banking service from the viewpoint of the bank.

• To identify the major challenges for the adoption of e-banking service in commercial
bank of Ethiopia in Debre Tabor branch.
1.5 Scope of the Study
This study has the geographical, conceptual and methodological scopes. The geographical of the
study conducted on commercial bank of Ethiopia, Debre Tabor branch. Conceptual scope of the
study examined the potential problems that are related to practicing e-banking considering online
banking, mobile banking, automated teller machine (ATM), debit cards, credit cards, electronic
funds transfer and more system in commercial bank of Ethiopia in Debre Tabor branch.

4
Methodologically the study used descriptive type of research design by collecting data from
primary and secondary source. The research was conducted from January 2023 to July 2023.

1.6 Significance of the Study

This paper will be used to first of all us to acquire BA Degree in Management as partial fulfilment
and for the college of business and economics. Since E-banking system is in an infant stage in
Ethiopia, by investigating the different opportunities and challenges for the adoption of this
service delivery channel and by recommending solutions for the identified problems, this study
helped banks to benefit from the adoption of modern technologies. In addition, it helped to fill
significant knowledge gaps about e-banking landscape in Ethiopian banking industry; thereby it
gave insight to researchers about the problem and stimulate further investigation of the issue. It
also assisted the bank in understanding the key factors affecting e-banking adoption.

It also benefited the researchers by expanding their knowledge base and to learn something
new, to be better at our solving skills, challenging our self in new ways. Being closely
monitored by experienced researcher has also benefits us to build more knowledge. It
provided a route to an academic career as well as increasing opportunities for employment in
both private and public sectors.
1.7 Definition of Operational terms

E-commerce (electronic commerce):-is the buying and selling of goods and services, or the
transmitting of funds or data, over an electronic network, primarily the internet.

E-banking (electronic banking):-indicates a process through which a customer is allowed o

carry out, personal or commercial banking transaction using electronic and telecommunication
network. It is also a product offered by banks which facilitates online banking, with the help of
which the customer can have access to the bank account in just one click.

Electronic fund transfer (EFT):- is any transfer of funds, other than a transaction originated by
check, draft, or similar paper instrument, which is initiated through an electronic terminal,
telephonic instrument, computer, or magnet, tape so as to order, instruct, or authorize a financial
institution to debit or credit an account.

5
E-payment (electronic payment):-is use of any form of payment processed through electronic
means, including credit cards, debit cards, and automatic clearing house transaction. It is a
payment to or from the account made by any means other than cash or cheque.
1.8 Limitation of the Study
The focus of this study is on the assessment of e-banking system practices in Commercial Bank
of Ethiopia in Debre Tabor Branch. Owing to the initial stage of e-banking services available in
Ethiopia, it was very difficult to get secondary data as well as literature in this area from the
country perspective. Lack of willingness and carelessness of employee in giving information by
some respondents are also the other limitation.
1.9 Organization of the paper

This paper consists of five chapters with different sections and sub-sections. Chapter one presents the
introduction for the main part of the paper, and chapter two states the theoretical and empirical
literature review about the adoption of e-banking service in some countries. Chapter three discusses
research methodology Chapter four focuses on results and discussions. Finally, the last chapter
(chapter five) gives conclusion and recommendation of the study.

6
 CHAPTER TWO - REVIEW OF LITRATURE
2.1 TheoreticalLiterature Review

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). E-banking, also known as electronic funds transfer
(EFT), is simply the use of electronic means to transfer funds directly from one account to
another, rather than by check or cash (Malak, 2007).

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). It should be noted that electronic
banking is a bigger platform than just banking via the internet.

E- banking can be also defined as a variety of platforms such as internet banking or (online
banking), TV based banking, mobile phone banking, and PC (personal computer) banking (or
offline banking) whereby customers access these services using an intelligent electronic device,
like PC, personal digital assistant (PDA), automated teller machine (ATM), point of sale (POS),
kiosk, or touch tone telephone (Alagheband 2006, p.11). Different forms of E- banking system
were discussed as follows.

2.1.1 Automated Teller Machine (ATM)

It is an electronic terminal which gives consumers the opportunity to get banking service at
almost any time. To withdraw cash, make deposits or transfer funds between accounts, a
consumer needs an ATM card and a personal identification number (PIN).

7
2.1.2 Point- of- Sale Transfer Terminals (POS)

It is a system allows 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 account of debit card holder to the store's account
(Malak, 2007).

2.1.3 Internet / extranet banking

It is an electronic home banking system using web technology in which Bank customers are able
to conduct their business transactions with the bank through personal computers.

2.1.4 Mobile banking

Mobile banking is a service that enables customers to conduct some banking services such as
account inquiry and funds transfer, by using of short text message (SMS).

Banks offer Internet banking in two main ways. The first one is an existing bank with physical
offices can establish a Web site and offer Internet banking to its customers in addition to its
traditional delivery channels. A second alternative is to establish virtual branchless or Internet
only, Bank almost without physical offices. Virtual Banks may offer their customers the ability
to make deposits and withdraw funds via ATMs or other remote delivery channels owned by
other institutions. In the context of this study E- banking were not considered as only transferring
of service by using internet connection rather it considered as multi-channel service provided
through ATM, internet banking, Mobile banking (Mod birr system), point sale terminal and
telephone banking (Furst&Nolle 2002, p.5).
2.2 The Evolution of E -Banking System

Electronic innovation in banking industry can be traced back to 1970, when the
computerization of financial institutions gained momentum (Malak 2007). However; a
visible presence of this was evident to the customers since 1980, with the introduction of
ATM Innovative banking has grown since then, aided by technological developments in the
telecommunications and information technology industry. The early decade of the 1990s
witnessed the emergence of automated voice response (AVR) technology. By using the AVR
Technology, banks could offer telephone banking facilities for financial services.

8
2.3E- Banking Systems in Ethiopian Banking Industry

The appearance 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. In addition to eight ATM Located in Addis Ababa, CBE has had Visa membership since
November 14, 2005. But, due to lack of appropriate infrastructure it failed to reap the fruit of its
membership. Despite being the pioneer in introducing ATM based payment system and acquired
visa membership, CBE Lagged behind Dashen bank, which worked aggressively to maintain its
lead in E- payment system according to Gardachew (2010).
2.4 Factors influencing Banks to adopt E-banking system

Many researchers have been used different frame works in the study of adopting new
technological innovation. Among frameworks that have been developed based on the past studies
includes, the Technology organization Environment framework (TOE) (Tornatzky& Fleischer
1990), which identifies three basic Factors for the adoption of technological innovation i.e.,
technological factors, organizational and environmental factors.

According to Tornatzky and Fleischer (1990), technology adoption within an organization is

influenced by factors pertaining to the technological context, the organizational context, and the
external environment. Based on this, the researcher summarizes possible key factors affecting e-
banking adoption as shown in Figure 2.1

Environmental factors
Legal framework
Organizational factors
National ICT infrastructure
 Financial and human
Competitive pressure Resources
Government support 9
 E-banking
Adoption

Technological factors
Perceived risks (relative disadvantage)
Perceived benefits (relative advantage)

Source: Tornatzky& Fleischer (1990)

Figure2.1 Factor affecting E-banking adoption

For each context, various factors have been identified from the literature but only those that are
considered relevant for E-banking adoption are included in the study. Details of factors
considered in this study are discussed below.
2.4.1 Technological Factors

According to Elias (2009), chooses two basic factors related to technology competences, which
have relevant to the organizational factors, i.e. Perceived benefits and perceived risks are
considered in this study from the technological factors.

2.4.1.1 Perceived benefits

Perceived benefits of E- banking cover both direct and indirect benefits for the banking industry
as well as for the consumers. Direct benefits include the savings on operational cost improved
organizational functionality, productivity gain, improved efficiency and increased profitability.
Indirect benefits include the opportunity or intangible benefits such as improved customers’
satisfaction through improved services improved banking experience and fulfillment of their
changing needs and lifestyle (Iacovou, 1995).

2.4.1.2 Perceived risks

10
according to (Zhao, 2008)one of the important risks faced by banking institutions in offering E-
banking services is the customers‟ resistance to use the services which significantly hinder the
growth of E- banking services. Issues related to security have always been a concern when
dealing with technologies related to online transactions such as E- banking. Therefore, the
perception of the risks regarding E-banking is expected to influence its adoption and further
growth.
2.4.2 Organizational Factors

Organizations are influenced by different factors to adopt and growth the E-banking services,
like firm size, top management support and financial and human resources. In the framework for
this study, researcher uses one basic organizational factor as discussed below. (Iacovou, 1995)

2.4.2.1 Financial and human resources

Financial resources are an important factor in facilitating innovation adoption for any
organization and they are often correlated size with firm. Therefore, there is expected that the
availability of financial resources within the adopting firms is important for E banking adoption.
These resources enable banking institutions to obtain human related resources including the
required skills and expertise to develop and support provision of E banking services (Worku,
2010)
2.4.3 Environmental factors

The four environmental factors relevant for E-banking adoptions included in this study are:-
2.4.3.1 Legal Frameworks

The existence and maturity of E-commerce legal frameworks within a country influence the
diffusion of online transactions including E-banking.

2.4.3.2 The National ICT infrastructure

National ICT infrastructure is a major factor that supports the adoption of E-banking services.
Without an adequate development level and quality of a nations ICT infrastructure, E-banking
adoption and use cannot do well.

2.4.3.3 Competitive pressure

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Competitive pressure can strongly influence any bank to develop and adopt E-banking initiatives
and it may affect the banks perception towards E-banking system.

2.4.3.4 Government Support

Government can either directly or indirectly affect the adoption of E-banking in terms of creating
a favorable environment and impetus for banking institutions and their customers so that the
services can be diffused with the community (Worku, 2010)
2.5 Challenges of adopting E- banking in Ethiopia

According to Gardachew (2010) Ethiopian banking industry faces numerous challenges to adopt
E banking system and grab the opportunities presented by ICT- applications in general. The Key
Challenges for E-banking applications are:-

2.5.1 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

2.5.2 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.

2.5.3 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 in Ethiopia.
These include high startup investment costs, high costs of computers and telecommunication and
licensing requirements.

2.5.4 Absence of financial institutions networks that links different banks (Banks are not
yet automated)

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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.

2.5.5 Frequent power interruption

Lack of reliable power supply is a key challenge for smoothly running E-banking in Ethiopia.
2.6.Benefitof adopting E- banking system

According Robinson (2000) in delivering banking products the cheapest way can be done only
through the Online Banking. With the help of online banking services, the branch networks of
banks have reduced and also the staff for working in banks and customers are satisfied to use the
online banking services as it will save a lot of time and effort to go to branch of bank and
perform these transactions.

Joseph & Stone (2003) emphasized that human and technology based delivery channels were
greatly linked with the customers‟ perceptions of how these bank services were delivered to
them and pointed out that these perceptual outcomes would affect the level of bank customer
satisfaction, retention, and switching. Before the shift of technology, customers were facing a lot
of problems like handling a lot of money and transferring of that money, submission of utility
bills and waiting in a long queue as there was no online transferring facility, and there was no
information about new services offered by banks and mostly deposit holders were unaware of
how to get benefits from bank products and services like bank loans, credit cards, ATM cards
etc.
2.6.1. Benefit of E-banking for Banks

It should be noted that E banking can bring about various benefits for banks and their customers
as well. It is obvious that cost savings, efficiency, gaining new segments of customers,
improvement of the bank’s reputation and better customer services and satisfaction are primary
benefits to banks.

Under the view of Robinson (2000), relevant costs for conducting banking transaction via online
are much lower than via a brick and mortar branch. The author emphasizes that the banking can
bring about many competitive advantages for banks in today’s highly competitive banking
market.

13
A research on E banking has been carried out by Mols (1998), argues that E banking can play an
important role in enhancing cross selling and price differentiation. E-banking can make favorable
conditions for banks to provide customers numerous services 24 hours a day and 7 days a week.
E-ban king can improve customer satisfaction with the bank due to the fact that it makes
customers less price sensitive, and improve their intention to repurchase, and more loyalty to the
bank via providing more positive words of mouth about the bank than other bank customers.

2.6.2. Benefit of E-banking for Customers

It should be noted that E banking is not only brings about benefits 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. Customers can enjoy a variety of services,
especially services which are not provided by traditional bank branches Pham (2010)

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 Pham (2010). He made believed that E-
customers don’t want to travel to or from a bank branch to conduct some banking transactions. In
other words, they want to utilize E banking to save time and money. E banking can bring about
convenience and accessibility, which will have positive effects on customer satisfaction and
loyalty on bank. It is totally possible for customers to manage their banking transactions
whenever they want and to enjoy improved privacy in their interactions with the bank. In
addition, customers can enjoy more benefits at lower cost levels by utilizing E-banking (Mols
1998). According to Turban (2008), that E banking is really beneficial to customers in terms of
cost savings, no limit on time and space, quick response to customer complaints, and better
services/products. Such benefits are believed to elevate customer satisfaction.
2.7 EMPERICAL REVIEW LITERATURE
According to MM Mahman (2008) in Bangladesh despite huge demand from the business
community as well as the retail customers particularly the urban customers, electronic banking
(e-banking) is still at a budding state due mainly to a number of constraints such as unavailability
of a backbone network connecting the whole country; inadequacy of reliable and secure
information infrastructure especially telecommunication infrastructure; sluggish ICT penetration
in banking sector; insufficient legal and regulatory support for adopting e-banking and so on.

14
The concept of e-banking includes all types of banking activities performed through electronic
networks. It is the most recent delivery channel of banking services, which is used for both
business-to-business and business-to-customer transactions.
However, in true sense, e-banking includes activities like payment of bills and invoices, transfer
of funds between accounts, applying for a loan, payment of loan installments, sending funds to
third parties via emails or internet connections regardless of where the client is located. Leow,
Hock Bee (1999) state that the terms PC banking, online banking, Internet banking, telephone
banking or mobile banking refers to a number of ways in which customer can access their banks
without having to be physically present at the bank branch. Therefore, e-banking covers all these
ways of banking business electronically. Since e-banking offers some smart services benefiting
both banks and customers compared with traditional banking system, it has become imperative to
make necessary room for banks to flourish e- banking. Among others, attractiveness of e-
banking includes: it lowers transaction cost; provide 24- hour services; ensure increased security
and control over transactions; reduces fraud risk; performs higher volume of transactions with
less time; increases number and volume of value payment through banks; allows remote
transactions facilities that replace physical presence of a customer in a bank branch and;
increases transaction speed and accuracy. On the other hand, traditional banking is time-
consuming and more costly and therefore, e-banking is replacing traditional banking all over the
world.
Today, almost all banks have adopted ICT as a means of enhancing their banking service quality.
These banks provide ICT based electronic service which is also called electronic banking,
internet banking or online banking etc to their customers. Despite the increasing adoption of
electronic banking and it relevance towards end users satisfaction, few investigations has been
conducted on factors that enhanced end users satisfaction perception. In this research, an
empirical analysis has been conducted on factors that influence electronic banking user’s
satisfaction perception and the relationship between these factors and the customer’s satisfaction.

The growing trend in the world of Information and Communication Technology has drastically
changed the perspective of both bank customers and the banking industries on general banking
activities. The combination of information technologies with functions of banks and financial
institutions is called electronic banking. Electronic banking technologies have led banks and
financial institutions to improve effectiveness of distribution channels through reducing the

15
transaction cost and increasing the speed of service. Majority of banks in the developed world
and some in the developing world are now offering electronic banking services with various
degrees of complexities. This gives the indication that e-banking is gradually taking the place of
traditional banking services. In developing countries, for example, some banks have adopted e-
banking as a way of communicating to customers with regards to issues concerning bank
statements whiles other banks use internet banking services to allow customers to access their
bank accounts and perform other banking transactions. All those mentioned researchers above
used simple random sampling to collect data, but in our research, we will use census survey to
collect data. There is also a time gap, technological gap, geographical gap, and human attitude
about e-banking.

16
CHAPTER THREE - RESEARCH METHODOLOGY
3.1 Introduction

Designing appropriate research methodology is a prerequisite in order to conduct a good research

work. Accordingly, this chapter discusses about the methodology thus, research design, target
population, sample size and sampling technique, data source and method of collection and method of
data analysis are presented below respectively.
3.2 Research design

The researchers studied about assessment of e-banking practices in commercial bank of Ethiopia
in Debre Tabor branch. To achieve the intended objective the researchers used descriptive
method which only describing, summarizing, presenting the qualitative data.

3.3 Target population

There are 55 employees in commercial bank of Ethiopia in Debre tabor branch. The target
population is 35because our aim is e banking so we only took employees that work in that area
so we used census survey method by taking all population in the study area.
3.4 Sample Method and SamplingSize
The sampling design for this population used census survey. In this sampling method each
individual in the population has an equal probability of being selected which is important for the
external validity of the study (Creswell, 2009). As a result, to collect available information we
used the population of employees by taking all employees.

3.5 Source of data and method of data collection

In order to have complete information about the study the researchers used both primary and
secondary data. The primary data’s are collected from the employees and managers of the bank
through questionnaires and unstructured interview while secondary data’s are collected from
journals and documents of the bank.
3.6 Methods of data analysis and presentation

For the purpose of data analysis, the researchers used descriptive type of analysis tools by using
this data analysis tool the researchers analyzed the collected data by using of tables, percentage
and graphs. The researchers also presented the analyzed data in qualitative and quantitative

17
nature in a manner that the users of the research understand. The table and percentage as well as
graphs facilitate the summarization and effective communication of the collected data.
3.7 Ethical Consideration
The researchers, recognizing the limitations of their competence, every person involved in the
study will be entitled to the right of privacy and dignity of treatment, and no personal harm will
be caused to subjects in the research. Information that will be obtained hold in strict
confidentiality by the researcher and all assistance, collaboration of others and sources from
which information will draw will acknowledge.

18
CHAPTER FOUR- Results and discussion
4.1. Introduction
As it is discussed in the methodology part of this study, data collected by using different techniques were
analyzed in this chapter by using table, percentages and graphs. A total of 33 questionnaires were
distributed to purposely sampled employees in commercial bank of Ethiopia Debre Tabor branch and all
questioners are collected. In addition to questionnaire, the researcher conducted an interview with 2
managers.
4.2. Demographic information of the respondents
The study participants on survey questionnaire have different personal information; besides these
differences they introduce different responses towards e-banking usage, and the factors that influence e-
banking adoption. The following discussion shows these differences. The demographic profile of
respondents, participated in this study was shown in table 4.1
Table 1 sex, work experiences and educational status of employees in commercial bank

No Variables Classification of Frequency Percentages

variables
Male 22 62.85%

1 Sex Female 13 37.14%

Total 35 100%
<1 year 4 11.42%

1– 5 year 13 37.14%
2. Work >5 year 18 51.42
experience
Total 35 100%
Certificate -- --
3 Educational
status Diploma 3 8.57%
BA degree 26 74.28%
MA degree 6 17.14%
Total 35 100%
Source: questionnaires, 2015.

According to table 4.1, the respondent (62.85%) were males and (37.14%) were females. the
next items show that out of the total respondent (11.42%) of them were work experiences less

19
than 1 year and (37.14%) of them were between (1-5 years) and the others (51.42%) are work
experiences more than 5 years.

The last thing from the table was out of the total respondent most of (8.57%) of them were
diploma holder, (74.28%) of them were BA degree holder, (17.14%) of them were MA degree
holder.

One thing that can be generalized from the above table was that most of (above74%) workers in
commercial bank of Ethiopia Debre tabor branch were educational status above BA degree and
work experiences greater than 5 years. This enables the bank to adopt other e-banking services
easily.
4.3 Efficiency and cost advantage of e-banking
Table 2 cost and efficiency advantage of E-banking system

Do you think expansion of E-banking Number of

Percentages
services makes your task easy? respondents
Yes 35 100%
No -- --
Total 35 100%
Source: questionnaires, 2015.

It can be easily seen from table (4.3) about (100%) or the total respondents believed that
expansion of e-banking makes easy our tasks in providing banking services to customers. The
justifications given by respondents respond e-banking makes our tasks easy are: it can reduce
number of customers come to bank this decrease the face-to-face interaction with customers. It
also increases the working hour’s from10/12 to 24hours in a day and 6 days to 7 days in a week.
Finally, it also reduces the documentation works because of making transaction electronically.
Table 3 cost advantage of e-banking services in commercial bank of Ethiopia

Do you think using E-banking components Number of

Percentages
reduce costs of the bank? respondents
Yes 27 77.14%
No 8 22.85%
Total 35 100%
Source: questionnaires, 2015.

20
Cost minimization is an important goal for business organization in addition to revenue
maximization. When we look the response of respondents from the above table (4.4) for the
question “Do you think using e-banking components reduce costs of the bank?” (77.14%) from
the total respondents were using e-banking reduce costs and the other (22.85%) responses were
using e-banking not reduces costs. Thus, the majority (77.14%) of respondents responded using
e-banking reduce costs by giving the following clear justification: using e-banking system like,
ATM, internet banking, mobile banking and others, banks save a lot of costs. In the long run a
bank can save money by not paying for tellers or for managing branches. It also reduces printing,
mailing and financial handling costs associated with processing transactions. This way of cutting
transaction cost results in higher profit margin for the bank.
Table 4 Role of technological infrastructure in adopting e-banking system

No Do you agree on the technological and Frequency Percentages

infrastructural requirement is significant for
successful adoption of E-banking adoption?

a Extremely significant 25 71.42%

b Very significant 10 28.57%
c Significant --
d Less significant --
Total 35 100%
Source: questionnaires, 2015.

It can be seen from the above table (4.5) the majority of respondents (71.42%) response is
extremely significant and (28.57%) of the respondent considered as very significant. And none
of the respondent said significant or less significant. From this we can say the major prerequisite
to adopt e-banking services is technological infrastructure
4.4 Customer trends in using e-banking services
Table 5 E-banking customers’ trends in commercial bank of Ethiopia

How you express the number of E-banking user’s No of Percentages

customers from time to time in the bank? respondent
s
Increase 35 100%
Decrease -- --
Constant -- --

21
 Total 35 100%
Source: questionnaires, 2015.

It can be easily understood from the above table the total respondents (100%) were number of
customers increasing from time to time in e-banking system that the bank offered and (0%) no
respondents respond the number of e-banking customer are constant or decrease from time to
time in the bank. The above result were also supported by bank documents through numerical
evidence by taking three consecutive years which indicated that compared with the previous year
currently customers were increase using e-banking system.
Table 6 Number of e-banking customers in commercial bank of Ethiopia Debre Tabor
branch from 2004-2006 E.C
Year in E.C Total customers of e-banking customers percentages remark
the bank(A) of the bank(B)

2013 14282 1857 13.002

2014 21420 3428 16.003 increase
2015 25251 6566 26.002 increase
Total 25251 6566 26.002 increase
Source: bank documents
From the above table we can understand the number of e-banking customers increase from time
to time. E.g., in 2013 total customers and e-banking customers of the bank are 14282 &1857
respectively, I.e., e-banking customers are 13% of the total customers but after two years (in
2015) total customers of the bank are 25251 whereas e-banking customers are 6566, i.e., 26% of
the total customers of the bank.
4.5 Barriers to adopt e-banking system
Table 7 Barriers of adopting system in commercial bank of Ethiopia Debre Tabor branch

Are there any obstacles (barriers) the bank face to Number of

Percentages
adopt E-banking system and operate it in your bank? respondents
Yes 29 82.85%
No 6 17.14%
Total 35 100%
Source: questionnaires, 2015.

22
Although there are many associated benefits with the adoption of e-banking, there are also many
factors that hider the bank from adoption of e-banking system. The question asked to employees
“Are there any obstacles (barriers) the bank face to adopt E-banking system and operate it in
your bank?” (82.85%) respondents respond that there are factors that hinder the bank to adopt e-
banking system, and the other (17.14%) respond there are no factors without intention.

Additionally, the respondents who replied ‘yes ‘in the above question were asked to list and
discuss the barriers. Accordingly, they list in the following ways by dividing internal and
external barriers: -

1. Internal barriers (challenges): -as the name implies this type of barriers arise from the
institution or the bank itself. As respondents replied internal barriers are: -

• Lack of technical and managerial skill on the use of technological innovation in the bank.
In commercial bank of Ethiopia there is no technological innovation department, which
works for new technology adoptions to the bank rather than copy the technology done by
other bank or branches.

• Lack of skill to implement E-banking system. As usual employees who do in e-banking

related works in the bank have not special knowledge in e-banking differ from other bank
employees rather than graduate in accounting or another business-related field. There are
no employees who have a special knowledge on e-banking employed in the bank.

• Customers of our bank are not familiar with service provided through ATM and POS. the
main reason for this was the banks weakness in introductions services that the bank
provides.

2. External barriers (challenges): -it also called non-controllable factors. This type of
challenges arises from external environments or from different parties out the bank and bank
employees like Government, customers, competitors, policy makers etc. As respondents replied
the external barriers to adopt e-banking services are: -

• The first and the major factor which can affect the adoption of e-banking in banking industry
from an external environment is the low level of ICT infrastructure. Despite the recent some
improvements made by Ethiopian government on the national infrastructure, the overall ICT
infrastructure in Debre Tabor area remains inadequate. ICT infrastructure in Debre Tabor

23
 cannot see insolently from over all of the country. ICT infrastructure in Ethiopia for internet
access is not sufficient to use online banking service; Mobile banking services also not
perform well because of network problems. Similarly, an interview script received from the
bank manager indicates that the poor quality of telecommunication network service is a
major obstacle for all banks in Ethiopia to effectively deliver some services such as
internet banking, mobile banking and others.

• High rates of illiteracy: - Low literacy rate is a serious impediment for the adoption of E-
Banking in Debre Tabor or as a whole in Ethiopia that 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.

• Lack of suitable legal and regulatory framework that govern and regulate e-banking
transaction in the country, absence of financial networks that links different banks, Lack of
government initiation or lack of government prioritization, high cost of internet,

• One of the basic barriers a firm face, while adopting technological innovation is the
perceived risks. Customers fear to use e-banking services. It means that the bank
customers cannot easily interact with the new technology of the bank because of fearing
risk.

• Finally, even though it may be temporary, frequent power interruption is another challenge
that affects the provision of e-banking service among those banks that are currently providing
the service. Therefore, from the above discussion it is possible to conclude that there are
challenges for the adoption of e-banking service among those banks that are not yet adopted
the system and for the sufficient adoption of the service from the viewpoint of those banks
that are currently providing the service in the country.
4.6 Benefits of E-banking to general economy
Table 8 e-banking benefits to general economy of the country

Do you think that E-banking system

Number of
can have an important role in economic Percentages
respondents
development of the country?
Yes 32 91.42%
No 3 8.57%
Total 35 100%

24
Source: questionnaires, 2015.

Results shown in the table 4.9, (92.8%) respondents from the total respondents were e-banking can
have an important role in developments of overall economy of the country and (7.2%) of
respondents respond were e-banking cannot have an important role in the development of
economy of a country their reason gives how it is important for the development of the overall
economy of the country are the following: -

• Electronic Banking as already stated has greatly serviced both the public and the banking
Industry. This has resulted in creation of a better enabling environment that supports growth,
productivity and prosperity. This is a useful tool in the hand of the bank to device suitable
commercial packages that are in conformity with customer needs. Besides, E-banking has
also helped in documentation of the economic activity of the masses.

• Besides many tangible benefits in the form of reduction of cost, reduced delivery time,
increased efficiency, reduced wastage, banking electronically controlled and thoroughly
monitored environment and discourage many illegal and illegitimate practices associated
with banking industry like money laundering, frauds and embezzlements. Further E-banking
has helped banks in better monitoring of their customer base.

• E- banking provide opportunity to banking sector to enlarge their customer base, a

consequence to increase the volume of credit creation which results in better economic
condition.

• Country which adopts e-banking system reduces the flow of cash and check in money
market. This can save the printing cost of paper money/coin and check. It also facilities
country import and export activities by making payment with card.

• It facilitates the transfer of money in all over the country; so that all transaction will be
smooth, easy and safe then the economy of a country will grow.

• It induces circulation of money in a country, so that with e-banking system it is possible

to use easily e-commerce that is important to the development of economy of country.

• Dramatically reduce printing, mailing, and financial handling costs associated with
processing transaction.

• Enhance payment security by minimizing theft or loss.

25
4.7 Comparative advantage of E- banking
Table 9 comparative advantage of the bank which offer e-banking services over banks give
services traditionally

Do you agree, your bank is more beneficiary by

providing E-banking services than traditional bank Number of
services to customers? Percentages
respondents

Yes 35 100%
No -- --
Total 35 100%
Source: questionnaires, 2015.

The question to employees “Do you agree, your bank is more beneficiary by providing E-
banking services than traditional bank services to customers?” (100%) respondents respond that
“yes” the bank that adopt e-banking system have a comparative advantage over the banks that
give bank service traditionally. The clear justification given by the respondents for “yes” answer
are shown below; -

Attracting High Value Customers: -E-Banking services attracts high profit customers with higher-
than-average income and education levels, which helps to increase the size of revenue streams of the
bank.

Enhanced Image (goodwill): E-banking helps to enhance the image of the organization as a
customer focused innovative organization. This was especially true in early days when only the most
innovative organizations were implementing this channel. Despite its common availability today, an
attractive banking website with a large portfolio of innovative products still enhances a bank’s image.
This image also helps in becoming effective at e-marketing and attracting young/professional
customer base.

Increased Revenues: Increased revenues as a result of offering e-channels are often reported,
because of possible increases in the number of customers, retention of existing customers, and cross
selling opportunities. It has also allowed banks to diversify their value creation activities. E-banking
has changed the traditional retail banking business model in many ways, for example by making it
possible for banks to allow the production and delivery of financial services to be separated into

26
different businesses. E-banking has also resulted in increased credit card lending as it is as sort of
transactional loan that is most easily deliverable over the internet

Easier Expansion: Traditionally, when a bank wanted to expand geographically it had to open new
branches, thereby incurring high startup and maintenance costs. E-channels, such as ATM and POS
have made this unnecessary in many circumstances. Now banks with traditional customer base in one
part of the country or world can attract customers from other parts, as most of the financial
transactions do not require a physical presence near customers living/working place.

Load Reduction on staff workers and Other Channels : E-Channels are largely automatic, and
most of the routine activity such as account checking or bill payment may be carried out using these
channels. This usually results in load reduction on staff workers and other delivery channels, such as
branches. This trend is likely to continue as more sophisticated services such as mortgages or asset
finance are offered using e-Banking channels.

Cost Reduction: The main economic argument of e-banking so far has been reduction of overhead
costs of other channels such as branches, which require expensive buildings and staff presence. It
also seems that the cost per transaction of e-banking often falls more rapidly than that of traditional
banks once a critical mass of customers is achieved. The general consensus is that fixed costs of e-
banking are much greater than variable costs, so the larger the customer base of a bank, the lower the
cost per transaction would be

Organizational Efficiency: To implement e-banking, organizations often have to re-engineer their

business processes, integrate systems and promote agile working practices. These steps which are
often pushed to the top of the agenda by the desire to achieve e-banking often result in greater
efficiency and agility in organizations. However, radical organizational changes are also often linked
to risks such as low employee morale, or the collapse of traditional services or the customer base. In
addition, electronic banking has also helped banks in proper documentation of their records and
transactions
Table 10 E-banking driving forces in commercial bank of Ethiopia

Are there any driving forces towards No of respondents Percentages (%)

the adoption of e-banking service in
your bank?
A. Yes 30 85.71%
B. No 5 14.28%

27
 Total 35 100%
Source: questionnaires and interview, 2015.

As depicted in the above table, (85.71%) of respondents respond that the bank has its driving
forces to adopt e-banking services while the other (14.28%) of respondents respond the bank has
not any driving forces. As The above results were also supported by an interview script received
from both respondents, which indicated that, the main driving forces push the bank to adopt e-
banking system are: -

• Desire to improve organizational performance

• Desire to improve the relationship with customers

• Desire to reduce transaction cost

• To keep the international banking standard

• To satisfy rapidly changing customers’ needs and preferences

• Desire to cover wide geographical area

28
 CHAPTER FIVE-MAJOR FINDINGS, CONCLUSION AND
RECOMENDATION
5.1 Introduction
Information technology is considered as the key driver for the changes taking place around the
world. Due to a pervasive and steadily growth of information and communication technology,
the world banking industry is entering into new phenomena of unprecedented form of
competition supported by modern information and communication infrastructure. The rate at
which e-banking technology is adopted by banks constitutes an important part of technological
change. With this regard currently, our banks are in an infant stage. This chapter as a whole
presents the concluding remarks for the main findings in chapter four and important
recommendations as per the main problems investigated in this research study respectively
5.2 Major Findings
 Most of the customers were used e-banking services to check and make balance enquiry
frequently
 Customers found reliable and flexible to use e-banking services of bank CBE
 It is found that e-banking service is more popular among customers than the other online
banking services of CBE
 Most of e-banking service users are educated so it is found that e-banking service were
used by customers those who are aware about technical and professional skills only

5.3 Conclusions

Based on the analysis made in chapter four the following conclusions are made on the
assessment of E-banking system practices in commercial bank of Ethiopia Debre Tabor branch.

• The most dominant e-banking channel services currently provided by the bank are only
ATM and POS, which is the first generation of electronic banking channel, so from this it
is possible to conclude that even banks that are providing the service did not sufficiently
adopt the latest e-banking channel such as internet and mobile banking.

• The main practice of e-banking among those banks that are providing the service have
been for, balance inquiry, cash withdrawal, statement printing, PIN change, purchase
goods or services, accessing his/her accounts 24*7 and fund transfers to others accounts.

29
• Adoption of e-banking service have the benefit of attracting high value customers,
enhanced image, larger customer coverage, improvement of o organizational efficiency,
and load reduction etc. from the view point of the bank. Important perceived benefits of
using e-banking among those banks that are not currently providing the service but are
planned to adopt the system were relative advantage, organizational performance,
customer relationship and perceived ease of use.

• The benefits of e- banking are not only to limited banks, rather they also benefits the
general economy of the country; by reduces the circulation of money and its substation in
money market, decreasing printing, mailing, and financial handling costs, facilitates the
transfer of money in all over the country, facilities country import and export activities,
etc.

• As per the findings, the major driving forces that initiate banks to deliver banking
services to the customer using electronic channels are existence of high competition in
the banking industry, rapidly changing customers’ needs and preferences , desire to
improve organizational performance, desire to improve the relationship with customers,
desire to reduce transaction cost, desire to cover wide geographical area, desire to satisfy
customers and to keep the international banking standard among others

• Technical and managerial skills in the bank for the adoption of e-banking and run it are
limited. This influence the choice of technology operated in the banks.

• Chances of risk, lack of trained and efficient staff in e-banking context, lack of suitable
legal and regulatory framework, absence of financial networks that links different banks,
low level of internet penetration and poorly developed telecommunication infrastructure,
high cost of internet and security issues are the main challenges for adoption of e-banking
in commercial bank of Ethiopia Debre Tabor branch.

• Even though there is some improvement currently, lack of customer awareness regarding
the service the bank offered is another challenge in order to provide the service.
Therefore, from this, it is possible to conclude that there are challenges for the adoption
of e-banking service among those banks that are not yet adopted the system and for the
sufficient adoption of the service from the viewpoint of the banks that are currently
providing the service in the country

30
5.4 Recommendation
As per the findings from the analysis of the collected data; the following recommendations are
forwarded in order to promote and develop viable e- banking service in commercial bank of
Ethiopia Debre Tabor branch and other related Ethiopian banks.

 The result show that the number of e-banking customers in the bank increase from time
to time. This indicates that increase the awareness of customers on e-banking services
that offered by the bank and its advantages. So, the bank advisable adopts other e-
banking channels to the customers like, mobile and internet banking.
 The lack of legal and regulatory framework for e-banking services has discouraged banks
from introducing these innovative payment instruments or where they have introduced,
has put them at legal risk. Electronic payments are not recognized in Ethiopia legal
system. Thus, government should issue laws that govern electronic payment. This helps
financial service providers introduce innovative products currently in use around the
world which are cost effective, efficient and safe.
 In recent years, due to its convenience, mobile banking and internet banking are the latest
electronic banking channel, so in this context, it is important to the bank to formulate
relevant acts, policies, and adopt operative guidelines
 Because of the E-banking benefits are not limited only to the bank, it is advisable that
other organizations (institutions) collaborate with the bank to adopt e-banking services
and operate it. E.g., by accepting banks POS terminal at places of in wholesale and retail
business shops etc.
 The National Bank of the country should prepare various capacity building activities for
banks regarding e-banking operation and provide incentives for banks to invest
rigorously on ICT and use of e-banking.
 The bank should strengthen its ICT department through providing training to IT
personnel and procuring required hardware and software. Create separate unit in each
branch for rendering ICT related operational activities under the supervision of the ICT
department. Train all staff in basic ICT related matters in phases.

31
 Banks that are currently providing the service should promote the system in order to raise
public awareness on the use of e-banking service.
 Since sufficient power supply is mandatory for the uninterrupted and efficient provision
of e-banking service, therefore, ongoing effort by the government to address adequate
power supply to the country should be encouraged.
 In general, the finding of this study offer additional insights to other Ethiopian banks on
the current e-banking adoption situation and implication, factors to adopt, comparative
advantage and opportunities for e-banking growth. Furthermore, the understanding of
barriers to e-banking g adoption identified in this study may help to identify the bast
course of action to be taken to promote its e-banking services development.

32
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33
Appendix
Debre Tabor University

College of Business and Economics

Department of Management

Dear Sir/madam:
This questionnaire is prepared for employees of Commercial Bank of Ethiopia of Debre Tabor
Town to collect information about the assessment of e-banking system in the Bank. The research
will be conducted for the particle fulfillment of the requirement for the BA degree in
Management at Debre Tabor University. we would like to assure you that the information you
provide will be used only for the purpose of achieving academic award. Your involvement is
regarded as a great input to the quality of the research results. Hence, we believe that you will
enlarge your assistance by participating in the study. Your honest and thoughtful response is
invaluable.

Please fill the following questionnaire uby putting “X” sign in box

Part: 1 back ground employee information

1 sex male female

• Educational level: MSC/BA BA degree Diploma

Certificate

• Work experience: less than one year between one and five years

Above five (s) year

Part: 2. General information

1. What type of e-banking practices in your bank? (Multiple answers is possible).
A, ATM B, POS (post of sale terminals) C, Mobile banking D, internet banking E,
others specify ………………………...
2. Do you think expansion of E-banking services makes easy your task?
A, yes B, no

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3. If you say “yes” in the above question give some
justification?.......................................................................................................................................
4. Do you think using E-banking components reduce costs of the bank? If you say “no” go to
Q#5 A Yes B, no
5. If you say “yes” in the above question say something how it reduce
costs?..................................................................................................................................................
6. Do you agree on the technological and infrastructural requirement is significant for
successful adoption of E-banking adoption?
• Extremely significance
• Very significant
• Significant
• Less Significant
7. How you express the number of E-banking user’s customers from time to time in the bank?
A, increase B, decrease C constant
8. Are there any obstacles (barriers) the bank face to adopt E-banking system and operate it in
your bank?
A. yes B. no
9. If your answer to the above question is yes, please specify ……...
………………………………………………………………………………
10. Do you think that E-banking system can have an important role in economic development of
the country?

A. yes B. no
11. If your answer to the above question is yes, please specify how?
…………………………………………………………………………………………………..…
12. Do you agree, your bank is more beneficiary by providing E-banking services than
traditional bank services to customers?

A. yes B. no
13. If you say yes for Q #12, what are those benefits your bank
gained.................................................................................................................................................
14. Are there any driving forces towards the adoption of e-banking service in your bank?

A. yes B. no
15. If you say “yes” for the above question, what are those driving forces? (Please specify)
……………………………………………………………………………………………

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THANK YOU!!!!!!!!!!!!!!!!!!

Interviews’
1. What type of electronic banking service your bank provides? ATM, Internet
banking, mobile banking or others? Please specify

2. In your opinion what are the factors (barriers) that hinder your institution to adopt E-banking
system and operate it? (Please explain in terms of social, economic, legal, etc.)?

3. Do you think that government policy have impact on the adoption of E- banking system?
(Please Specify/explain)

4. What are the benefits your institution gained from the adoption of ATM, internet banking and
mobile banking system in the delivery of service to customers?

5. How you express your bank customers in E-banking service awareness and number of users
by taking latest 3 year trends?

6. If there is what are the driving forces towards the adoption of e-banking service in your bank?

THANK YOU!!

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