i

ASSESSMENT OF THE CHALLENGES OF E-BANKING (A CASE

STUDY OF DASHEN BANK)
A RESEARCH PAPER SUBMITED FOR THE REQUIRMENT OF
PARTIAL FULFILMENT OF BACHILER OF ARTS (BA) DEGREE
OF BUSINESS MANAGEMENT'S
PREPARED by:
GROUP NAME Id No
1.DEGINET PETIROS..............0120/18
2.ABIRHAM DEBANCHO................0110/18
3.AYENEW TEGAGN …………….
4.ABEJA ASAFA …….. .............0150/18

ADVISOR------

RIFT VALLEY UNIVERSITY BUSINESS MANAGEMENT .

April, 2021

ADDIS ABEBA, ETHIOPIA

ACKNOWLEDGEMENT

First of all ,we want to like thanks almighty GOD and A.A Kality Branch
Manager of Dashen Bank for helping us accomplishing our study.Next,we
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would like to express our gratitude to our advisor provide us continues

advice in our research.
We would also warmly thanks Kality branch Managers and
employees.Lastbutlist,we would like to pass

ABSTRACT
This study was conducted to assess the challenges of E-banking in case
study of dashen bank.

The population of this study were consist 81 employees of the selected

branch and the users(customers) of E-banking in this branch. and
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interpretation the conclusions are made on the assessment of challenges

ande-banking of Dashen bank.
For the purpose of makin gour study on an efficient and effective manner in
line with the research teams time and resource,the researcher team was
conduct the stud yon 11 representative respondent they were selected from
each selected branch, they were from E-banking service department and IT
department as well and 16 customers whouse the E-banking service.

We were using both primary and secondary data. The primary data was
collected through using direct personal interview and with structured
questionnaires which contain question relating to different dimension of E-
banking challenges and preference. The type of questionnaires includes both
open-ended,as well as closed end dichotomies and also multiple choice. The
secondary data was collected from different published reports,articlesone-
banking,priors’research,journal’s,internets.

ACRONYMSANDABBRIVATION
ATM...............Automatic Teller Machine
IT……………Information Technology
GAAP………Generally Accepted Accounting principle
ACSI................Addis Credit And Saving Institution
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Table of contents
ACKNOWLEDGEMENT………………………………………………..ii

ABSTRACT ……………………………………………………………...iii

CHAPTER ONE.............................................................................................1
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1. INTRODUCTION......................................................................................1

1.1 Back ground of the study..........................................................................1

1.2. Background of the Organization..............................................................3

1.3. Statement of the problem.........................................................................4

1.4 Objective of the study...............................................................................5

1.5. Significant of the study............................................................................6

1.6. Scope of the Study...................................................................................6

1.7 Organization of the study..........................................................................7

1.8 Limitation of the Study...........................................................................7

CHAPTER TWO............................................................................................8

2.LITERATURE REVIEW............................................................................8
2.1.1Introduction to E-banking.......................................................................8

2.1.2 Definition of E-Banking.........................................................................9

2.1.3 Evolution of E-Banking.......................................................................10

2.1.4 E-Banking Channels:...........................................................................11

2.1.5 Benefit of E-banking............................................................................15

2.1.6. Challenges of E-banking.....................................................................19

2.1.7 E-Banking Fraud..................................................................................21

2.1.8 E-Banking Risks...................................................................................21

CHAPTER THREE.......................................................................................24

3. RESEARCH METHODOLOGY.............................................................24

3.1 Research design.......................................................................................24

3.2 Population...............................................................................................24
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3.3 Sample size and sampling techniques.....................................................24

3.4. Source of data and collection.................................................................25

3.5 Method of data processing and analysis..............................................25

CHAPTER FOUR.......................................................................................26

4.Data Analysis and Interpretation...........................................................26

4. Introduction.............................................................................................26

4.1. Demographic characteristic of selected employees...........................26

4.2. Factor determining adoption of E-banking............................................28

4.3. Challenge of using E-banking System...................................................34

4.4. Benefit of Using E-banking system.......................................................36

CHAPTER FIVE...........................................................................................51

5. Conclusion and Recommendation.............................................................48

5.1 Conclusion...............................................................................................48

5.2 Recommendation.....................................................................................49

Reference.......................................................................................................50

QUESTIONNAIRES....................................................................................52

List of Tables

Table 4.1: Position of respondents…………………….……………….…26

Table 4.2: Distribution of sex………………………..……………………26

Table 4.3 Respondents educational background……………………….......27

Table 4.4 How long have you been working current position.....................27
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Table 4.6 Types of E-banking facilities primarily used................................29

Table 4.6 Infrastructural problem on effectiveness on employee´s job……29

Table 4.8 Role on customer awareness on E-Banking service by using

marketing activities………………………………………………………...30

Table 4.9 The existing network provides by Ethio-Telecom affects E-

services….31

Table Factors influencing adoption of E-baking in your branch IT..............31

Table Lack of computer literacy influencing customer E-banking

adoption……………………………………………………………………32

Table 4.13 the attitude of society affect the adoption of E-banking………33

Table 4.15You have adequate skill to run the

systems…………………………………………………………………….34

Table 4.16 Level of security

risk………………………………………………………………………….35

Table 4.17 Level of legal

risk…………………………………………………………………………36

Table 4.18 Increased

revenue……………………………………………………………………37

Table 4.18 Demographic characteristic of selected

customer……………………………………………………………………40

Table 4.20 Educational back

ground…………………………………………………………………..…40
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Table 4.21Shows that majority

58.33%...........................................................................................................41

Table 4.25 Facilities affects your saving habits negatively………………..43

Table 4.27 the transacting through e-banking facilities is convenient and

safe?...............................................................................................................44
Table 4.28 benefited by using E-banking facilities………………………..45
Table 4.29 level of satisfaction of e-banking facilities you use……………46

Table 4.31 feeling about the E-banking current service in Dashen Bank?...47

CHAPTER ONE
1. INTRODUCTION
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1.1 Back ground of the study

The rapidly growing ICT is knocking the front door of every organization in
the world, where Ethiopian banks would never be exceptional. In the face of
rapid expansion of E-payment systems throughout the developed and the
developing world, Ethiopian’s financial sector cannot remain an exception in
expanding the use of the system (Gardachew 2010, p.2). Technological
innovations play a crucial role in banking industry by creating value for
banks and customers, that it enables customers to perform banking
transactions without visiting a brick and mortar banking system. On the
other hand, E-banking has enabled banking institutions to compete more
effectively in the global environment by extending their products and
services beyond the restriction of time and space (Turban 2008)

Electronic banking system gives everybody the opportunity for easy access
to their banking activities. These banking activities may include but not
limited to: retrieving an account balance, money transfers between a user’s
accounts, from a user’s account to someone else’s account, retrieving an
account history. It had been projected that more than 32 million households
globally were banking online by 2003 (Simpson 2002) banks and other
financial institution have moved to E-banking in their effort to cut costs
while maintaining reliable customer service (kolodinsky and hogerth 2008

It is evident that banks and other financial institutions in developed and

developing countries are embracing E-banking. As technology evolves,
different kinds of electronic banking systems emerge, each bringing a new
dimension to the interaction between user and bank. They include ATM,
mobile and Internet (online) banking, electronic funds transfer, direct bill
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payments and credit card (Gikandi and Bloor, 2010; Liaoa and Cheung,
2002). The use of these facilities is on the increase.

In Ethiopia E-banking is in its infant stage, even though the concept of E-

banking implemented in Ethiopia with a single service of SMS message
during late 2008.

It does not show that much improvement as its age now a day’s some banks
are adopting E-banking system which is the state of the art (Mattewos knife
Jan 22, 2016) in addition many banks are making what seem like huge
investment in technology to maintain and upgrade their infrastructure, in
order not only to provide new electronic information based service but also
to manage their risk position and pricing. (Mattewos knife Jan 22, 2016)

The bank obtained its license from the National Bank of Ethiopia (NBE) on
20 September 1995 and started normal business activities on 1 January 1996.
It operates through its head office in Addis Ababa and 303 branches, 6
foreign Exchange bureaus. 837 POS terminals and 205 ATM located in and
outside Addis Ababa.(DASHEN BANK 21St Annual report 2017).

To better meet the growing needs of customers for convenient, secure and
accessible services, the bank has been investing hugely on banking
technologies. The Bank has launched Mobile, Internet and Agent Banking
services. It also started providing SMS alert service, which lets customers to
be in the know on their finances with short message notifications.
(DASHEN BANK 20 ST Annual report 2017)

The bank growing network of ATM and POS terminals accept international
cards including visa, master card, union pay and American express. During
the reporting period,123,198 customers joined the card banking service
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which raised the total number of cardholders by 28% to 556,688 . A total of

10,353 customers have subscribed for the bank internet banking service.
Compared to the number of users in the previous fiscal year there is an
increment of 33 %.( DASHEN BANK 21St Annual report 2017).

1.2. Background of the Organization

Dashen Bank was established by the intent of monetary and banking

proclamation number 84/1994. The bank came in to existence on September
20, 1995 G.C according to the commercial code of Ethiopia, 1960 and the
licensing and supervision of banking proclamation no.84/1994.The first
founding members were 11 businessmen and professional that agreed to
combine their financial resources and expertise to form this new private
bank with initial capital of 50 million birr. Know the total shareholders
‘equity contribution and legal reserve of the bank reached birr 4 billion,
indicating a 19% year-on year growth. Paid up capital of the bank increased
by birr 435 million.

The bank recruited 987 permanent employees , 90 short term and 885
outsourced contract employees. As at June 30,2017 the bank staff strength
(including long term and short term contract employee)stood at 7,297.
(DASHEN BANK 21St Annual report 2017).

Despite the importance of these scenario or development, in our opinion

limited studies were available in the case of Dashen bank. Therefore, more
studies required to understand the relevance of E-banking in the Dashen
bank, identify areas in which the bank lags behind that inhibit their E-
banking adoption and diffusion. Therefore, to address the current gap in the
literature, this study was designed to identify the challenge and prospects of
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E-Banking in Dashen bank and recommend appropriate actions to be taken

to promote E-banking system in the bank.

1.3. Statement of the problem

One main advancement Technology has brought to us is the introduction of

electronic banking. E- banking does away with the need for the most visits
to the bank however, according to locket and littler (1997), physical banks
assure customer that their banks has substantial resource and guarantee the
security of the savings. A study indicated that electronic banking has been
available in UK since the early 1980s

It is not clear whether all customers want or are comfortable with Electronic
banking (Daniel &storey, 1997) Technology is changing at a rapid pace
making is it is difficult for both the customer and the bank to determine the
best approach particular problems arise with trying to integrate new channel
with legacy channel’s it is for these reasons that academic research is needed
in this newly emerging delivery channels (Daniel and story 1997)

Similarity in Ethiopia, most banks practicing E-banking currently are also

facing challenges such as very poor connection, customer’s preference of the
electronic banking facilities, trust of the people in the modern tools,
conveniences of the customer to utilize and adapt E. banking facilities.
While numerous studies have been undertaken to examine issues in the
wider context of economic and financial implication of E-banking problems
and prospects in Ethiopian. Comprehensive research in the area of E-
banking issues in the specific context of Dashen bank has been rather
limited. This study will try (attempt) to identify influencing challenges and
prospects enhancing the acceptance of E-banking in Dashen Bank.
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Research Questions

The research was conducted to address the following research questions.

1. What is the future in relation to the challenge being facedcurrently?

2. What are major factors impedes the performance E-banking service

inDashen Bank?

3. How to identify status and to enhance E-banking usage in Dashenbank

?

1.4 Objective of the study

1.4.1General objective

To assess the and identified the main challenges of E-banking in

Dashenbank.

1.4.2 Specific objective

1. To examine the factors that affect adaptation of E-banking

2. To identify the major factors that impedes the performance E-banking

service in Dashen bank

3. To identify its status and how to enhance E-banking usage in Dashen

bank and prepare possible recommendation

1.5. Significant of the study

This research study was providing information on the challenges and

prospect of E-banking particularly on the development of using E-banking
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service, its status and its main challenge and threat and how to enhance the
Dashen bank service. This study would be beneficial:-

To the bank by identifying its possible challenges and threat and provide the
necessary information on the different challenge E-banking face, which was
expectedly heighten the awareness of the bank and equip a counterattack to
possible threat.

This research was help user (customer) to fill the significant knowledge gap
about E-banking scenery in Dashen bank.

Lastly it will give insight to researcher about the problems and stimulate
further investigation of the issue.

1.6. Scope of the Study

The study was confined to assess the challenge and prospect of E-banking at
selected Three Dashen bank in Addis Ababa. This branch were, stadium,
Meskel flower and saris this selection was based on ouropinion that this
branch’s has a better application of E- banking and also E-banking users in
this branch is very high relatively to other branches’.

The study was involved the staff from the selected bank, its customers
specifically the users of E-banking. The study focus only on the assessment
of the prospect and challenge of E-banking from the point of view of
thebank. The study might not be generalizable to all areas of financial
institution and time constraints will also become the main limitation of the
study.
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The other limitations faced by the researcher 81 questioners were prepared

to be fulfilled by customers and employees of Dashen Bank but among these
questionersfourteen(14) were not fulfilled.

1.7 Organization of the study

This study is organized into five chapters. The first chapter includes
background of the study, statement of the problem, basic research questions,
objectives of the study, significance of the study, limitation and /scope of the
study, and organization of the study. The second chapter contains literature
review. The third chapter has the research methodology, research design,
population, sample size and sampling techniques, source of data and
collection, method of data possessing and analysis. The fourth chapter deals
withdata analysis and interpretation. Finally fifth chaptercontains conclusion
and recommendation.

1.8 Limitation of the Study

The focus of this study was on the assessment of the prospect and challenges
of E- Banking service of Dashen bank in Addis Ababa, Owing to the initial
stage ofE-banking services available in Ethiopia. These researches not
include below diploma holders and it will be difficult to get secondary data
as well as literature in this area from the bank perspective. In addition, the
study was conducted in three branches in Addis Ababa because of time
limitation and scarce resource. The study not includes the branch’s outside
of Addis Ababa and which will be decreases the generalizability of findings.
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CHAPTER TWO
2.LITERATURE REVIEW
2.1.1Introduction to E-banking

According to Mohammed shamsuddoha (2008), electronic Banking is

transforming the financial services industry through various innovations.
The quantity of cross-border trading and other financial activities is
increasing geometrically make possible by technology. It has been made
possible by technology, particularly information technology to generate,
collect and process information about bank operation and bank customers
efficiently and effectively. It provides the ability to create more effective
systems of controls in individual institutions and in the market themselves.
Compared to the paper based operation, Electronic Banking Systems, in its
most proficient form, offer instant verification and transfer and reduces the
flow of costly paper in the record keeping process. Application of
technology in banking offer opportunity for reduction of both paper and
people. Banks have developed electronic banking service to protect and
increase its market share, to reduce operating cost by substituting physical
capital and technology for labor to generate new revenue.

In addition, electronic banking could reduce operating costs for banks. More
broadly, the continued development of electronic banking and electronic
money may contribute to improving the efficiency of the banking and
payment system and to reducing the cost of retail transactions nationally and
internationally. Although many financial instrument and systems are now
considered as “Electronic Banking” came into the terminology of the
financial world in the late 1980s, with the possibility of emergence of true
electronic money. All sorts of back-office information management
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technology and financial services using electronic devices can be included

into the term “Electronic Banking”.

The development in information technology has contributed positively to

economic growth through several channels. ICT has led to a productivity
growth through the impact on activity processes.

Banks have been increasing their own size and financial strength and
expanding the scope of their products lines to meet the growing demand of
their customers.

2.1.2 Definition of E-Banking

. E-banking is defined as the automated delivery of new and traditional

banking products and services directly to customers through electronic,
interactive communication channels. The definition of e-banking varies
amongst researches partially because electronic banking refers to several
types of services through which bank customers can request information and
carry out most retail banking services via computer, television or mobile
phone (Daniel, 1999; Mols, 1998; Sathye, 1999). For example,

Burr (1996) describes it as an electronic connection between bank and

customer in order to prepare, manage and control financial transactions.

According to Singh &Malhotra (2004), E-banking can be defined as the

deployment of banking services and products over electronic and
communication networks directly to customers.

2.1.3 Evolution of E-Banking

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Since the late 1990s E-Banking has developed from virtual insignificance to
tens of millions of users worldwide (OECD, 2001). However, E-Banking is
the product of different generations of electronic transactions. The current
web-based internet is the latest of several generations of systems: Automated
Teller machine (ATMs), Phone Banking, PC or House Banking. Automated
teller machines (ATMs) were the first well-known machines to provide
electronic access to customers where as in phone banking, users call their
bank’s computer system on their ordinary phone and use the phone keypad
to perform banking transactions. PC banking superseded phone banking and
allowed users to interact with their bank by means of a computer with a dial-
up modem connection to the phone network. Phone and PC banking entailed
maintenance costs associated with keeping up to date with diverse modems
and with avoiding prohibitively complex installation procedures. After those
generations Deutsche Bank launched the very first Internet banking project
in Latin America in 1996 and Citibank has developed a special “e-toolkit”
across all its branches worldwide (UNCTAD, 2002).

E- Banking uses the web browser for the user interface and the Internet for
data transfer and download of software, and so has a potential for reducing
maintenance costs. For users, E- Banking provides current information, 24-
hours-a-day access to banking services. The primary services provided by e-
banks are transferring money among one’s own accounts, paying bills, and
checking account balances. Loans, brokering, share trading, service
bundling, and hosts of other financial services are being added to these
primary services). E-Banking is widely used in, among other places
(Dewan&Seidmann, 2001).

2.1.4 E-Banking Channels:

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2.1.4.1 Internet banking

According to Booz, Allen & Hamilton (1999),“Internet banking” refers to

systems that enable bank customers to access accounts and general
information on bank products and services through a personal computer
(PC) or other intelligent device. Internet banking products and services can
include wholesale products for corporate customers as well as retail and
fiduciary products for consumers.

Numerous factors that motivating banks to evaluate their technology and

assess their electronic commerce and internet banking strategies includes the
following:

Competition— Studies show that competitive pressure is the chief driving

force behind increasing use of internet banking technology, Banks see
internet banking as a way to keep existing customers and attract new ones to
the bank.

Cost Efficiencies —banks can deliver banking services on the internet at

transaction costs far lower than traditional brick-and-mortar branches. The
actual costs to execute a transaction will vary depending on the delivery
channel used. For example, according to Booz, et.al, as of mid- 1999, the
cost to deliver manual transactions at a branch was typically more than a
dollar, ATM and call center transactions cost about 25-50 cents, and internet
transactions cost about a penny. These costs are expected to continue to
decline. Banks have significant reasons to develop the technologies that will
help them deliver banking products and services by the most cost-effective
channels.
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Geographical Reach — Internet banking allows expanded customer contact

through increased geographical reach and lower cost delivery channels.

In fact some banks are doing business exclusively via the internet they do
not have traditional banking offices and only reach their customers online.

Branding— Relationship building is a strategic priority for many banks.

Internet banking technology and products can provide a means for banks to
develop and maintain an ongoing relationship with their customers by
offering easy access to a broad array of products and services. By
capitalizing on brand identification and by providing a broad array of
financial services, banks hope to build customer loyalty, cross-sell, and
enhance repeat business.

Customer Demographics — Internet banking allows banks to offer a wide

array of options to their banking customers. Some customers will rely on
traditional branches to conduct their banking business. For many, this is the
most comfortable way for them to transact their banking business. Those
customers place a premium on person-to-person contact. Other customers
are early adopters of new technologies that arrive in the marketplace. These
customers were the first to obtain PCs and the first to employ them in
conducting their banking business. The demographics of banking customers
will continue to change. The challenge to banks is to understand their
customer base and find the right mix of delivery channels to deliver products
and services profitably to their various market segments.

2.1.4.2Electronic Payment Methods

Cheques and drafts have replaced the traditional payment system with
money as a medium of settlement and further development in the field has
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been with the advent of electronic cards. The most commonly used
electronic cards include ATM cards, Debit cards, Credit cards and Smart
cards. ATM card is a kind of plastic card, which allows a cardholder to
withdraw money from his bank account through automated teller machine.
This card can be used also for other banking services like deposit and
transfer to any other account by using the ATM machine. Credit card is the
modern electronic plastic card that may be used repeatedly to borrow money
or buy products and services on credit.

VISA, Master Card, American Express and Discoveries commonly known

and widely used credit cards throughout the world. The decision with which
card to go depends on the comparison of the features of the specific card
(not the brand). The most important features, of course, are Interest rate and
Annual fees. Debit cards are electronic plastic cards directly tied to bank
account and the amount of money the cardholder can spend with it is limited
to the amount of money he/she has in the bank. It is called debit card
because when cardholder uses a debit card, the transaction debits
(withdraws) the amount of the transaction from cardholders’ account,
usually on the same day (C.S.V Murthy, 2004).

2.1.4.3. Mobile banking

Also known as M-banking or SMS banking is a term used for performing

balance checks, account transactions, payments etc. via a mobile device such
as a mobile phone. Mobile banking is most often performed via SMS or the
Mobile Internet but can also use special programs called clients downloaded
to the mobile device. The standard package of activities that mobile banking
covers are: mini-statements and checking of account history; alerts on
account activity or passing of set thresholds; monitoring of term deposits;
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access to loan statements; access to card statements; mutual funds/equity

statements; insurance policy management; pension plan management; status
on cheque , stop payment on cheque; ordering check books; balance
checking in the account; recent transactions; due date of payment
(functionality for stop, change and deleting of payments); PIN provision,
change of PIN and reminder over the internet; blocking of (lost/stolen)
cards; domestic and international fund transfers; micro-payment handling;
mobile recharging; commercial payment processing; bill payment
processing; peer to peer payments; withdrawal at banking agent and deposit
at banking agent (Rahman, 2006).

2.1.4.4. Tele Banking

Tele banking refers to the services provided through phone that requires the
customers to dial a particular telephone number to have access to an account,
which provides several options of services (Rahman, 2006).

2.1.4.5. Home Banking

Home banking frees customers from visiting branches and most transactions
will be automated to enable them to check their account activities, transfer
funds and to open L/C sitting in their desk with the help of a personal
computer and a telephone (Rahman, 2006).

2.1.4.6. Point of Sale Terminal

An advanced payment system, which enables customers to use an ATM

card to pay for goods and services, electronically debiting the cardholders
account and crediting the account of the merchant (Rahman, 2006).
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2.1.4.7 Society for Worldwide Inter-Bank Financial Telecommunication

(SWIFT)

It is a bank owned non-profit co-operative based in Belgium servicing the

financial community worldwide. It is a highly secured messaging network
enables banks to send and receive fund transfer, L/C related and other free
formal messages to and from any banks active in the network. Having
SWIFT facility, banks will be able to serve its customers more profitable by
providing L/C, payment and other messages efficiently and with at most
security. Especially it will be of great help for clients dealing with imports
and exports etc. (Mohammed shamsuddoha, 2008

2.1.5 Benefit of E-banking

Many banks and other organizations have already implemented or are

planning to implement e-banking because of the numerous potential benefits
associated with it. Some of these major benefits according to Shah & Clarke
(1997) are briefly described below.

2.1.5.1 from the Banks Perspectives

Attracting High Value Customers: E-Banking often attracts high profit

customers with higher than average income and education levels, which
helps to increase the size of revenue streams. For a retail bank, e-banking
customers are therefore of particular interest, and such customers are likely
to have a higher demand for banking products. Most of them are using
online channels regularly for a variety of purposes, and for some there is no
need for regular personal contacts with the bank’s branch network, which is
an expensive channel for banks to run (Berger &Gensler, 2007).
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Enhanced Image: E-banking helps to enhance the image of the organization

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

Increased Revenues: Increased revenues as a result of offering e-channels

are often reported, because of possible increases in the number of customers,
retention of existing customers, and cross selling opportunities. Whether
these revenues are enough for reasonable return on investment (ROI) from
these channels is an ongoing debate. It has also allowed banks to diversify
their value creation activities. E-banking has changed the traditional retail
banking business model in many ways, for example by making it possible
for banks to allow the production and delivery of financial services to be
separated into different businesses. This means that banks can sell and
manage services offered by other banks (often-foreign banks) to increase
their revenues. This is an especially attractive possibility for smaller banks
with a limited product range. E-banking has also resulted in increased credit
card lending as it is a sort of transactional loan that is most easily deliverable
over the internet. Electronic bill payment is also on rapid rise (Young, 2007)
which suggests that electronic bill payment and other related capabilities of
e-banking have a real impact on retail banking practices and rapidly
expanded revenue streams.

Easier Expansion: Traditionally, when a bank wanted to expand

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

Load Reduction on Other Channels: E-Channels are largely automatic, and

most of the routine activity such as account checking or bill payment may be
carried out using these channels. This usually results in load reduction on
other delivery channels, such as branches. This trend is likely to continue as
more sophisticated services such as mortgages or asset finance are offered
using e-Banking channels. In some countries, routine branch transactions
such as cash/cheque deposit related activities are also being automated,
further reducing the workload of branch staff, and enabling the time to be
used for providing better quality customer services.

Cost Reduction: The main economic argument of e-banking so far has been
reduction of overhead costs of other channels such as branches, which
require expensive buildings and a staff presence. It also seems that the cost
per transaction of e-banking often falls more rapidly than that of traditional
banks once a critical mass of customers is achieved. The research in this area
is still inconclusive, and often-contradicting reports appear in different parts
of the world. The general consensus is that fixed costs of e-banking are
much greater than variable costs, so the larger the customer base of a bank,
the lower the cost per transaction would be. Whilst this implies that cost per
transaction for smaller banks would in most cases be greater than those of
larger banks, even in small banks it is seen as likely that the cost per
transaction will be below that of other banking channels.
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Organizational Efficiency: To implement e-banking, organizations often

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

2.1.5.2. Benefits from the Customers’ Perspectives

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 benefits from e-banking for private customers are as per Bank
Away (2001) are as follows:-

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. In
 i

addition, besides withdrawing cash customers can also have mini banks
statements, balance inquiry at these ATMs

E- Banking has also greatly helped in payment of utility bill. Now there is
no need to stand in long queues outside banks for his purpose. All services
that are usually available from the local bank can be found on a single
website The Growth of credit card usage also owes greatly to E-banking.
Now a customer can shop worldwide without any need of carrying paper
money with him and Banks are available 24 hours a day, seven days a week
and they are only a mouse click away.

2.1.6. Challenges of E-banking

Banking organizations have been delivering electronic services to consumers

and business remotely for years. Electronic funds transfer, including small
payments and corporate cash management systems, as well as publicly
accessible automated machines for currency withdrawal and retail account
management, are global fixtures. However, the increased world-wide
acceptance of the Internet as a delivery channel for banking products and
services provides new business opportunities for banks as well as service
benefits for their customers (BCBS, 2001).

Notwithstanding the significant benefits of E-banking and its capabilities, it

carries risks challenges as which are recognized and need to be managed by
banking institutions in a prudent Manner. The speed of change relating to
technological and customer service innovation in E-banking is
unprecedented. Historically, new banking applications were implemented
over relatively long periods of time and only after in-depth testing. Today,
however, banks are experiencing competitive pressure to roll out new
 i

business applications in very compressed time frames, often only a few

months from concept to production. This competition intensifies the
management challenge to ensure that adequate strategic assessment, risk
analysis and security reviews are conducted prior to implementing new E-
banking applications (BCBS, 2001).

E-banking increases banks’ dependence on information technology, thereby

increasing the technical complexity of many operational and security issues
and furthering a trend towards more partnerships, alliances and outsourcing
arrangements with third parties, many of whom are unregulated. This
development has been leading to the creation of new business models
involving banks and non-bank entities, such as Internet service providers,
telecommunication companies and other technology firms (BCBS, 2001)
The Internet is ubiquitous and global by nature. It is an open network
accessible from anywhere in the world by unknown parties, with routing of
messages through unknown locations and via fast evolving wireless devices.
Therefore, it significantly magnifies the importance of security controls,
customer authentication techniques, data protection, audit trail procedures,
and customer privacy standards (BCBS, 2001).

Other E-banking related problems are user error, bad internet connections,
access problems and security issues. Most of these problems happen less to
outweigh its benefit

2.1.7 E-Banking Fraud

Convenience is the key reason of why millions of people are opting out of
traditional banking for online banking. Banks also enjoy providing the
 i

option of online banking because they can save on operating costs. Most
internet banking fraud occurs in a two-step process.

Firstly, the offender must get their hands on the customer's account
information, like their username and password. Secondly, the offender will
use that information to move his victim's money to another account or
withdraw it to make fraudulent purchases. For the first step, offenders often
employ one of the many popular fraud schemes to obtain personal
information. These fraud schemes include, but are not limited to: ’Over the
shoulder looking” scheme: involves the offender observing his potential
victim making financial transactions and recording the personal information
used in the transaction. - "Phishing" scheme: stems from the two words
"password" and "fishing." It entails sending e-mail spam’s and mail
supposedly from the consumer's bank as a way to obtain the consumer's
personal information, social insurance number, and in this case their online
banking username and password (Kaleem& Ahmed,2008)

2.1.8 E-Banking Risks

Although e-banking has bright prospects, it involves some financial risks as

well. The major e-banking risks according to FSA (2010) include:

Operational risks: Banks faces three main types of operations risk: such as
volume forecasts, management information systems and Outsourcing.
Accurate volume forecasts have proved difficult - One of the key challenges
encountered by banks is how to predict and manage the volume of customers
that they will obtain. Many banks going on-line have significantly
misjudged volumes. When a bank has inadequate systems to cope with
demand it may suffer reputational and financial damage, and even
 i

compromises in security if extra systems that are inadequately configured or

tested are brought on-line to deal with the capacity problems. The second
type of operations risk concerns management information systems. Again,
this is not unique to E-banking. Banks may have difficulties in obtaining
adequate management information to monitor their service, as it can be
difficult to establish/configure new systems to ensure that sufficient,
meaningful and clear information is generated. Such information is
particularly important in a new field like e-banking.

Finally, a significant number of banks offering e-banking services outsource

related business functions, e.g. security, either for reasons of cost reduction
or, as its often the case in this field, because they do not have the relevant
expertise in-house. Outsourcing a significant function can create material
risks by potentially reducing a bank’s control over that function.

Security risk: Security issues are a major source of concern for everyone
both inside and outside the banking industry. E-banking increases security
risks, potentially exposing hitherto isolated systems to open and risky
environments. Security breaches essentially fall into three categories;
breaches with serious criminal intent (e.g. fraud, theft of commercially
sensitive or financial information), breaches by ‘casual hackers’ (e.g.
defacement of web sites or ‘denial of service’ - causing web sites to crash),
and flaws in systems design and/or set up leading to security breaches (e.g.
genuine users seeing / being able to transact on other users’ accounts). All of
these threats have potentially serious financial, legal and reputational
implications.
 i

Reputational risk: This is considerably heightened for banks using the

Internet. For example, the Internet allows for the rapid dissemination of
information, which means that any incident, either good or bad, is common
knowledge within a short space of time. Internet rumors can easily become
self-fulfilling prophecies. The speed of the Internet considerably cuts the
optimal response times for both banks and regulators to any incident. Banks
must ensure their crisis management processes are able to cope with Internet
related incidents (whether they be real or hoaxes).

Any problems encountered by one firm in this new environment may affect
the business of another, as it may affect confidence in the Internet as a
whole. There is therefore a risk that one rogue E-bank could cause
significant problems for all banks providing services via the Internet. This is
a new type of systemic risk and is causing concern to e-banking providers.
Overall, the Internet puts an emphasis on reputational risks.

In addition, legal risks (e.g. without proper legal support, money laundering
may be influenced); Strategic risks; credit risks; market risks; and liquidity
risks are also e-banking risks.

Therefore, identification of relevant risks, and formulation and

implementation of proper risk mitigation policies and strategies are
important for banks while performing e-banking among these security risks
that affects the network system is the major one FSA (2010).

Private Networks). The firewall’s main task is to regulate traffic between

network segments at different trust levels—for example, between the
Internet, as a zone with no trust, and the internal control network, a zone of
higher trust.
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CHAPTER THREE
3. RESEARCH METHODOLOGY
3.1 Research design

The study was adopted descriptive research design in order to explain and
show the challenges and prospects of E- Banking and were use both
quantitative and qualitative methods, aimed to identifying the challenges
faced by E-Banking system in Dashen Bank. Quantitative data helped us to
draw conclusion and recommendation and Qualitative method used to
collect facts from the customers.

3.2 Population

The population of this study were consist 81 employees of the selected

branch and the users (customers) of E-banking in this branch.

3.3 Sample size and sampling techniques

For the purpose of making our study on an efficient and effective manner in
line with the research teams time and resource, the researcher team was
conduct the study on 11 representative respondent they were selected from
each selected branch, they were from E-banking service department and IT
department as well and 16 customers who use the E- banking service. To be
more convenient we were prepared questioners form for the customer and
for the bank representatives. The questionnaires were self-administrated to
the respondent and a random sampling technique was used to select from the
staff as well as from the customer. An informal interview was also
conducted with some officers to gather more information needed for the
study.
 i

3.4. Source of data and collection

We were using both primary and secondary data. The primary data was
collected through using direct personal interview and with structured
questionnaires which contain question relating to different dimension of E-
banking challenges and preference. The type of questionnaires includesboth
open-ended, as well as closed end dichotomies and also multiple choice. The
secondary data was collected from different published reports, articles on e-
banking, priors’ research, journal’s, internets.

3.5 Method of data processing and analysis

Data was first checked for completeness and error in data collection,
recording entry and coding. The data was analyzed using Microsoft Excel.
The data analysis was based on the data processing steps. Appropriate
statistically analysis was performed according to the nature of the data.
Finally, the result was displayed by using chart and table.

CHAPTER FOUR
Data Analysis and Interpretation
4. Introduction

This chapter presents the results and discussion of challenge and prospects
of E-Banking in the case of Dashen bank. In all (sixty four) 64
questionnaires were administered to both customers and employees of
Dashen Bank from 3 (three) branches. From the total 64 questionnaires
distributed to target respondents only 40 questionnaires were collected.

4.1. Demographic characteristic of selected employees

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Table 4.1: Distribution of categories of respondents with their position

Respondents position Frequency Percent

IT Staff 11 27.5%
Management 7 17.5%
Others 22 55%
Total 40 100%

Source: (Questionnaires, 2020)

4.1.2 Distribution of categories of respondents with their sex

Table 4.2: Distribution of sex

Respondents sex Frequency Percent

Male 23 57%
Female 17 43%
Total 40 100%

Source: (Questionnaires,2020)

As indicated from the above table 4.2.that from 40 (forty) employee

respondents 57% were male and 43% were female. This implies that more
than 50% of employees are male.

Table 4.3 respondents with their educational background

Respondents Frequency Percent
Diploma 5 12.5%
Degree 24 60%
Above degree 11 27.5%
Total 40 100%

Source: (Questionnaires, 2020)

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As shown from the above table 4.3 that the respondents of Dashen Bank
employees were drawn from different educational background and from the
total respondents, 60% have degree and 27.5% had above degree, 12.5%
have diploma background.

Table 4.4 How long have you been working in your current position
Frequency Percent
Below 5 years 16 40%
5-10 years 11 27.5%
10-15 years 10 25%
Above 15 years 3 7.5%

Source: (Questionnaires, 2020)

Table 4.4 shows that from all respondents 40% have been working in their
position below 5- years, 27.5% of them have been working between 5-10
years, 25% of the respondents have been working in their position between
10-15 years and 7.5% of respondents have been working more than 15 years
in his/her position.

4.2. Factor determining adoption of E-banking.

Table 4.5:What motivates Dashen use to become the user of Dashen E-

banking?

Frequency Percent

Modernization 9 22.5%

24 hours electronic banking service 18 45%

Fast and easily accessibility 10 25%

Being staff 3 7.5%

Total 40 100%
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Source: (Questionnaires, 2020)

Above table 4.5 shows that motives of Dashen Bank to use E-Banking.
Majority of Dashen Bank respondents 45% are motivated by 24 hours
electronic banking service, 25% are motivated by fast and easily
accessibility, the respondents 22.5% have been attracted by modernization
and 7.5% are by being staff.

Table 4.6 Types of E-banking facilities primarily used

Frequency Percent

ATM 25 62.5%

Mobile Banking 9 22.5%

Internet banking 6 15%

Total 40 100

Source: (Questionnaires, 2020)

Figure 4.6 shows that Majority of the respondents 62.5% are use ATM,
22.5% of the respondents are user of mobile banking and 15% of the
respondents are user of internet banking.
 i

Table 4.7. Do you think infrastructural and other problem affects your
effectiveness and it brings any dissatisfaction on your job?

Frequency Percent
Strongly agree 10 25%
Agree 21 52.5%
Neutral 5 12.5%
Disagree 2 5%
Strongly disagree 2 5%
Total 40 100%

Source: (Questionnaires, 2020)

Table 4.7 Shows that the infrastructural problem on effectiveness on

employee’s job. Majority of the respondents 52.5% are agree with
infrastructural problem, 25% of the respondents are strongly agree and the
remaining respondents are neutral , disagree and strongly disagree with
12.5%, 5% and 5%respectively on infrastructural problem on job satisfaction

Table 4.8 Do you believe that the bank's exerting marketing activities to
enhance customer awareness regarding to E-banking services?
Frequency Percent
Strongly agree 8 20%
Agree 20 50%
Neutral 6 15%
Disagree 4 10%
Strongly disagree 2 5%
Total 40 100%
 i

Source: (Questionnaires, 2020)

Table 4.8 shows that whether the bank has any role on customer awareness
on E-Banking service by using marketing activities. Majority of the
respondents 50% are agree, 20% of the respondents are strongly agree, 15%
of the respondents are neutral , 10% of the respondents are disagree & the
remaining 5% are strongly disagree.

Table 4.9 Does the existing network provides by Ethio-Telecom affects the
E-banking services?
Frequency Percent
Disagree 3 7.5%
Agree 14 35%
Strongly agree 23 57.5%
Total 40 100%

Source: (Questionnaires, 2020)

Table 4.9 shows that the existing network provided by Ethio Telecom Affect
E-Banking services. Majority of the respondents 57.5% are strongly agreed,
35% of the respondents are agree and the remaining of respondents 7.5% are
disagree. This implies that…………………..

Table 4.10 Factors influencing adoption of E-banking in your branch IT?

Frequency Percent
Strongly agree 15 37.5%
Agree 19 47.5%
 i

Neutral 3 7.5%
Disagree 2 5%
Strongly disagree 1 2.5%
Total 40 100%

Source: Questioner

Table4.10 shows that majority 47.5% of the staff agree that one of the
factors influencing adaptation of E-banking by their customer is lack of
IT(information technology) knowledge while 37.5% of the respondents are
strongly agree,7.5% of the respondents are neutral 5% are disagree and 2.5%
are strongly disagree.

Table 4.11 Do you think lack of computer literacy influencing customer E-

banking adoption?
Frequency Percent
Strongly agree 2 5%
Agree 24 60%
Neutral 7 17.5%
Disagree 3 7.5%
Strongly disagree 4 10%
Total 40 100%

Source: (Questionnaires, 2020)

Table4.11.shows that majority 60% of the staff agree that one of the factors
influencing adaptation of E-banking by their customer is lack of computer
literacy while 17.5% of the staff are neutral, 10% are strongly disagree,
7.5% are disagree with this and 5% are strongly agree.

Table 4.12Does the lack of legal and regulatory framework of country inf
luencing E-banking adoption?
Frequency Percent
 i

Strongly agree 4 10%

Agree 26 26%
Neutral 5 12.5%
Disagree 3 7.5%
Strongly disagree 2 5%
Total 40 100%

Source: (Questionnaires, 2020)

Table4.12. Shows that majority 26% of the staff agree that one of the factors
determine the adaptation of E-banking is lack of suitable legal and
regulatory framework, while 12.5 % of the staff are neutral, 10% are
strongly agree 7.5 % disagree and 5% are strongly disagree.

Table 4.13.Do you think the attitude of society affect the adoption of E-
banking?
Frequency Percent
Strongly agree 14 35%
Agree 18 45%
Neutral 3 7.5
Disagree 5 12.5%
Total 40 100%

Source: (Questionnaires, 2020)

Table 4.13 shows that majority 45% of the staff agree that one of the factors
determine the adaptation of E-banking by the society perspective toward the
system while 35% are strongly agree ,12.5% disagree and 7.5 % of the staff
are neutral.
 i

4.3. Challenge of using E-banking System

Table 4.14 Do you think that Dashen Bank is capable of running the E-
banking operationbusiness?
Frequency Percent
Strongly satisfied 6 15%
Satisfied 24 60%
Neutral 6 15%
Dissatisfied 4 10%
Total 40 100%

Source: (Questionnaires, 2020)

Table 4.14 shows that the capability of Dashen Bank to run E-Banking
system. Among the respondent’s majority 60% of them are satisfied with the
capability of the bank, 15% of the respondents are strongly satisfied and
neutral the rest of the respondents are dissatisfied.

 Table 4.14. Do you think that you have adequate skill to run the system?
Frequency Percent
Strongly agree 13 32.5%
Agree 23 57.5%
Natural 4 10%
Total 40 100%

Source: questioner

Table 4.14 shows that the skills of Dashen Bank employees to run the E-
Banking System Majority of respondents 57.5% are agreed that they have
adequate skill to run the system, 32.5% are strongly agreed and the rest of
10% respondents are neutral with concerning the skill.
 i

Table 4.16 How long will it take on average to process any E-banking
service r
Frequency Percent
1-week 7 17.5%
3-4 week 21 52.5%
Greter than 4 week 12 30%
Total 40 100%
equest after full document presented

Source: (Questionnaires, 2020)

Table 4.16 shows that the average time to process E-Banking service.
Majority of the respondents 52.5% are said that it takes between 3-4 weeks
to process, 30% are said that it takes greater than 4 week and 17.5% of the
respondents are respond that it takes one week.

Table 4.16 (A)what is your level of security risk?

Frequency Percent
Strongly agree 2 5%
Agree 19 47.5%
Natural 3 7.5%
Disagree 8 20%
Strongly disagree 8 20%
Total 40 100%

Source: (Questionnaires, 2020)

Table 4.17(A)shows that majority 47.5% of the staff agree that the bank
can have a security risk because of using E-banking system while 20%
strongly disagree and disagree with this, 7.5% of the staff are neutral and 5
% are strongly agree.

Frequency Percent
 i

Strongly agree 5 12.5%

Agree 18 45%
Natural 6 15%
Disagree 8 20%
Strongly disagree 3 7.5%
Total 40 100%
Source: (Questionnaires, 2020)

Table4.17(B)shows that majority 45% of the staff agree that the bank can
have a legal risk of using E-banking system while,20% of the respondent are
disagree, 15% of the staff are neutral, 12.5% are strongly agree and 7.5%
strongly disagree.

4.4. Benefit of Using E-banking system

4.4.1 The benefit does the bank is realized by using e-banking system

Table 4.18(A)-Increased Revenue

Frequency Percent
Strongly agree 10 25%
Agree 17 42.5%
Natural 5 12.5%
Disagree 4 10%
Strongly disagree 4 10%
Total 40 100%

Source: (Questionnaires, 2020)

Table 4.18(A)- shows that majority 42.5% of the staff agree that, the bank
has gain more revenue by using E-banking system while, 25% are strongly
agree, 12.5 % of the staff are neutral and 10% of respondents are disagree
and 10% are strongly disagree.

Table 4.18(B)-Large Customer Coverage

 i

Frequency Percent
Strongly agree 13 32.5%
Agree 18 45%
Natural 2 5%
Disagree 2 5%
Strongly disagree 5 12.5%
Total 40 100%

Source: (Questionnaires, 2020)

Table 4.18(B) - shows that majority 45% of the staff agree that, the bank can
reach large number customer by using E-banking system while, 32.5 % were
strongly agree, 12. 5 % are strongly disagree and the rest 5% of the
respondent are equally neutral and disagree.

Frequency Percent
Strongly agree 10 25%
Agree 19 47.5%
Natural 5 12.5%
Disagree 2 5%
Strongly disagree 4 10%
Total 40 100%

Source: (Questionnaires, 2020)

Table 4.18(C) - shows that majority 47.5% of the staff agree that, the bank
can reduce its cost by using E-banking system while, 25 % are strongly
agree,12.5% of the staff are neutral ,10%are strongly disagree and the rest
5% are disagree.

Table 4.17(D) - Organization Efficiency

Frequency Percent
Strongly agree 12 30%
Agree 26 65%
 i

Disagree 1 2.5%
Strongly disagree 1 2.5%
Total 40 100%

Source: (Questionnaires, 2020)

Table 4.18(D) - Shows that majority 65% of the staff agree that the bank can
be more competence by using E-banking system while, 30 % are strongly
agree and the rest of 2.5% ,2.5% are disagree and strongly disagree
respectively.

Frequency Percent
Strongly agree 8 20%
Agree 22 55%
Disagree 1 2.5%
Strongly disagree 9 22.5%
Total 40 100%

Source: Questioner

Table 4.18(E)) - Shows that majority 55% of the staff agree that, the bank
can have a better image by using E-banking system while,22.5% are strongly
disagree , 20 % are strongly agree & the rest of 2.5% are disagree.

Table 4.17 (F) - Attract high volume customer

Frequency Percent
Strongly agree 20 50%
Agree 17 42.5%
Neutral 2 5%
Strongly disagree 1 2.5%
Total 40 100%

Source: (Questionnaires, 2020)

 i

Table 4.18(F) - shows that majority 50 % of the staff agree that, the bank
can attract high volume customer by using E-banking system while,42.5%
are agree, 5% of the staff are neutral and 2.5% of the respondent are neutral

Table 4.18. Demographic characteristic of selected customers.

Respondents position Frequency Percent
Male 14 58.3%
Female 10 41.7%
Total 24 100%

Source: (Questionnaires, 2020)

As Table 4.18 from the above chart 58.3% of the respondents were male and
41.7% were female.

Table 4.20 Educational background

Respondents position Frequency Percent
Diploma 8 33.3%

Degree 12 50%

Above degree 4 16.7%

Total 24 100%

Source: (Questionnaires, 2020)

Table 4.20 .shows that majority 50% of the respondent have degree, while
16.7% and 33.3% respondent respectively have above degree and diploma.

Frequency Percent
Private 16 66.7%

Government 5 20.8%
 i

Other 3 12.5%

Total 24 100%

Source: (Questionnaires, 2020)

Table 4.19 shows that majority 66.7% of our respondent was private
organization workers, 20.8% of the respondent were government workers
and 12.5% of the Respondent are included in others.

4.5.3 Factors Determine Adoption of E-Banking

Table 4.20How long have you been customer of Dashen Bank

Frequency Percent

Less than 5 years 14 58.33%

Between 5 and 10 years 9 37.5%

Above 10 years 1 4.17%

Total 24 100%

Source: (Questionnaires, 2020)

Table 4.21 Shows that majority 58.33% of our respondents have been E-
banking user of Dashen bank for less than 5 year ,37.5% of them are E-
banking users of Dashen bank for between 5-10 year and 4.17% of the
respondents are users of Dashen bank for above 10 years.

4.5.4 What motivates you to become the user of Dashen E-banking?

Modernization 4 16.7%

24 hours E-banking service 12 50%

 i

Fast and accessibility 8 33.3%

Total 40 100%

Source: (Questionnaires, 2020)

Table 4.22 Shows that majority 50% of the respondent motivates to become
the user of 24 hours E-banking accessibility of the services while, 33.3%
motivated to use E-banking by fast and accessibility & 16.7% of the
respondents interested to use e-banking service by modernization.

4.5.5 Which type of E-banking facilities do you use? (primarily)

Frequency Percent
ATM 18 75%

Mobile banking 5 20.8%

Internet Banking 1 4.2%

Total 24 100%

Source: (Questionnaires, 2020)

Table 4.22 show that majority of 75% of our respondent use the ATM type
of e-banking facilities while 20.8% of the users use mobile banking and 4.2
% are user of internet banking facilities.

4.6.1 Challenge of using E-banking System

4.6.1 Do you encounter a network problem while transacting

using E-banking facilities?
Frequency Percent
 i

Strongly Agree 8 33.3%

Agree 12 50%

Neutral 3 12.5%

Strongly disagree 1 4.2%

Total 24 100%

Source: (Questionnaires, 2020)

Table 4.24 Shows that majority 50% of the respondent agreed that they face
a network problem while using E-banking facilities of Dashenbank , 33.3%
strongly agreed, 12.5% are neutral and 4.2% are strongly disagreed.

Table 4.26 Does usage of E-banking facilities affects your saving habits
negatively?
4.6.2 Does usage of E-banking facilities affects your saving habits negatively?

Frequency Percent
Strongly Agree 5 20.8%

Agree 13 54.2%

Neutral 5 20.8%

Strongly disagree 1 4.2%

Total 24 100%

Source: (Questionnaires, 2020)

Table 4.26 Shows that majority 54.2% of the respondents agreed those using
E-bank facilities is affecting their saving habits negatively, while 20.8% and
 i

20.8% are strongly agree & neutral respectively and 4.2% strongly
disagreed.

Table4.26 Have you ever exposed to any fraudulent act by using E-banking
Facilities?

4.6.3 Have you ever exposed to any fraudulent act by using E-banking

facilities?
Frequency Percent

Agree 13 54.2%

Neutral 8 33.3%

Disagree 2 8.3%

Strongly Disagree 1 4.2%

Total 24 100%

Source: (Questionnaires, 2020)

Table 4.25 Show that majority agree 54.2% of respondent have been
exposed to any fraudulent act of using E-banking Facilities. while 33.3%
neutral with this 8.3% disagree and that 4.2% strongly disagree that is not
exposed to any fraudulent act.
 i

4.7.1 Benefit of Using E-banking system

4.27 Do you think that transacting through e-banking facilities is convenient

and safe?

Frequency Percent
Strongly Agree 8 33.3%

Agree 12 50%

Neutral 3 12.5%

Strongly disagree 1 4.2%

Total 24 100%

Source: (Questionnaires, 2020)

Table 4.276 Shows that majority of 50% of respondent agreed that

transaction through E-banking facilities is convenient and safe, 33.3% of the
respondent strongly agreed that using Dashen E-banking facilities is
convenient and safe , 12.5% of the respondent are neutral and the rest of
them are strongly disagree.

Table 4.28 Do you think you are benefited by using E-banking facilities?

Frequency Percent
Strongly agree 8 33.3%

Agree 15 62.5%

Neutral 1 4.2%
 i

Total 24 100%

Source: (Questionnaires, 2020)

Table 4.28Shows that majority 62.5% of the respondent agreed that they are
Benefited by using E-banking facilities of Dashen bank while 33.3% of
strongly agreed that they benefited more by using E-banking Facilities and
4.2% of respondent are neutral.

Table 4.28The service on E-banking facilities is accessibility any time

Frequency Percent
Strongly agree 9 37.5

Agree 13 54.2%

Neutral 2 8.3%

Total 24 100%

Source: (Questionnaires, 2020)

Table4.29 Shows that majority 54.2% of the respondent agrees that the
service on E-banking facilities is accessible in any time while, 37.5% of
strongly agree and 8.3% of the respondent are neutral.

Table 4.29 On the scale1-5 what is your level of satisfaction of e-banking

facilities you use
Frequency Percent

Excellent 4 16.7%

Very good 12 50%

Good 6 25%
 i

Average 2 8.3%

Total 24 100%

Source: (Questionnaires, 2020)

Table 4.30 Shows that majority 50% respondents are feels satisfied by using
E-banking facilities of Dashen Bank, 25% are satisfied , 16.7% are highly
satisfied and 8.3% of the respondents are averagely satisfied.

Table 4.310 Will you continue to use E-banking facilities to transact?

Frequency Percent
Strongly agree 12 50%

Agree 10 41.7%

Neutral 2 8.3%

Total 24 100%

Source: (Questionnaires, 2020)

Table 4.30 Shows that the majority 50% respondents strongly agreed that
they will continue to use E-banking facilities to transact, 41% are agreed and
8.3% of the respondent are neutral.

Table 4.31What is your general feeling about the E-banking current service
in Dashen Bank?
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Frequency Percent

Very satisfied 2 8.3%

Satisfied 9 37.5%

Neutral 10 41.7%

Dissatisfied 3 12,5%

Total 24 100%

Source: (Questionnaires, 2020)

Table4.31 Shows that majority 41.7% respondent are Neutral on the current
service of Dashen bank and 37.5% of the respondents are satisfied,12.5% are
dissatisfied & 8.3% of the respondent are very satisfied.

CHAPTER FIVE
5. Conclusion and Recommendation
5.1 Conclusion

There were certain limitations in this study. Within the limitation of the
study, the following recommendations are made

1. We recommended that the bank could be co-operatively worked with

Ethio-telecom to improve the network service.

2. Advertisement and marketing of E-banking products could be

encouraged in the bank to attract more E-banking customers.

3. The bank could be focus and work on different E- banking products

rather than ATM
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4. The bank could be announce (advertise ) to the customer of Dashen

bank ATM machines are networked with other bank ATM.(open
ended question)

5. We recommended the bank to make customer satisfaction survey in

certain time interval .

6. Further research could be carried out to find out how customers are
preferring the bank and E-banking and enhancing the volume of
customers on e-banking products (open ended question)

5.2 Recommendation

Based on the above analysis and interpretation the conclusions are made on
the assessment of challenges and prospects e-banking of Dashen bank.
1. As per the findings, the major facilitators of E-banking services are
employees of the bank hence; the bank has employees with adequate
skills to facilitate E-Banking service.
2. In our finding the general feeling of respondents in the service of E-
banking somewhat moderate and it takes long period of time to
process the service.
E-Banking service drive certain benefits predominantly 24 hour E-banking
service , easy and fast access to convenient in the use of the products &
modernization ,Despite the benefit of E-Banking the study shows that there
are some challenges associated with network failure from internet
connection, economic development of the country, overall infrastructure and
attitude of the society specifically the customers of the bank to-wards E-
banking even customers believed that using E- banking products affected
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their saving habit negatively are the major challenges faced by customers
and the bank ,however customer prefers ATM because of effectiveness and
friendliness.
1. Even though, E-Banking products have security such as password, our
findings show that there are risks like; legal risk and security risk with
their percentage 45% and 47.5% respectively
2. Respondents believed that advertisement on E-banking products are
made by the bank with compared to the potential and capability(60%)
of the bank to run the system even If, advertisement plays a great roll
to increase customer’s volume and to create awareness to use e-
banking products.

REFERENCE

Bradley, L., & Stewart, K. (2003).Thediffusion of online banking. Journal of

marketing Management1087-1113
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CBK. (2008). Payment Systems in Kenya: Central Bank of Kenya annual

financial report for the year 2008, Kenya
Cheng, T. C. E., (2006). Adoption of internet banking: An empirical study in
Hong
Chorofas, D. N. (1988). Electronic funds transfer. Butterworth‟s, London,
Uk
. Claessens, J., Dem. V., De Cock, D., Preneel, B. &Vandewalle. J. (2002).
On the security of today’s online electronic banking systems. Computers &
Security, Vol
Nib international bank annual report, (2015). Ethiopia, Addis Ababa
Nyangosi, R., Arora, J. S., & Sing, S. (2009). The evolution of e-banking: a
study of Indian and Kenyan technology awareness. International Journal of
Electronic Finance. 3, 2: 149–169.Pakistan.
Riyadh A. N., Akter S. M., & Islam N. (2009). The Adoption of E-banking
in developing countries: A Theoretical Model for SMEs. International
Review of Business Research Papers (6) 5, Pp.212-230.
Rose, P. S. (1999). Commercial bank management, (4 t) ed)
Forster, T 1998, `’Industrial Marketing Communication: An Empirical
Investigation on the use of Marketing Communication Tools’, Licentiate
Thesis, Lulea University of Technology.
Furst, K & Nolle, D 2002, ‘Internet banking: developments and prospects’,
working Paper from office of the comptroller of the currency, administration
of National banks.’ http://www.occ.gov/ftp/workpaper/wp2000- 9.pdf,
viewed 12 May 2013
Irwin/McGraw-Hill, Boston, USA.
Simpson, J. (2002). The impact of the internet in banking: Observations and
evidence from developed and emerging markets. Telemetric and
Informatics.19,4,315– 330
Smith, A. D.& Rupp W. T. (2003). E-banking: Foundations of financial and
technologies by American consumers. Consumer Interests Annual, 47, 3: 1–
9.
Sohail, S. M. &Shanmugham, B. (2003). E-banking and customer
preferences in Malaysia: An empirical investigation. Information Sciences
150: 207–217
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Thulani, D., Tofara, C &Langton, R. (2009). Adoption and Use of Internet

Banking in Zimbabwe: An Exploratory Study. Journal of Internet Banking
and Commerce, Vol. 14(1). Vol. 21:3:257-269

APPENDIX I
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QUESTIONNAIRES
Dear valued respondent;

We are conducting a research study on challenges and prospect of E-banking

in case of Dashen Bank S.c. we are very placed to have you as our
respondent and really applicant your contribution to this academic exercise
your inputs will provide the most valuable information in disseminating
finding for the research project. The information given will be treated as
private and confidential and we will only be used for the purpose of this
research only.

Instruction: - please put in the box next to the answer of your choice or write
in the space provided as the case may be

Part I. Demographic Characteristic.

1-Sex:-Male Female

2-What is your position፡IT staff Management

Others
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3-Educational background: - Diploma Degree

Above degree

4-How long have you been working in your current position? Below 5 years

5-10 years 10-15 years Above 15

years

Part II Question regarding E-banking challenges and prospects.

1. What motivate you to become the user of Dashen E-banking?

Modernization 24 hours electronic banking service

Fast and easily accessibility its advisement

2. Which types of E-baking facilities do you use?

ATM Mobile banking Internet banking

3.What do you think infrastructural and other problem affects your

effectiveness and its brings any dissatisfaction on your job?

Strongly agree Agree Neutral

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Disagree Strongly disagree

4. Does the existing network provide by Ethio-Telecom affects the E-

banking services?

Strongly agree Agree Neutral

Disagree Strongly disagree

5. Do you think IT (Information Technology) knowledge affect the adoption

of E-banking in your branch?

Strongly agree Agree Neutral

Disagree Strongly disagree

6.Do you think lack of computer literacy influencing customer E-banking

adoption?
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Strongly agree Agree Neutral

Disagree Strongly disagree

7. Does the lack of legal and regulatory frame work of country influencing
adoption of E-banking?

Strongly agree Agree Neutral

Disagree Strongly disagree

8. Do you think the altitude of society affect the adoption of E-banking?

Strongly agree Agree Neutral

Disagree Strongly disagree

9. Do you think Dashen bank is capable of running the E-banking operation?

Strongly satisfied Dissatisfied Neutral

Satisfied
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10. Do you think that you have adequate skill to run the system?

Strongly agree Agree Neutral

Disagree Strongly disagree

11. How long will it take an average to process any E-banking services
request after full document presented?

1- Week Greater than 4 -week

3-4 Week

12. What is your level of security and legal risk?

Strongly

Strongly Agree Neutral Disagree

agree

disagree

Security risk
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Legal risk

13.Do you think that the bank benefited by increasing revenue, cost
reduction, organization efficiency,

Enhancing image, and high volume customer by using E-banking.

Strongly agree Agree Strongly

N e u t r a l Disagree
Disagree

Increased
revenue

Large
customer
coverage

Cost reduction

Organization efficiency
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Enhance image

914. What possible solution do you recommend to Dashen Bank S.c.to

improve the E-banking services

_____________________________________________________________
_____________________________________________________________
_____________________________________________________________
_____________________________________________________________
_____________________________________________________________
_____________________________________________________________
_____________________________________________________________
_____________________________________________________________
_____________________________________________________________
___________________________

Declaration
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The thesis is our original work, has not been presented for a degree in any
other university and that all sources of material used for the thesis have been
duly acknowledged.

Declared by:

Name Of Students’ Signature Date

1. Ahmed Tukela……………….. …….….…….

2 .Ermiyas Girma ………………. ….

…………..

3. Mequanent Mehret ………………… ………………

4. Mulatu Workeye …………………..

……………..

5. Tigist Ashenafi………………….. ……………

Approval by Advisor:

Name: ______________________

Signature: ___________________

Date: _______________________

Place: Admass University, Addis Abeba, Ethiopia