SCHOOL OF POST GRADUATE

MASTER OF BUSINESS ADMINISTRATION

Assessment on the challenges and prospect of E-banking: In the

Case of Dashen Bank.
A RESEARCH PAPER SUBMITTED TO THE SCHOOL OF POST GRADUATE STUDIES
IN PARTIAL FULFILLMENT FOR THE AWARD OF DEGREE IN MASTER OF BUSINESS
ADMINISTRATION

By: Yeshareg Getamesay

ID No MBA/109/12

Advisor: Habtamu Abebaw(Ph.D)

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Table of Contents

Abstract......................................................................................................................................................III
CHAPTER ONE..........................................................................................................................................1
1. Introduction.........................................................................................................................................1
1.1. Background of the study..............................................................................................................1
1.2. Statement of the problem.............................................................................................................2
1.3. Research question........................................................................................................................3
1.4. Objective of the study..................................................................................................................3
1.4.1. General objective.................................................................................................................3
1.4.2. Specific objectives...............................................................................................................3
1.5. Significance of the study..............................................................................................................4
1.6. Scope and limitation of the study.................................................................................................4
1.7. Organization of the Paper............................................................................................................5
CHAPTER TWO.........................................................................................................................................6
2. Literature Review....................................................................................................................................6
2.1. Definition of banking........................................................................................................................6
2.2. E-banking in Global Perspective......................................................................................................9
2.3. E-banking Practice in Ethiopian Dashen banks..............................................................................10
2.4 Theories E-banking..........................................................................................................................12
2.4.1 Innovation Diffusion Theory....................................................................................................12
2.4.2. Technology Acceptance Model (TAM):..................................................................................14
2.5. Types of E-banking........................................................................................................................14
2.5.1 Internet banking:.......................................................................................................................14
2.5.2. The evolution of internet banking............................................................................................14
2.5.3. Advantages of internet banking...............................................................................................16
2.5.4. Automated Teller Machine (ATM)..........................................................................................17
2.5.5. TELE BANKING....................................................................................................................18
2.5.6. SMART CARD.......................................................................................................................18
2.5.7. DEBIT CARD.........................................................................................................................19
2.5.8.. E-CHEQUE............................................................................................................................19
2.6. Benefits of Electronic Banking.......................................................................................................20

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 2.6.1. Benefits from the bank point of view.......................................................................................21
2.6.2. Benefits from the customers’ point of view.............................................................................21
2.7. Challenges of E-banking.................................................................................................................22
2.8. E-banking challenge in Ethiopia.....................................................................................................23
2.9. Empirical studies related with E-banking challenges and prospects...............................................25
CHAPTER THREE...................................................................................................................................28
3. RESEARCH DESIGN AND METHODOLOGY..................................................................................28
3.1 Research Design..............................................................................................................................28
3.2. Target Population...........................................................................................................................30
3.3. Sample and Sampling Technique....................................................................................................30
3.4. Instruments of Data Collection.......................................................................................................31
3.5. Procedures of Data Collection........................................................................................................31
3.6. Methods of Data Collection............................................................................................................32
3.7. Data analysis technique..................................................................................................................32
3.8. Ethical Consideration......................................................................................................................33
4. Finding and Discussion.........................................................................................................................34
4.1. Introduction....................................................................................................................................34
4.2. Finding and Discussions from bank staffs......................................................................................34
4.2.1. Demographic Characteristics...................................................................................................34
4.2.2. Attitudes of Staffs about E-banking.........................................................................................41
4.2.3. Challenges to adopt e-banking for customers of Dashen bank of Ethiopia............................1
4.3. Finding and Discussions from bank customers.................................................................................1
4.3.1. Demographic information of customers.....................................................................................1
4.3.2. Attitudes of customers about e-banking.....................................................................................7
4.3.3 Challenges of e-banking for customers of Dashen bank.............................................................9
5. Conclusion and Recommendation..........................................................................................................3
5.1. Conclusions.................................................................................................................................3
5.1.1 Overall E-banking performance in Dashen bank of Ethiopia...............................................3
5.1.2 Prospects of e-banking.........................................................................................................4
5.1.3. Challenges of e-banking............................................................................................................5
5.2. Recommendation.........................................................................................................................5
References...................................................................................................................................................7

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 Abstract
This study examined challenges and prospects electronic banking facilities in Dashen Bank.
The study adopted a descriptive research design and qualitative research approach. A total of
selected (randomly) sample. (Customers /employers) from primary data was collected through
questionnaire. In this study descriptive /inferential data analyses techniques such as………. was
employed. Data is presented through tables, graphs, pie charts and figures. The study was
identified attitudes of customers and staffs, challenges, prospects and overall performance of
the bank. The findings of study it would observing that prospects include: excellent Banking
transactions can be performed from the comfort of the home or office or from the place a
customer‘s wants to, E-banking would be the best means to reduce customer over load, E-
banking technology helps customer for quickly access account, reduces time spending in the
bank and other services and E-banking service is better managing of financial transaction.
According to findings the challenges include: customers Lack of awareness on the benefits of
new technologies related with electronic banking, not literate enough to understand the usage of
e-banking service, network and electric power interruption and Languages are an obstacle to
use electronic-banking. The study suggests a series of measures which could be taken by the
Dashen bank. The measures include, detail training of employees about E-banking, localize
language for his customers, internalize electric and network problems, and familiarize their
customers with the processes and benefits of the system.
Key Words: E-Banking, Challenges, Opportunities

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 Acronomys

ATM: Automated Teller Machine

B2C: Business to Consumers

CSF: Critical Success Factors

E-Banking: Electronic Banking

E-Commerce: Electronic Commerce

EFT: Electronic Fund Transfer

POS: Point of Sale

PC: Personal Computer

TAM: Technology Acceptance Model

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 Chapter One
1. Introduction
Most new channels of distribution to be used in the financial services organizations are electronic
banking; this method was established in the mid-1990s, thereafter steadily becoming more
important. The term electronic banking refers to "the provision of information or services by a
bank to its customers, via a computer or television"(Allen, 2001).
A more developed service is one that provides customers with the opportunity to gain access to
their accounts and execute transactions or to buy product online via the internet (Daniel, 1999).

E-banking implies provision of banking products and services through electronic delivery
channels. Electronic banking has been around for quite some time in the form of automatic teller
machines (ATMs) and telephone transactions. In more recent times, it has been transformed by
the internet a new delivery channel that has facilitated banking transactions for both customers
and banks. For customers, the internet offers faster access, is more convenient and available
around the clock irrespective of the customer‘s location. New Information technology has taken
important place in the future development of financial services, especially banking sector
transition are affected more than any other financial provider groups. Increased use of mobile
services and use of internet as a new distribution channel for banking transactions and
international trading requires more attention towards e-banking security against fraudulent
activities. The development and the increasing progress that is being experienced in the
Information and Communication Technology have brought about a lot of changes in almost all
facets of life. In the Banking Industry, it has been in the form of online banking, which is now
replacing the traditional banking practice. Linked banking has a lot of benefits which add value
to customers ‘satisfaction in terms of better quality of service offerings and at the same time
enable the banks gain more competitive advantage over other competitor(Kotler, 1998). So this
study was concerned in identified the challenges and prospect of E-Banking industry in
Ethiopia the case of Dashen Bank in Addis Ababa.

1
Background of the study

World over banks are reorienting their business strategies towards new opportunities offered by
e-banking. E-banking has enabled banks to scale borders, change strategic behavior and thus
bring about new possibilities. However the economy of most developing countries is cash driven;
meaning that monetary transactions are basically made through the exchange of bank notes and
coins for goods and services. On the other hand developed countries, e-banking is now giving
way to a modern and sophisticated payment system where the currency and notes are converted
to data, which are in turn transmitted through the telephone lines and satellite transponders. This
is as a result of rapid technological progress and development in the financial market(Ozuru et al.
2010).
There is faser delivery of information from the customer and service provider, thus
differentiating Internet enabled electronic banking system from the traditional banking operation.
The appearance of E-banking in Ethiopia goes back to the late 2001, when the largest state
owned, Dashen bank introduced automatic teller machine to deliver service to the local users.
Electronic banking facilities provided by most Ethiopian Banks are very basic. The modern e-
banking methods like alert, Internet banking, Mobile banking and others are very new to the
Ethiopian banking sector. E-banking which refers to the use of modern technology that allows
customers to access banking services electronically whether it is to withdraw cash, transfer
funds, to pay bills, or to obtain Dashen information and advices are nearly recent years adopted
by Dashen bank.

1.1. Statement of the Problem Study

The ancestor for the contemporary home online banking products and services were the distance
banking products and services over electronic media from early 1980s. The term ―online‖
became popular in the beginning of 1990s and referred to the use of a terminal, keyboard and TV
(or monitor) to access the banking system using a phone line. Online services started in New
York in 1981 when four of the city's major banks (Citibank, Chase Manhattan, Chemical and
Manufacturers Hanover) offered home banking services using the videotext system (Cronin,
1997). Because of the commercial failure of videotex these banking services never became
popular except in France where the use of videotex (Minitel) was subsidized by the telecom
provider and the UK, where the Prestel system was used(Taylor,2002)..
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The advent of Internet has initiated an electronic revolution in the global banking sector. The
dynamic and flexible nature of this communication channel as well as its everywhere reach has
helped in leveraging a variety of banking activities. E-banking technologies have proliferated in
recent years, and the availability of a wide range of products has led to increasing adoption
among customers. These technologies include direct deposit, computer banking stored value
card, and debit cards (Servon and Kaestner, 2008).
Certainly the banking industry in Ethiopia is underdeveloped and therefore, there is an all
immediate need to embark on capacity building arrangements and modernize the banking system
by employing the state of the art technology being used anywhere in the world. With a growing
number of import-export businesses, and increased international trades and international
relations, the current banking system is short of providing efficient and dependable services and
therefore all banks operating in Ethiopia should recognize the need for introducing electronic
banking system to satisfy their customers and meet the requirements of rapidly expanding
domestic and international trades, and increasing international banking services. Undeniably the
largest state-owned bank, Dashen Bank, is the pioneer in introducing ATM service for local
users in 2001 with its fleet of eight ATMs located in Addis Ababa (Zelalem, 2015).
Banks play a key role in improving economic efficiency by channeling funds from resource
surplus unit to those with better productive investment opportunities. In less monetized countries,
like Ethiopia, financial sector is dominated by banking industry, effective and efficient
functioning of the economy has significant role in accelerating economic growth. To enhance the
role of banks in an economy, competition is an important driving force In other words,
insufficient competition may result in substantial social losses on account of higher price, higher
transaction cost, lower credit supply, lack of innovation and poor service quality (Taylor, 2002)
Competition leads to innovation of new technology especially e-banking in recent years in
Ethiopia. One of the best competitive banks in Ethiopia is Dashen bank. Dashen bank carries a
comprehensive business throughout the country with its network of 948 branches, (From which
812 branches linked online until 30/05/2015). Which truly makes it national as well as the largest
bank at present. However, currently different competitor’s union-banks are flourishing in the
country at an alarming rate. To be more competitive with other banks, there is a need for more
diversified services, more speculative to reach the varying requirements of the economy,
specially being adoption of new technology. When we talk about new technology, it can be

3
viewed from different angles that are internal banking systems such as more complicated
software, well-educated employees e-banking systems such as mobile banking, alert, point of
sale, automatic teller machine and internet banking. Electronic banking is spreading quickly in
recent years it leads much lower costs and greater competition in the financial service.
This study examines the challenges and prospects to assess whether the implementation of e-
banking clients in Dashen bank is constrained by the technology, particularly on the basis of non-
accessibility of internet, educational level and Income level The gap between the previous study
and this study address the Challenges and prospects of e-banking is that previous studies are
about e-banking in Ethiopia focus only automatic teller machine(ATM) and point of sale( POS),
however these study focus including recently launched on ATM, point of sale, internet banking,
mobile banking and alert . The other gap is that time gap, the previous customer‘s attitude and
believing on e-banking different from today‘s e-banking users. . Findings of this research are
useful for the banking sector in formulating appropriate strategies to build customer satisfaction,
to know customer attitude about e-banking, and a guide to create cashless society in Ethiopia.
1.2. Research question
The study has answered the following research questions:
1. What is the attitude of the customers about the e-banking?
2. What is the attitude of employees about e-banking?

3. What are the challenges to adopt e-banking in Dashen bank?

4. What are the prospects to adopting e-banking in Dashen bank?

1.1. Objectives of the study

1.1.1. General objective
The main objective of this study was to investigate the challenges and prospects of adopting
Electronics banking services at Dashen bank.
1.1.2. Specific Objectives
1. The specific objectives of the study address on:
2. To determine the attitude of the customer about electronic banking.
3. To find out the attitude of employees of Dashen bank about e-banking.
4. To identify the challenges of E-banking in Dashen bank.

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5. To examine the prospects of e-banking in Dashen bank.
1.2. Significance of the study
The importance of the study is pointing out challenges in the application of bank in the
implementations of electronic banking and to generate supportive recommendation that possibly
solve this problem. The research output used by Dashen bank for e-banking procedure guideline
and positively configure to words enhanced operational activities of new banking activities such
as mobile internet, alert, ATM and POS. It would also be used as an input for further study by
individual or organizations. In Dashen bank no sufficient study was conducted on e-banking
especially more recent lunched technology due to that:
• It facilitates research beginners who are interested to conduct their research in this area.
• It aids the Dashen bank management to hedge against adverse factors Tendency to be
content with the existing structures like; Tendency to be content with the existing
structures, Lack of awareness on the benefits of new technologies, uncertainty, and like
strong demand and cost complementarities that improves performance.
• The study adds knowledge on the field of finance. The studies that are conducted on
the perspectives and challenges affecting Dashen banks e-banking are rare, therefore
the study will be an important reference material on the field of finance.

1.3. Scope of the Study

This study was focus on Dashen Bank about the challenges and prospects of e-banking those
include mobile banking, internet banking, point of sale and automatic teller machine only at
Addis Ababa city different branches and head office organs of the bank.
1.4. Limitation of the Study
Every research study was faces a certain limitations till its end. While conducting this study, a
number of limitations was occurred. The first challenge occurred in this study were getting all
necessary data. To test all of the potential determinants of e-banking such as availability of
networks, level of literacy, cost of internet, and the capability of employees, but it is difficult to
explain in quantitative terms rather extremely subjective this leads unreliable conclusion. The
researcher highly depends on a limited number of variables. Therefore, such a limitation may
adversely affect the findings of the study. Paper, books and articles on e-banking in Dashen
banks is very small due to that there is no sufficient data to do .Hence, this paper by no means

5
claim itself complete and exhaustive due to time shortage and insufficient (nonexistence)of
findings on similar area.
1.5. Organization of the Paper
These research comprise in five chapters, which include : Chapter one contains background of
the study, statement of the problem, basic research questions, objective of the study, significance
of the study and delimitation of the study.
Chapter two include review of related literatures both theoretical and empirical literatures.
Chapter Three: Methods of the Study Under this chapter; conceptual framework
adapted/adapted from previous studies, the subjects/participant of the study; the sources of given
data; the data collection tools/instruments employed; the procedures of data collection; and the
methods of data as analyzed.
Chapter Four: Results and Discussion this chapter should summarize the results/findings of the
study, and interpret and/or discuss the findings. Here, there was expected to make extensive use
of the literature review.
Chapter five: Summary, Conclusions and Recommendations this chapter comprises four
sections, which include summary of findings, conclusions, limitations of the study and
recommendations. Summary of findings should be drawn from the results discussed under
chapter four, conclusions should draw from the summary of findings, and specify any limitations
that could have effect on conclusions.

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 CHAPTER TWO

2. Literature Review

2.1. Definition of banking

Banking is one of the oldest professions in human history, it also flourished with civilizations.
Since humans started using money bank services were in use throughout history. Modern
banking established as we know it today was established in Italy and Greece in the 15th century.
Today, banks are one of the most important institutions to for a modern economy to work in
any country. From different historical sources the first foundations of the banking service in the
world were put by goldsmiths and silversmiths. They have a safe box to put & they were the
most trusted they used to receive gold, silver and various jewelries to put with them. Therefore
an individual or merchant puts his wealth under their custody, for their service they charge a
small amount of money and give the customer a receipt to guarantee their acceptance. Then they
started using, money paying instrument what we now call this document as ‗check‘. However as
time goes by , the goldsmiths and silversmiths observed that their customers wouldn‘t take their
jewelry soon, and those clients ,whenever they face they shortage of money they started lending
to this people and started to get profit from their service. They encouraged depositing and
lending and rather than making the customers to pay a charge for depositing, they started to pay
them interest and introduced the public to work with money. It is believed that, ancient
Assyrians, Babylonians, Athenians, Romans and Abyssinians also used the banking service
(Gedey, 1999). For further development of the bank there is the need for technological
transformation in banking industry which is electronics banking.
2.2. Definition of Electronic Banking
The concept of electronic banking has been defined in many ways. Daniel (1999) defines
electronic banking as the delivery of banks' information and services by banks to customers via
different delivery platforms that can be used with different terminal devices such as a personal
computer and a mobile phone with browser or desktop software, telephone or digital television.
Pikkarainen (2014) define e- banking as an "internet portal, through which customers can use
different kinds of banking services ranging from bill payment to making investments". With the

7
exception of cash withdrawals, internet banking gives customers access to almost any type of
banking transaction at the click of mouse. Indeed the use of the internet as a new alternative
channel for the distribution of financial services has become a competitive necessity instead of
just a way to achieve competitive advantage with the advent of globalization and fiercer
competition.
Wise and Ali (2010) argued that many banks want to invest in ATMs to reduce branch cost since
customers prefer to use them instead of a branch to transact business. The financial impact of
ATMs is a marginal increase in fee income substantially offset by the cost of significant
increases in the number of customer transactions. The value proposition however, is a significant
increase in the intangible item "customer satisfaction". The increase translates into improved
customer loyalty that in result in higher customer retention and growing organization value.
Internet banking is a lower-cost delivery channel and a way to increase sales. Internet banking
services has become one of the most important factors in the business economy today.
Banks which have a formal risk identification process and mechanisms in place to identify and
assess the wide range of risks that impact their e-banking business are well placed to react
quickly and put measures in place to reduce potential losses. Risk identification depends on the
experience and knowledge of the analysts, and it is prudent to assign this exercise to competent
people with the necessary qualifications, experience and credentials. Further research on the risks
associated with the e-banking technologies and services could be helpful on resolving these risks.
This could be done with research undertaken on the enhancement of IT security levels and
authenticity of the banks ‗networks, with firewalls or other software authentication. As far as the
strategic risks are concerned, banks also need to conduct surveys, consult experts from various
fields, establish achievable goals and monitor their performance. E-banking is an innovative
product that banking institutions offer all over the world with superior benefits for the customers.
In other words, an e-banking is an idea, practice, or object that is perceived as new by an
individual or other unit of adoption (Rogers, 20133). E-banking is an umbrella term for the
process by which customers can conduct various banking transactions 24 hours a day, 7 days a
week electronically without the need to visit a brick and mortar ‗institution (physical branch).
E-banking consists of Internet banking, telephone banking, PC Banking, mobile banking, TV
based banking and ATMs. All the above distribution channels which involve the use of the
internet or technology have enabled banks to offer to their customers access to their accounts as

8
well as the ability to perform any banking activity, such as paying utility bills, transferring
amounts between accounts, applying for credit or debit cards as well as applying for loans or
even mortgages. In the Business to Consumer (B2C) segment, the Internet banking services that
are being offered to customers include transfers of funds, viewing of account balances, payments
of credit cards and bills, set ups of direct debits and standing orders, applications for loans and
cheque books as well as requests for new personal identity numbers( Taylor, 2002).
Supervisory and regulatory authorities are further required to develop methods for identifying
new risks, assessing risks, managing risks and controlling risk exposure (Kondabagil, 2007). In
the last decades, banking over the internet has attracted increased attention from bankers and
bank customers. This popularity can be attributed to all the advantages that Internet banking is
offering to both banks and customers. For instance, customers can have access to their accounts
around the clock, from all over the world. In addition, they have access to up to date information
on their accounts. Banks on the other hand can employ fewer personnel, as Internet banking
encourages customers to perform banking transactions electronically at a lower cost. Automated
e-banking services, offer banks a perfect opportunity for maximizing profits (Kotler, 2010).
The main economic benefit is the positive impact of communication technologies on the entire
economic growth of banking institutions. Banks are able to offer their services at lower costs,
with fewer staff. Banks which offer e-banking services are perceived as leaders in technology
implementation and they would have a better brand image. Moreover, there is easy publicity for
banks, which can pass the information they want over the Internet, so there is significant
reduction in banks costs. Opposed to the above advantages, there are also some down sides
related to Internet banking. These include security concerns, along with insufficient knowledge
of the technology used and lack of personal computers. Nowadays, banking institutions face
various policy issues. A key policy could be considered to be the management of risks that are
associated with the implementation of e-banking technologies and services (Kondabagil, 2007).
In particular, credit risk arises when customers cannot meet their financial obligations. Similarly,
liquidity risk arises in the case of customers insufficient funds (Kondabagil, 2007). Legal risk
arises due to the existence of a poor legal framework or legal uncertainties that lead to credit or
liquidity risk. Moreover, operational risk arises in the case of operational mistakes or
malfunctions that could possibly lead to credit or liquidity risks (Kondabagil, 2007). Further,
systematic risk refers to the inability of a participant to meet the obligations; this might be in the

9
form of a disruption which leads to a failure of the participants, within the financial system, to
meet their obligations. Reputational risk is the risk of receiving significant negative public
opinion, which might result in a loss of customers. Additionally, there is the money laundering
risk and the identity theft risk. All the above risks have influenced the overall risk profile of
banking. It is crucial for banks to have flexible and responsive operating processes, in addition to
sound and robust risk management systems that recognize, address and manage these risks in a
prudent.

2.2. E-banking in Global Perspective

The advent of Internet has initiated an electronic revolution in the global banking sector. The
dynamic and flexible nature of this communication channel as well as its everywhere reach has
helped in leveraging a variety of banking activities. E-banking technologies have proliferated in
recent years, and the availability of a wide range of products has led to increasing adoption
among customers. These technologies include direct deposit, computer banking stored value
card, and debit cards (Servon and Kaestner, 2008).
Growth of Electronic banking in a country depends on many factors, such as success of internet
access, new online banking features, household growth of internet usage, legal and regulatory
framework. E-banking can offer speedier, quicker and dependable services to the customers for
which they may be relatively satisfied than that of manual system of banking. E-banking system
not only generates latest viable return, it can get its better dealings with customers. New banking
intermediaries offering entirely new types of banking services have emerged as a result of
innovative e-business models. The Internet has emerged as one of the major distribution
channels of banking products and services, for the banks in US and in the European countries.
Initially, banks promoted their core
Capabilities i.e., products, services and advice through Internet. Then, they entered the
ecommerce market as providers/distributors of their own products and services. More recently,
due to advances in Internet security and the advent of relevant protocols, banks have discovered
that they can play their primary role as financial intermediate‘s and facilitators of complete
Dashen bank transactions via electronic networks especially through the Internet. Some banks
have chosen a route of establishing a direct web presence while others have opted for either
being an owner of financial services centric electronic marketplace or being participants of a
non-financial services centric electronic marketplace (Taylor, 2002).

10
The trend towards electronic delivery of banking products and services is occurring partly as a
result of consumer demand and partly because of the increasing competitive environment in the
global banking industry. The Internet has changed the customers' behaviors who are demanding
more customized products/services at a lower price. Moreover, new competition from pure
online banks has put the profitability of even established brick and mortar banks under pressure.
However, very few banks have been successful in developing effective strategies for fully
exploiting the opportunities offered by the Internet. For traditional banks to define what niche
markets to serve and decide what products/services to offer there is a need for a clear and concise
Internet commerce strategy. Banks use online banking as it is one of the cheapest delivery
channels for banking products. Such service also saves the time and money of the bank with an
added benefit of minimizing the likelihood of committing errors by bank tellers (Jayawardhena
& Foley, 2000).
Banking is no longer bound to time and geography. Customers over the world have relatively
easy access to their accounts, 24 hours per day, and seven days a week’. The author further
argued that, with internet banking services, the customers who felt that branch banking took too
much time and effort are now able to make transactions at the click of their fingers. There are
other numerous advantages to banks offered by online banking such as mass customization to
suit the likes of each user, innovation of new products and services, more effective marketing
and communication at lower costs, development of non-core products such as insurance and
stock brokerage as an expansion strategy, improved market image, better and quicker response to
market evolution (Jayawardhena & Foley, 2010).
Banking transactions had already started taking place through the Internet way back in 1995. The
Internet promised an ideal platform for commercial exchange, helping banks to achieve new
levels of efficiency in financial transactions by strengthening customer relationship, promoting
price discovery and spend aggregation and increasing the reach. Electronic finance offered
considerable opportunities for banks to expand their client base and rationalize their business
while the customers received value in the form of savings in time and money.

2.3. E-banking Practice in Ethiopian Dashen banks

Certainly the banking industry in Ethiopia is underdeveloped and therefore, there is an all
immediate need to embark on capacity building arrangements and modernize the banking system
by employing the state of the art technology being used anywhere in the world. With a growing

11
number of import-export businesses, and increased international trades and international
relations, the current banking system is short of providing efficient and dependable services and
therefore all banks operating in Ethiopia should recognize the need for introducing electronic
banking system to satisfy their customers and meet the requirements of rapidly expanding
domestic and international trades, and increasing international banking services. Undeniably the
largest state-owned bank, Dashen Bank, is the pioneer in introducing ATM service for local
users in 2001 with its fleet of eight ATMs located in Addis Ababa (Taye, 2015).
Moreover, Dashen bank has had Visa membership since November 14, 2005. However, 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, Dashen bank
lagged behind Dashen Bank, which worked aggressively to maintain its lead in electronic
payment systems. Dashen bank, a forerunner in introducing e-banking in Ethiopia, has installed
ATMs at convenient locations for its own cardholders. The Dashen Bank ATM is available 24
hours a day, seven days a week and 365 days a year providing service to Dashen Debit
Cardholders and International Visa Cardholders coming to the country. At the end of June 2009,
Dashen bank has installed more than 40 ATMs in its area branches, university compounds,
shopping malls, restaurants and hotels. Available services on Dashen Bank ATMs are, cash
withdrawal, balance Inquiry, mini-statement, fund transfer between accounts attached to a single
card and PIN (Personal Identification Number) change (Binyam, 2009). Currently, the bank
gives debit service only for Visa cards. Dashen bank clients can withdraw up to 3,000 birr in
cash and can buy
goods and services of up to 5,000 birr a day. As of June 30, 2009, Dashen Visa card holders have
reached 54,624. Expanding its leadership, Dashen Bank has begun accepting MasterCard in
addition to Visa credit cards it began serving over two years ago. Dashen won the membership
license from MasterCard in 2008. Moreover, harnessing its leadership with advanced banking
technology, Dashen Bank signed an agreement with iVeri, a South African electronic payment
technology company, for the introduction of mobile commerce in April 21, 2009. According to
the agreement, very Payment Technologies has licensed its Gateway and MI Card e-payment
processing solution to Dashen Bank.The younger United Bank is the first to introduce tile-
banking - including text messages (SMS) - by the end of 2008.Wegagen Bank has signed an
agreement with Technology Associates (TA), a Kenyan based IT firm, for the development of

12
the solutions for the payment system and installation of a network of ATMs on December 30,
2008(Binyam, 2009). Automated Teller Machine (ATM) and Point of Sale terminal (POS)
network, in February 2009 is welcoming strategy to improve electronic card payment system in
Ethiopia. Three private Dashen banks - Awash International Bank S.C., Nib International Bank
S.C and United Bank S.C. – have agreed in principle to establish an ATM network called Fettan
ATM network. If everything goes as planned, Fettan ATM will install over 140 ATM machines
and over 340 POSs across Ethiopia. There will be one ATM at every branch of the consortium
banks, all domestic airports serviced by dashen service, shopping complexes and merchants. The
agreement is the first significant cooperation between competing banks in Ethiopia, which others
should be encouraged to follow as there is no single bank in Ethiopia that can afford to provide
extensive geographical coverage and access (Binyam , 2009). The first ever electronic banking
gateway was signed between Ethiopian Commodity Exchange (ECX) and Dashen Bank.The
electronic banking system being developed with both banks is designed to give a secure
electronic data sharing gateway between clients, banks and ECX, facilitating a smooth
transaction (Abiy Demilew, 2008). As the dashen bank continues to move at a snail's pace in its
turnkey solution for Card Based Payment System, Dashen Bank remains so far the sole player in
the field of electronic banking since 2006. The agreements signed by other private banks to
introduce e-banking are welcoming and further steps towards realizing those agreements should
be taken.
Now in Ethiopia electronic banking is highly growing from which mobile banking service
provider banks in Ethiopia are Wegagen, Commercial Bank of Ethiopia, United international
bank, Dashen, Abay and Cooperative bank of Oromia. Internet banking service provider
includes united international, Wegagen, dashen, Abay, Nib international and Commercial Bank
of Ethiopia. Agent bank service provider includes united international, Dashen, Abay, Anbesa
and cooperative bank of Ethiopia. In the year 2014/2015 National bank of Ethiopia give
ATM( automatic teller machine) license permission to Abay international bank, Anbesa
international bank, Nib international bank and Cooperative banks of Oromia ( National bank of
Ethiopia, 2015).

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2.4 Theories E-banking

2.4.1 Innovation Diffusion Theory

This theory developed by Roger in 1983 explains individuals‘intention to adopt a technology as a
modality to perform a traditional activity. The critical factors that determine the adoption of an
innovation at the general level are the following: relative advantage, compatibility, complexity,
trial ability and observability. It is concerned with the manner in which a new technological
idea, artifact or technique, or a new use of an old one, migrates from creation to use. According
to (IDT) theory, technological innovation is communicated through particular channels, over
time, among the members of a social system. The stages through which a technological
innovation passes are: knowledge (exposure to its existence, and understanding of its functions);
persuasion (the forming of a favorable attitude to it); decision (commitment to its adoption);
implementation (putting it to use); and confirmation (reinforcement based on positive outcomes
from it). Early users generally are more highly educated, have higher social status, and are more
open to both mass media and interpersonal channels of communication, and have more contact
with change agents. Mass media channels are relatively more important at the knowledge stage,
whereas interpersonal channels are relatively more important at the persuasion stage. Innovation
decisions may be optional (where the person or organization has a real opportunity to adopt or
reject the idea), collective (where a decision is reached by consensus among the members of a
system), or authority-based (where a decision is imposed by another person or organization
which possesses requisite power, status or technical expertise). Important characteristics of an
innovation include: relative advantage (the degree to which it is perceived to be better than what
it supersedes); compatibility (consistency with existing values, past experiences and needs);
complexity (difficulty of understanding and use); trial ability (the degree to which it can be
experimented with on a limited basis); observebility (the visibility of its results). Different
adopter categories are identified as: innovators (venturesome); early adopters (respectable); early
majority (deliberate); late majority (skeptical); laggards (traditional). Earlier adopting individuals
tend not to be different in age, but to have more years of education, higher social status and
upward social mobility, be in larger organizations, have greater empathy, less dogmatism, a
greater ability to deal with abstractions, greater rationality, greater intelligence, a greater ability
to cope with uncertainty and risk, higher aspirations, more contact with other people, greater
exposure to both mass media and interpersonal communications channels and engage in more

14
active information seeking. Important roles in the innovation process include: opinion leaders
(who have relatively frequent informal influence over the behavior of others); change agents
(who positively influence innovation decisions, by mediating between the change agency and the
relevant social system); change aides (who complement the change agent, by having more
intensive contact with clients, and who have less competence credibility but more correctly or
trustworthiness credibility). The change agent functions are: to develop a need for change on the
part of the client; to establish an information-exchange relationship; to diagnose the client
problems; to create intent to change in the client; to translate this intent into action; to stabilize
adoption and prevent discontinuance; and to shift the client from reliance on the change agent to
self-reliance.

2.4.2. Technology Acceptance Model (TAM):

TAM, introduced by Davis (1986), is an adaptation of TRA specifically tailored for modeling
user acceptance of information systems. The goal of TAM is to provide an explanation of the
determinants of computer acceptance that is general, capable of explaining user behavior across a
broad range of end-user computing technologies and user populations, while at the same time
being both parsimonious and theoretically justified(Davis, 1986). TAM posits that two particular
beliefs, perceived usefulness and perceived ease of use, are of primary relevance for computer
acceptance behaviors. Perceived usefulness is defined as the prospective user's subjective
probability that using a specific application system will increase his or her job performance
(Davis, 1985).

2.5. Types of E-banking

2.5.1 Internet banking:

Internet Banking lets you handle many banking transactions via your personal Computer. For
instance, you may use your computer to view your account balance, request transfers between
accounts, and pay bills electronically. Internet banking system and method in which a personal
computer is connected by a network service provider directly to a host computer system of a
bank such that customer service requests can be processed automatically without need for
intervention by customer service representatives. The system is capable of distinguishing
between those customer service requests which are capable of automated fulfillment and those
requests which require handling by a customer service representative.

15
2.5.2. The evolution of internet banking
The ancestor for the contemporary home online banking products and services were the distance
banking products and services over electronic media from early 1980s. The term ―online‖
became popular in the beginning of 1990s and referred to the use of a terminal, keyboard and TV
(or monitor) to access the banking system using a phone line. Online services started in New
York in 1981 when four of the city's major banks (Citibank, Chase Manhattan, Chemical and
Manufacturers Hanover) offered home banking services using the videotext system (Cronin,
1997). Because of the commercial failure of videotex these banking services never became
popular except in France where the use of videotex (Minitel) was subsidized by the telecom
provider and the UK, where the Prestel system was used.
Today, many banks are internet only banks. Unlike their predecessors, these internet only banks
do not maintain brick and mortar bank branches. Instead, they typically differentiate themselves
by offering better interest rates and online banking features. In Europe, adoption rates of internet
banking usage decreases from north to south and from rich to poor. According to a research
report from Deutsche Bank, GDP per capita and latitude explain statistically around 80 per cent
of the variation in Europe, as suggested by linear regression analysis, and the European average
(EU-25, 36%) is below the USA average (44%) (February, 2006). Internet banking grows –
usually, but not always at the expense of branch visits. Bank customers in Europe increased their
use of internet banking while Europeans do not discriminate between internet banking and
ecommerce. By saying this, there is a tendency that those who shop online are also more willing
to bank online with Nordic countries to be more responsive to internet banking than their share
of online shoppers would suggest while Germans and British exhibit a more reserved and
constant attitude towards online banking (Cronin, 1997). Moreover, the same research report
from Deutsche Bank states that the share of internet bankers does not decrease with age. In the
opposite, internet usage declines with age but relative to internet users as a whole, the share of
internet bankers in the EU is constant for those over 24 years, e.g., out of those who use the
internet, around 40 percent also use internet banking, irrelevant of age. In doing so, one of the
most difficulties in people approaching the internet is their reluctance which is further an
obstacle to proliferation of online banking between older customers. In addition, Europeans with
higher education are more likely to use the internet and do financial transactions online because

16
better educated people have fewer reservations about technology adoption and therefore, are
early adopters of it.
However, following Rousseau et al., (1998), customers‘ trust in e-banking is defined as
willingness of customers to perform on-line banking transactions, expecting that the bank will
fulfill its obligations, irrespective of their ability to monitor or control banks' actions. Security of
online financial transactions is a main concern for customers' trust in e-banking services and
specifically, in internet banking products and services. In doing so, even if security incidents
have been on the fall, customers do not have trust in online banking services, partly, of their
concern of losing their money. In the following section, withdraw on security issues is raised in
order for security to be better understood. The system is integrated with the host computer
system of the bank so that the remote banking customer can access other automated services of
the bank. The method of the invention includes the steps of inputting a customer banking request
from among a menu of banking requests at a remote personnel computer; transmitting the
banking requests to a host computer over a network; receiving the request at the host computer;
identifying the type of customer banking request received; automatic logging of the service
request, comparing the received request to a stored table of request types, each of the request
types having an attribute to indicate whether the request type is capable of being fulfilled by a
customer service representative or by an automated system; and, depending upon the attribute,
directing the request either to a queue for handling by a customer service representative or to a
queue for processing by an automated system.

2.5.3. Advantages of internet banking

Many banks have begun to offer customers the option of online-internet banking, a practice that
has advantages for both all parties involved. The convenience of being able to access accounts at
any time as well as the ability to perform transactions without visiting a local branch, draw many
people to be involved. Some of these advantages of internet banking but are not limited to,
include:
• Customer Convenience- Direct banks are open for business anywhere there is an internet
connection. They are also 24 hours a day, 365 days a year open while if internet service
is not available, customer services is normally provided around the clock via telephone.
Real-time account balances and information are available at the touch of a few buttons
thus, making banking faster, easier and more efficient. In addition, updating and

17
 maintaining a direct account is easy since it takes only a few minutes to change the
mailing address, order additional checks and be informed for market interest rates.

• More efficient rate-The lack of significant infrastructure and overhead costs allow direct
banks to pay higher interest rates on savings and charge lower mortgage and loan rates.
Some offer high-yield checking accounts, high- yield certificate of deposits (CDs), and
even no-penalty CDs for early withdrawal. In addition, some accounts can be opened
with no minimum deposits and carry no minimum balance or service fees.

• Service- Direct banks typically have more robust websites that offer a comprehensive set
of features that may not be found on the websites of traditional banks. These include
functional budgeting and forecasting tools, financial planning capabilities, investment
analysis tools, loan calculators and equity trading platforms. In addition, they offer free
online bill payments, online tax forms and tax preparation.
• Mobility: Internet banking also includes mobile capabilities. New applications are
continually being created to expand and improve this capability or smart-phones and
other mobile devices.
• Transfer-Accounts can be automatically funded from a traditional bank account via
electronic transfer. Most direct banks offer unlimited transfers at no cost, including those
destined for outside financial institutions. They would also accept direct deposits and
withdrawals that the customer authorizes such as payroll deposits and automatic bill
payment.
• Each of use: Online accounts are easy to set up and require no more information than a
traditional bank account. Many offer the option of inputting the customer's data online or
downloading the forms and mailing them in. If the customer runs into a problem, he has
the option of calling or e-mailing the bank directly.
• Environment friendly-Internet banking is also environmentally friendly. Electronic
transmissions require no paper, reduce vehicle traffic and are virtually pollution-free.
They also eliminate the need for buildings and office equipment.

2.5.4. Automated Teller Machine (ATM)

An automated teller machine or automatic teller machine (ATM) is an electronic computerized
telecommunications device that allows a financial institution's customers to directly use a secure

18
method of communication to access their bank accounts, order or make cash withdrawals (or
cash advances using a credit card) and check their account balances without the need for a
human bank teller. Many ATMs also allow people to deposit cash or cheques, transfer money
between their bank accounts, top up their mobile phones' pre-paid accounts or even buy postage
stamps. On most modern ATMs, the customer identifies him or herself by inserting a plastic card
with a magnetic stripe or a plastic smartcard with a chip that contains his or her account number.
The customer then verifies their identity by entering a pass code, often referred to as a PIN
(Personal Identification Number) of four or more digits. Upon successful entry of the PIN, the
customer may perform a transaction. The growth of ATM‘s has rapidly grown in the public
places around the globe.

2.5.5. TELE BANKING

Undertaking a host of banking related services including financial transactions from the
convenience of customers chosen place anywhere across the GLOBE and anytime of date and
night has now been made possible by introducing on-line Tele banking services. By dialing the
given Tele banking number through a landline or a mobile from anywhere, the customer gets the
following facilities
 Automatic balance voice out for the default account.

 Balance inquiry and transaction inquiry in all

 Inquiry of all term deposit account

 Statement of account by Fax, e-mail or ordinary mail

 Cheque book request

 Stop payment which is on-line and instantaneous

 Transfer of funds with CBS which is automatic and instantaneous

 Utility Bill Payments

 Renewal of term deposit which is automatic and instantaneous

 Voice out of last five transactions.

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2.5.6. SMART CARD
A smart card usually contains an embedded 8-bit microprocessor (a kind of computer chip). The
microprocessor is under a contact pad on one side of the card. Think of the microprocessor as
replacing the usual magnetic stripe present on a credit card or debit card. The microprocessor on
the smart card is there for security. The host computer and card reader actually ―talks" to the
microprocessor. The microprocessor enforces access to the data on the card. The chips in these
cards are capable of many kinds of transactions. For example, a person could make purchases
from their credit account, debit account or from a stored account value that's reload able. The
enhanced memory and processing capacity of the smart card is many times that of traditional
magnetic-stripe cards and can accommodate several different applications on a single card. It can
also hold identification information, which means no more shuffling through cards in the wallet
to find the right one -- the Smart Card will be the only one needed. Smart cards can also be used
with a smart card reader attachment to a personal computer to authenticate user. Smart cards are
much more popular in Europe than in the U.S. In Europe the health Insurance and banking
industries use smart cards extensively. Every German citizen has a smart card for health
insurance. Even though smart cards have been around in their modern form for at least a decade,
they are just starting to take off in the U.S.

2.5.7. DEBIT CARD

Debit cards are also known as check cards. Debit cards look like credit cards or ATM
(automated teller machine) cards, but operate like cash or a personal check. Debit cards are
different from
credit cards. While a credit card is a way to "pay later," a debit card is a way to "pay now." When
you use a debit card, your money is quickly deducted from your checking or savings account.
Debit cards are accepted at many locations, including grocery stores, retail stores, gasoline
stations, and restaurants.

2.5.8.. E-CHEQUE
 E-Cheque is the electronic version or representation of paper cheque.
 The Information and Legal Framework on the E-Cheque is the same as those of the
paper cheques.

 It can now be used in place of paper cheques to do any and all remote transactions.

20
  An E-cheque work the same way a cheque does, the cheque writer "writes ―The e-
Cheque using one of many types of electronic devices and "gives" the e-Cheque to the
payee electronically. The payee "deposits" the Electronic Cheque receives credit, and the
payee's bank "clears" the e-Cheque to the paying bank. The paying bank validates the
eCheque and then "charges" the check writer‘s account for the check
OTHER FORMS OF ELECTRONIC BANKING
Direct Deposit

 Electronic Bill Payment

 Electronic Check Conversion

 Cash Value Stored, Etc.

2.6. Benefits of Electronic Banking

Banks just like other businesses are tuning to information technology to improve business
efficiency, service quality and attract new customers. The most important factors encouraging
consumers to use online banking are lower fees followed by reducing paper work and human
error. Subsequently electronic channels can lead to lower transaction costs which are very
competitive (Claessens and Kliengbiel, 2000). Conducting business outside the normal branch
working hours has also been a factor that has been considered convenient for bankers. According
to Jayawardhena and Foley (2000) each ATM has the capacity to carry out the same, essentially
routine, transactions as do human tellers in branch offices but at half the cost and with a four to
one advantage in productivity. Thus banks can provide customers convenient, inexpensive access
to the bank 24 hours a day and seven days a week. Increased availability and accessibility of
more self-service distribution channels help bank administration in reducing the expensive
branch network and associated staff overheads. A reduction in the percentage of customers
visiting the banks with an increase in alternative channels of distribution will also minimize the
queues in branches (Thornton and White, 2001). According to Thornton and White (2001) this
ultimately leads to improved customer satisfaction. Jayawardhena and Foley (2000) observe that
electronic banking increases competition within the banking system and also from non-bank
financial institutions. Electronic banking also increases the power of the customer to make price
comparisons across suppliers quickly and easily and as a consequence this pushes prices and

21
margins downward. Observes that banks are responding to electronic banking differently and
that those which see electronic banking as a complement and substitute to the traditional
channels achieved better communication and interactivity with the customers. Online banking
extends the relationship with the customers through providing financial services right into the
home or office of customers (Robinson, 2000). Support the view that technology can improve
service quality for banks and enhance customer satisfaction and loyalty. Provision of high
quality services may also lead to high profit consumers for the bank. E-banking customers do not
face problems of handling a lot of money, submission of utility bills and waiting in a long queue
for services.

2.6.1. Benefits from the bank point of view

The first benefits for the banks offering Internet banking services is better branding and better
responsiveness to the market. Those banks that would offer such services would be perceived as
leaders in technology implementation. Therefore, they would enjoy a better brand image. The
other benefits are possible to measure in monetary terms. The main goal of every company is to
maximize profits for its owners and banks are not any exception. Automated e-banking services
offer a perfect opportunity for maximizing profits.

2.6.2. Benefits from the customers’ point of view

The main benefit from the bank customers‘ point of view is significant saving of time by the
automation of banking services processing and introduction of an easy maintenance tools for
managing customer‘s money. The main advantages of e-banking for corporate customers are as
follows (Bank Away! 2001; Gurău, 2002):
• Reduced costs in accessing and using the banking services.

• Increased comfort and timesaving transactions can be made 24 hours a day, without
requiring the physical interaction with the bank.

• Quick and continuous access to information. Corporations will have easier access to
information as, they can check on multiple accounts at the click of a button.

• Better cash management. E-banking facilities speed up cash cycle and increases
efficiency of business processes as large variety of cash management instruments are
available on Internet sites of Estonian banks. For example, it is possible to manage

22
 company‘s short-term cash via Internet banks in Estonia (investments in over-night,
short- and long term deposits, in commercial papers, in bonds and equities, in money
market funds). Private customers seek slightly different kind of benefits from e-banking.
In the study on online banking has found that providing faster, easier and more reliable
services to customers were amongst the top drivers of e- banking development. The main
benefits from e-banking for private customers are as follows (Bank Away! 2001)

• Reduced costs. This is in terms of the cost of availing and using the various banking
products and services.

• Convenience. All the banking transactions can be performed from the comfort of the
home or office or from the place a customer wants to.

• Speed. The response of the medium is very fast; therefore customers can actually wait
till the last minute before concluding a fund transfer.

• Funds management. Customers can download their history of different accounts and do
a ―what-if‖ analysis on their own PC before affecting any transaction on the web. This
will lead to better funds management.

2.7. Challenges of E-banking

The ability to adopt global technology to local requirements: An adequate level of infrastructure
and human capacity building are required before developing countries can adopt the global
technology for their local requirements:
• The ability to strengthen public support for e-finance: Historically, most e-finance
initiatives in developing countries have been the result of cooperative efforts between the
private and public sectors. For example, Singapore‘s successful Trade Net system was a
government-sponsored project.

If the public sector does not have the necessary means to implement the projects it is
essential that cooperative efforts between public and private sectors, along with the
multilateral agencies like the World Bank, be developed to facilitate public support for e-
finance related initiatives.

23
• Confidentiality, integrity and authentication are very important features of the banking
sector and would be very successfully managed the world over in pre-internet times.
Communication across an open and thus insecure channel such as the internet might not
be the best base for bank-client relations as trust might partially be lost.

• E -Banking has created many new challenges for bank management and regulatory and
supervisory authorities. They originate not just from increased potential for cross border
transactions but also for domestic transactions based on technology applications which
raise many security related issues.

• There are some serious implication e-banking. It is a common argument that low
transaction costs potentially make it much easier to conduct cross-border banking
electronically. For many banks, cross- border operations offer an opportunity to reap
economies of scale. But cross-border finance also needs a higher degree of cross-border
supervision. Such cooperation may need to extend to similar supervisory rules and
disclosure requirements (for efficiency and to avoid regulatory arbitrage) and some
harmonizing of legal, accounting and taxation arrangements.

• The flips side of this technological boom is that electronic banking is not only
susceptible to but may exacerbate, some of the same risks—particularly governance,
legal, operational, and reputational—inherent in traditional banking. In addition, it poses
new challenges. In response, many national regulators have already modified their
regulations to achieve their main objectives: ensuring the safety and soundness of the
domestic banking system, promoting market discipline, and protecting customer rights
and the public trust in the banking system.

• New methods for conducting transactions, new instrument and new service provider
would require legal definition, recognition, and permission. For example, it will be
essential to define an electronic signature and give it the same legal status as the
handwritten signature. Existing legal definitions and permissions—such as the legal
definition of a bank and the concept of a national border—will also need to be rethought.

24
2.8. E-banking challenge in Ethiopia
Banking in Ethiopia faces numerous challenges to fully adopt and adapt E-Banking applications
and seize the opportunities presented by ICT applications in general. According to Garedew
worku Key Challenges for E-Banking applications are:
• Low level of internet penetration and poorly developed telecommunication
infrastructure: Lack of infrastructure for telecommunications, Internet and online
payments impede smooth development and improvements in e-banking 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-banking
activities.
• Lack of suitable legal and regulatory framework for e-commerce and e-payment:
Ethiopian current laws do not accommodate electronic contracts and signatures. Ethiopia
has not yet enacted legislation that deals with e-commerce concerns including
enforceability of the validity of electronic contracts, digital signatures and intellectual
copyright and restrict the use of encryption technologies.
• Political instabilities in neighboring countries: Political and economic instabilities in
Somalia, Southern Sudan, and Eritrea are threatening traits that do not provide a very
conducive environment for e-banking in Ethiopia. Political instabilities inevitably disturb
smooth operations of business and free flow of goods and services.

• High rates of illiteracy: Low literacy rate is a serious impediment for the adoption of E-
Banking in Ethiopia as it hinders the accessibility of banking services. For citizens to
fully enjoy the benefits of E-Banking, they should not only know how to read and write
but also possess basic ICT literacy.

• High cost of Internet: The cost of Internet access relative to per capita income is a
critical factor. Compared to the developed countries, there are higher costs of entry into
the e-commerce market in Ethiopia. These include high start-up investment costs, high
costs of computers and telecommunication and licensing requirements.

• Absence of financial networks that links different banks (Banks are not yet automated):
Most of the banking-transactions currently taking place use credit and debit cards
supplied by Visa and MasterCard. For conducting e-banking, the use of credit or debit

25
 cards is mandatory thus requiring the need for specialized systems which are not
currently available.

• Frequent power interruption-La of reliable power supply is a key challenge for smoothly
running e-banking in Ethiopia.

• Resistance to changes in technology among customers and staff due to꞉

 Lack of awareness on the benefits of new technologies

 Fear of risk
 Lack of trained personnel in key organizations,

 Tendency to be content with the existing structures,

 People may be resistant to new payment mechanisms

 Cyber security issues: Cyber security is a global challenge that requires global and
multidimensional response with respect to policy, socio-economic, legal and
technological aspects. E-banking applications represent a security challenge as they
highly depend on critical ICT systems that create vulnerabilities in financial institutions,
businesses and potentially harm banking customers. It is imperative for banks to
understand and address security concerns in order to leverage the potentials of ICTs in
delivering E-banking applications.

2.9. Empirical studies related with E-banking challenges and prospects

Some related studies are conducted by different researchers in different parts of the world.
However, there are limited numbers of studies conducted in Ethiopia on the implementation of
technological innovation. Specifically, Gardachew (2010) conducted research on the
opportunities and challenges of E-banking in Ethiopia. The aim of his study was focused on
analyzing the status of electronic banking in Ethiopia and investigates the main challenges and
opportunities of implementing E-banking system. The author conducted a survey on the existing
operating style of banks and identifies some challenges of using E-banking system, such as, lack
of suitable legal and regulatory frame works for E-commerce and E- payments, political
instability in neighboring countries, high rates of illiteracy and absence of financial networks that
links different banks. According to Gardachew (2010), Opportunities offered by ICT through

26
elearning programs and Commitment of the governments on development of ICT infrastructures
is considered as drivers of using E-commerce and E-payment systems.
Wondwossen and Tsegai (2005) also studied on the challenges and opportunities of E-payments
in Ethiopia; their objective was studying of E-payment practices in developing countries, Africa
and Ethiopia. The authors employs interview and on site observation to investigate challenges to
E-payment in Ethiopia and found that, the main obstacles to the development of E-payments are,
lack of customers trust in the initiatives, Unavailability of payment laws and regulations
particularly for E-payment, Lack of skilled manpower and Frequent power disruption. According
to Wondwossen and Tsegai (2005), an adequate legal structure and security framework could
foster the use of E-payments, which is contradicting with the finding of the previous study. On
the other hand the study conducted by Daghfous and Toufaily (2007) on the success and critical
factors in adoption of E-banking by Lebanese banks. The research was conducted on the factors
that can lead to success the adoption of E-banking and the other factors that can constitute as
barrier to its adoption, it focus on the organizational, structural and strategic factors which can
accelerate or, on the contrary, slow the adoption of this electronic mode of distribution and
communication by the banks, through analyzing the case of the Lebanese market. In order to test
the validity of the theoretical framework, structured survey was used, interview questionnaire
that was given to E-banking managers or to information technology managers of all the banks on
the official list of institutions operating on the Lebanese market, with a total of 57 banks, 31 of
them operate internationally and 26 are strictly local were used to gather data. The results of their
study shows that the organizational variables (bank size, functional divisions, technical staff,
technical infrastructure, perceived risks, decision makers` international experience and mastery
of innovation) are variables which exert significant impact on the adoption of E-banking, among
the structural characteristics, the result revealed that internal technological environment of the
bank is a very important factor in determining the adoption of E-banking, also the result shows
that banks which are developing in the international scale are more likely to adopt E-banking
innovations.
In general, review of empirical studies show that understanding the practice of e-banking in
Dashen Bank, Ethiopia, and Africa and on the other world. The study mostly deals about the
opportunity and challenges of e-banking practices. Some studies also deals about the critical
success factors in e-banking is important for banking industry because it would potentially help

27
to improve their strategic planning process. The main obstacles and barriers the oppose e-
banking practice are the concern of security, privacy of information and technology investment
cost. The literature also indicates that according to the customers there are different factors
related to the service itself and how to be accepted and used by the customers, which differs from
country to country.

Conceptual framework?

28
 CHAPTER THREE
3. RESEARCH METHODOLOGY
Under this chapter; conceptual framework adapted/adopted from previous studies, the
subjects/participant of the study; research design, target population, sample and sampling
technique, instruments of data collection, procedures of data collection, and data analysis
techniques. Sullivan (2001) states that descriptive technique of a research is used to discover
facts or descriptive reality to snatch of phenomenon under investigation. He explained
descriptive research is ―a picture or accounts of what exist sometimes summarized in numbers,
percentage or other statistics‖ and is characterized by the prior formation of specific research
question or hypothesis. As a result a researcher select descriptive research is pre planned and
structured the research design specifies the methods for selecting the source of information and
for collecting data for real sources.

3.1 Research Design

The research method in this study is descriptive survey type. Descriptive research includes
surveys and fact-finding enquiries of different kinds. The major purpose of descriptive research
is description of the state of affairs as it exists at present. This method is chosen because it is a
sound to identify and explain investigations of challenges and prospects of implementing
electronic banking in Dashen bank.
The researcher designed through an iterative process of designing of structural questionnaires for
respondents in their respective areas. Therefore, research design to the respective parties help for
the success of the subject study on clarify, completeness, and relevance of questions in relation
to the issues and concepts which were addressed on the statement of the problem. Data is
gathered in such a way that 150 employees of Dashen bank and 150 Dashen bank customers. The
reason for selecting 150 customers, and 150 staffs, for proportional for large population of
Dashen bank staffs and customers. Data collection is done only in Addis Ababa through
randomly selected branch and within the branch the selection technique is simple give
questionnaire for those who are clerical staff and active and literate customers. There are twelve
branches are randomly selected those are: Aradagiorgis branch, Yared branch, Aratkillo branch,
18 Mazoria branch, Abunepetros branch, Urael branch, Gedam sefer branch,

29
Sidist killo branch, mehalketema branch, Dejachwube, Rasdesta branch and Kidistemariam
branch. The reason for focusing in Addis Ababa is first e-banking service in Dashen bank is
almost similar (central administration about the service of e-banking) in urban and city except
network and electric power difference. The second one economical reason, there is high cost of
research due highly scattered (very far from one branch to another branch) of rural branches.
The research design for the study was grouped and categorized based on the service provider and
service receiver in two parts: thus are employees and customers of dashen bank. Questionnaires
are prepared for both customers and employees of Dashen bank.
The first part of the questionnaires was designed to gather information from staffs about the
qualification of the staff, benefits of e- banking for bank, customer and economy, the attitude of
customers about e-banking, the best means of awareness to customers, the challenges of adopting
e-banking in the bank, the cost, loading and timing of transaction processing, external factor such
as, network, electric power interruption
The second part of the questionnaires well be designed to access the experience of customers
with regards to the challenge and prospects of e-banking and with experience pertaining to
electronic payments, the types of electronic banking service use, awareness level of customers
about e-banking, the security level, attitudes, and challenges of e-banking .

3.2. Target Population

The total population of this study is the submission of the literate account holder customers,
branch manager, manager customer service, senior customer service officer, customer service
officer, junior officer, and other dashen staff members at Addis Ababa city. Branches at Addis
Ababa city categorize in to four districts those are: north Addis, East Addis, South Addis, and
West Addis Districts.
Based on the number of customers they serve and amount of transaction they handle, the
branches in dashen Bank are classified in to four different grades from grade one to grade four.
But in Addis Ababa city branches classified from grade two to grade four only, grade one branch
open only out of Addis Ababa. From the purpose of the study, branches from all the three grade
levels of the four districts are selected. The total population of the study is literate and active
account holding customers and branch employees and management.

30
3.3. Sample and Sampling Technique
Researchers usually draw conclusions about large groups by taking a sample A Sample is a
segment of the population selected to represent the population as a whole. Ideally, the sample
should be representative and allow the researcher to make accurate estimates of the thoughts and
behavior of the larger population. Designing the sample calls for three decisions: Who will be
surveyed? (The Sample)
• The researcher must determine what type of information is needed and who is most likely to
have it. How many people will be surveyed? (Sample Size)
• Large samples give more reliable results than small samples. However, it is not necessary to
sample the entire target population. How should the sample be chosen? (Sampling)
• Sample members may be chosen at random from the entire population (probability sample)
• The researcher might select people who are easier to obtain information from non probability
sample. The needs of the research project to determine which method is most effective. A list
of all sampling units those are available for selections at the stage of sampling process were
identified and sampling frames were prepared. Besides the respondents who have been
conduct an question with the participants of the studies is customers and employees of Dashen
bank. The customers participated in this study are the ones with an active saving and current
account holder literate customers who were being served at one of the sampled branches
when the study was being conducted.

3.4. Instruments of Data Collection

The instruments of data collection include questionnaires, observation and reading. Essentially
the researcher must ensure that the instrument chosen is valid and reliable. The validity and
reliability of any research project depends to a large extent on the appropriateness of the
instruments. The appropriateness of questionnaires is due to easiness, simply collect basic
information based on the interest of the respondents. For these study questionnaires are the most
important instrument to gather basic information. Questionnaires: this is a data collection
instrument mostly used in descriptive surveys. This is a systematically prepared form or
document with a set of questions deliberately designed to elicit response from respondents or
research informants for the purpose of collecting data or information. Questionnaires prepared
for both customers and employees of Dashen bank, the structure of the questions are those in
which some control or guidance is given for the answer. This is described as closed ended form

31
because the questions are basically short, requiring the respondent to provide a multiple choice
options from which the respondent selects the answer closer to their own opinion. The
respondent‘s choices are limited to the set of options provided.

3.5. Procedures of Data Collection

Methods of data collection procedures are in financial institution depend very much on the nature
of the topic of research objective and scope of the study. Availability of finance, time
accessibility and facilities also influence the selection of the method to be used for data
collection. However, in the present study it is self that any single method is bound to have only a
limited relevance in meeting the overall objectives of the project; hence different tools shall be
used to collect the data so as to develop a near accurate understanding of the topic of research.
The main tool of data collection is the questioner schedule used to collect data from employees
and customers of Dashen bank, and schedules will be pre-tested. After that the interview
schedule is standardized and finalized. The interview schedules are containing mostly close
ended questions though same open-ended questions shall also be included. Sample selection is
both Random and non- Random sampling techniques. Simple random sample selections is to
select branches whereas within the branch any employees who are a target population and
customers who is active , literate, e- banking user and customers of dashen bank.,

3.6. Methods of Data Collection

Data is collected through preparing questioners for target groups for dashen bank employees and
customers by researcher and filling of pre-coded questionnaires by respondent. The respondents
will be filling the questionnaires‘ using a pre- tested questioner‘s. Restructuring is done using
sufficient number of non-sample respondent in order to suitably modify the questions for smooth
administration. Qualitative data collection also collected through observation and discussion with
the target group and individuals formally and informally to develop constructs of the concept to
strengthen the Qualitative data tell the point of saturation and the feelings of employees and
customers. To conduct this study both primary and secondary data are used. Data‘s related with
bank information and literature using secondary data was collected from books, articles, websites
and reports of the bank. These data helped in to introducing the concept of e-banking, the
theoretical framework designed for the study, implied the research gap existed etc.

32
3.7. Data analysis technique
This study employed a descriptive research design which is preferred for the data analysis is
descriptive statistics. Data is analyzed using different Qualitative statistical procedures and
methods. The statically tools that is used to analyze the data includes simple descriptive
statistics, Such as frequency, mean, table pie chart, graph and percentage. Based on results of
Qualitative data analyzed and upon articulation of various ideas and opinion from employees and
give appropriate conclusion and recommendation was drawn. The Qualitative data partly
analyzed on spot during data collection not to lose fresh memory and to be able to identify the
gaps to be covered through subsequent data collection. The Quantitative data analysis was
carried out with different steps.
 First summarized on a data summery sheet

 Editing, coding and verification then subsequently entered into computer

 Finally, the data was analyzed with statistical procedures

3.8. Ethical Consideration

An obvious form of student misconduct is plagiarism. Copying or quoting directly from source
material without providing quotation marks or crediting the source is a fundamental issue of
ethical part of the researcher. A more indirect form, but equally improper is paraphrasing
material or using an idea that is not properly introduced and documented (i.e., no reference
citation provided) leads the quality of research as well as researcher. The Department of
Education requires following the student conduct and disciplining. But there is a lacking for
direct monitoring. Thus, it is not implemented yet. Therefore, strong recommendation has been
made for effective action against plagiarism and such unethical practices immediately. The
researcher was considering the following ethical values and approaches while collecting both
primary and secondary data for considering thesis. When preparing questioners the researcher
clearly explains the purpose of the questionnaire’s and the right to accept or refuses to participate
in any times of the research activity when collecting data. Show the purpose of the study and
clearly stating in the introduction of each questionnaires also the research was told that the
respondents were not written their name or any form of their identity about it.

33
 CHAPTER FOUR

4. Finding and Discussion

4.1. Introduction
This chapter examines the finding and discussions of gathered information from the field. Data
was collected through questionnaires, the findings from the questionnaires have been presented
through two parts, the first one is from staffs of dashen bank and the second part is customers of
dashen bank. In total three hundred twenty four questionnaires were administrated to the
respondents but, the valid filling of the questionnaires are three hundred only. For
customers of dashen bank one hundred sixty seven questionnaires‘ distributed and only one
hundred fifty only the valid one, for staffs one hundred fifty seven distributed and one hundred
fifty only collected.
A descriptive analysis was used to present and interpret the data collected on various variables of
challenge and prospects of e-banking. Frequent tables and graphs along with percentages
are employed to analyze the response of bank staffs and customers of dashen bank. Microsoft
excel package was used for tables, graphs, pie charts and word processing of the research
report.

4.2. Finding and Discussions from bank staffs

4.2.1. Demographic Characteristics

The general information such as, gender, age, educational qualifications, job position and work
Experience for staffs of Dashen bank. This background data are analyze and presented as
follows.
I. Gender profile of respondents
The frequency distribution of the gender profile of the respondents is given in table 4.1 below.
The table shows that 86 of the respondents, representing 57.3%are male and 64
respondents representing 42.7% are female. The table shows the gender distribution for male
staffs are larger the female staffs.

34
 4.1. Gender of the staff
Gender

Male female Total

Frequency 86 64 150
Percentage 57.3% 42 .7% 100 %

Source: own survey, 2021

II. Age profile of respondents
The frequency table of age profile of respondents is given below table 4.2 below. The
table shows that 8 respondents, representing 5.3% are their age under 20 years, 127
respondents, representing 84.70% are there age between 21- 30 years, 14
respondents ,representing 9.30% there are between 31-40years, 1 respondents, representing
0.7% are there age above 50 years. This indicates that 90% of the staff‘s age is lies up to
30 years shows the largest staff is very young and the age above 50 year is only 0.7% very
small old staff exist.
Table 4.2 age profile of the staff
Age
Under20years 21-30years 31-40years Above 50 years Total
Frequency 8 127 14 1 150
percentage 5.30% 84.0% 9.30% 0.70% 100%
Source: own survey, 2021
III. Educational qualification profile of the staff
The frequency table of educational qualification profile of the respondents is given table
4.3 below. The table shows that 9 respondents, representing 6% of the staff are diploma
or below educational profile, 134 respondents, representing 89% are degree holder, 7
respondents, representing from the total sample 5% are master‘s degree holder on the other hand
there is no PhD holders from the samples. The data shows the largest part of the respondent is
degree older, there is small number on the less educated and more educated in
academicals way. With the banks selection criteria minimum requirement on average fell
degree level.

35
Table 4.3 educational qualification profile of the staff
Educational qualification
Diploma or below Degree masters PHD total
Frequency 9 134 7 -
percentage 6% 89% 5% 100%
Source: own survey, 2021
IV. Work experience
The frequency table of work experience profile of the respondents is given table 4.4 below shows
that 70 respondents, representing 46.70% of the staff there experience are 0-2 years, 50
respondents, representing 33.30% of the sampled staff are there experience lies between
2-5 years, 17 respondents, representing 11.30% of the sampled staff their experience
between 5-10years and 13 respondents, representing 8.70% are their experience above 10 years.
To see the overall experience of the staff 80% of the staff‘s experience less than or equal
to 5 years, the remaining staff experience is above 5years. 17 respondents, representing 11.30%
of the sampled staff their experience between 5-10years and 13 respondents, representing
8.70% are their experience above 10 years. To see the overall experience of the staff
80% of the staff‘s experience less than or equal to 5 years, the remaining staff experience is
above 5years.
Table 4.4 Respondents‘ experience in the bank
Respondents' experience in the banking sector
Years of experience Frequency Percentage
0-2 years 70 46.70%
2-5 years 50 33.30%
5-10 years 17 11.30%
Above 10 years 13 8.70%
Total 150 100%
Source: own survey, 2021
V. Job position of the staff in the bank
From table 4.5 below shows that 35 respondents, representing 23.30% of the sampled
staff is junior officer, 90 respondents, represents 60% of the staff are customer service
officer, 12 respondents, represents 8% of the staff are senior customer service officer, 8

36
respondents represents 5% are manager customer service officer and 5 respondents from
the total sample covers 3.7% are managers and above in position. As data indicates the large
number of staff is customer service officer and junior officer they cover 83.30% from the total
sampled staff.
Table4.5 job position of the staff
Position of the respondents in bank
Position frequency Percentage
Junior officer 35 23.30%
Customer service officer 90 60%
Senior customer service officer 12 8%
Customer service manager 8 5%
Manager and above 5 3.70%
Total 150 100%
Source: own survey, 2021
The trained and competent staffs
The competent and capable of employees of dashen bank about e- banking in the view of the
staff‘s show in table 4.6 below. According to the data 52% of the staff agree the skill,
qualification and trained of the employees of dashen bank about electronic banking. On the other
hand only 3.3% staffs believe that the employees of dashen bank does not know how about
electronic banking or strongly disagree about the skill, and qualification of the employees.
From the total 23 respondents, represents 15.3% of the sampled data neutral about the skill and
qualification of employees about e-banking, 25 respondents, 19 respondents, represented from
the total sampled staffs 12.7% believe that dashen bank employees highly trained, skillful
and competent about electronic banking.
Table 4.6 well qualified and competent employees
The skill and qualification of employees in the view of the staffs
Strongly Agree Agree neutral disagree strongly disagree
Frequency 19 78 23 25 5
Percentage 12.70% 52% 15.30% 16.70% 3.30%
Source: own survey, 2021

37
The commonly used electronic banking service
In Ethiopia even if there is no high level of electronic banking service, there is a sign to
grow electronic banking service in recent time. The largest share of e-banking in Ethiopia
taken by dashen bank , from which dashen bank, there are more than four basic e-banking.
services give for the customers those are, ATM( Automatic Teller Machine), POS( Point
of Sales), internet banking and mobile banking with a combination of alert. As shown in table
4.7, the largest proportion of e-banking service in dashen bank is automatic teller machine rank
the first one, the second one is point of sale, the least service is given for internet
banking. The reason for ATM‘s large number of service provider is due to the pioneer,
e-banking instrument used in Ethiopian banking industry, as a result almost all customers of
the bank know about the purpose and function of ATM. Internet banking is the least due to low
computer user, unavailability of internet in most areas, and the banks lunched more recent times.
Table4.7 types of e-banking and there rank in dashen bank
Rank of electronic banking service in dashen bank
Types of e-banking First second third Forth
ATM 96% 4% - -
POS 2% 57% 39% 1%
Internet banking - 2% 12% 86%
Mobile banking 2% 37% 48% 13%
Source: own survey 2021
Banks responsibility to give information about e-banking
Dashen bank try‘s to give information, for customers about electronic means by so many ways,
in graph 4.1 shows the staff of dashen bank believe about information display for customers
accordingly. 36 respondents, represents 22.7% strongly agree the banks give good information
for customers about electronic banking, 73 respondents, represents 48.7% agree giving of
information about e-banking for customers, 11 respondents, represents 7.3% neutral the banks
aware for their customer. On the other hand some staffs says that there is no give any
information for customers even for staffs there is no any awareness about e-banking.
Accordingly 25 respondents, represent 16.7% disagree they believe that the bank is not give
awareness for customers, 7 respondents, represent 4.6% strongly disagree about awareness for
the customers of the bank.

38
 Graph 4.1 Aware of customers about e-banking
Source: own survey, 2021
The best means of aware of customer’s about e-banking
gives good information to customers about
E-banking number of responses

100
50
0 gives good information to
customers about e-banking
0 number of responses
strongly agree neutral disagree strongly
agree disagree

Dashen bank use so many advertising mechanisms to announce their product, and services for
his customer. In table 4.8 shows below that TV advertising is the best means of advertising
which covers 51.3% from the total advertising mechanism, 22 respondents, represent 14.7% says
brusher and pamphlets are the best means of advertising mechanism, 38 respondents, represent
25.3% believe that personal contact is the best means, only 2% is believe that sponsoring
is good mechanism to advertising electronic banking. 8 respondents, represent 5.4% believe sales
promotion is a good means to advertise. There is no respondent magazine is the best means
of advertising. As a result TV advertising is reach all societies easily and with least advertising
cost, and personal contact also give detail information about electronic banking but it is costly
and only takes place if the customers comes to the bank otherwise it is difficult.
Table 4.8 advertising mechanism
Advertising mechanism Frequency Percentage
TV advertising 77 51.30%
Brusher and pamphlets 22 14.70%
Personal contact 38 25.30%
Sponsoring 2 1.30%
Radio 3 2%
Magazine
Sale promotion 8 540.‫﮳‬%

39
Other
Source: own survey, 2021
Characteristics of customers to aware about e-banking
For applying of new technology in Ethiopia the users of technology did not accept actively rather
accept the technology slowly compared with the worlds.in dashen bank context the adoption of
electronic banking as follows the following. In table 4.9 shows that 81 respondents
represent 54% of the characteristics of customers are interested to use electronic banking
when after the employees of the bank giving awareness about e-banking. 18 respondents,
represent 12% says customers are reluctance when to give information about e-banking,
43 respondents, represent 28.7% says customers are indifference whatever the way to aware
about electronic banking there for there is a cost to aware customers. Only 8 respondents,
represent 5.3% says when to give awareness the customers are aggressively rejected
about electronic banking. Finally according to the data customers of dashen bank is
interested to use when new technology exist due that the banks invest his effort to aware
e-banking for customers by a best means of advertising without tired.
Table 4.9 characteristics of customers to aware e-banking
Characteristics of customer when aware about e-banking
characteristic's Frequency Percentage
Reluctance 18 12%
Interested to use 81 54%
Indifference 43 28.70%
Aggressively rejected 8 5.30%
Other characteristic's - -
Total 150 100%
Source: own survey, 2021

4.2.2. Attitudes of Staffs about E-banking

Staffs of Dashen bank believe that various agreement level with various attitudes of about e-
banking. In table 4.10 shows 103 respondents, represent 68.7% strongly agree with e-banking is
a best means to reduce customers overload, 41, respondent‘s, represent 27.3% agree about the
best means of reducing customer overload, 5(3.3%) respondents neutral and only 1 respondents

40
disagree about e-banking with related to reduction of customer overload. In general more
than 96% of the respondent accepts e-banking is a best means of reducing customer overload in
Dashen bank.
When to use e-banking especially mobile and internet banking transaction takes place other than
branches, it may in home, office and other places, for to that various respondents‘
answer as follows, 76 respondents, represent, 50.7% strongly agree about Banking
transactions can be performed from the comfort of the home or office or from the place
a customer‘s will be, 60(40%) respondents agree, 13(8.6%) neutral and only one
respondents disagree about e-banking Banking communication can be performed from the
comfort of the home or office or from the place a customer‘s will be.
Dashen bank design various strategies, and products to achieve his vision, more than 89% staffs
agree about e-banking is the best means with compared to traditional banking to achieve dashen
bank, s vision, 15 respondents, represent 10% neutral about E-banking is the best
means with compared to traditional banking to achieve dashen bank, s vision( world class bank
by the year 2025 g.c) and only one respondents disagree e-banking is better than traditional
banking to achieve dashen bank‘s vision.

41
Table 4.10 attitudes of staff about e-banking
Strongly Agree Agree Neutral Disagree Strongly
Attitude of staff's about e-banking
Freq‫﮳‬ % Freq‫﮳‬ % Freq‫﮳‬ % Freq‫﮳‬ % Freq‫﮳‬ %
E-banking in the best means to reduce customer 103 68.7% 41 27.3% 5 3.3% 1 0.7% -
over load‫﮳‬
Banking transaction can be performed from the 76 50.7% 60 40% 13 8.6% 1 0.7%
comfort of the home or office or from the place
a customer's wants to‫﮳‬
E-banking is the best means with compared to 104 69.3% 30 20% 15 10% 1 0.7%
traditional banking to achieve dashen bank¸s
vision‫﮳‬

Customer can be quick and continuous access 47 31.3% 63 42% 22 14.7% 16 10.7% 2 1.3%
to information‫﮳‬
It is difficult to be confident on the security of 20 13.3% 52 34.7% 33 22% 35 23.3% 10 67.‫﮳‬%
manmade technology for monetary activity
Application of new e-banking lead banks staff 13 8.7% 33 22% 41 27.-3% 41 27.3% 22 14.7%
to make more transaction error since it is new
for the staff‫﮳‬
Banking information technology will add new 65 43.3% 63 42% 9 6% 10 67‫﮳‬% 3 2%
responsibilities on employees‫﮳‬
Source: own survey, 2021

0
According to table 4.10 above shows, 47 respondents, represent 31.3% strongly agree
about Customers can be quick and continuous access to information using electronic
banking, 63 respondents, represent 42% agree e-banking for customers quick and
continuous access of information about their account, and bank information. 22(14.7%),
neutral Customers can be quick and continuous access to information, 16(10.7%) disagree and
2(1.3%) strongly disagree about Customers can be quick and continuous access to information.

Electronic banking rise questions related to security issue, various staffs says as follows
with related to security, 20 respondents, represent 13.3% strongly agree e-banking is difficult
to be confident on the security of manmade technology for monetary activity, 52(34.7%) agree
using e-banking technology is difficult to confident on the security, 30% of the respondents does
not accept electronic banking is difficult to be confident on the security of manmade technology
for monetary activity and the others neutral related to security issue.
Banking information technology will add new responsibilities on employees and create
banks staff to make more transaction error since it is new for the staff, in table 4.10
shows 65 respondents represent 43.3% strongly agree Banking information technology will
add new responsibilities on employees, 63(42%), 9(6%), 10(6.7%) and 3(2%) says agree,
neutral, disagree and strongly disagree respectively about new responsibility due to new e-
banking technology.
To summarize the attitude of staffs in table 4.11 below about e-banking, the critical points that
staffs are strongly good attitude about e-banking is the best means of reducing customer overload
in branches and head office with a mean 4.64( from 5) , next e-banking is the best means with
compared to traditional banking to achieve dashen banks vision with a mean 4.58, the
third good attitude is that Banking transactions can be performed from the comfort of the home
or office or from the place a customer wants to, and the least good attitudes of staffs
about electronic banking is Application of new e-banking lead banks staff to make more
transaction error since it is new for the staff this indicate that e-banking does not lead transaction
error for staffs. Overall the attitudes of staffs indicate that 3.97 from 5 shows greater than
average (3) concludes electronic banking is a good image in the mind of staffs of dashen bank.
Notes number of response, response measurement, given that accordingly strongly agree=5.
Agree=4, neutral=3, disagree=2, and strongly disagree=1

0
Table 4.11 mean of staffs attitude
Attitudes of staffs about e-banking Number of mean rank
response
1 Banking information technology will add new 150 4.18 4
responsibilities on employess‫﮳‬
2  e- banking is the best means to reduce customer over 150 4.64 1
load
3 ‫ ﮳‬banking transaction can be performed from the comfort of 150 4.41 3
the home or office or from the place a customer wants to
4 ‫ ﮳‬e-banking is the best means with compared to traditional 150 4.58 2
banking to achieve a dashen bank¸s vision
5 customer can be quick and continuous access to 150 3.91 5
information
6 it is difficult to be confident on the security of manmade 150 3.25 6
technology for monetary activity
7 application of new e-banking lead banks staff to make 150 2.83 7
more transaction error since it is new for the staff
The average mean of attitudes 150 3.97 -----
Own survey, 2021

4.2.3. Challenges to adopt e-banking for customers of Dashen bank of Ethiopia

There is a challenge with related to new information system or electronic banking adoption, table
4.12 below shows, as the following. According to the data the customers are not aware
of the different features of electronic banking service in dashen bank. 80 respondents,
represents, 53.3% agree with customers are lack of awareness on the benefits of
electronic banking, 49respondents, represents 32.7% from the total sample strongly agree
customers about lack of awareness on e-banking, 9 respondent(6%) neutral the awareness of the
customers about e-banking. On the other hand 8(5.3%) respondents disagree about customer‘s
lack of awareness about e-banking, 4 respondents, represents 2.7% strongly disagree about
lack awareness of customers for electronic banking.
The acceptance of new payment mechanism and technology in dashen bank by customers are as
follows express accordingly. 33 respondents, represents 22% strongly agree the resistance of

1
customers about new payment mechanism and technology, 51 respondents, represent34%
agree the resistance of customers about new payment mechanism. on the other way 37
respondents, represent 24.7% from the total data neutral about the acceptance and
resistance of customers about new payment mechanism and technology, 8 respondents,
represents5.3% disagree, 4 (2.7%) respondents strongly disagree about the resistance of
customers about the payment mechanism and technology. The new payment mechanism
and technology is for this paper ATM for withdraw, transfer and check balance, mobile and
internet banking is for transfer from one account to other account, sent remittance for the
other party, check balance and order check. POS used to purchase goods and services and other
purposes. To see the above means of payment mechanism and technology is resist by
customers, the data shows 56% of the respondents accept for the resistance of customer for new
technology.
Cyber security problems in dashen bank according to data states as follows. 52 respondents,
represents 35.7% agree the existence of cyber security problem, 43 respondents, represent
28.7% says there no information about the problem of cyber security issues problem( neutral),
33 respondents, represent 22% strongly agree the cyber security issues problem in dashen
bank. 18 respondents, represents 12% says disagree about cyber problem, 8 respondents,
represents5.3% strongly disagree about the problem of cyber problem in Dashen bank.
From the challenges electric interruption is one of a serious problem to smoothly running of e-
banking. According to data 74 respondents, represent 49.3% from the sample strongly
agree about the serious challenges of electric power interruption, for a day to day
operation related with electronic banking specially automatic power consumer such
as,ATM, and POS.51respondents, represent 34% agree the existence of electric power
interruption creates a serious problem for effectively implementation of electronic banking
service in dashen bank, 9 respondents, represent 6% neutral about the problem of electric power
interruption. 5.3% and 5.4% of the respondents dis agree and strongly disagree respectively
about the serious challenges of electric power for the adoption of electronic banking service. As
shown the below table 4.12, High installations cost of technology for e-banking are agreed
by 50 respondents, represent 33.3%from total data, 46 respondents , represent 30.7% strongly
agree about high cost of installation for e-banking technology, such as, purchase ATM

2
machine, POS and other materials and techniques support for implementation of electronic
banking.

3
 Table 4.12 challenges to adopt e-banking
Strongly agree Agree Neutral Disagree Strongly
Challenge on adoption of e-banking disagree
Freq % Freq % Freq % Freq % Ferq %
Customer are lack of awareness on the benefits of e- 49 32.7% 80 53.3% 9 6% 8 53.3% 4 2.7%
banking
Customer of Dashen bank are resistant to new payment 33 22% 51 34% 37 24.7% 25 16.7% 4 2.7%
mechanism and technology.
Cyber security issues problem. 29 19.3% 52 34.7% 43 28.7% 18 12% 8 5.3%
Electric interruption is a serious problem to smoothly 74 49.3% 51 34% 9 6% 8 53% 8 5.4%
running of e-banking.
High installations cost of technology for e-banking. 46 30.7% 50 33.3% 34 22.7% 9 6% 11 7.3%
Network failures are serious problem to smoothly 90 60% 43 287% 8 53% 9 6%
running e-banking.
Top management negative attitude towards new 9 6% 26 17.3% 36 24% 39 26% 40 26.7
technology. %
Lack of suitable legal and regulatory framework for 31 20.7% 48 32% 38 25.3% 22 1.7% 11 7.3
electronic service. %
Most users of banking service are not literate enough to 47 31.3% 64 42.7% 18 12% 14 9.3% 7 46.7
understand the usage of e-banking. %
Source: own survey, 2021

0
 34(22.7%) respondents neutral about the cost of installation for e-banking, 9 respondents
represents 6% disagree the cost assonated with installation of e-banking and 11(7.3%)
respondents strongly dis agree the installation cost of technology for e-banking.
To summarize the challenges of e-banking in the view staffs accordingly below in table
4.13. The Network failures are serious problem to smoothly running e- banking highest
compared to other challenges on average 4.43 (5), the next serious challenge according to
respondents Electric interruptions are a serious problem to smoothly running e- banking
with mean 4.17 , the third related with other challenges Customers are Lack of awareness on
the benefits of e-banking. According to data top managements are not negative attitude
related with electronic banking; this shows technology is highly supported by top
management. Notes number of response, response measurement, given that accordingly
strongly agree=5. Agree=4, neutral=3, disagree=2, and strongly disagree=1
Table 4.13 Challenges of e-banking for staffs of Dashen bank
Challenge of e-banking for staffs of Dashen bank Number of Mean Rank
respondents
1. Customers are Lack of awareness on the benefits of e- 150 4. 08 3
banking
2. Customers of Dashen bank are resistant to new payment 150 3.56 6
mechanisms and technologies.
3. Cyber security issues problem 150 3.51 7
4. Electric interruptions are a serious problem to smoothly 150 4.17 2
running e-banking.
5. High installation cost of technology for e-banking 150 3.74 4
6. Network failures are serious problem to smoothly running 150 4.43 1
e- Banking.
7. Top managements negative attitude towards new 150 2.50 9
technology.
8. Lack of suitable legal and regulatory framework for 150 3.44 8
electronic service.
9. Most users of banking service are not literate enough to 150 3.73 5
understand the usage of e-banking service.
Own survey, 2021

0
The overall performance of dashen bank about e-banking is shown below graph 4.2 shows
below. According to the data 66 respondents, represents 44% of the respondents their attitude
about performance of electronic banking in dashen bank is good, 48 respondents,
represents32% from total sample says the performance of e-banking is very good, 20
respondents, represent 13.3% from the total sample of the staff believe that the performance of e-
banking in dashen bank is moderate, 9 respondents, represent 6% says the performance of e-
banking is poor on the other hand 7 respondents , represent 4.7% believe that the performance of
e- banking in dashen bank is excellent. In general from the data the performance of the bank with
related to electronic banking is good.

Percentage
60.00%
40.00%
20.00%
percentage
0.00%

exellent very ggod good moderate poor

Source: own survey, 2021

4.3. Finding and Discussions from bank customers

4.3.1. Demographic information of customers

The general information‘s about customers of Dashen bank include: gender, age, educational
qualification, and their job are describe, analyze and presented as follows.
Pie chart 4.1 gender of the customers

Number of
respondents
Female
42% Male
42% 58%

Source: own survey, 2021

1
I. Gender of customers
According to the data 87 respondents, represent 58% of the sampled customers are male and the
remaining 63(42%) are female. When to see proportion of male and female, male
respondents are large in number this shows a largest proportion of customers Dashen bank is
male and electronic banking service users are also males are cover the largest proportion
II. Age profile of customers
According to table 4.14 124 respondents, represent 82.7% their age is below or equal to 30
years, 22 respondents, represent 14.7% of the sampled respondents age is between 31-40
years, only fore respondents represent 2.6% are there age is between 41-50 and there is
no respondent as their age is above 50 years. As a result more than 97.4% of the
respondent‘s age is below or equal to 40 years.
Table 4.14. age profile o of customers
Age Frequency Percentage
Below or equal to 30 124 82.70%
31-40 years 22 14.7%
41-50 years 4 2.6%
51-60 years ----- ------
Above 60 years ----- -----
150
Source: own survey, 2021
III. Profile of educational level of customers
The level educational background of customers mentioned in graph 4.3 below. According to the
respondent from 150 respondents, 5 respondents, represent 3.3% their educational qualification
is secondary or less, 56 respondents, represent 37.3% are their educational level is diploma, 87
respondents, represent 58% of the respondent degree holder, 2 respondents, represent 1.4% only
masters holder, unfortunately there is no PhD holder from 150 respondents. This data shows that
the largest proportion of the respondent is means level of educational background that is degree.

2
Graph 4.3 level of educational background of customers

Chart Title
high school or
below
deploma

Source: own survey, 2021

IV. Profile of customers job
Customers of Dashen bank involved in various work environment and jobs in table 4.15
below shows, the largest proportion of customers involved in government employment, 126
respondents, represent 84% government employee, 5 respondents, represent3.3% work in
private organization, 19 respondents, represent 12.7% work their own job, there is no
customers without job.
Table 4.15 profile of customers
Job Frequency Percentage

government employee 126 84%

private employee
self-employee(own job) 5
19 3.30%
12.70%
no job ----------------- ---------------

Total 150 100%

3
 Source: own survey, 2021

Years of e-banking service provided by customers

E-banking technology in Ethiopia is a recent phenomenon, except ATM introduce in 2001 by a
leading government owned dashen bank, the other e- banking technology is start operation in
recent time. According to table 4.16 below no respondent not use e-banking, even if there is
not effective knowledge about e-banking, 55 respondents, represent 36.7% are served less
than one year, 56 respondents, and represent 37.3% served 1-3years, only 39 respondents,
represent 26% use e–banking effectively more than three years.

Table 4.16 years of service

years of service in dashen bank frequency Percentage
still not use 0

55 32%
less than 1 years
1-3 years 56 35.30%
more than 3 years 39 26%
source:own survey¸2021
Customers of dashen bank sometimes customers of other private and government bank customer
in pie chart 4.2 shows below. 39 respondents represent 26% open account and e-banking service
other than dashen bank and 111 respondents, represent74% are not account in other banks.
Pie chart4.2 serves other than dashen bank

4
 number of respondents
yes, 39, 26%

no, 111, 74%

Source: own survey, 2021

Electronic service access gain in dashen bank by customers
In dashen bank more than four e-banking package services lounged those are: mobile banking,
ATM( Automatic teller machine), POS( Point of sale), internet banking, internet banking and
alert, here if the customers use either mobile banking or internet banking alert is a pre-condition
to serve those products. There are 126 respondents, represent 84% are users of ATM, 19
respondents, represent 12.7% serve by POS, 34 respondents, represent 22.7% moving their
account using mobile banking with a connection of alert, 24 respondents , represent 16%
operate using internet banking. To conclude results of below customer’s response, ATM users
are large in number, because ATM is a pioneer banking product in Ethiopia and customers are
adopt the purpose, function and service of ATM. While POS users are must be a customer of
ATM, because POS, dose not works without ATM card.
Table 4.17 e-banking service access in Dashen bank
TYPES OF E-BANKING NUMBER OF USERS PERCENTAGE

ATM 126 84%

POS 19 12.70%
mobile banking 34 22.70%
internet banking 24 16 24 16%
Alert 36 28%
Source: own survey, 2021
Convenient place of e-banking service specially ATM and POS in the view of customers
In Ethiopia there is a number of ATM and POS machine exist in various shops, mall,
government organization, private organization, hotels, service areas, industry areas,
petroleum service areas, and branches. In graph 4.3 below see the attitudes of customers about
the existence of POS and ATM in conveniences place. According to the data 39 respondents,
represent 26% strongly agree the existence of POS and ATM at correct place, 82 respondents,
represent 54.7% agree the existence of e-banking machines, five customers neutral for the
convenience places of ATM and POS, on the other hand 24 respondents, represent 16% disagree
5
the convenience place of ATM and POS machine. The overall results of below data shows
80.7% of the respondents accept the setting of e- banking machine at achievability places, this
indicate planting of ATM and POS are highly studied.
Graph 4.3 levels of agreement for location of ATM and POS

Number of
100 resposes
50
0 number of resposes

Source: own survey, 2021

The best means of aware of customer’s about e-banking
As we know Dashen bank use so many advertising mechanisms to announce his product, and
services for his customer. The customers also think and choice the best means of knowing new
information about electronic banking in table 4.18 below shows, accordingly. From total
respondents 83 respondents, represent 55.3% are TV advertising is the best means of advertising,
24 respondents, represent 16% agree that brusher and pamphlet are best means of
announcing for customers, 36 respondents, represent 24% agree that direct contact with bankers
are best means of knowing e-banking, 7 respondents, represent4.7% believe that hearing
information from colleagues is a best means,17 respondents, represent 11.3% says radio is a best
instrument to announce about e-banking, 2 respondents, represents 1.4% believe that sales
promotion is a best means, 12 respondents, represent 8%magazines and news are good
for announcing about e-banking.
Table 4.18 the best means of advertising

Means of Advertising number of response Percentage

TV advertising 83 55.3%
Brusher and Pamphlet 24 16%
direct contact with bankers 36 24%
hearing from your colleague 7 4.7%
Radio 17 11.3%

6
Sales promotion 2 1.4%
Magazines and news 12 8%
Source: own survey, 2021

4.3.2. Attitudes of customers about e-banking

The attitude of customers about e-banking is different with varies condition, at various
environment, in table 4.19 below shows, in the following way. 64 respondents, represent 42.7%
strongly agree about Attitudes of electronic banking technology supports collaboration and
sharing of information, 64 respondents, represent 42.7% also agree with e-banking
support collaboration and sharing of information, 5 respondents, represent 3.3%neutral the
important of -banking for sharing information , seventeen respondents disagree the
important of sharing information and there is no respondents strongly disagree about e-
banking for support collaboration and sharing of information.
Attitudes related to e-banking service for better managing of financial transaction shows
34 respondents, represent 42% strongly agree for better management of financial
transaction, 69(46%) agree, 10 respondents represent 6.7% neutral for the purpose of
managing financial transaction using e-banking, 8 respondents, represent 5.3% disagree about e-
banking service for financial transaction and there is no customers strongly disagree about the
service of e-banking for managing financial transaction.
E-banking technology helps customer for quickly access account, reduce time spending in
the bank and other services, according to data in table 4.17, seventy two respondents, represent,
48% are strongly agree about quick access of account balance and other account related
operation, 56 respondents, represent 37.4% agree about quick access of account, 12 respondents,
represent 8% neutral about quick access of account using e-banking, only 10 respondents did not
accept the functions of e-banking for quick access of account. The times spending in bank is a
serious issue for some customers for other it is not a matter, but the existence and launching e-
banking there is rest for customers form different dimension one is reduce time spending in the
ban. In table 4.17 shows 68 respondents, represent 45.3% strongly agree e-banking reduce
time spending,48 respondents, represent 32% agree about reduction of time to use
electronic banking, only22 respondents represent 14.7% did not accept the time and
space reduction through using e-banking. In general more than 77% agree electronic banking
is a best means to reduce time and space spending, therefore dashen bank tries to expand e-

7
banking service in order to satisfy his customer and more smooth relation with customers in the
future.
Table 4.19 attitudes of customers about e-banking
Strongly Agree Neutral Disagree Strongly
agree disagree
Attitudes of Freq % Freq % Ferq % Freq % Freq %
customers
Electronic banking 64 42.7% 64 42.7% 5 3.3% 17 11.3% ---- ----
technology support
collaboration and
sharing of
information.
E –banking services 63 42% 69 46% 10 6.7% 8 5.3% ---- ----
help me to better
manage finance
transactions
I can quick and 72 48% 56 37.4% 12 8% 5 3.3% 5 3.3%
continuous access to
information about my
account
E-banking technology 68 45.3% 48 32% 12 8% 15 10% 7 4.7%
eliminates times and
space constraint.
Source: own survey, 2021
Summarization of attitudes of customers about e-banking positive attitude almost in all existed
parameters, with this e –banking services helps to customers for better manage finance
transactions, the next very good attitude is can quick and continuous access to information about
my account, and the least is e-banking technology eliminates times and space constraint.
In general customers of Dashen bank positive attitude for adoption of electronic were banking
for further development of banking industry. According to data the average respondents attitude

8
is 4.29 this show far greater that an average 2.5 these leads to conclude almost all customers are
strong positive attitude about Dashen bank electronic banking lunching.
Notes number of response, response measurement, given that accordingly strongly
agree=5. Agree=4, neutral=3, disagree=2, and strongly disagree=1.
Table 4.20 Summarized Attitudes of customers about e-banking
Attitudes of customers about e-banking Number of mean Rank
responses
1. Electronic banking technology support collaboration and 150 4.17 3
sharing of information.
2. E –banking services help me to better manage finance 150 4.71 1
transactions
3. I can quick and continuous access to information 150 4.23 2
about my account.
4. E-banking technology eliminates times and space 150 4.03 4
constraint.
Average attitudes or means 150 4.29
Source: own survey, 2021

4.3.3 Challenges of e-banking for customers of Dashen bank

Innovation and adopting of new technology may be creates security problem, in table 4.21
show,29 respondents, represent19.3% the sample strongly agree Security is a serious problem
when to use e-banking, 60 respondents, represent 40% agrees security is serious problem
to use e-banking, 22(14.7%) neutral about security, 32 respondents disagree security
problem, rather electronic banking leads more personalize and easily control of account
and bank information without risk, 22(14.7%) believes neutral about security, 39(26%)
respondents did not accept the existence of security problem. There is Cost using electronic
banking services charges especially ATM (automatic Teller machine) according to
table4.18 below 24 respondents, represent 16% strongly agree with Electronic banking cost
of service charge is high especially ATM, 32 respondents, represent 21.3% agree costs of
e-banking service charge,22(14.7%) neutral about costs of e-banking service charge, 49
respondents, represent 32.7% disagree costs of e-banking service charge especially ATM,
and 23(15.3%) respondents strongly disagree costs of e-banking. The other serious problem

9
for challenging of e-banking is electric interruption and network failures according to table
4.21 below data 39 (26%) and77 (51.3%) strongly agree about electric interruption and network
failure respectively a serious problem to use electronic banking, 64 (42.7%) and 45(30%)
agrees the problem of electric and network failure respectively. Obstacle of language is a
serious problem for customers of Dashen bank, according to table 4.21 the data shows 20
respondents, represent13.3% strongly agree about problems of langue to use e-banking, 46
respondents, represent 30.7% says Languages are an obstacle to use e-banking due to that the
banks try to localize the language, especially for internet and mobile banking, 27 respondents
neutral the matter of language for serving electronic banking, the remaining 38% of the
respondents does not accept language is a serious problem for serving e-banking.

10
 Table 4.21 Challenges to adopt e-banking
Challenges to adopt e-banking Strongly agree Agree Disagree Strongly disagree
Neutral
Freq % Freq % Freq % Freq % Freq %
Security is a serious problem when 29 19.3% 60 40% 22 14.7% 32 21.3% 7 4.7%
to use e-banking
Electronic banking cost of service 24 16% 32 21.3% 22 14.7% 49 32.7% 23 15.3%
charge high especially ATM
Lack of suitable, legal and regulatory 12 8% 59 39.3% 47 31.3% 20 13.4% 12 8%
framework for electronics services.
Electric interruptions are a serious 39 26% 64 42.7% 27 18% 20 13.3% ---
problem to use e-banking.
The dynamic changes of information 39 26% 61 40.7% 15 10% 27 18% 8 5.3%
technology are serious challenge for
understanding e-banking
Network failures are serious problem 77 51.3% 45 30% 16 10.7% --- ---- 12 8%
to use e- banking.
Languages are an obstacle to use e- 13.3% 46 30.7% 27 18% 41 27.3%
banking 20 16 10.7%
Inadequate banks staff skill exist 24 16% 56 37.3% 34 26.7 17 11.3 19 2%
in dashen bank about-banking % %
Source: own survey, 2021

0
Skills and knowhow of a staff is a big matter for effective adoption of e-banking in Dashen bank,
according to table 4.21 above 24 respondents represent, 16 % strongly agree inadequate skill of
staff exist in Dashen bank, 56 respondents, represent 37.3% agree Inadequate banks staff skill
exist in Dashen bank about-banking . This shows really there is a serious problem staffs
about the skill in Dashen bank and knowhow about e-banking, therefore the bank try to train,
educate both in job and off job training for his staffs.

To summarize the challenges of e-banking for customers in table 4.22 below shows that
all challenges are serious except service cost of e-banking especially ATM, but it also
above average means greater than 2.5. Network failures are the most serious challenge for
customers to use e-banking, the next serious challenge is electric interruptions are a serious
problem to use e-banking.

Notes number of response, response measurement, given that accordingly strongly agree=5.
Agree=4, neutral=3, disagree=2, and strongly disagree=1.

Table 4.22 means of challenges of e-banking for customers

Challenges of e-banking Number of Mean Rank

respondents

1. Security is a serious problem when to use e-banking. 150 3.48% 4

2. e-baking‘s Cost of service charge is high especially 150 2.9% 8

ATM.

3. Lack of suitable legal and regulatory framework for 150 3.26% 6

electronics services.

4. Electric interruptions are a serious problem to use e- 150 3.81% 2

banking.

5. The dynamic change in information technology are a 150 3.64% 3

serious challenge for understanding about e-banking

6. Network failures are ser5ious problem to use e- banking. 150 4.17% 1

7. Languages are an obstacle to use e-banking 150 3.09% 7

0
8. Inadequate banks staff skill exist in Dashen bank 150 3.33% 5
about e-banking

Source: own survey, 2021

Overall performance Dashen bank in the view of customers. The overall performance e- banking
in Dashen bank in the view of customers sees in graph 4.4 below. According to the data 24
respondents, represent16% believes excellent the performance of e-banking in Dashen bank, 75
respondents, represent 50% agree the performance of e-banking is very good, 48 respondents,
represent 32 % believes good about performance e-banking in Dashen bank, only 3 respondents
believe the performance of electronic banking Dashen bank is poor. In general 98% of the
respondents agree performance of e-banking in Dashen bank is good and above, due to this the
banks try to expand more services, competitive with other banks and achieve the banks vision
without any failure.

Graph 4.4 overall performance of Dashen bank according to customers

Number of respondents
Number of respondents
75
48
24
3

exellent verygood good poor

Source: own survey, 2021

Summary of findings and discussion

Electronic banking is considered as the key driving force around the world. Due to a pervasive
and steadily growth of the 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. In the Ethiopia banking system is very
far back compared to the rest of the world. But recently Ethiopians banking industry flourishes
and start to use electronic banking. In the case of dashen bank the banks try to introduce

1
themselves in new technologies and electronic banking system form traditional banking
environment. These study focus as above as follows, attitudes of customers and staffs of the bank
about e-banking, challenges of e-banking, the best means of advertising, opportunities of e-
banking, demographic character of the respondents and the overall performance. According to
the data various variables show that electronic banking is a good means to smooth running and
performing of banking business and achievement of the vision of the bank.

Chapter Five

2
5. Conclusion and Recommendation

The e-banking revolution has fundamentally changed the business of banking by scaling borders
and bringing about new opportunities. in Ethiopia the banking industry Is underdeveloped and
therefore there is an all immediate need to board on capacity structure preparations and
modernize the banking system by employing the state of the art technology and internalizing new
banking technology as being used anywhere in the world. However, now in Ethiopia banks have
rapidly introduced and innovative of e- banking technologies and e-banking services in recent
years. Almost all banks have invested in expanding and improving the IT systems and a number
of new e-banking services have been developed.

All major banks have declared e-banking as one of the core strategies for the future
developments. At the same time, e-banking acceptance depends probably on bank service
quality, customer preferences and satisfaction determine. In the case of commercial bank of
Ethiopia electronic banking is underdeveloped, but the growing rate is very fast compared to
previous times. Dashen bank now providing the following e-banking service, those are: ATM
(Automatic Teller Machine), POS (Point of Sale) machine, internet banking and mobile banking.
From above e-banking lists ATM is used in Dashen bank for the past ten years 2005G.C even if
launched in 2001. Internet and mobile banking is recent history for Dashen bank and also for
other Dashen bank.

5.1. Conclusions
Various papers, articles, and business news says various conclusion about e-banking. Various
opportunists and challenges also exist to adopt for new e-banking technologies.

According to the previous data the researcher conclude in the following way:

5.1.1 Overall E-banking performance in Dashen bank of Ethiopia

Dashen bank is one of the fastest growing of capital and profitability of financial institution in
Ethiopia. For which the one pillar is introducing themselves for new technologies and payment
mechanism. Attitudes of staffs and customers of Dashen bank accept the overall performance of
e-banking is in good health due to: existence of e-payment instruments such as ATM and POS
are at convenience place, and number of e-banking services is large in number compared with

3
other Dashen banks. Customers of Dashen good attitude about e–banking services help to better
manage finance transactions, can quick and continuous access to information about their account,
and Electronic banking technology support collaboration and sharing of information.

5.1.2 Prospects of e-banking

Due to innovation and adoption of new technology creates an opportunity for banking industry.
In commercial bank of Ethiopia electronic banking give various opportunities for customer and
employees of the bank. The following lists are important points of prospects of e-banking from
pervious finding and discussion parts.

 Banking transactions can be performed from the comfort of the home or office or from
the place a customer‘s wants to. When Customers of Dashen bank use e- banking
technology, especially internet and mobile banking, they control their account, transfer
remittance, and find location of ATM, stop payment order, get daily exchange rate and
other bank and banking information can be served 24 hours a day. If use ATM and
POS¸a service provide reach around a machine and give service whatever the time
including holiday and night without any restriction can be served.
 E-banking is the best means to reduce customer loading burden. Electronic banking un
substitutable role for reducing customer overload in branches, when educated and e-
banking users are served using e-banking technology, the only comer in branch is only
uneducated, serves can‘t be given by e-banking and those who are not use e-banking.
 E-banking technology helps customer for quickly access account, reduces time spending
in the bank and other services. Customers who Users of e-banking reduce time that spend
in branch, because he/she use e-banking does not need to come branches. Easily access
account without support of banker simply, the customer consider the bank exist in your
mobile or ATM card.
 E-banking service is better managing of financial transaction. Customers can be check
their history of different accounts and do a ―what-if‖ analysis on their own mobile
(computer) or ATM card before affecting any transaction on the bank. This will lead to
better funds management.

4
5.1.3. Challenges of e-banking
There are a lot of challenges discussed in the previous chapter are related with e-banking,
those are:
 Customers of Dashen bank are resistant to new payment mechanism and technology. The
reason for resistance of new technology is unknown fear in the minds of the customers
this leads a big challenge to penetrate the market through electronic banking in Ethiopia.
 Electric interruption is a serious problem to smoothly running of e-banking. Due
interruption of electric power, hinder the smooth function e-banking for example, ATM
and POS does not work when there is no electric power supply, even mobile and internet
banking also slow or does not work effectively.
 Network failures are serious problem to smoothly running of e-banking. One of the
serious challenge for Dashen bank‘s daily activities of e-banking service and traditional
banking is network failure, due network interruption customers are not interested to use
e-banking rather they hold their cash on hand, especially at the time of serious cash needs
the customers does not confidence on network. Due to that customer‘s choice the best
means of accessing cash is by holding in pocket or on hands.
 Languages are an obstacle to use electronic-banking. Services provide especially mobile
banking and internet on English is a serious problem for customers. Customers who are
not more educated (high school or below) not smoothly running using website and even
in a simple dial up of *889# for farther as much as they need all services of electronic
banking.
 Inadequate banks staff skill exists in dashen bank about-banking. When customers ask
staffs about e-banking the staff tells about electronic banking function and benefits well,
but actually the staffs are not know how it runs especially about services of internet
banking. Challenges of e-banking

5.2. Recommendation
Electronic -banking service is a new financial progression in Ethiopia, but it‘s an key
issue, because it has a great impact on the whole banking activity, at the same time it‘s
difficult and need a lot of efforts to be adopted and accepted by customers and staffs of
dashen bank, so it need a lot of efforts to achieve something.

5
 The researcher recommends in the following way:
 Consider the capacities and skills, know-hows of the customers about e-banking,
especially languages. Languages are a basic instrument to understand everything, there
for the bank try to localize the language for internet banking and mobile banking in order
to understand more about e-banking and function well.
 Choice the best means of advertising mechanism for the customers, consider those who
live in city and those who live in rural area. More focus on the content of word, and
ways of advertising is a sensitive issue for customers. The bank tries to reduce the gap
between what the bank says and what actually done about advertising.
 Control the interruption of electric power and network failure even if those are external
factor, the bank try to choice other option in order to keep the interests of his customer.
 The bank instruct his employees about electronic banking in detail, especially recently
lunched products such as , internet banking, and mobile banking , how it work in website
and a dial up mechanism, when it is crucial and better than traditional banking and on
other issues.
 To exploit the benefit of E-banking system, banking activity operated in Dashen bank
needs to familiarize their customers with the processes and benefits of the system.
 Educate customers in detail about E-banking technology helps customer for quickly
access account, reduces time spending in the bank and other services. Customers who
Users of e-banking reduce time that spend in branch, because he/she use e-banking does
not need to come branches.

6
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Where is your instrument? Add here as appendix

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